Warner Music Group Corp. (WMG) Earnings Call Transcript & Summary

Okay. We're ready to go with disclosure statement. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com. If you have any questions, reach out to your Morgan Stanley sales rep. I'm Ben Swinburne, Morgan Stanley's media and entertainment analyst, and we are really happy to welcome back to the conference from Warner Music Group, Robert Kyncl, Chief Executive Officer. Robert, thanks for being back.

Thank you so much for having me. Great to be here.

Absolutely, absolutely. It's been about a year, right, as CEO. Lots happened, both inside the company and in the industry. You guys have been busy. Maybe you could just step back for a minute, Robert, and tell us sort of how you'd summarize the year and what you guys have been able to accomplish so far.

Yes. So yes, about 1 year and 2 months, but who's counting? So I'll kind of break it down into two things. One is the music ecosystem in general and the other is our company. Because one of the ways that I can make a lot of difference in the value of the company is actually to focus on the ecosystem, and so I'll start there. A year ago, we had no price increases for 15 years prior to that. We had the same payout model for 15 years, no change, and we have the looming threat of AI. And if you fast forward to today, we have lots of positive changes on all three fronts. So there's been a ton of work. I've focused on that quite a lot and also my colleagues obviously and the other companies. And so we made a lot of progress. It's all in early stages, but it's amazing to see the positive ecosystem evolution that's happening. I actually think this has been probably the most amount of change in 15 years. And so it's really good, but lots more to do, a lot more opportunity. And then on the company front, when I joined, one of the things that I focused on is organizational structure. And obviously, I've refreshed the leadership team, roughly half of it, brought in lots of new blood, different thinking, so expanded the culture basically inside the company. That is gelling quite well and that's what's allowed us to start focusing on sort of very intentional and strategic projects. One of those outcomes was the restructuring that we announced about a month ago that allows us to set up the company for operating leverage for the future. We worked on an investment framework and all of those things together. And so it's amazing to see it all come together. And then last but not least, we started to have real success with music on the charts. Zach Bryan, Jack Harlow, Megan Thee Stallion, all the chart-toppers. So it's been sort of really great to see that the core business started to improve sequentially because, as you know, when I started, it wasn't so great in the first quarter. And so it was great to see the team really executing against it and driving it. So lots of change, both on the ecosystem front as well as on the company front.

That's a great overview, and we'll certainly talk about all that in more detail. I just wanted to ask you, you and I have chatted a lot about trying to bring technology and creativity together. I think that's something you're quite passionate about. And your background in YouTube and Netflix sort of lend itself to that ambition. How is it going at Warner Music at this point? You guys are trying to bring, I think, a lot of technology resources and tools to creatively-driven executives, and their success is super important for the company.

Yes, you're right. I have experience with it from Netflix and from YouTube, in both cases, as we were bringing creativity to technology companies and the teams that I worked in. So I've been kind of straddling Silicon Valley and Hollywood for well over 20 years, so kind of well-versed in both languages and both cultures. So here, we're doing the opposite and bringing it together. The first thing that I want to say is that, A, you have to focus on having a company of equals. And if I think about Warner, Warner is excellent at discovering artists and kind of bringing them up from the cradle up. So Cardi B, Ed Sheeran, Dua Lipa, Bruno Mars, it's like all of those we discovered when they were very unknown. And so we had A-list talent for talent discovery inside the company. We don't have equivalent talent on the technology side, right? So obviously, that made the company lopsided a little bit. We now have that. We have the equivalent of that in technology. So when you have that, then you have to set up the right processes for people to actually collaborate together. Because everybody has to have a voice, people have to have a voice in what's getting developed and why and how it's measured. So we focused a lot on the processes, on bringing people together, which then allow us to set the road maps together, agree upon them, agree on how we're going to measure it and then just start delivering against it. And generally, people ask me this question quite a lot. And I think it always comes with like, "Do the music people really want technology?" And what I say is the answer is yes because they have it in their personal lives. Everybody has an iPhone or an Android phone. They got all the apps on it. They have like perfectly digital personal lives, and everything, ordering on Uber and Postmates, everything, and many other things. They just didn't have it in their professional lives. So inherently, it's there, they want it. Of course, they want it because it's going to supercharge their skills. So now we have the ingredients to deliver on it. So yes, I've been very much focused on making sure the cultures mesh, and it's been going quite well.

