Universal Music Group (UMG) Morgan Stanley European Technology, Media & Telecom Conference 2024 summary

Streaming growth strategy and targets

• Targeting 8%-10% subscription revenue CAGR through 2028, with growth expected in waves rather than evenly each quarter.

• About half of growth to come from continued subscriber increases, especially in high-potential markets, and half from ARPU improvement, mainly in developed markets.

• Streaming 2.0 involves evolving product offerings, including tiering, premium, and simpler mobile tiers to drive both subscriber growth and ARPU.

• Price increases are seen as necessary and in the interest of both platforms and content owners, with current prices lagging inflation.

• Wholesale pricing models include revenue share, per-play, and per-subscriber minimums, providing flexibility in negotiations.

Premium tiers and consumer adoption

• Super-premium tiers are expected to launch in 2025, with features like early music releases, artist-fan chat, collectibles, and privileged ticket access.

• Revenue sharing for premium tiers will follow current models, combining rev share and minimums.

• Consumer research indicates 20%-30% of current subscribers are willing to pay up to double for premium offerings, with adoption expected to reach this level in 2-3 years.

• Competitive pressure is expected to drive all major platforms to offer super-premium tiers.

Platform partnerships and market dynamics

• Positive engagement with major partners like Apple and Amazon, who remain committed to music despite differing growth rates.

• Competitive dynamics and product innovation are expected to stimulate further investment and growth from all major platforms.