Hello everyone. It's good to be with you today to discuss the recent results of Sony Music Group and how we see the future for us strategically. I will paint a vivid picture of how positive we are whilst achieving groundbreaking results. There is a dramatic amount of change in our industry happening, but we are well placed to win. It's poignant, therefore, to start with how we have fared in the last years individually and compared to the market. Sony Music Group's revenue grew at 14.7% CAGR the last four years, compared to the industry CAGR at 11.3% during the same time period. And our streaming revenue CAGR during this period was an impressive 15.1%. And now, for the ninth year in a row, we have set record revenue and reached all-time high levels for Sony Music of our adjusted operating income and adjusted OIBDA.
In the last four years, revenues were up $3.9 billion. Our operating income improvements represent an 18.1% four-year CAGR, and our OIBDA gains in the same time period represent a 17.2% CAGR, both industry-leading percentages. According to MIDiA Research, Sony Music's recorded music company was the fastest-growing major in the first half of the decade, up by 74% between 2020 and 2024, and the only one of the three to increase its market share. In fact, Sony Music has higher independent market share than any other label or distributor. We've maintained strong discipline when it comes to spending. We've controlled costs and have robust margins without sacrificing quality or productivity. We've experienced these impressive metrics through a myriad of connected strategies that neatly and carefully spring from our core offerings. As you would expect, our artists and songwriters keep delivering top-quality musical content.
Sony Music Group's superstar, the incomparable Beyoncé, won Album of the Year at the Grammys with Cowboy Carter. Tyler, the Creator, Tate McRae, and Future delivered number-one albums. Bad Bunny reaffirmed his status as the most important Latin talent in the world with his latest album. Sony Music claimed nine of the top 10 tracks in the Latin region last year, and Edgar Barrera was Songwriter of the Year at the Latin Grammys. Our songwriters, Chappell Roan and Charli XCX, became cultural icons through their hugely successful albums. These successes enabled Sony Music Publishing once again to be the number-one music publisher, signified by recent ASCAP and BMI Publisher of the Year awards, and the list goes on and on and on at both local and global levels. This artistic progression is fueled by our desire to cultivate our rosters through more signings and acquisitions.
As part of this, we have completed more than 60 investments in the past year alone, utilizing over $2.5 billion for frontline, catalog, as well as creative and service ventures with outside entrepreneurs across a vast number of territories. Now I will guide you through the sheer scale of this strategy across our divisions. In our central local companies, we have forged new ventures in the Czech Republic, Greece, Saudi Arabia, and all across Southeast Asia. Our appetite for this is endless in its potential. In the high-growth markets of Latin America, Asia, Eastern Europe, and the Middle East, all of which have bloomed at double-digit rates in the last few years' growth, we have been vigorously targeting ways to better position Sony Music. In India and Latin America, we are still number one in recorded music.
As you are probably aware, Sony Music owns The Orchard, the leading independent distribution organization in the world today. Artists and entrepreneurs require greater flexibility and choice than ever before. We offer unique and tailored solutions to upwards of 26,000 label partners. We have minority interests in over half, at least, of The Orchard's top 20 clients, and it has recently formed a rapidly profitable admin initiative with our central publishing group. We recently concluded transactions with independents in Croatia, Ghana, India, and South Korea, to name but a few countries, alongside what we've already done in our established English-speaking regions. Our artist services company, AWAL, which we purchased in 2021, currently works with 20,000+ artists and is leveraging Sony Music's footprint to bolster its reach. Yes, I did say those breadth of numbers, as none of our competitors come close to that magnitude of scale.
We continue to build Alamo Records, which was acquired in 2021, as the umbrella group of Foundation Media and Santa Anna incubator, which all now represent nearly 3,000 artists. In an environment where nearly half the marketplace is made up of the independent music sector, sales flowing through our independent distribution business more than doubled the last four years. Understanding the audio and visual repertoire depth of a storied and historical operation like ours, it is natural that we would look to extend the financial potential of our catalog. As the streaming age matures, similarly, the consumer does the same. A young, lean-forward contemporary music fan of 2015 may well now be more of a lean-back one in 2025, listening to hits from a decade ago.
The wider diversity in offerings of digital providers, from full-length clips to short visual clips, has also allowed our library to be consumed in a plethora of ways, which is one of the key reasons why we see more of our catalog in the charts as every year passes. In 2020, 24% of the top 200 tracks were catalog songs. In 2024, that percentage grew to about 50%. This trend is extremely beneficial to Sony Music, given our rich, deep working content. We are, of course, perfectly placed to understand the data from this activity, and this has stimulated our desire to purchase full bodies of work of labels and iconic artists.