That's great. You mentioned before that we've started to see price increases. And I wanted to ask you just about kind of framing the opportunity for the music industry in streaming sitting here today. There's certainly maybe some caution out there that the business is maturing, at least from a user growth perspective. When you think about the long-term opportunity to grow the business, what do you think that opportunity looks like?

Yes. It's a little bit just like some of the thinking that went into my decision to take the job in the first place because I have to believe in the space. So I work across all medium. I understand it quite well. And when you think about music, I think it's in a class of its own at this point because we are growing in consumer engagement. By the way, we're very, very high in consumer engagement. We have huge amounts of reuse of content, right? The amount of times that you listen to the same song over your lifetime is incredible. Therefore, value of library continues to increase. The number of people that are engaging with music is growing, and the monetization of it is growing. Obviously, certain markets are going slower because of large numbers than others, but all of that continues to grow. Secondly, we're aligned with some of the underlying consumer trends, which is a lot of move towards short-form consumption. And when you think about music, it's embedded in long-form movies and TV shows through sync deals. Music itself is consumed through DSPs, right, in that format. It's consumed through music videos, and bits and pieces are consumed in short-form content. We're across every spectrum of content that exists, embedded in it, which keeps us relevant forever all the time, which is incredible. This is the hardest thing to do because if you're in an industry, let's say, movies and TV shows today, the opposite is happening. When you have contractions in subscribers, you have contractions in overall usage and growth, and no matter what business moves you make, it's a lot harder. When you have the tailwind of the user engaging with you, and you're in all the right consumption patterns and the streams, it's incredible. So I would say that, in itself, gives us the canvas to deal with problems. So I'm not saying there are no problems. There are many different problems to solve, but the underlying wind that's blowing is the right wind. So that's what makes me believe in it. And I've spoken last year here and throughout the whole year about the monetization opportunity, how much, obviously, prices haven't moved in 15 years prior to last year. There's a lot of opportunity to capitalize on that in the next 10 years, doing it gradually, responsibly, no herky-jerky behavior around that, right? So that there's just ongoing growth, but that is an opportunity. Whatever we left behind for the last 10, 15 years, it's ahead of us and we just need to structure things correctly so that we capitalize on it. And again, that doesn't exist, let's say, in movies and TV shows. The users and ARPU are maximized. For us, they're underoptimized.

You mentioned you had to believe in the space to come and take this job. I want to ask you about believing in the role of the music label in general. That is still also a debate. You've been around disruption and disintermediation a long time. Investors will occasionally ask, "Why don't artists just go direct to TikTok, YouTube? What do they need a label for?" So what is the role of the label? Why is it durable, in your mind?

Yes, so two reasons: one, catalog, very, very durable; but separately from that, for artists, songwriters -- well, 3 reasons: one, catalog; two, publishing; three, it's actually a very difficult craft when you think about it, and it's a very durable revenue stream. And that one is very difficult for anybody to administer on their own because it's collecting lots of pennies and lots of coaches all around the world and doing it incredibly well and increasingly so with technology. And then in terms of recorded music, artists, et cetera, I would say the closest analogy is actually the advertising space where, in the year 2000, somewhere around then, when Google launched AdWords, everybody was predicting the demise of advertising agencies because everybody can go to Google.com and click on AdWords, sign up, go direct and market themselves. Guess what happened? Over the following 20 years, the world got so complicated and the Internet presented so much opportunity that brands actually pushed more business through the agencies. And the agencies became Google's largest clients for 20 years, and that's it, it's the biggest thing. And I actually think the same thing is happening here because demarketized distribution means everybody can publish, but it doesn't mean that everybody is going to be heard. When anyone can publish, the noise level is so high that it's really difficult to stand out from the clutter. It may happen randomly if you have certain platforms of random algorithms suddenly can spike you. But if you want it on a sustained basis, it takes a village. We're that village. We're a global village. We have teams in 45 countries around the world, global infrastructure to activate artists. Two, it takes actually advice, whether it's creative advice or creative business advice. There are many artists who do things on their own. They succeed for a year and then they will make a bunch of difficult or not great decisions and suddenly things go sideways. It's really good to have experts who can help you make the right decisions along the way. And then the other thing that's happening is that for the music industry, in the past, the largest distributors used to be companies like Walmart, who is the largest distributor, and then Tower Records, companies that have millions of users, ten of millions of users and market caps of maybe tens of billions, maybe. I don't know at that time how big Walmart was. But today, our customers are trillion-dollar companies, right, the largest companies in the world. How much chance do you have as an individual against trillion-dollar companies? What you want is experts who are expert dealmakers, understand technology to work on your behalf and set the terms for how you're compensated. And the stakes are bigger than ever. And AI is actually a great proof of that. Then you overlay that, not just commercial terms but new technologies, and again, how does an individual really know what to do with that versus when you have an incredible team on your side doing that. So we do. That's why I believe in it.

