Warner Music Group Corp. operates as a music entertainment company worldwide.
The company is the direct parent of WMG Holdings Corp. (‘Holdings’), which is the direct parent of WMG Acquisition Corp. (‘Acquisition Corp.’). Acquisition Corp. is one of the world’s major music entertainment companies. The company and Holdings are holding companies that conduct substantially all of their business operations through their subsidiaries.
The company’s renowned family of iconic record labels, including...
Warner Music Group Corp. operates as a music entertainment company worldwide.
The company is the direct parent of WMG Holdings Corp. (‘Holdings’), which is the direct parent of WMG Acquisition Corp. (‘Acquisition Corp.’). Acquisition Corp. is one of the world’s major music entertainment companies. The company and Holdings are holding companies that conduct substantially all of their business operations through their subsidiaries.
The company’s renowned family of iconic record labels, including Atlantic Records, Warner Records, Elektra Records and Parlophone Records, is home to many of the world’s most popular and influential recording artists. In addition, Warner Chappell Music, the company’s global music publishing business, boasts an extraordinary catalog that includes timeless standards and contemporary hits, representing works by over 180,000 songwriters and composers, with a global collection of more than one and a half million musical compositions. The company’s entrepreneurial spirit and passion for music has driven the company’s recording artist and songwriter focused innovation for decades.
The company has championed new business models and empowered established players, while protecting and enhancing the value of music. The company was the first major music entertainment company to strike landmark deals with important companies such as Apple, YouTube and Tencent Music Entertainment Group, as well as with pure-play music technology companies such as MixCloud, SoundCloud and Audiomack. The company adapted to streaming faster than other major music entertainment companies, and in 2016, was the first such company to report that streaming was the largest source of the company’s recorded music revenue.
Music Publishing
Music publishing involves the acquisition of rights to, and the licensing of, musical compositions (as opposed to sound recordings) from songwriters, composers or other rights holders.
Music publishing revenues are classified by Music & Copyright as coming from four main royalty sources: digital, mechanical, performance, and synchronization. In 2023, digital, which accounted for approximately 60% of global revenue, represented the largest component of industry revenues, while performance, which accounted for approximately 17%, represented the second-largest component of industry revenues. Synchronization accounted for approximately 16% of global revenue in 2023. Mechanical revenues from traditional physical music formats (e.g., vinyl, CDs, DVDs), accounted for approximately 5% of global revenue in 2023.
Growth Strategies
The company’s growth strategies are to attract, develop and retain established and emerging recording artists and songwriters; focus on growth markets to position it to realize upside from incremental penetration of streaming; expand global presence with investment in local music in nascent markets; embrace commercial innovation with new digital distributors and partners; and pursue acquisitions to enhance asset portfolio and long-term growth.
Recorded Music segment
The company’s Recorded Music business primarily consists of the discovery and development of recording artists and the related marketing, promotion, distribution, sale and licensing of music created by such recording artists. The company plays an integral role in virtually all aspects of the recorded music value chain from discovering and developing talent to producing, distributing and selling music to marketing and promoting recording artists and their music.
In the United States, the company’s Recorded Music business is conducted principally through the company’s major record labels—Atlantic Records, which includes TenThousand Projects, and Warner Records. In October 2018, the company launched Elektra Music Group in the United States as a standalone label group, which comprises the Elektra, Fueled by Ramen and Roadrunner labels. In December 2021, the company acquired 300 Entertainment and subsequently launched 300 Elektra Entertainment, or 3EE, a frontline label group that brings together the multi-genre power of 300 Entertainment and Elektra Music Group. The company’s Recorded Music business also includes Rhino Entertainment, a division that specializes in marketing the company’s recorded music catalog through compilations, reissuances of previously released music and video titles and releasing previously unreleased material from the company’s vault.
The company also conducts its Recorded Music business through a collection of additional record labels, including Asylum, Big Beat, Canvasback, East West, Erato, FFRR, Nonesuch, Parlophone, Reprise, Sire, Spinnin’ Records, Warner Classics and Warner Music Nashville.
