UMG has struck a brand new YouTube deal that features ‘guardrails’ round AI… and three different issues Sir Lucian Grainge mentioned on UMG’s Q3 earnings name
We’ve already reported on a few massive offers from Common Music Group prior 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 most important music firm introduced one other vital settlement throughout its Q3 earnings name at this time (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 now we have efficiently concluded our third main Streaming 2.0 settlement, this one with YouTube, masking each recorded music and music publishing,” Grainge instructed buyers.
“The settlement consists of all elements of YouTube’s varied music providers and platforms, embodies our artist-centric rules and drives better monetization for artists and songwriters.”
The YouTube partnership represents extra than simply one other renewal. In response to Grainge, UMG secured “actually vital 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 now we have efficiently concluded our third main Streaming 2.0 settlement, this one with YouTube, masking 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 vital elements of our core aims right here, bearing in mind 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 mentioned, we secured key protections within the settlement on AI, which is a important 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 business – 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 forex.
Listed below are three different key takeaways from UMG’s newest quarterly earnings presentation…
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1. UMG sees AI as the subsequent main income driver, evaluating it to the streaming revolution
Grainge expressed confidence in AI’s potential to remodel the music business, 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 the reason 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 progress.”
“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 serious gamers of their classes because the chief within the music vertical, and that places us ready to instantly have interaction in a really artist-centric method the dialog with our inventive group across the evolution of those instruments.”
Trying forward, Grainge envisions “Agentic AI will dynamically make use of complicated reasoning and adaptation, has the facility to revolutionize the way by which followers work together with and uncover music. Think about interacting along with your favourite music via a complicated, extremely personalised chatbot.”
When requested in regards to the timeline and monetary impression, Nash mentioned these partnerships “might represent an vital supply of incremental extra new future income for artists and songwriters,” although particular monetary projections weren’t supplied provided that product launches are scheduled for 2026.
As Grainge concluded: “That is occurring. It’s on. And we’re on”.
2. Japanese artists are breaking via globally, with BABYMETAL making historical past
UMG is “shattering the misunderstanding” that Japanese artists have restricted alternatives outdoors their dwelling 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 mentioned 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.”
Famous person Ado’s current 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 outdoors of Japan.”
Moreover, Fujii Kaze noticed “huge success along with his third album, launched in September by Republic Data 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 inventive firm,” Grainge mentioned.
3. Bodily music gross sales surged 23% as superfans search deeper connections with artists
Opposite to business 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 forex to €341 million ($398.31m), pushed, in line with UMG, “by preliminary shipments of Taylor Swift’s The Lifetime of a Showgirl and energy in new releases, significantly in Japan”.
CFO Matt Ellis challenged typical knowledge in regards to the format: “What our followers are exhibiting us is once they have alternatives to have interaction in many alternative methods with our artists, they wish to try 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 via a bodily product, the 2 most vital examples of that thus far is the expansion in vinyl and the collectible facet of that.”
“Vinyl that’s bought is bought to individuals who don’t personal document gamers. So that is a few collectible,” Muir famous.
He revealed {that a} “very vital a part of that is now coming via” 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 full quantity truly coming via our personal managed shops in relation to this product.”
Grainge added: “It’s the followers telling us that the assumption that now we have within the superfan and the way we’re in a position to present services, each bodily in addition to what they seem like digitally sooner or later. They’re telling us about conduct and about connection.”
