UMG has struck a brand new YouTube deal that features ‘guardrails’ round AI… and three different issues Sir Lucian Grainge stated on UMG’s Q3 earnings name
We’ve already reported on a few large offers from Common Music Group up to now 24 hours.
First got here the corporate’s licensing deal and copyright lawsuit settlement with AI music generator Udio. Subsequent up was a strategic alliance with Stability AI to develop “next-generation skilled music creation instruments.”
The foremost music firm introduced one other vital settlement throughout its Q3 earnings name immediately (October 30): a brand new licensing take care of YouTube.
UMG Chairman & CEOSir Lucian Grainge outlined a number of strategic developments through the name, together with the AI partnerships that he says will create “new and vital sources of future income.”
He additionally revealed in his opening remarks that UMG has accomplished a complete new take care of YouTube, marking the corporate’s third main “Streaming 2.0 settlement” following a take care of Spotify in January and with Amazon in late December 2024.
“I’m happy to report that we now have efficiently concluded our third main Streaming 2.0 settlement, this one with YouTube, protecting each recorded music and music publishing,” Grainge advised traders.
“The settlement consists of all elements of YouTube’s varied music companies and platforms, embodies our artist-centric rules and drives larger monetization for artists and songwriters.”
The YouTube partnership represents extra than simply one other renewal. In line with Grainge, UMG secured “actually necessary guardrails and safety for our artists and writers round gen AI content material” as a part of the settlement.
“I’m happy to report that we now have efficiently concluded our third main Streaming 2.0 settlement, this one with YouTube, protecting each recorded music and music publishing.”
Sir Lucian Grainge
Chief Digital Officer Michael Nash elaborated later within the name, that the deal addresses a number of elements of YouTube’s platform: “We’re advancing necessary elements of our core targets right here, making an allowance for these distinctive and multifaceted elements of their platform and the foundational rules that we’re carrying throughout in all of our negotiations with our companions.
“As Lucian stated, we secured key protections within the settlement on AI, which is a essential achievement in selling curiosity of our artists on their platform.”
Nash additionally confirmed that improved monetization of short-form video – a key problem for the trade – is “definitely an goal that we’re actively advancing throughout a number of deal renewal discussions, together with this one.”
The execs’ feedback arrived after UMG posted revenues of €3.021 billion ($3.53bn) throughout all of its divisions (together with recorded music, publishing, and extra) for Q3, up 10.2% YoY at fixed foreign money.
Listed below are three different key takeaways from UMG’s newest quarterly earnings presentation…
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1. UMG sees AI as the following main income driver, evaluating it to the streaming revolution
Grainge expressed confidence in AI’s potential to rework the music trade, drawing parallels to the streaming revolution that reshaped the enterprise 15 years in the past.
“I’ve precisely the identical feeling about this progress that I did 15 to 16 years in the past once we had been what was the transaction enterprise and the actually early fledgling what was perceived on the time of the disruption of the album into one thing known as ad-funded streaming,” Grainge revealed.
“We’re on the vanguard of a brand new period. And it’s one of many explanation why we’re constructive, we’re assured, and why we proceed to take a position proper throughout the board in all elements of what we anticipate would be the development.”
“We’re on the vanguard of a brand new period.”
Sir Lucian Grainge
Past the Udio partnership, UMG introduced a strategic alliance with Stability AI to “codevelop skilled AI music creation instruments for creators of video, pictures and now music.”
Nash defined the importance: “UMG joins that group of great gamers of their classes because the chief within the music vertical, and that places us ready to straight interact in a really artist-centric approach the dialog with our artistic group across the evolution of those instruments.”
Wanting forward, Grainge envisions “Agentic AI will dynamically make use of complicated reasoning and adaptation, has the ability to revolutionize the style during which followers work together with and uncover music. Think about interacting together with your favourite music by way of a complicated, extremely personalised chatbot.”
When requested concerning the timeline and monetary affect, Nash stated these partnerships “might represent an necessary supply of incremental extra new future income for artists and songwriters,” although particular monetary projections weren’t supplied on condition that product launches are scheduled for 2026.
As Grainge concluded: “That is taking place. It’s on. And we’re on”.
2. Japanese artists are breaking by way of globally, with BABYMETAL making historical past
UMG is “shattering the misperception” that Japanese artists have restricted alternatives exterior their residence market, with a number of breakthrough successes in 2025.
“I’m extraordinarily proud to report that UMG is shattering that false impression in a number of methods,” Grainge stated of Japan, the world’s second-largest recorded music market.
“BABYMETAL launched its first album after signing with Capitol within the US in August. The album debuted No.9 on the Billboard 200, making them the primary Japanese group ever, ever to succeed in the Prime 10 within the U.S.”
Celebrity Ado’s latest tour attracted 500,000 followers throughout 33 cities in Asia, Europe, the US and Latin America, which Grainge known as “a historic first for a Japanese artist purely exterior of Japan.”
Moreover, Fujii Kaze noticed “monumental success along with his third album, launched in September by Republic Information and subsequent yr, he set to carry out [internationally].”
“I’ve additionally believed that we will break extra native expertise from Japan world wide. I’m actually thrilled to see this progress. It’s what units us out and defines us as a artistic firm,” Grainge stated.
3. Bodily music gross sales surged 23% as superfans search deeper connections with artists
Opposite to trade expectations about bodily music’s decline, UMG’s bodily revenues soared in Q3.
Inside Common’s recorded music enterprise, Bodily income grew23.1% YoY at fixed foreign money to €341 million ($398.31m), pushed, based on UMG, “by preliminary shipments of Taylor Swift’s The Lifetime of a Showgirl and power in new releases, significantly in Japan”.
CFO Matt Ellis challenged typical knowledge concerning the format: “What our followers are exhibiting us is after they have alternatives to have interaction in many alternative methods with our artists, they wish to do this and they’ll spend cash doing that.”
Chief Working Officer Boyd Muir defined that this isn’t about conventional format transformation: “This enterprise is morphing into how we join the fan along with the artists by way of a bodily product, the 2 most important examples of that to date is the expansion in vinyl and the collectible side of that.”
“Vinyl that’s bought is bought to individuals who don’t personal file gamers. So that is a few collectible,” Muir famous.
He revealed {that a} “very vital a part of that is now coming by way of” direct-to-fan channels.
He defined: “Round that new launch of those album merchandise, we’re seeing someplace within the area of two thirds to 75% of the overall quantity really coming by way of our personal managed shops in relation to this product.”
Grainge added: “It’s the followers telling us that the assumption that we now have within the superfan and the way we’re in a position to present services and products, each bodily in addition to what they appear like digitally sooner or later. They’re telling us about conduct and about connection.”
