Warner Music CEO Stephen Cooper Discusses the ‘New Era in Music Entertainment’
Warner Music CEO Stephen Cooper discussed a "new era in music entertainment" during Goldman Sachs' virtual Communacopia conference, touching on TikTok, gaming, streaming expansion and more.
Warner Music Group (WMG) CEO Stephen Cooper discussed the now publicly-traded company’s streaming-fueled growth and future outlook during Goldman Sachs’ virtual Communacopia conference Thursday, envisioning that music’s continued application to social media, fitness, TV and film and other businesses will ring in a “new era in music entertainment.”
“Music has gone way beyond singles, albums and videos,” he said. “Subscription streaming is just the beginning.”
Specifically, the executive pointed to Peloton, TikTok and video games (including in-game performances) as examples of businesses which increasingly feature music as a “cornerstone.” Despite the financial impact of the pandemic, he said, coronavirus has accelerated consumer adoption of new platforms like these, which “represent for us meaningful nine-figure opportunities that we would expect to see in the relatively near term.”
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Negotiating music licensing deals with emerging platforms, of course, has never been a simple task — and Cooper discussed the at times contentious road to reaching such deals with TikTok, explaining that “we believe we should treat start-ups differently” than more established companies at the negotiating table. He said that WMG, which is home to artists like Lizzo, Cardi B and Ed Sheeran, is now on good terms with TikTok. “They and we have a clear understanding how much music means to their platform,” Cooper said. “We have had, and we believe we will continue to have a very strong, mutually supportive relationship and an economic interface with them that appropriately values music.”
Meanwhile, he declined to comment on the specifics of WMG’s recent licensing renewal deal with Spotify, but said that the terms of its current licensing deals with streaming services are “equal to or slightly better than they were in our prior deals.” He noted that streaming now makes up 70% of WMG’s total revenue, with room to grow: “I think personally, we’re in the early inning of streaming growth.”
Despite the ongoing coronavirus pandemic, WMG launched its initial public offering in June. As with the majority of music companies, it took a financial hit due to the pandemic, with third quarter revenue dropping 4.5% (3.1% at constant currency) compared to third quarter 2019 to $1.010 billion, according to the company’s Aug. 4 earnings report. But Cooper took the opportunity during the Goldman conference to highlight how the company has adapted amid the pandemic, including by shipping out home recording kits and making its dozens of in-house studios globally “safe havens for artists to do their work.”
As racial inequality in the music industry and beyond emerged as a national conversation over the summer, WMG and the Blavatnik Family Foundation also launched a $100 million fund to support causes related to the music industry, social justice and racial equality, and in August, hired Dr. Maurice Stinnett as head of global equity, diversity and inclusion. “There is no doubt that we need to do better, especially at the senior management and Board levels,” Cooper said during the Goldman conference. “We’re doing it because we see having an equitable, diverse, inclusive company as being a company that will be stronger, both creatively and commercially.”
Looking ahead, “With respect to our release schedule, we’re very, very excited about our back half of the year as we move into calendar ’21,” he added. “We have some huge artists coming back. They’re all at the top of their game.”
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