Shares of Universal Music Group, the major label backing Don Jazzy’s Mavin Records, plunged more than 20% on Thursday as the company reported disappointing results in its streaming and subscription sectors.
The Netherlands-based UMG, home to high-profile artists like Taylor Swift, Drake, Justin Bieber, and Adele, saw this sharp decline shortly after markets opened. The drop followed a report showing weaker-than-expected performance in its streaming businesses.
During the earnings call, UMG Vice President and CFO Boyd Muir attributed the slowdown in subscription growth to “the timing of price increases” by its partners, including major platforms such as Spotify, Amazon Music, and Apple Music. These price hikes had previously helped boost UMG’s subscription revenue.
Muir explained, “The slowdown in subscription revenue this quarter is partly due to reduced subscriber growth on certain platforms, even as the global subscription marketplace continues to expand. While platforms like Spotify and YouTube show strong growth, some large partners have struggled to increase their global subscriber base.”
Although specific platforms experiencing subscriber declines were not named, Muir noted that UMG is actively engaging with its key partners to discuss product innovation.
Earlier this year, UMG also launched a restructuring plan aimed at achieving €250 million in annual savings by 2026, which included workforce reductions.
UMG has faced challenges with social media partnerships recently, including the termination of its agreement with Meta Platforms in May. The company ended its licensing deal for premium music videos on Facebook, citing lower-than-expected popularity compared to other music offerings.
In a strategic move, UMG acquired a majority stake in Mavin Global Limited, founded by Don Jazzy, to enhance its presence in Nigeria through its global network. Mavin artists, such as Ayra Starr and Rema, are now prominently featured in UMG’s international roster.
Rema’s single “Calm Down” featuring Selena Gomez has achieved significant milestones, including reaching No. 3 on the U.S. Billboard Hot 100 and becoming the most-viewed video by an African artist on YouTube.
UMG’s financial report revealed a 3.9% decrease in streaming revenue for Q2, a sharp contrast to the 10.3% growth seen in Q1. The decline was attributed to slower growth at key advertising-based platforms and shortfalls related to deal renewals.
Despite these challenges, UMG reported a 44% increase in merchandising revenue, driven by artists such as Taylor Swift. Total revenue rose to €2.93 billion ($3.18 billion), marking a 9% year-over-year growth and exceeding estimates. Adjusted EBITDA also grew by more than 11% from the previous year, reaching €649 million ($705 million), excluding foreign exchange effects.
