Warner Music Group CEO Robert Kyncl has written a detailed letter to shareholders outlining the industry’s new growth vectors.
It comes ahead of his question and answer session during the Morgan Stanley Technology, Media & Telecom Conference on Wednesday (March 4).
Following a period of rationalisation at the major – alongside investment in catalogues and artists – Warner has seen success with artists new and returning, including Zach Bryan, Bruno Mars, Charli XCX, Benson Boone and Sombr. UK artist and producer PinkPantheress is currently making waves with Zara Larsson on Stateside, which is No.1 in Spotify’s Daily Global rankings.
Warner is also seeing consistent catalogue success with the likes of Fleetwood Mac, David Bowie, Linkin Park and Ed Sheeran.
“Demand is booming for hits new and old and music companies now generate more predictable, recurring revenue streams than at any time in history,” wrote Kyncl. “With algorithmic personalisation fueling interest in artists from all eras, new listeners of all ages are exploring historic catalogues and embedding clips into short-form videos. Best of all, there’s plenty of room for even more growth, especially as AI begins to enable fans to more deeply interact with the music they love, by reimagining it rather than just listening.”
Six years after WMG went public, Kyncl said the then economic model based on consumption has since expanded to combine consumption and creation, “opening up a new set of partners, opportunities, and revenue streams”.
With 27% of US streaming consumption in 2024 coming from new releases versus 45% 10 years ago, Kyncl noted that music companies no longer rely as heavily on the success of new releases.
“Today music is a far more attractive category to invest in than film and TV,” he added. “In film and TV, the aggregate distribution and average revenue generated per user has largely been maxed out through the co-existence of traditional and new media over the last two decades, while open platforms like YouTube and TikTok now pose extraordinary competition for viewers’ attention, time, and money.
“Music, on the other hand, does not, and never will, have a demand problem. Global on-demand audio streams reached a record high level of 5.1 trillion in 2025, a more than five-fold increase compared to 950 billion in 2017! Music is incredibly well-aligned with the disruptive forces of the internet. It has a continually growing premium offering that enables subscribers to enjoy all the music ever distributed. At the same time, it is embedded in all types of entertainment, from the shortest TikToks to the biggest sporting events to the three-hour epic movies directed by James Cameron or Martin Scorsese, and everything in between. Music makes all video better!”
With a strong foundation in place, now is the time to deliver on growing our share, growing the value of music and increasing efficiency, while harnessing the power of AI
Robert Kyncl
With the 800 million-plus total music streaming subscribers around the world spending just $40 each, on average, last year, Kyncl said 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,” he said. “The number of paying streaming subscribers is projected to nearly double to 1.5 billion by 2035, with the global recorded music industry forecasted to reach $55 billion by 2035, up from $30 billion in 2024, according to Goldman Sachs research. And as a growing number of platforms seek licences to our content, and established DSPs innovate with higher-engagement features to drive premium offerings, it’s clear that rights-holders, artists, and songwriters stand to benefit.”
The nod to Goldman Sachs follows the recruitment of Lisa Yang from the investment bank as EVP, global head of strategy – and her market insights may well have contributed to Kyncl’s thinking.
Here, the Warner CEO outlines the three main levers to increase music’s value:
1. Subscription Pricing
Subscription has been a successful business model for music. The recorded music industry is around 35% above [the] 1999 peak – this is mainly driven by the fact that more people are paying for music, but on average they are paying less per person. DSPs only began to increase prices in 2022 after more than a decade of stasis, and the price increases by DSPs in recent years have not shown any evidence of spiking churn. The average American spent $14 a month on recorded music between streaming subscriptions and purchases last year, according to Goldman Sachs research, a sliver of the $69 per month they spend on on-demand video streaming subscriptions. There’s clearly more share of the wallet left for music.
In markets like China, we have seen encouraging signs of sustained subscriber growth despite price bumps. Tencent Music, for example, added about 16 million net new subscribers on average in both 2023 and 2024, in line with growth in the previous three years, and Tencent Music’s average revenue per user rose 16% in 2023 and 8% in 2024.
We also see the division of the royalty pool using an artist-centric approach as a key and fair component of remuneration. The good news is that we’ve successfully established it together with our DSP partners; now we will focus on evolving it to match the changing landscape.
2. Audience Segmentation
While reach and access at one low price drove subscribers and the industry, we have not tapped into the superfan opportunity in the digital world since music became digitized. The current streaming model charges each user the same flat fee independently of the level of engagement with the platform and its artists. Total annual revenue the recorded music industry earns per capita, adjusted for inflation, is currently $51, compared to $95 in 1999 at the peak of the CD era. That delta, at a minimum, is our audience segmentation opportunity.
20% of US music listeners are considered to be superfans and spend 2x more than average listeners. We are collaborating with our DSP partners to find ways to satisfy these passionate users and create more value for artists and songwriters, by offering perks like early access to new music or the ability to play with songs in new ways.
We also believe AI creates a significant opportunity.
3. Direct Digital Licensing for Music Publishing
A significant portion of our music publishing rights are licensed to DSPs through local collecting societies, meaning less-than-free-market licences, fees retained by collecting societies, and less money for our songwriters. It’s an archaic landscape where DSPs operate global businesses but music publishing licensing is often national. The situation is worst in the US, where the largest PROs, ASCAP and BMI, continue to be subject to consent decrees entered into in 1941 which prohibit the selective withdrawal of digital rights. While we continue to work on getting these consent decrees modified, we are actively pursuing commercial strategies to increase the portion of our music publishing rights which are directly licensed by us.
