The boss of major label Warner Music Group has warned rivals to “think very carefully” before restricting the free tiers of streaming services like Spotify, after his company revealed that it now makes more money from streams than from download sales.
The tipping point came in the first quarter of 2015, according to WMG’s latest financial results, which saw the label’s revenues grow 4% year-on-year to $677m, helping it record a net profit of $19m.
That included a 33% increase in streaming income, as it overtook WMG’s download revenues for the first time.
“The rate of this growth has made it abundantly clear to us that in years to come, streaming will be the way that most people enjoy music,” chief executive Stephen Cooper told analysts in the company’s earnings call.
“Not only that, we are also confident that streaming’s ongoing expansion will return the industry to sustainable, long-term growth.”
Cooper’s comments come at a time when the economics of streaming music are the subject of intense debate within the music industry, with two main issues.
Firstly, whether streaming – and the free, on-demand streaming tiers of companies like Spotify and Deezer – is making as much money as artists, songwriters, and labels and publishers representing them, want.
And, secondly, whether streaming even pays off for the companies providing it, given that flagship service Spotify recorded losses of €162m in 2014 alone.