Outside the United States, the company’s Recorded Music business is conducted through various subsidiaries, affiliates and non-affiliated licensees. Internationally, the company engages in the same activities as in the United States: discovering and signing artists and distributing, selling, marketing and promoting their music. In most cases, the company also markets, promotes, distributes and sells the music of those recording artists for whom the company’s domestic record labels have international rights. In certain smaller markets, the company license the right to distribute and sell the company’s music to non-affiliated third-party record labels.
The company’s Recorded Music business’ operations include WMX, a new generation services division that connects artists with fans and amplifies brands in creative, immersive, and engaging ways. The division includes a rebranded WEA commercial services and marketing network (formerly Warner-Elektra-Atlantic Corporation, or WEA Corp.), which markets, distributes and sells music and video products to retailers and wholesale distributors, as well as acting as the company’s media and creative content arm. The company’s business’ distribution operations also include Alternative Distribution Alliance (‘ADA’), which markets, distributes, and sells the products of independent labels to retail and wholesale distributors; and various distribution centers and ventures operated internationally.
In addition to the company’s music being sold in physical retail outlets, the company’s music is also sold in physical form to online physical retailers, such as amazon.com, barnesandnoble.com and bestbuy.com, and distributed in digital form to an expanded universe of digital partners, including streaming services, such as those of Amazon, Apple, Deezer, SoundCloud, Spotify, Tencent Music and YouTube, radio services, such as iHeart Radio and SiriusXM and other download services.
The company has diversified its revenues beyond the company’s traditional businesses by entering into expanded-rights deals with recording artists in order to partner with such artists in other aspects of their careers. Under these agreements, the company provides services to and participates in recording artists’ activities outside the traditional recorded music business, such as touring, merchandising and sponsorships. The company has built and acquired artist services capabilities and platforms for marketing and distributing this broader set of music-related rights and participating more widely in the monetization of the artist brands the company helps create. Entering into expanded-rights deals and enhancing the company’s artist services capabilities in areas, such as merchandising, VIP ticketing, fan clubs, concert promotion and management has permitted the company to diversify revenue streams and capitalize on other revenue opportunities. This provides for improved long-term relationships with the company’s recording artists and allows the company to more effectively connect recording artists and fans.
A&R
The company is identifying and contracting with recording artists who become commercially successful. The company’s ability to select recording artists who are likely to be successful is a key element of the company’s Recorded Music business’ strategy and spans all music genres and all major geographies and includes recording artists who achieve national, regional and international success.
In the United States, the company’s major record labels identify potentially successful recording artists, sign them to recording contracts, collaborate with them to develop recordings of their work and market and sell or license these finished recordings to legitimate digital channels and retail stores. Increasingly, the company is also expanding its participation in image and brand rights associated with artists, including merchandising and sponsorships. The company’s labels scout and sign talent across all major music genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, alternative, folk, blues, gospel and other Christian music. Internationally, the company markets and sells the U.S. and local repertoire through the company’s network of subsidiaries, affiliates and non-affiliated licensees. With a roster of local recording artists performing in various local languages throughout the world, the company has an ongoing commitment to developing local talent aimed at achieving national, regional or international success.
Many of the company’s recording artists continue to appeal to audiences long after the company ceases to release their new music. The company has an efficient process for sustaining sales across the company’s catalog releases. Relative to the company’s new releases, the company spends lesser amounts on marketing for the company’s catalog.
The company maximizes the value of its catalog of recorded music through the company’s Rhino Entertainment business unit and through activities of each of the company’s record labels. The company uses its catalog as a source of material for re-releases, box sets and special package releases, which provide consumers with incremental exposure to familiar music and recording artists. Rhino Entertainment also releases new music from legacy recording artists and markets and promotes the name and likeness of certain artist estates and brands.
Recording Artists’ Contracts
The company’s recording artists’ contracts define the commercial relationship between its recording artists and the company’s record labels. The company negotiates recording contracts with recording artists that define the company’s rights to use the recording artists’ music. In accordance with the terms of the contract, the recording artists receive royalties based on sales and other uses of such recording artists’ music. The company customarily provides upfront payments to recording artists called advances, which are recoupable by the company from future royalties otherwise payable to such recording artists. The company’s typical contract for a new recording artist covers a sufficient number of master recordings to constitute an extended-play record (known as an EP) or an album and provides the company with a series of options to acquire subsequent albums from the artist. Royalty rates and advances are often increased for subsequent albums for which the company has exercised its options. Many of the company’s contracts contain a commitment from the record label to fund video production costs, at least a portion of which in certain countries is treated as advances recoupable by the company from future royalties.
