Entertainment

Leila Abboud is a Bloomberg Gadfly columnist covering technology. She previously worked for Reuters and the Wall Street Journal.

Pop star Taylor Swift may be wary about putting her music on Spotify, but her record label is finding succor from streaming.

Rocking Vivendi
The stock has declined over the past five years
Source: Bloomberg data

Results from Vivendi's Universal Music Group, as well as Sony and Warner Music, show record labels may be finally be turning a corner -- helped by the growth of streaming.

Universal acclaim
Vivendi's Universal Music Group is tentatively returning to sales growth
Source: Bloomberg Intelligence

At UMG, the biggest of the three, recorded music sales climbed 2.7 percent, excluding currency effects, to 5.1 billion euros ($5.7 billion) in 2015, while cash flow from music rose by 31 percent to 620 million euros.

Notably, UMG said growth in streaming revenue is offsetting the decline in CD sales and downloaded tracks -- a major concern for investors.

Streaming Success
Revenue is growing while download sales dwindle
Source: Company presentation
Figures are for second half of 2015

In the second half, revenue from streaming jumped 50 percent, while downloads dropped 20 percent. The company didn't provide more detailed figures. That's a pity, because it's an important trend: if it holds hold up, it's a sign that after a decade of declining sales, the global music market may be able to return to modest growth.

Sony credited its 8 percent increase in sales in the most recent quarter to increased digital streaming revenue. Warner Music CEO Stephen Cooper said streaming is on track to become its largest revenue source as the label posted a 3 percent rise in revenue in the last three months of 2015.

Universal Music
Operating income has rebounded since 2010
Source: Bloomberg data

Step back, and there are signs that after years of pain, the industry is at an inflection point. Warner Music has been profitable for two out of the past four quarters, as this chart shows.

Warner Rebound
After years of pain, the music label has been profitable for two out the past four quarters

Operating income at Sony has rebounded from its low in 2010.

Sony Music
Operating income has been slowly rebounding
Source: company press releases

But it's too soon to party like a rock star. The global music market has halved in size since 1999 to $14.9 billion, according to Morgan Stanley. The bank finds reason for optimism though: the market grew 1 percent in the first half of last year -- the fastest pace in 15 years, and growth will accelerate to 4 percent by 2020.

The opening of Apple Music's streaming service in June is expanding the reach of the technology, and Spotify had 20 million paying subscribers as of May, double the year-earlier figure. The services licence content from the labels in return for payments linked the number of tracks played. (The terms of those agreements aren't typically disclosed.)

If streaming turns into a flood, Spotify is likely to move ahead with its long-awaited initial public offering. Deezer, a French competitor which postponed its IPO in October blaming market conditions, could return.

The boom in streaming, though, isn't an unalloyed benefit for everyone in the music business. The shift has sparked fights between the streaming companies, labels and artists over how to divide revenue given the big differences between the old and new business models.

Those tussles led Taylor Swift to pull her music from Spotify in late 2014 because she felt that the service gave too much of her work away for free. Labels and artists want streaming companies to more aggressively push users to pay for content. Spotify and its peers would rather add the listeners.

It will take time for everyone to start singing in harmony. But that will be a far easier task if revenue is growing.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Leila Abboud in Paris at labboud@bloomberg.net

To contact the editor responsible for this story:
Edward Evans at eevans3@bloomberg.net