Streaming Price Hikes Propel Universal Music's Subscription Revenue Beyond Analyst Expectations

Streaming Price Hikes and New Music Lift Revenue

Spotify raised its US premium subscription price by 8% in January 2026. Apple Music similarly increased its US subscription fees in July, pointing to increased costs for music licenses. Higher monthly fees mean more money flows back to Universal every time someone hits play.

At the same time, Universal had a packed release schedule. New albums from Drake and Olivia Rodrigo also helped lift sales. Universal's second-quarter sales were boosted by top artists including Drake, Olivia Rodrigo, BTS, and Noah Kahan.

The Operating Profit Miss and the Merchandising Drag

For the quarter, Universal's EBITDA - a measure of operating profit that excludes interest, taxes, depreciation, and amortization - came in at €610 million, which includes the acquisition of Downtown Music Holdings. That figure fell short of the €643 million analysts had expected.

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The gap emerged from a weak spot in the business. Universal's Merchandising unit saw revenue drop 10.7% in constant currency. The decline was due to "concert tours and merchandise launches that were not well scheduled," a company spokesperson said. Improvements in the core Recorded Music and Music Publishing divisions helped, but they were not enough to fully offset the merchandising shortfall.

Big Moves Behind the Scenes

While the earnings numbers grabbed attention, the bigger story might be what Universal is doing with its ownership. In June 2026, activist investor Bill Ackman sold his holding in Universal Music worth €1.42 billion, following the label's rejection of a €56 billion takeover bid from Pershing Square, which would have relocated its stock listing from Amsterdam to the US. From that sale, Universal repurchased roughly 14.2 million of its own shares.

The company is also chasing new ways to grow. Through its "Streaming 2.0" initiative, Universal aims to increase revenue per user, particularly by offering paid subscription levels and ways for superfans to connect more closely with their preferred artists. Additionally, Universal is striking agreements with a range of firms - from Nvidia Corp. to smaller outfits like Klay Vision - to capitalize on artificial intelligence. The company also pursues lawsuits when artificial intelligence creators train their systems on copyrighted songs without permission.

Last quarter, Universal announced plans to sell 50% of its Spotify holdings and boost its share repurchase program, a move that responds to Ackman's concerns about the company's stock being undervalued.

Strategic Initiatives and Future Outlook

These behind-the-scenes moves, including share buybacks and the rejection of a US listing, reflect a broader strategy to unlock value for shareholders. Universal's "Streaming 2.0" initiative is central to its long-term revenue ambitions, as the label seeks to capture more from each listener through premium tiers and superfan experiences. Its active pursuit of AI partnerships - alongside legal battles over copyright - demonstrates how the music giant is navigating the technology-driven transformation of the industry. Combined with the recent share repurchases, these actions signal Universal's focus on sustainable growth beyond quarterly earnings fluctuations.

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