Tim Ingham http://www.musicbusinessworldwide.com 1/29/15
As the world comes to terms with Apple posting the biggest quarterly profits in Wall Street’s history, it’s surely worth asking this question: just how much bigger is the iPhone giant than companies which the music industry considers ‘major’?
First, though, let’s explain that headline. Apple turned over US $75bn in its fiscal Q1, in the three months to December 27, 2014.
[Just take a moment to digest that. $75bn. That’s roughly the annual GDP of Jamaica, Iceland and Slovenia combined.]
Back to business… that gives Apple a mean average monthly turnover of $25bn.
According to the IFPI, the entire global recorded music business generated $15bn in 2013 – the last year we currently have on record.
In other words, Apple is making more money every three weeks than Universal Music, Sony Music, Warner Music, Beggars etc. combined manage to generate each year.
Let’s take a look at how Apple’s latest quarter stacks up against music’s biggest companies.
Universal Music group
Universal Music Group’s latest public quarterly results came in parent Vivendi’s Q3.
The French conglomerate reported the numbers by covering the nine months to the end of September 2014.
UMG – which owns Universal Music and Universal Music Publishing – posted revenues of €3.01bn, or $3.4bn, in the nine-month period, which averages out at a clean €1bn ($1.1bn) per quarter.
That means Apple’s turnover – wait for it – is around 75 TIMES that of recorded music’s biggest company.
It’s fair to note that because Apple’s results are hot off the press, they’re for the busiest consumer period of the year – the three months before Christmas – while Vivendi’s latest results cover quieter spring/summer/autumn months.
But as a rough guide, it certainly paints a telling picture. (Universal’s revenues in the whole of 2013 were €4.9bn, so its quarterly average income is slightly higher at around €1.2bn.)
In terms of net profits, I hope you’re sitting comfortably.
Vivendi posted a €442m net income in the first nine months of its latest fiscal year. That works out at around €147m ($166m) each quarter.
Apple notoriously posted a ginormous $18bn net profit for its Q1 this week, making its take-home quarterly income 108 times as big as the Universal parent’s average in 2014 so far.
One hundred. And eight. Times.
SONY MUSIC entertainment
We’re used to writing ‘Japanese technology giant’ or ‘Japanese entertainment giant’ when referring to Sony.
But, in reality, Apple now makes it look pretty weeny.
Let’s first look specifically at Sony Music. According to Sony Corp’s Q2 fiscal results for the three months to the end of September, 2014, Sony Music Entertainment – including Sony’s record company and its share of the world’s biggest music publisher, Sony/ATV – turned over $1.07bn in the quarter.
Handily, that’s basically the same as Universal.
Looking at Sony Corp as an entire entity – PlayStation, mobile phones, music, TVs and all – it turned over an impressive $17.5bn in its Q2.
Impressive, that is, until you realise that’s a tenth of the size of Apple’s revenues in its latest quarter.
And let’s have a look at the balance sheet. Apple, remember, posted that whopping $18bn net profit in its Q1.
In Sony’s Q2? A $1.24bn loss.
WARNER MUSIC GROUP
Warner Music Group is technically a private company, owned by Len Blavatnik’s Access Industries – who bought it in 2011 for $3.3bn.
But it still reports its quarterly figures publicly, giving us an insight into its fiscal health.
In its latest public quarter – its Q4, the three months to end of September 2014 – WMG turned over $771m.
That makes its quarterly revenue slightly smaller than both UMG and Sony Music Entertainment. And a LOT smaller than Apple’s record-breaking Q1.
97 times smaller, in fact.
As for profit/loss, Warner posted a net loss of $24m in its Q4 2014 (narrowed compared to Q4 2013’s $57m).
That might sound like loose change to Apple, but it still makes Warner’s latest balance sheet $18.02bn behind the Cupertino company’s.
Ah, we hear you say. But that’s all records and publishing. Everyone knows they’ve been hurting for more than a decade.
Live music. That’s what will give Apple a hiding. That’s where the big money is.
Well, yes, it is true that in Live Nation’s latest quarter – its Q3, in the three months to end of September 2014 – it did turn over more than double that of any major label group, with $2.5bn on its books.
Even relatively speaking, that hardly cuts Apple down to size.
The iPhone company’s quarterly revenue is still 30 times as big as Live Nation’s.
As for what’s left after expenses, Live Nation’s net profit in its Q3 stood at a healthy-sounding $115.8m.
We don’t need to tell you how far behind Apple that is.
How far behind Apple everybody is.