That's a good defense. I like that. Let's talk a little bit about the strategic priorities you guys laid out or you laid out on your earnings call, the last earnings call. So grow engagement with Warner Music, increase the value of your music and evolve how you work together. Let's start with engagement. You mentioned it before so I'll bring it back up again. A year ago, the streaming revenue growth at Warner was disappointing the market, and that was, I think, your first quarter out of the gate as CEO. The numbers have gotten better then, but I would argue the stock is still suffering a bit from a hangover from that kind of 6-month, 9-month period. How do you grow engagement and, in particular, increase the return on your investment in content that we don't have those sort of dips in the future?

Yes. So there's multiple things. One is how we're putting money to use, and then the other one is how do we help streams basically, how do we get more streams. I'll focus on the first one, how do we put money to use more intentionally. So I mentioned, I think, that we, for the last 6 months or so, we've been working on a new investment framework so that we're very intentional about where we're putting the money. And that's all with the eye towards more predictability, stability, and faster growth. When you think about our capital expenditures, you can think about, okay, what's the ratio between recorded music and publishing? What is the geographic distribution of our capital allocation? Which countries will have run up in GDP per capita, therefore, higher conversion to subscriptions, therefore, increased ARPUs of subscriptions? Where do streams travel? So let's say, if you have Indonesian content that's traveling to America, it's a smart place to put money because it's from a lower ARPU country to high ARPU streams. So we're getting sort of intentional in those ways. So there's the asset level one, there's the geographic one. And then also within the assets is how much do we put towards new release versus shallow catalog versus deep catalog. And looking at those cohorts, they're basically at different risk levels and how do we invest in that? And again, different risk levels and also different predictability and stability. So we've developed a framework that we started to implement. And obviously, it takes time for that to percolate through the system and show up in the numbers. But to me, that's a very, very important thing to do in order to increase engagement with our music because then, if we put the chips in the right places, that, in itself, is going to yield better results. The second part is how do we optimize our content on DSPs so that it streams more. And it's like, well, if we could do that across everything, that will be fabulous. The challenge is that when you're large and you have millions of songs, it means you have to optimize millions of assets. And that's a very difficult thing to do with people because it's a manual task. Therefore, it's very useful to have people who can help us solve it with technology. So certain things, you do manually, and certain things, you do in automation. I'll give you one example, which is like motion art on thumbnails, let's say, on Apple Music. We've noticed that whenever we had it, it was delivering higher growth rates, higher stream rates, so let's say, by 1% than the rest. And so okay, how do we change it across our entire catalog? Not an easy thing to do, but we're now using AI to actually do that and to create it and then update it. And those are the kind of things that you have to work on to incrementally keep on improving the engagement with your music. So one is where we put capital allocation framework, and the other one is operational efficiencies in terms of optimizing on the DSPs. And then the third one is how do we market our content better, in general. And obviously, that also comes with lots of systems that we build for attributions as well as upgrading skill sets of our team.

You mentioned capital allocation being more intentional. When we listened to the earnings calls of all the majors, everyone's focused on geographic expansion and focused on high-growth markets. So how do you do that in a way that you're not just trying to basically outspend Universal or Sony to go find the artists in these high-growth markets like the Middle East or Africa, et cetera? What can you do that's differentiated?

By the way, there are two answers to this, kind of similar to the first question, which is there's the ecosystem and then there's how we compete with each other. Because we can also benefit tremendously from the ecosystem itself. And I can get back to that on the Middle East because I was just there. But how do we not just basically price compete, right? So one, we have a really good history in finding talent early. And it's truly like the heritage of the company that has continued and proven to be true, even to this day, right, Benson Boone, Zach Bryan, we would bring from the Navy. Like, it's incredible what's happening and how we are managing to find amazing new talent. Same thing is applying around the world, by the way. But I'd just go back to the investment framework. It's not just geos, it's asset types and also how do the streams flow. So for me, it's more can we get better and more deep and more thoughtful about data science to really understand these things, right? Therefore, it's just constantly better. I would say Google does it with search queries. They have a team focused on it, making sure they're optimizing that for the last 10 years. They've done an incredible job. That's what we're doing here. And so I hope that every quarter and every year, it's just a cruise and, over time, creates a competitive advantage for us.

