Spotify Q2 300M Subs + EPS Miss, WMG Revenue Hits $1.86B - Wed, August 5

Spotify and Warner Music Group dominated Wednesday's headlines with major earnings reports, while UMG's $467M Spotify stake sale sent ripples through artist royalty conversations. AI continued to reshape policy and product, from South Korea's KOMCA reversing its ban to Spotify pushing forward on AI remixes without full major-label sign-off. Deals & M&A • WMG Q3 2026 revenue up 10% to $1.864B; operating income surged 80% to $305M. • UMG sold Spotify equity for $467M; artists set to receive ~$131M non-recoupable. • Sony Music promotes 21-year veteran Stephanie Yu to Global General Counsel and EVP. Lawsuits & AI • South Korea's KOMCA lifts AI music ban; AI-assisted works now eligible as of August 3. • Rapper Fenix Flexin denies AI-generated single amid chart-eligibility committee scrutiny. Streaming & Tech • Spotify Q2: 300M Premium subs, €4.8B revenue, but EPS miss drops shares 5.9%. • Spotify Co-CEO says no full major-label deal needed to launch AI covers and remixes tool. • Spotify testing "skip ahead" button for podcast ads, threatening seller ad revenue. • YouTube Music US Premium subscribers jumped 45% YoY, putting rivals on notice. Live & Touring • Ticketmaster acquires Uruguay's RED UTS, expanding its network to 35-plus markets. Also Today • Spotify AI DJ now used by 25% of all Spotify users, per Q2 earnings call. • Spotify launches Audiobooks+ tier and Narrated Articles from Rolling Stone, Vogue, Wired. • Nearly 100,000 fan tickets claimed via Spotify's Reserved ticketing feature in the US. • Harris Poll: over half of Gen Z reports weekend loneliness driven by financial anxiety. Five minutes, six categories, zero fluff.

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Today's Wednesday, August 5th, 2026. First up, deals and MA. Warner Music Group reported third quarter results with total revenue up 10% to $1.864 billion. Recorded music grew 10% to $1.488 billion, and publishing climbed 12% to $377 million. Operating income more than doubled, up 80% to $305 million. The company also beat analyst expectations on earnings per share. Meanwhile, Universal Music Group sold part of its Spotify equity stake for roughly $467 million in the first half of 2026. An estimated $131 million of that is expected to flow to UMG artists on a non-recupable basis, meaning they won't owe it back. Also, Sony Music promoted Stephanie Yu to general counsel and executive vice president of Business and Legal Affairs Globally. U has been at Sony for 21 years and replaces Julie Swidler, who retired after more than three decades with the company. Next, lawsuits and AI. South Korea's Comca, the copyright collective managing 55,000 music industry members, reversed its ban on AI assisted songs effective August 3rd. The reversal allows registration of works where a human played a substantial and leading role, though fully AI generated tracks remain ineligible. False filings now risk royalty holds and contract termination. A government audit conducted this year found nearly 61% of sampled registered songs were likely AI assisted under the prior ban. On the chart front, LA rapper Phoenix Flexen is denying claims that his new Billboard charting single was AI generated. Critics and an AI detection platform have cited telltale signs in the track, putting pressure on the recently formed industry AI Chart Eligibility Committee to weigh in. Moving to streaming and tech, Spotify reported second quarter results with 300 million premium subscribers, up 9% year over year, and 777 million monthly active users overall. Total revenue rose 15% to 4.8 billion euros, and operating profit hit 655 million euros, up 61% year over year. However, the company missed consensus on earnings per share, which sent shares down nearly 6%. Spotify also announced a licensing deal with Merlin, the independent label collective, for its new AI-powered covers and remixes tool. Co-CEO Gustav Soderstrom said the company doesn't need deals with all the major labels before launching the feature. Plus, Spotify appears to be testing a skip ahead button for podcast ads, including ad spots sold by Spotify itself, a move that could significantly cut into podcast ad revenue. And YouTube Music's US premium subscriber base surged 45% year over year, raising questions about whether competitors like Spotify, Apple Music, and Amazon Music should be concerned about its paid-tier growth trajectory. On to Live and Touring. Ticketmaster acquired Red UTS, one of Uruguay's leading ticketing platforms, and launched Ticketmaster. The move extends Ticketmaster's network to more than 35 markets and continues Live Nation's accelerated push into Latin America.