Resilience characterizes the music industry’s financial performance in the third quarter of 2025, as Warner Music Group reported a 9% increase in total revenue, or 7% when adjusted for constant currency. This growth, primarily driven by both recorded music and publishing segments, comes amid signs of industry-wide deceleration, suggesting a potential paradigm shift in business strategies across the sector.
The financial results paint a complex picture of the market’s trajectory. WMG’s adjusted OIBDA surged by 18% to $373 million, demonstrating significant margin expansion despite recording a net loss of $16 million in Q3—a stark contrast to the profit reported in the same period last year.
Operating income similarly declined by 18% year-over-year to $169 million, indicating rising operational costs despite the revenue gains.
Streaming continues to be the primary revenue engine, with subscription streaming revenue growing by 3% for WMG during Q3. The broader industry recorded global recorded music revenue of $18.3 billion in the first half of 2025, representing a 5.9% year-over-year increase.
Streaming remains the industry’s lifeblood, fueling modest growth amid signs of market maturation and strategic recalibration.
However, this growth rate marks a notable slowdown compared to previous years’ performance. Industry analysts point to market maturation as a key factor behind the deceleration. Artists increasingly pursue sync deals for film and commercial licensing to offset flattening streaming revenues.
“We’re witnessing a strategic pivot from pure growth pursuits toward maintaining margins and market share,” notes one industry observer, highlighting how companies are adapting to a new reality where flat revenue might be considered a success in certain segments.
The cash flow situation demands attention, with cash provided by operating activities dropping dramatically to $46 million from $188 million in the comparable period. The company’s free cash flow decreased significantly to just $7 million from $160 million in the prior-year quarter.
This reduction coincides with increased investment in catalog acquisitions and restructuring initiatives aimed at long-term profit growth. Forward-thinking labels are prioritizing editorial playlists as a cost-effective promotional channel to maximize streaming revenues while minimizing marketing expenses.
Physical formats, particularly vinyl, maintain their relevance despite digital dominance, comprising a steady portion of overall revenue. Meanwhile, companies are diversifying artist rosters and expanding catalogs to create new revenue streams and improve profitability—strategies that appear to be yielding results despite the challenging market environment and emerging disruptive forces like AI and high concert ticket prices.
The shift in market dynamics is particularly evident in how DSPs have emerged as the fastest-growing segment in the first half of 2025, contributing significantly more revenue than traditional rights companies.