And Robert, if you're successful with all these initiatives, do you think you can have a more consistent streaming revenue growth rate? And I asked that because it seemed like last year, as the company -- this is before you took the job -- probably had a bit of a new release, sort of, I don't know, a light slate, a gap in performance, however you want to describe it. And it seemed to actually impact shallow catalogs so it became almost like an amplified effect, I guess, using a music word for a second. Does success in these initiatives allow you to sort of mitigate that risk in the future?

I think so. And that is my goal, right? I'm very much focused on making sure that we drive stability and growth. And accelerated growth and stability, that's where I'm very, very much focused on. As you can see, already having an investment framework, it took a while to develop it, already have it. That is a big contributor to it. And even if we didn't get it right, right away, the fact that we have it, that we follow it, and then we find out what doesn't work, and we just iterate our way through it, the point is we'll find the right way and we'll get there. I'm very much focused on that.

You mentioned at the outset that the ecosystem has started to raise prices, and I think the market is starting to figure that out. Where do we go from here? What's your degree of confidence that price increases at the DSP level is a recurring event and that sort of there's real momentum and incentives that are aligned here?

So again, we're a wholesaler so we don't control retail. But what I can tell you is I'm not a status-quo person. And the status quo for the industry wouldn't be good or acceptable, right? We have to evolve it. It's happened in many industries. I'll give you an example. In television, broadcast networks used to pay radios and local TV stations for distribution. And then it turned around and it changed, and then they would pay for retrans. The TV stations will pay for retrans to the broadcast networks, like literally a 180 flip. You can't ever just accept status quo and keep going with it. So that's one. Two, I think it's important for us to take lessons from other industries, right? I'm very much focused on like this is how it works in music. And I think it's really important to have a much wider aperture in evaluating these things and what's possible. Their models, by the way, even today, I'll use China, there are no family plans in China. It's only individual subscriptions. They're upselling content on top of the subscription. So there's like innovative models already in place. And I think for us, we're determined to evolve this in a way that is gradual and friendly and accretive to both DSPs and us because that is the only way to ensure, again, stability and growth for the long term. And again, the fact that we haven't done it collectively in the past 15 years, it's giving us a huge opportunity to capitalize on that going forward. And I can give you some examples of how these things could go, which is today, we all work on a revenue-sharing basis. We could switch to cable fee model. We could get pay per subscriber. That's a senior model. It worked very well for 60 years on television, right? There's no reason why it couldn't work here. I would say that catalog is probably even more valuable than new release content today. So you could have DSP subscriptions that are for new release only. And then if you want the entirety and completeness, you end up paying extra for catalog. And generally, people, when they think about memory lane, they value that more and will have a higher propensity to pay than for new release. So there's different ways to slice it. The only thing that we shouldn't do is remain in status quo. So we're very actively engaged in this.

I mean, I don't want to lead the witness here, but it feels like compared to when we sat here a year ago and nothing had happened, that first step might be the hardest step. You've now had price increases across a number of DSPs. It seems like artist-centric models and relative models are changing. So I don't know, I don't want to again overemphasize where we're going. But a year from now, can we continue to see real substantive improvements in the way the incentives are set up to drive change?

I think a lot of these changes are -- so either we can make incremental improvements in the existing models or we can make more radical changes as well. More radical changes generally, and from my experience, usually take 12 to 18 months to play out. But then you have to coordinate the whole industry, so it's like these things are not quick if you do something radical. But the really important thing that we have is that there are two things that you mentioned that already happened which are positive, and they're happening. And then we can just lean into those incrementally. But I think the opportunity is far greater than that for both us and the DSPs. So we can get more radical about it, too.

Warner signed a new TikTok deal last year and you guys obviously wouldn't have signed it if you didn't like it. Universal and TikTok are in a pretty public dispute. I know you can't speak for Universal.

Or TikTok.

Or TikTok, for that matter. But let's go back to your deal. Why do you believe the deal you signed with TikTok is the right deal for not just Warner Music but for your artists who obviously care about monetization as much as you do?