We are pulling on all three levers above to increase the value of music for many years to come. In a sector as fast-moving and complex as music, there are clear returns to scale. As one of the world’s three largest music entertainment companies, we have the necessary size, resources, tech prowess, and the intellectual and creative capital to win.
In addition to the drivers to expand the value of music, Kyncl has restructured and realigned WMG to help seize new opportunities.
“These now include greater interactivity with music through innovative tools such as AI, which will only increase music’s value,” said Kyncl. “We flattened our global organisation, brought in new leadership, overhauled our tech infrastructure, and cleaned up our data, all the while delivering some of the biggest hits in the world today, developing and breaking artists, and growing the popularity of our iconic catalogue. 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.”
In Q1, WMG grew its US streaming market share by one percentage point and the market share on Spotify’s Top 200 jumped over three percentage points for the fiscal year-to-date.
Warner artists and songwriters dominated IFPI’s Global Singles Chart of 2025, landing four of the top five spots, while its songwriters contributed to half of the Top 10 most streamed songs in 2025 in the US.
“With additional firepower through our joint venture with Bain, we expect to deliver accelerated growth through margin-accretive acquisitions of high quality catalogues, starting in 2026,” said Kyncl.
He also noted that the major’s renegotiated DSP deals are “shifting the music industry from volume-driven growth to volume and price-driven growth”.
“Since streaming’s introduction 18 years ago, the music industry has predominantly grown through rapid subscriber growth, as both passionate and casual fans flocked to music’s incredible value proposition,” he said. “As subscriber growth moderates in developed markets, DSPs have started to drive growth through subscription price increases. Given this evolution, we have reached new wholesale terms with our partners that better reflect the ever-increasing value of music, while providing us with greater economic certainty and untethering us from where our partners choose to set subscription prices.”
He added: “We’ve also rolled out our artist-centric approach to monetisation with most of our DSP partners. While these programmes are in the early innings today, there is clear evidence that they have a positive impact on aligning economics with the most popular content. This has been an important component of our agreements and will remain critical for us going forward.”
AI DEALS 'SET AN IMPORTANT PRECEDENT'
Kyncl also addressed uncertainty over the impact of AI.
With Deezer reporting that more than 60,000 AI tracks being uploaded to its platform daily and with seven million tracks generated per day on Suno alone, it has raised concerns about oversupply, dilution of the royalty pool and the long-term value of recorded music.
However, Kyncl is confident about the future of music based on robust copyright rules.
“We have learned important lessons from previous technological shifts that were driven by consumers’ demand for innovation,” he said. “Today, we have taken a leadership role in shaping how AI will be ushered into the music world, enabling us to author the rules of engagement around how this transformative technology will impact the music industry.
“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. Audiences do not form emotional connections at scale – fans develop connections with individual artists through identity, storytelling, and authenticity. Those qualities remain human, and they remain at the core of humanity…and our business. 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.”
Warner Music will play a “central role” in the AI revolution, said Kyncl, ensuring that models respect copyright, artist/songwriter consent when their likeness is implicated, and attribution.
Today, we have taken a leadership role in shaping how AI will be ushered into the music world, enabling us to author the rules of engagement around how this transformative technology will impact the music industry
Robert Kyncl
Additionally, the major will continue to engage with policymakers to support a regulatory environment that respects artists’ identity. Kyncl testified alongside FKA Twigs in 2024 at a Senate Hearing in support of the NO FAKES Act.
“We are elevating our artists and songwriters,” he said. “Their unmatched talent will hold even more value in the AI world, one in which models, fans, and creators will draw inspiration from these artists to create new music using innovative tools.
“Today’s passive listening experiences are rooted in a market-share-based system. In a more lean-forward, interactive world, we are embracing an attribution-based system that will drive value to the most iconic artists and catalogues. This is effectively an alternative form of the artist-centric payment formats that we’ve been advocating for since I joined, that will increase the value of music while also rewarding quality and human artistry.”
Kyncl stressed that WMG has taken an “early and aggressive approach to author ethical guidelines that protect and serve our artists and songwriters”, while creating incremental opportunities for monetisation.
AI music deals have been secured with Suno, Udio, Stability AI and Klay. Importantly, all of our deals are based on variable economics, enabling us to grow as our partners do.
“These deals set an important precedent for the conversations we are having with both emerging and established potential partners,” said Kyncl.
WMG data shows that the more interactive the medium, the higher the average revenue per user: while fans spend about 25 cents per hour listening to recorded music and 50 cents per hour consuming video, they spend $5 an hour when gaming. There are two million subscribers on Suno paying $12.50 a month to create music – in addition to paying for their listening subscriptions.
With investments in AI infrastructure, Warner’s CEO suggested that every major distributor should be able to recognise copyright and name, image, likeness and voice (NILV) rights, in order to respect copyright and apportion revenue accordingly.
“We’ve transformed as an industry, and as a company,” concluded Kyncl. “Now, we’re ready to revolutionise our superpower – the music – and drive its value to new heights for our artists, songwriters, and shareholders.”
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