You have read in recent months that we have purchased the recorded music of Queen and Pink Floyd, and the publishing rights for the incredible library of songs for Queen, as well as their name, image, and likeness rights, which will present huge new promising revenue channels to us. These acquisitions are based on significant inside track expertise on the history and therefore the possibility of these artistic treasure chests. They are in no way based on random financial speculative tactics that peripheral music and financial players may choose to employ. This is our lifeblood, and we are best placed to proceed boldly but wisely in developing this strategy. Our plans aren't just in the areas of accelerating our creative activity, but also in the complementary strands of an artist and songwriter's career.
Since fiscal year 2022, when we bought a majority stake in the merch specialist Ceremony of Roses, we have multiplied revenue seven-fold by adding stars and brands to our widening client base. Our neighboring rights division acquired in 2021 through our purchase of AWAL collected north of $65 million for artists last year. We regularly strengthen the output of our content studio, Sony Music Vision, often in partnership with other Sony divisions. Our releases are featured in movie theaters and on all major visual streaming platforms. With these activations, we're plugging into new fans, and we're seeing meaningful, lasting rises in consumption. Not only is this an economic boost for us, but it also brings us closer to our creators, as do our ticketing, studios, management, and touring endeavors. We're always mindful that Sony Music is part of a bigger Sony jigsaw of diverse but symbiotic enterprises.
All of us benefit from working with Sony's games, anime, film, television, and electronics operations. As a long-term member of this journey at Sony, I can attest that synergy has never been stronger in sharing our vision both internally and with our collective communities. In terms of commercial developments, we are in constant discussions with our network of digital music providers to expand features, add new products, and most importantly, to advance our offerings to the consumer. As an example, this past year in our recorded music and publishing activities, we finalized hundreds of agreement renewals, including nearly every top DSP, as well as brand-new startups. Paid subscription remains the fulcrum of our business, with a high number of subscribers by 11% in 2024 to over 750 million, rising more than 80% over the last four years. Revenue from these accounts rose by 9.5% in the same time period.
These are part of our everyday activities, which is why we don't highlight them often, but we are constantly pushing to ensure audiences are getting an improved music experience. As Daniel Ek recently said in a Spotify earnings call, the relationship with all of us is better than ever. However, we firmly believe that there is room for additional upside for all of us if we work together even more closely. In particular, there is a need for prices to rise and new tiers introduced that truly reflect the successful maturity of streaming, especially compared with what we see in SVOD services.
Music should not be free or a cheap bargain still after a decade of such positive value-for-money proof of concept in mature territories, and there should be flexible pricing structures that are appropriate for high-growth countries, particularly if they are sometimes hampered by inflation or differing national economic transactional methods. We urge everyone to combat the fraud and manipulation that is a worldwide problem in falsifying real revenue, skewing charts, and clouding accurate statistics. Functional audio that clogs systems through its quantity hinders people from accessing and devalues the high-quality music that we clearly provide. Taken together, these activities are artificially siphoning billions of dollars away from artists and rights holders every year. And unfortunately, what the DSPs and us have to dedicate to policing all of this inappropriate behavior takes away from what we could devote to more innovation.
It is crucial that we do everything in our powers to act against these liabilities. To help understand all the data and learning that comes with a complex digital ecosystem, we are systematically rolling out new tools and insights that benefit musicians and ultimately the music consumer, who find it easy to discover what they're really looking for. We have invested dramatically in analytics and technology to enhance what we offer as a modern music group. We deploy our M&A expertise for acquisitions like FanSifter to enhance our marketing D2C capabilities around first-party data. This not only makes us smarter, it allows us to generate invaluable information, which gives our commercial partners unique perspectives. It also differentiates us in this complex and dynamic space, and we will keep putting resources towards our leadership position.
All of this work occurs as we embark on a new chapter of technological change with AI. The results we and others have achieved over the past decade are grounded in a very important principle. Platforms need licenses to formulate their endeavors. This has resulted in tremendous partnerships and enormous success for music services, social media, and the broader industry. In turn, this allows more investment in artists and songwriters, as well as for technological entrepreneurs who want to share new ideas for bringing music to more listeners. We're excited by this and have actively engaged with more than 800 companies on ethical product creation, content protection and detection, enhancing metadata, and audio tuning and translation, amongst many other shared strategies. AI will be a powerful tool in creating exciting new music that will be innovative and futuristic. There is no doubt about this.
