When the CEO of a major label posts “A Letter to Our Shareholders” you’d be forgiven for expecting it to be bad news: more layoffs, for example, or notice of their resignation.
Neither is the case for WMG boss Robert Kyncl’s letter yesterday: relief for staff who’ve seen a number of colleagues leave the company in the last year in previous layoffs.
Instead, this was Kyncl’s equivalent to UMG chief Sir Lucian Grainge’s annual new year’s message: setting out some strategic priorities for the year ahead and dropping the odd news crumb.
Kyncl said WMG remains keen to drive up subscription revenues, comparing the $14 a month that the average American spends on recorded music to the $69 a month they spend on video-streaming subscriptions.
“There’s clearly more share of the wallet left for music,” he wrote, pointing to Tencent Music’s “sustained subscriber growth despite price bumps” in China as a positive example.
Kyncl also talked up (as ever, as a future prospect because none have managed to launch yet) the potential for more-expensive superfan tiers on western DSPs, before addressing the disruption being wrought by AI, including its new business models for the music industry.
“Today’s passive listening experiences are rooted in a market-share-based system. In a more lean-forward, interactive world, we are embracing an attribution-based system that will drive value to the most iconic artists and catalogs,” he wrote.
Kyncl stressed that all WMG’s deals with AI-music companies – Suno included – are “based on variable economics, enabling us to grow as our partners do”. He also offered a positive take on Suno’s recent subscriptions milestone.
“Our data shows that the more interactive the medium, the higher the average revenue per user: while fans spend about 25 cents per hour listening to recorded music and 50 cents per hour consuming video, they spend $5 an hour when gaming,” wrote Kyncl.
“The more specific example is 2 million subscribers on Suno paying $12.50/month to create music… in addition to paying for their listening subscriptions.”
Other opinions are available: witness MBW’s takedown of Suno this week in an open letter to its CEO, suggesting that its premium tiers are merely an enabler for people “gleefully sucking money from streaming’s royalty pool” by pumping out hundreds of tracks a month.
As the only major label to have licensed Suno (so far) WMG will have a degree of insight into the dynamics of its growing subscription business.
“We are actively harnessing AI to win,” wrote Kyncl. “A as our underlying strength, resilience, and performance come back into focus, and given the steps we’ve taken to position ourselves favorably in a fast-evolving AI world, I am confident that all of our visionary work will be fully recognized.”
