Warner Music Group CEO Robert Kyncl outlined how the major is working to get more money from streaming, grow its share of the music getting played and use AI to drive innovation and efficiency in a letter to shareholders published on Tuesday.
Kyncl has led the third-largest record label and publisher since 2023, and the letter highlighted priorities that have become mainstays in his agenda, like the opportunity to raise the price of streaming subscriptions to be closer to the price hikes issued by traditional TV and film companies. The former Netflix and YouTube executive also said AI presents an opportunity to increase fans’ connection to artists, and explained how Warner is trying to become the trusted source for music “in a world of near-infinite sound.”
After several consecutive quarters of streaming revenue growth and market share gains, Kyncl argued that now is the time to solidify his broader agenda.
“With a strong foundation in place, now is the time to deliver on our three strategic priorities – growing our share, growing the value of music, and increasing efficiency, while harnessing the power of AI to serve as an accelerant for our three priorities,” Kyncl writes.
Kyncl’s comments lay out the company’s broad strategic agenda ahead of public remarks he is expected to make on Tuesday at a conference for investors and Wall Street bank analysts hosted by Morgan Stanley.
Here are a few take-aways from the WMG CEO’s letter, which can be read in full here.
“Music is… a refuge” for Investors With Maximum Upside
Music is “a refuge” for investors in the media landscape because unlike film and TV, is “well-aligned with the disruptive forces of the Internet,” and it is unlikely to face decreasing demand anytime soon, Kyncl writes.
Since being named CEO in 2022, Kyncl has pushed for raising the price of music streaming subscriptions, which he says cost $40 per subscriber last year, based on a total of 800 million global music streaming subscribers.
More people are paying for music than in 1999, the peak of the CD era, but they are paying less per person on average. As a result, the recorded music industry’s current per capita earnings, adjusted for inflation, have fallen 46% to $51 today from $95 in 1999.
By offering more types of subscriptions, including higher-priced plans for the 20% of U.S. music listeners considered superfans, who listen to twice as much music as average listeners, music companies can start to make back that revenue shortfall, Kyncl says.
WMG is collaborating with streaming platforms to appeal to superfans by experimenting with early access perks and the ability to play songs with AI.
“The opportunity to grow this total subscriber pool and increase revenue for the entire ecosystem is enormous; I believe we are only halfway there on both,” Kyncl writes. “As a growing number of platforms seek licenses to our content, and established DSPs innovate with higher-engagement features to drive premium offerings, it’s clear that rightsholders, artists, and songwriters stand to benefit.”
Kyncl also said they are working to strike direct licensing agreements for a greater portion of their music publishing rights, while they continue to get “archaic” consent decrees with the largest U.S.-based performance rights organizations, ASCAP and BMI, modified.
Kyncl writes that an artist-centric approach to paying streaming royalties is a “key and fair component of remuneration,” and WMG is focused on evolving the current version of that payment framework it has with streaming companies.
AI Opportunities
Kyncl spent nearly half of his once-a-year address to shareholders on AI, and he started with a clear address to the concerns that have so far dominated music industry discussions.
“To address the concerns head on: AI does not replace human artistry. It amplifies the importance of artists as familiar, beloved cultural icons in a jarringly noisy environment,” Kyncl wrote.
But fans do not fall in love with music at the same scale it is being produced through AI software tools like Suno, which reportedly is used in more than 60,000 songs uploaded daily to Paris-based streamer Deezer.
“Audiences do not form emotional connections at scale – fans develop connections with individual artists through identity, storytelling, and authenticity,” Kyncl wrote. “In a world of near-infinite sound, what becomes scarce is trust: trusted artists, trusted brands, trusted rights, and trusted marketplaces where creators, platforms, and fans can engage with confidence.”
WMG is working to protect the value of its music by lobbying for laws that require AI models to respect copyright and artists’ and songwriters’ consent for the use of their likeness by supporting the NO FAKES Act in the U.S. and the EU AI Act.
WMG is also embracing an “attribution-based” monetization framework that is “effectively an alternative form of the artist-centric payment” that Kyncl says he has long lobbied for and which will reward the most iconic artists and catalogs.
“Our principles are reflected in our deal with Suno, the market leader in genAI music content, as well as our agreements with Udio, Stability AI, and Klay,” Kyncl wrote. “All of our deals are based on variable economics, enabling us to grow as our partners do.”
Kyncl argued there is more revenue to be made by “enabling” the creative tools on platforms like Suno than withholding from them. Suno has 2 million subscribers paying $12.50 per month, “in addition to paying for their listening subscriptions.”
“We are actively harnessing AI to win,” Kyncl wrote. “We’re ready to revolutionize our superpower – the music – and drive its value to new heights for our artists, songwriters, and shareholders.”