But these positive steps are weighed down by the lack of recognition of copyright by much of the tech sector and government policymakers in many countries and regions. The training of these models to allow such movement cannot simply be laissez-faire and disrespectful to the fact that intellectual property has clear-cut rights. These should not be abused, and moving forward, a clear remuneration system should exist. We are not alone in this battle, as other media sectors are experiencing similar pushback. Working together is the only path forward, which will then avoid bureaucratic, legal, and political confusion that potentially halts progress for everyone. We're encouraged by the U.S. Copyright Office's recent position, stating that making commercial use of vast troves of copyrighted works, especially where this is accomplished through illegal access, goes beyond established fair use boundaries.
But so far, there is too little collaboration, with the exception of a handful of more ethically minded players. We are going to do deals for new music AI products this year with those that want to construct the future with us the right way. New subscription ideas with fair revenue-sharing arrangements will be further additive. Like anything new, it will start slowly and rapidly scale over time. Consistent with how we've managed the shift from ownership to streaming, we will share all our revenues with songwriters and artists, whether from training or related to outputs, so they are appropriately compensated from day one of this new frontier. And with deals being carried out, it will be clear to governments that a functioning marketplace does exist, so there's no need for them to listen to the lobbying from tech companies so heavily. Technology disruption is a constant in music.
We are here to embrace the next chapter. In conclusion, with experience and visionary management of all the facets of operating a hugely successful music company, we are more than capable of building a culturally exciting new chapter with a variety of alliances, as we have done throughout the streaming era. Music is as vital and resistant to broader economic tendencies as ever, and we prosper because our specific yet evolving expertise has clearly stood the test of time. We are confident and optimistic that Sony Music Group will keep growing at very attractive rates, fueled by our aggressive expansion strategies, alongside a healthy increase in paid streaming and better monetization of the ad-supported revenue channels. At Sony Music, we are less partial to sloganeering and more aligned to positive execution that our consistently impressive metrics and principal reputation demonstrate year after year. Thank you for your understanding.
Rob, thanks very much for the presentation. It was very informative, and we'd now like to turn to some questions from investors. How do you feel about the relationship between the music labels and the digital service providers? As the DSPs continue to grow, do you see any impact on the economic relationship with the labels?
I think the relationship has got gradually better. I think even Daniel Ek said in a recent earnings call that it was the best the relationship has ever been. There would always be room for improvement on our end, which would be obvious, really. But I think that between us and the major DSPs, we've found common ground now. Can there always be an emphasis that we'd like to make sure that we are fairly represented in that relationship? Of course.
But right now, I think we have a good way of negotiating with each other.
Great. What can the labels do to improve monetization of the advertising-supported tiers at the DSPs?
Well, that isn't just down to us. Obviously, that's really in the remit of the DSPs, but we are constantly lobbying about the relationship with pricing. I think that in recent times, for instance, at Spotify, the pricing has gone in the right direction. I think it's just a question of various strands of what we would like to see happen. First of all, there's the mature markets, and then there's the emerging markets, and then there's actually the paid tier versus the ad tier, and I think that if you start at the top, I think that we believe there's always room for pricing increases with the mature markets because we still think the value offering is incredible.
If you relate it to the audiovisual content platforms, you get everything: Spotify, Amazon, and Apple, et cetera, so we think the pricing should be super competitive because we don't think those platforms offer the same quality as the music streaming platforms, so that's the top of it, and then the emerging markets, you know, it's a more complicated relationship because obviously the free tier is much stronger, and we would like to see at least margin improvements in terms of subscriptions related to maybe inflation or related to other competitive offerings, but we also recognize that the ad-supported tier, we need to grow stronger with the ads, and there hasn't been a huge improvement in ad-supported revenue in the last few years on these DSP platforms. We'd obviously like to see that happen.
We would like to see the free tier be more closely looked at in terms of whether there were changes, whether there actually was a free tier in some of the more mature markets, or whether there was a different structuring of how we would get revenue from the free tier, not just via advertising, but also by hopefully trying to convince the consumer in those tiers to upgrade to a subscription.
There's been a lot of conversation in the market about the DSPs launching new premium service tiers, which target superfans. How big is that opportunity when it comes to monetizing that new tier, and will it have a major impact on our pool growth?
