Universal Music Group (UMG) recently held its 2024 Capital Markets Day at Abbey Road Studios in London, where key executives, including CEO & Chairman Sir Lucian Grainge, outlined the company's strategic plans for future growth. In the investor presentation, UMG set ambitious financial targets for the years leading up to 2028, forecasting a compound annual growth rate (CAGR) of 7% in revenue, supported by growth in subscription revenue and enhanced monetization of superfans.
Superfan monetization is a central focus for UMG, with the company aiming to increase average revenue per user as subscription growth progresses. Sir Lucian emphasized that streaming services have revolutionized the music industry, making it crucial for UMG to leverage its superfans who significantly contribute to the bottom line. In 2023, the revenue attributed to this segment—physical music and merchandise—amounted to $2.08 billion, which accounted for 18.7% of UMG's total revenue.
With streaming penetration still below 50% in some established markets and emerging territories like China and India, UMG sees considerable opportunities ahead. The company estimates that global music subscribers could surpass one billion by 2028, although there are signs of slowing growth in subscription numbers.
Key initiatives introduced to engage superfans include exclusive physical collectibles, premium merchandise, and unique live and digital experiences. Examples highlighted include the Rolling Stones' virtual store and Zedd's Virtual Beat Galaxy Experience on Roblox.
Furthermore, executives discussed future innovations, such as the anticipated super-premium subscription tier on platforms like Spotify, which would offer enhanced features and higher quality audio for an increased price. UMG's research suggests that 20% of current subscribers are willing to pay extra for such enhancements.
For more insights on UMG’s expansion plans, visit Music Week.