UMG has struck a brand new YouTube deal that features ‘guardrails’ round AI… and three different issues Sir Lucian Grainge stated on UMG’s Q3 earnings name
We’ve already reported on a few large offers from Common Music Group up 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 main music firm introduced one other important settlement throughout its Q3 earnings name at present (October 30): a brand new licensing take care of YouTube.
UMG Chairman & CEOSir Lucian Grainge outlined a number of strategic developments throughout the name, together with the AI partnerships that he says will create “new and important 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 we’ve efficiently concluded our third main Streaming 2.0 settlement, this one with YouTube, masking each recorded music and music publishing,” Grainge informed buyers.
“The settlement consists of all features of YouTube’s numerous music companies and platforms, embodies our artist-centric ideas and drives larger monetization for artists and songwriters.”
The YouTube partnership represents extra than simply one other renewal. In accordance with 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 we’ve 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 features of YouTube’s platform: “We’re advancing vital parts of our core goals right here, taking into consideration these distinctive and multifaceted parts of their platform and the foundational ideas that we’re carrying throughout in all of our negotiations with our companions.
“As Lucian stated, we secured key protections within the settlement on AI, which is a vital 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 foreign money.
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 have been taking a look at 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 features of what we anticipate would be the development.”
“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, photographs and now music.”
Nash defined the importance: “UMG joins that group of great gamers of their classes because the chief within the music vertical, and that places us able to immediately have interaction in a really artist-centric method the dialog with our artistic group across the evolution of those instruments.”
Wanting forward, Grainge envisions “Agentic AI will dynamically make use of complicated reasoning and adaptation, has the ability to revolutionize the way through which followers work together with and uncover music. Think about interacting together with your favourite music via a complicated, extremely customized chatbot.”
When requested concerning the timeline and monetary impression, Nash stated these partnerships “may represent an vital supply of incremental extra new future income for artists and songwriters,” although particular monetary projections weren’t offered on condition that product launches are scheduled for 2026.
As Grainge concluded: “That is taking place. It’s on. And we’re on”.
2. Japanese artists are breaking via globally, with BABYMETAL making historical past
UMG is “shattering the misperception” that Japanese artists have restricted alternatives exterior 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 stated 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 High 10 within the U.S.”
Famous person Ado’s latest 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 exterior of Japan.”
Moreover, Fujii Kaze noticed “huge success together 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 artistic firm,” Grainge stated.
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 foreign money to €341 million ($398.31m), pushed, in line with UMG, “by preliminary shipments of Taylor Swift’s The Lifetime of a Showgirl and power in new releases, significantly in Japan”.
CFO Matt Ellis challenged standard knowledge concerning the format: “What our followers are displaying us is once they have alternatives to interact in many various methods with our artists, they need to do this and they’re going to 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 to date is the expansion in vinyl and the collectible side of that.”
“Vinyl that’s bought is bought to individuals who don’t personal report gamers. So that is a few collectible,” Muir famous.
He revealed {that a} “very important 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 overall quantity really coming via our personal managed shops in relation to this product.”
Grainge added: “It’s the followers telling us that the idea that we’ve within the superfan and the way we’re capable of present services and products, each bodily in addition to what they appear to be digitally sooner or later. They’re telling us about habits and about connection.”