The company’s recording contracts with established artists generally provide for greater advances and higher royalty rates. Typically, such contracts entitle the company to fewer albums, and, of those, fewer are optional albums. In contrast to new artists’ contracts, which, with certain territorial or other exceptions, customarily give the company ownership in the artist’s work for the full term of the copyright or a long-term exclusive license, established artists’ contracts more commonly provide the company with an exclusive license for some fixed period of time. It is not unusual for the company to renegotiate contract terms with a successful artist during the term of their existing contracts, sometimes in return for an increase in the number of albums that the artist is required to deliver.
Many of the recording contracts the company enters into are expanded-rights deals, in which the company shares in the touring, merchandising, sponsorship, fan club or other ancillary music revenues associated with those artists.
Marketing and Promotion
The company’s approach to marketing and promoting its recording artists and their music is comprehensive.
The company has significant experience in its marketing and promotion departments, which allows the company to achieve an optimal balance between its marketing expenditure and the eventual sales of the company’s artists’ recordings.
Manufacturing, Packaging and Physical Distribution
The company has arrangements with various suppliers and distributors as part of the company’s manufacturing, packaging and physical distribution services throughout the world. The company’s manufacturing, packaging and physical distribution arrangements are sufficient to meet the company’s business needs.
Sales and Digital Distribution
The company generates revenues from the new releases of current artists and the company’s catalog of recordings. In addition, the company actively repackages music from the company’s catalog to form new releases. The company’s revenues are generated in digital formats including streaming and downloads, CD format, as well as through historical formats, such as vinyl albums.
In connection with the digital distribution of the company’s music, the company partners with a broad range of digital music services, such as Amazon, Apple, Deezer, KKBox, Spotify, Tencent Music Entertainment Group and YouTube; and is actively seeking to develop and grow the company’s digital business. The company also sells traditional physical formats through both the online distribution arms of traditional retailers, such as target.com and walmart.com and traditional online physical retailers such as amazon.com, bestbuy.com and barnesandnoble.com. Streaming services stream the company’s music on an ad-supported or paid subscription basis. In addition, downloading services sell downloads of the company’s music on a per-album or per-track basis. In digital formats, per-unit costs related directly to physical products such as manufacturing, distribution, inventory and return costs do not apply. The company sells its physical recorded music products through a variety of different retail and wholesale outlets, including music specialty stores, general entertainment specialty stores, supermarkets, mass merchants and discounters, independent retailers and other traditional retailers. Although some of the company’s retailers are specialized, many of the company’s customers offer a substantial range of products other than music.
Most of the company’s physical sales represent purchases by a wholesale distributor or retailer. The company’s sale and return policies are in accordance with wholesaler and retailer requirements, applicable laws and regulations, territory and customer-specific negotiations and industry practice. The company attempts to minimize the return of unsold product by working with retailers to manage inventory and SKU counts, as well as by monitoring shipments and sell-through data.
The company enters into agreements with digital music services to make its music available for access in digital formats (e.g., streaming and downloads). The company then provides digital assets for its music to these services in an accessible form. The company’s agreements with these services establish the company’s fees for the distribution of the company’s music, which vary based on the service. The company typically receives accounting from these services on a monthly basis, detailing the distribution activity, with payments rendered on a monthly basis. The company’s agreements with digital music services generally last one to three years.
In fiscal year 2024, Recorded Music revenue earned under the company’s agreements with its top three digital music accounts, Spotify, YouTube and Apple, accounted for approximately 41% of the company’s Recorded Music revenues.
Since the emergence of digital formats, the company’s business has become less seasonal in nature and driven more by the timing of the company’s releases.