Well, I think that the superfan tier is an early development concept.
And again, without wishing to pass the emphasis to the DSPs, the DSPs almost have to define with us what that actually means. We are partners with our artists and creators, but we also don't control every revenue stream. So it would be a multi-revenue stream-based concept. And so therefore, we have some of the biggest artists in the world. We have some of the biggest brands in the world. We own name and likeness on some of those brands. So I think we will be very comfortable with there being a tier that works. But I think we're in the early conceptualization of these stages, and we have to work together. As anything else, exactly as we discussed with pricing or as we discussed with even some of the elements of how well those platforms work, we have to work together. And I think it's an early stages concept.
I'd still like to stay on the pricing element here for a minute. Now that streaming has penetrated most of the developed markets and the high growth in emerging markets is actually contributing at a lower RPU, will price increases at the DSPs be necessary to achieve mid to high single-digit streaming growth? And will those price increases come at a regular cadence of every year, leading to consistent growth, or will the price increases be less frequent, leading to choppiness in growth rates year by year?
Well, I don't think choppiness is something we should be worried about. Do I think there'll be price increases every year? Probably not. 18 months would probably be more realistic. As for RPU in the emerging markets, yes, we're constantly monitoring RPU. We have to work together to get more interesting offerings to get that RPU number up.
Obviously, in some of those markets, the potential consumer numbers are immense, and we'd like to get there quicker on the sheer volume of people using the service, which would counterbalance to some degree some of the issues at RPU. But we hope in the future that we can balance all those equations because we don't, at the moment, perceive our streaming revenue numbers coming down into single digits because we think there's huge room for growth still.
How is your relationship with the short-form platforms? How do you see their role as a revenue contributor to the music industry evolving over time?
Well, first of all, our relationship is different with the short-form platforms because it's newer. It's less mature. We've been working with some of the premier DSP streaming platforms for well over a decade now. So it's a newer, evolving relationship.
Would we like to see more monetary value in our relationship with the short-form platforms? Of course, we would. We would like more data, and we would like to see more transparency in that it's being a partnership, and we're working on that. Every time we have deal negotiations, there are different types of deal negotiations to the way we would have with the mature DSP platforms, but there's room for improvement, and I'm sure actually there's probably room for improvement on both sides, but certainly from our end, we would like to have a more sort of symbiotic relationship with those platforms.
How would the distribution services part of your business evolve compared to the high-touch label part of your business? Is there an impact on margin from the growth of the distribution services side?
Well, I think we're a market leader in this respect.
I think we were the earliest to adapt a major indie distribution platform into our system. So I think that we're the most experienced in understanding the relationship between distribution and our general ecosystem. And the answer is that our margin hasn't come down. In fact, it's got better. So that's a mythology that the margin will come down if you incorporate a sort of more distant relationship directly with the creator in terms of the label system. At The Orchard, we have 26,000+ labels. So we have that relationship, and we understand how that works, and we understand what that relationship is in connection with the more high-touch relationship that's been traditionally through the major label system. So we have a pretty good understanding of the balance of how we need to juggle all the systems.
And there is one in the middle too, which is artist services, which we bought in the last decade, an artist services division in AWAL. And that is a sort of mid-tier ground between the major label system and the independent distribution system. So we have a pretty good balance of how all these ecosystems work. I want to follow up on what you just said about the high-touch part.
What is the value that the labels provide to artists that will make that part of the business endure?
Well, the value is we hope to keep creators in our ecosystem providing value on every level they would require that value. A major label system provides total value. An independent distribution network may provide more independence to the artists, but also would be less services. On all these services, we provide data. We provide information. But we think that once we have someone in our ecosystem, they may well change over time and may require more high-touch type activity. But the fact is that we want creators in our system, and we have to be able to provide a menu of opportunities.
Great. I'd like to move on to music catalogs. Will you continue to aggressively acquire catalogs and make other investments going forward? And how do you maintain financial discipline when making those investments?
I think the re-emphasis on catalog was highlighted by companies like Hipgnosis and investment funds coming into the marketplace, where, quite frankly, it's always been part of our structure. So our expertise on catalog is immense. And many people have seen us be very aggressive in the catalog space, but people have to understand that that is based on expertise. We have 125 years of catalog experience.
