Universal Music Sees Artist Touring Income Dip Even As Overall Revenue Hits $3.8 Billion

Universal Music Group posted 3.294 billion euros ($3.795 billion) in revenue for the company’s second quarter, the record company reported in its latest earnings report on Thursday, a 10.5 percent increase year over year.

Excluding revenue from recently-acquired Downtown Music, revenue was just over 3 billion euros, or about $3.5 billion.

Recorded revenues grew about 13 percent to 2.516 billion euros ($2.89 billion), while publishing revenue grew about 8 percent to 616 million euros (about $710 million).

“We’re delivering on our strategic plan, and working to further sharpen our execution, while capitalizing on the opportunities presented by new technologies and the ever-evolving music ecosystem,” UMG chairman and CEO Lucian Grainge said in a statement. “Our unique combination of global reach, local expertise, artist development, vast audio and visual IP and entrepreneurial culture positions UMG to deliver long-term growth, sustained value creation, and creative and commercial success for our artists and songwriters.”

Merchandising revenue was weak, dropping 13 percent year over year to 167 million euros (about $193 million), with UMG citing the drop to a decline in touring income due to the UMG roster’s timing of tours, and to lower direct-to-consumer revenue over product release scheduling. It marks the second consecutive quarter of lower overall merchandise revenue.

Beyond the earnings themselves, during the call, Grainge also revealed a new streaming strategy streaming UMG will institute in India, where the company’s new music from both domestic and international artists will be exclusive to paid streaming for the first 72 hours of release before it will be made available on free, ad-supported tiers. It follows a similar strategy UMG had previously rolled out in China.

Answering an analyst question about the strategy, UMG’s chief digital officer Michael Nash called India “a key high potential market that certainly should rank higher than the 15th global market.”

“We felt like it was very important to work and organize an effort to facilitate market development,” Nash said, noting “low paid conversion rates in the country.”

The move reflects the record industry’s push in converting more listeners to paid subscriptions, which the companies argue reflects greater value on music than the cheaper ad-supported offerings. The company gave no indication such a strategy would hit the largest markets like the U.S. or U.K.