Music Publishing segment
While Recorded Music is focused on marketing, promoting, distributing and licensing a particular recording of a musical composition, Music Publishing is an intellectual property business focused on generating revenue from uses of the musical composition itself. In return for promoting, placing, marketing and administering the creative output of a songwriter, or engaging in those activities for other rightsholders, the company’s Music Publishing business shares the revenues generated from use of the musical compositions with the songwriter or other rightsholders.
The operations of the company’s Music Publishing business are conducted principally through Warner Chappell Music, the company’s global music publishing company headquartered in Los Angeles, and through various subsidiaries, affiliates, and non-affiliated licensees and sub-publishers. The company owns or controls rights to more than one and a half million musical compositions, including numerous global pop hits, standards, folk songs and motion picture and theatrical compositions. Assembled over decades, the company’s award-winning catalog includes over 180,000 songwriters and composers and a diverse range of genres, including pop, rock, jazz, classical, country, R&B, hip-hop, rap, reggae, Latin, folk, blues, symphonic, soul, Broadway, electronic, alternative and gospel. Warner Chappell Music also administers the music and soundtracks of several third-party television and film producers and studios. The company has an extensive production music catalog collectively branded as Warner Chappell Production Music.
Music Publishing Royalties
Warner Chappell Music, as a copyright owner and administrator of musical compositions, is entitled to receive royalties for the use of musical compositions. The company continually adds new musical compositions to the company’s catalog and seek to acquire rights in musical compositions that will generate substantial revenue over the long term.
Warner Chappell Music acquires copyrights or portions of copyrights and administration rights from songwriters or other third-party holders of rights in musical compositions. Typically, in either case, the grantor of rights retains a right to receive a percentage of revenues collected by Warner Chappell Music. As an owner and administrator of musical compositions, the company promotes the use of those musical compositions by others. For example, the company encourages recording artists to record and include the company’s musical compositions on their recordings, offer opportunities to include the company’s musical compositions in filmed entertainment, advertisements and digital media and advocate for the use of the company’s musical compositions in live stage productions. Examples of music uses that generate music publishing revenues include:
Performance: performance of the song to the general public
Broadcast of musical compositions on television, radio and cable.
Live performance at a concert or other venue (e.g., arena concerts, nightclubs).
Broadcast of musical compositions at sporting events, restaurants or bars.
Performance of musical compositions in staged theatrical productions.
Digital: licensing of recorded music in various digital formats and digital performance of musical compositions to the general public
Streaming and download services.
Social media and short-form video platforms.
Graphic design and editing software and other creator tools.
Mechanical: sale of recorded music in various physical formats
Vinyl, CDs and DVDs
Synchronization: use of the musical composition in combination with visual images
Films or television programs
Television commercials
Video games
Merchandising, toys or novelty items
Other:
Licensing of copyrights for use in printed sheet music
In the United States, mechanical royalties are collected directly by music publishers, from recorded music companies, via The Harry Fox Agency, a non-exclusive licensing agent affiliated with the Society of European Stage Authors and Composers (‘SESAC’), or The Mechanical Licensing Collective (‘The MLC’), while outside the United States, mechanical royalties are collected directly by music publishers or from collecting societies. Once mechanical royalties reach the publisher, percentages of those royalties are paid or credited to the writer or other rightsholder of the copyright in accordance with the underlying rights agreement. In 2024, U.S. mechanical royalties for physical formats (e.g., CDs and vinyl albums) and permanent digital downloads are paid at a rate of 12.4 cents per song per unit or 2.38 cents per minute of playing time (whichever is greater).
Composers’ and Lyricists’ Contracts
Warner Chappell Music derives its rights through contracts with composers, lyricists (songwriters) or their heirs and with third-party music publishers. In some instances, those contracts grant either 100% or some lesser percentage of copyright ownership in musical compositions and/or administration rights. In other instances, those contracts only convey to Warner Chappell Music rights to administer musical compositions for a period of time without conveying a copyright ownership interest. The company’s contracts grant the company exclusive use rights in the territories concerned excepting any pre-existing arrangements. Many of the company’s contracts grant the company rights on a global basis. Warner Chappell Music customarily possesses administration rights for every musical composition created by the writer or composer during the exclusive acquisition term of the contract.