The catalog in our company is undoubtedly one of our main bases, and you would expect us to have that expertise, so when we have gone into the marketplace and specifically bought catalogs, whether they be recorded catalogs or publishing catalogs, that is based on knowledge, data, and clear expertise in those areas. We are not a fund buying into something and guessing what the multiple might be or what the earnings would be over a period of time. We have inside track on those earnings, and some of the major investments over the last two years or so have really been based on in-house expertise.
I'd like to turn to artificial intelligence for a moment. You've said that you see positive opportunities for music from artificial intelligence. How should we think about the impact of this technology? Is this the next step beyond streaming? How is Sony Music positioned to have success in that area?
I come from a creative background originally, so I'm incredibly optimistic about it being an amazing creative tool for artists and songwriters and anybody creative. I think that it is going to break the boundaries of what you can do in blending music together to be something unique and innovative. However, I do think that what AI is based on, which is learning models and training models based on existing content, means that those people who have paved the way for this technology do have to be fairly treated in terms of how they get recompense for that usage in a training model. We have been pretty clear on this since day one, that there is absolutely no backwards view as to what this technology will do. There will be artists.
Probably there will be young people sitting in bedrooms today who will end up making the music of tomorrow through AI. But if they use existing content to blend something into something magical, then those original creators have to be fairly compensated. And I think that's where we are at the moment. We are between us and the AI tech platforms trying to find common ground. And that common ground is not going to take a minute. It's going to take a moment, and it's going to take a trial and error process. And we are in that era right now.
Great. Why is Sony Music's profit margin so much higher than your competitors? Does this have something to do with catalog?
I think if you have a base, as I said earlier, of 120 years of catalog, that is a very solid, concrete base on which to build a profitable company. But I also think if people really look at our margins, which I do believe it's accurate to say are the most effective in the industry, that we constantly look at a balance between revenue and margin and OIBDA and every angle of the financial disciplines we are very, very careful on. We don't have to be the biggest, but we have to be the best in terms of balancing those margins, and I do believe we are that. Hopefully, every year when we talk about our end of fiscal year, that element comes across because our margins don't go down and our profit doesn't go down and our revenue doesn't go down.
So from that point of view, it's always a balancing act. But we feel very positive, particularly even with some of the systems we have within our organization, such as an extremely strong independent distribution network, such as a very strong catalog, and also in recent times, a very powerful M&A strategy where we're aware of how the scale of the business keeps growing and we have to grow with it. And that is a reflection of our M&A strategy getting more bold.
I'd like to return to something you mentioned in your presentation around synergy within the Sony Group. Can you give us some concrete examples of past achievements and future plans?
Well, I've been at Sony a long time. I think the synergy now is more organic and natural than it's ever been.
I think that with the development of digital distribution, I think that we have been able to bond our platforms of PlayStation and movies and television and even electronics as well with our audio and our audiovisual content. So there are now hundreds of examples of cross-synergy between the platforms that don't feel like some sort of major task, but they actually happen naturally, and I feel that's really important. I feel it's obvious now that in an era where audiovisual content is spread around the world fairly easily and economically, that we would combine to share those distributions. So if you look at, we make movies together. We make television programs together. We provide music for PlayStation. We provide live experiential events together with the movie studio and PlayStation.
And obviously, we have a long-standing relationship with electronics in that we would hope that our audio content is used in the electronics field as well. So we feel pretty good about it. I have to say that it used to be where we had to arm wrestle to be in the same room, but that isn't what happens now. Now it is a completely organic process, and we work together to find the best solutions for each of our own platforms.
Final question. Looking out 10 years, where do you think Sony Music's sales and profit will be? And will operating income margin change much from where it is today?
I think the change we've just been through in the last, never mind the last 10 years with the advent of streaming, but the last three years with our increasing emphasis on M&A, being broader in terms of what our rights model would be and the portfolios we might have not looked at in a traditional physical CD distribution model from the turn of the century. I feel incredibly optimistic about how we can adapt. We have adapted to the sheer scalability of digital distribution in the last few years. As I used the example of the number of labels we represent, we've had to grow on that basis. The amount of audio and audiovisual content now on the distribution platforms and the DSPs is immense. We've adapted to that. We are willing to be bold and brave in our strategy of how we move with the market.
As we talked about with AI, we are going to be a serious content rights holder in that business. I see no reason why all the natural strands of economics to do with profitability and revenue and margin will not continue to go in the right direction in the next decade.
Thanks very much, Rob. That was very helpful.
Thank you very much.