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Universal Music 2016 Earnings: Streaming Drove Revenue Growth for Recordings, Publishing

Sir Lucian Grainge, Chairman and CEO UMG, attends the Universal Music Group's 2017 Grammy After Party at The Theatre at Ace Hotel on Feb. 12, 2017 in Los Angeles


Sizable growth in streaming and subscription services again helped Universal Music Group offset falling physical and download sales in 2016. Annual earnings released by parent company Vivendi show UMG's recorded music revenues grew by 2.9 percent last year, made possible by a 57.9 percent jump in streaming.

UMG's overall revenues were €5.26 billion ($5.57 billion), up 4.4 percent at constant currency over 2015's tally (€5.11 billion, or $5.41 billion). The label group's earnings before interest, taxes, and amortization (EBITA) -- seen as a key way to measure profitability and efficiency -- amounted to €644 million ($681 million), up 9.1 percent at constant currency compared to 2015.

("Constant currency" is a measure that eliminates foreign currency fluctuations -- like the British pound following Brexit -- which can impact earnings reported in a single currency.)

The rise of music streaming also helped publishing revenues grow 6.7 percent compared to 2015, though synchronization and performance income also helped in that segment. Revenue in merchandising (and "other") grew 16.1 percent thanks to "stronger touring activity" among its artists, according to the earnings report. Income from music operations jumped 10.7 percent compared to 2015, which was down 0.6 percent, amounting to €687 million ($726.9 million). The company cited "revenue growth and cost savings" for this turnaround.

UMG's best sellers for the year included new releases from Drake, Rihanna and Ariana Grande, as well as carryover sales from Justin Bieber.

Vivendi's revenue was €10.819 billion, up a slight 0.5 percent year over year.

Billboard will have a deeper analysis of UMG's annual performance later.