Recording Artist and Songwriter Value Proposition
Below is an overview of the many creative and commercial services the company provides its recording artists and songwriters. The company’s interests are aligned with theirs.
Welcoming Talent
The company offers recording artists and songwriters numerous pathways into the company’s ecosystem. Whether it is an up-and-coming songwriter making music in his or her bedroom, a breakout superstar recording artist selling out stadiums or an icon looking to curate a legacy, the company offers the necessary support and resources.
The company is not just searching for immediate hits. The company scouts and signs talent with the market potential for longevity and lasting impact. As a result, the company is investing in more new music every year without losing the company’s commitment to each recording artist and songwriter. It is that focus, patience and passion that has built and sustained the reputation that perpetuates the company’s cycle of success.
Creative Partnership
The company’s A&R executives both champion and challenge the talent they sign, empowering them to realize their visions and evolve over time. The company’s longstanding relationships within the creative community also provide the company’s recording artists and songwriters with a wide network of collaborators, which is a vital part of helping them to realize their best work. The company provides the investment that gives its recording artists and songwriters the requisite time and space to experiment and flourish. This includes access to a multitude of songwriters’ rooms and recording studios around the globe with more to come.
Marketing and Promotional Firepower
The company is experts in the art of amplification, with proven specialties in every aspect of marketing and promotion. From every meaningful digital music service and social media network to radio, press, film, television and retail, the company is plugged into the most influential people and platforms for music entertainment. At the same time, by combining the company’s collective experience with billions of transactions each and every week, the company gathers the insights needed to make meaningful commercial decisions grounded in data-based discipline. Most importantly, the company quickly adapts to changes in how music is consumed to maximize the opportunities for the company’s recording artists and songwriters. For example, the company quickly honed its expertise in securing placement on playlists and other valuable positioning on digital music services.
Global Reach and Local Expertise
As of September 30, 2024, the company employed approximately 5,800 persons around the world. This means the company can build local fan bases for international recording artists and songwriters, as well as supply the network to deliver worldwide fame. The company’s local strength fuels the company’s global impact and vice versa. The company employs a global priority system to provide as many recording artists as possible a genuine shot at success. The company’s approach combines a deep understanding of local cultures, with a close-knit, nimble team that is in constant communication around the world.
A Broad Universe of Opportunity
Albums, singles, videos and songs are still the primary drivers for the company’s business.
In the company’s Recorded Music business, beyond digital and physical revenue streams, the company provides a wide array of artist services, including merchandise, e-commerce, VIP ticketing and fan clubs. In the company’s Music Publishing business, the company takes an active role in expanding the consumption of music, through performance, digital, mechanical, synchronization and, the original music publishing revenue stream, sheet music. In 2022, the company launched a creative services team that is tasked with finding innovative ways to revitalize catalogs and create new possibilities for the company’s songwriters.
The centralization of the company’s technology capabilities and data insights has resulted in increased transparency of the company’s royalty reporting to the company’s recording artists and songwriters. The company defends and protects its recording artists’ and songwriters’ creative output by remaining vigilant in the collection of different types of royalties around the world and defending against illegitimate and illegal uses of the company’s owned and controlled copyrights.
Representative Sample of Recording Artists and Songwriters
The company’s Recorded Music business includes music from:
Global superstars such as Ed Sheeran, Dua Lipa, Linkin Park, Coldplay, Twenty One Pilots, Cardi B, Bruno Mars, Michael Bublé, Lizzo, Kelly Clarkson, David Guetta, Kenny Chesney, Madonna, Neil Young, Red Hot Chili Peppers, Prince, Green Day, Cher, Pink Floyd, David Bowie, Fleetwood Mac, Aretha Franklin and The Smiths.
Next-generation talent including Charli XCX, Benson Boone, Teddy Swims, Zach Bryan, Megan Thee Stallion, Jack Harlow, Lil Uzi Vert, Fred Again.., Artemas, Maria Becerra and CKay.
International stars such as Burna Boy, Aya Nakamura, King, Robin Schulz, TWICE, Ninho, Capo Plaza, Diljit Dosanjh, Udo Lindenberg and Laura Pausini.
