The Ledger: In Strong 2022, Advertising Is Rare Weakness for


The Ledger is a weekly newsletter about the economics of the music business sent to Billboard Pro subscribers. An abbreviated version of the newsletter is published online.


With a handful of music companies’ quarterly earnings releases now in the books, the outlook for the second half of the year appears strong almost across the board. There is one area of weakness, however: online advertising.

On Wednesday, French music company Believe slightly raised its guidance for fiscal 2022 but warned in its investor presentation that organic growth will slow in the second half of the year “as the ad-funded streaming activities should be affected by rising inflation and economic uncertainties.”

Spotify also pointed to some weakening in advertising. “For advertising, we did see some softening in trends over the last two weeks of June,” said CFO Paul Vogel during the company’s July 27 earnings call.” But with that as context,” he noted, “we still expect solid growth in Q3, albeit slower than we might have forecast earlier in the year.”

Advertising isn’t expected to fall off a cliff, and Spotify can temper any advertising softness by improving its ad load. “We think there’s probably some room to expand [ad engagement] over time,” said Vogel. Spotify already benefits from favorable listening trends. Over time, as people spend less time listening to broadcast radio, Spotify believes the opportunity for online audio ads will improve. Advertising will be a “massive” category, said Spotify CEO Daniel Ek.

Online advertising weakness can be seen elsewhere in the tech market. Alphabet CFO Ruth Porat pointed to “uncertainty in the global economic environment” after the company’s Q2 missed expectations for revenue, YouTube revenue, Google Cloud revenue and earnings per share. Likewise, social media company Snap underperformed expectations in the second quarter, citing advertising weakness. Snap declined to give guidance for the third quarter.

Advertising and other economic turbulence has caused many companies to hire fewer workers. Alphabet, Snap, Meta and Spotify are among the many tech companies to reduce their hiring growth rates. Music streaming platform SoundCloud isn’t just slowing its hiring growth – it plans to lay off about 20% of its global workforce due to “the challenging economic climate and financial market headwinds,” CEO Michael Weissman wrote in an email to employees this week.

By and large, though, the outlook for the second half of 2022 is positive. This is especially true in live music where artists are again on tour and fans spending is strong. On Thursday, concert promoter Live Nation said it sold more tickets to concerts this year than it did in all of 2019. “For the 2023 tours we have put on sale so far,” said CEO Michael Rapino, “all signs continue pointing to strong fan demand.”

“Even with a cloudy macroeconomic environment, we continue to see strong secular growth in the music industry,” Reservoir Media CEO Golnar Khosrowshahi said during Friday’s (Aug. 5) earnings call. “We are seeing expanded opportunities emerge day after day, including news ways stock consume music through video gaming and social media platforms — recession or not.”

Spotify is optimistic about its subscriber and monthly active user growth through the end of the year. Its third-quarter guidance is subscribers up 6 million to 194 million, and new MAUs up 17 million to 450 million. Spotify has not given fourth-quarter guidance, but Vogel said Spotify is “pacing pretty well” through the end of the year.



Through August 5, the % change over the last week, and the year-to-date change.

Universal Music Group (AS: UMG): 21.45 euros, -2.8%, -13.4% YTD
Spotify (NYSE: SPOT): $118.73, +5.1%, -49.3% YTD
Warner Music Group (Nasdaq: WMG): $31.50, +5.0%, -27.0% YTD​​​​​​​
HYBE (KS 352820): KRW 175,000, -0.3%, -49.9% YTD
Live Nation (NYSE: LYV): $96.76, +2.9%, -19.2% YTD​​​​​​​
iHeartMedia (Nasdaq: IHRT): $8.80, +17.6%, -58.2% YTD​​​​​​​
SiriusXM (Nasdaq: SIRI): $6.58, -1.5%, +3.6% YTD​​​​​​​​​​​​​​
Deezer (PA: DEEZR): 4.64 euros, +25.4%, -22.7% YTD

NYSE Composite: 15,273.23, -0.4%, -11.0% YTD
Nasdaq: 12,657.55, +2.2%, -19.1% YTD​​​​​​​​​​​​​​
S&P 500: 4,145.19, +0.4%, -13.0% YTD

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