The company’s Music Publishing business includes musical compositions by:
Superstars such as Anderson Paak, Belly, Bruno Mars, Cardi B, Chris Stapleton, Damon Albarn, Dan + Shay, Dave Mustaine, Deftones, Dua Lipa, Green Day, Imagine Dragons, Kacey Musgraves, Katy Perry, Lil Uzi Vert, Lil Wayne, Lizzo, Madonna, Pablo Alborán, Radiohead, Tayla Parx, Teddy Swims, Tom Petty, Tones and I, and William Corgan.
International talent such as Aya Nakamura, Angèle, Bausa, Danna Paola, Jack & Coke, Joaquin Sabina, Jonathan Lee, Manuel Medrano, Marco Borreo, Melendi, MZMC, Raye, Shy’m, Stromae, and Tove Lo.
Songwriting icons like Amy Allen, Brody Brown, busbee, Cole Porter, David Bowie, Eric Clapton, Gamble & Huff, George & Ira Gershwin, George Michael, Grateful Dead, Justin Tranter, Led Zeppelin, Lin Manuel Miranda, Liz Rose, Marco Antonio Solís, Mick Jones, Quincy Jones, Stephen Sondheim and Zach Bryan.
Intellectual Property
Copyrights
The company’s business, like that of other companies involved in the music entertainment industry, rests on the company’s ability to maintain rights in sound recordings and musical compositions through copyright protection. In the United States, copyright protection for works created as ‘works made for hire’ (e.g., works of employees or certain specially commissioned works) on or after January 1, 1978 generally lasts for 95 years from first publication or 120 years from creation, whichever expires first. The period of copyright protection for works created on or after January 1, 1978 that are not ‘works made for hire’ lasts for the life of the author plus 70 years. Works created and published or registered in the United States prior to January 1, 1978 generally enjoy copyright protection for 95 years, subject to compliance with certain statutory provisions including notice and renewal. Additionally, the MMA extended federal copyright protection in the U.S. to sound recordings created prior to February 15, 1972. The duration of copyright protection for such sound recordings varies based on the year of publication, with all such sound recordings receiving copyright protection for at least 95 years, and sound recordings published between January 1, 1957 and February 15, 1972 receiving copyright protection until February 15, 2067. The term of copyright in the EU for musical compositions in all member states lasts for the life of the author plus 70 years.
In the EU, the term of copyright for sound recordings lasts for 70 years from the date of release in respect of sound recordings that were still in copyright on November 1, 2013 and for 50 years from date of release in respect of sound recordings the copyright in which had expired by that date. The EU also harmonized the copyright term for joint musical works. In the case of a musical composition with words that is protected by copyright on or after November 1, 2013, EU member states are required to calculate the life of the author plus 70 years term from the date of death of the last surviving author of the lyrics and the composer of the musical composition, provided that both contributions were specifically created for the musical composition.
The company actively lobbies in favor of industry efforts to increase copyright protection and support the efforts of organizations such as RIAA, IFPI, National Music Publishers’ Association, International Confederation of Music Publishers and the World Intellectual Property Organization.
Trademarks
The company’s major trademarks include 300 Entertainment, ADA, Asylum, Atlantic, East West, Elektra, EMP, Erato, Nonesuch, Parlophone, Reprise, Rhino, Roadrunner, Sire, Songkick, SPINNIN’ RECORDS and Warner Chappell, and their respective logos. The company also uses certain trademarks pursuant to a royalty-free license agreement. The duration of the license relating to the WARNER, WARNER MUSIC and WARNER RECORDS word marks and ‘W’ logo is perpetual, but may be terminated under certain limited circumstances, including the company’s material breach of the license agreement and certain events of insolvency.
Joint Ventures
The company has entered into joint venture arrangements pursuant to which the company or its various subsidiary companies distribute, market, promote, license and sell (in most cases, domestically and internationally) recordings and other rights owned by the joint ventures. An example of this arrangement is Frank Sinatra Enterprises, a joint venture established to administer licenses for use of Frank Sinatra’s name and likeness and manage all aspects of his music, film and stage content.
History
Warner Music Group Corp. was founded in 1929. The company was incorporated in 2003.