Look, I run Warner Music Group. We represent artists and songwriters, and our goal is to always maximize value for them. That's our job, right? That's the #1 job. I'm also very public about my three priorities, right, which I put out in my New Year's letter, one of which is to always increase the value of music, whether it's ad-supported or subscription, right? That's it. So it's squarely in my focus. And it was last year, it's this year and will be for the next 10 years always. This has to go up. And so I can tell you that we achieved that last year with our deal. And that's what we do in every single deal now and forever.

Okay. So I am asking you to speak for Universal. I mean, it's counterintuitive that two labels would look at seemingly similar terms and have such different conclusions. Or am I thinking about that wrongly?

I don't know what their terms are so I don't know if they're similar. I think everyone out there in the market is speculating. But literally, nobody has the information so it's a bit of a waste of time for everyone to speculate anything. We don't know.

Right. Working with imperfect information, welcome to our world. Okay, let me ask you about superfans. I think this has become a big thing in the last...

I'm your superfan.

Yes. You talked about superfan. You've also talked about sort of product development and superfan apps. What can you guys do? Again, you're not a direct-to-consumer company today. But what are you thinking are the opportunities here around monetizing superfans for your artists?

So when you think about how to grow our company, how to serve artists and songwriters, one of the most important things is to figure out a direct relationship with the most valuable fans because it's not only important to monetization and new revenue stream, but it's also important to launching new music, which is the core of what we do. And when you do that, you don't want to compete with large platforms of 2 billion users. You want to focus on a much more condensed set of users, the ones that matter the most. And so for large platforms, that's a subscale activity, a subscale behavior. For us, we can do that. And one of the things that I think organically sets us up well here is that music is ubiquitous. Before, I described how we're in every stream of consumption from long-form to super short-form and everything in between. We're across every platform. If every distribution platform creates products for superfans, it's very hard for artists to adopt it because then they have to optimize for that one platform. But that's not what they want to do. They want to be across everything. And so I think organically and structurally, we're in a better position to do something like this than any actually large distribution platform today. So one, we have a technology team that can deliver now, which is not what we used to have in the past. So we have the capabilities to do it. And we have artists and songwriters that we have deep relationships with so we can seed the platform with it. And it's as adjacent as possible to what we do today, other than it's the expansion in technology and direct-to-consumer. So it just feels like a very natural thing for us to do. Now it's speculative. We have to figure out what the MVP is, et cetera, but it's an effort that's worth undertaking because again, it not only touches on new revenue stream but also on more effective launching of new music.

I mean, maybe it's too early to give us more of a tangible sense. So one of my kids is a big Dua Lipa fan. Let's call her a superfan for the sake of this conversation. Is this another subscription? Is this another app? What does this actually look like from a consumer point of view?

Yes. It's another app where she can interact with Dua and have all kinds of benefits. I don't want to speculate on the offering yet, what's in it. But yes, another subscription would follow with that, it makes sense. And when you think about superfans in most industries, so let's say, gaming, 20% of users represent 80% of the revenue. In music, if you look at ticketing, right, and concerts, it's a $20 billion business. People get in their car, drive somewhere and get on the plane, fly somewhere, buy expensive tickets, do that. But the artist has to come to your town or you have to come to them. There's nothing in the digital realm and it should be. So we think it's a great opportunity and so we're focused on that.

Great. Well, we're looking forward to see what you guys bring to market. Okay, let's go to the last of the priorities, which is sort of evolving, how the company works together. The night before you reported earnings, you guys announced a $200 million restructuring plan. And you've indicated that's really around freeing up resources to accelerate your growth. Can you talk a little bit about where those statements are coming from and sort of how they'll be realized over the course of the next couple of years?

Yes. So it's for multiple areas. One of the more immediate areas was our divestiture of our owned and operated websites, media platforms, which were driving advertising revenue. And the insight is quite simple, which is we're here to serve our roster, our artists and songwriters. When you're operating a platform like that, you can't really bias for a company's roster because, otherwise, you lose credibility in the market and in what you do. So therefore, it's not in the service of the roster. So it doesn't have that strategic component. The second one is it's really more focused on brand sales, and that's an area that is not growing so much. It's very high touch, very lumpy. Unlike direct response, if you look at YouTube, TikTok, Meta, et cetera, they're growing really fast. Why? Auction-based advertising, direct response, all of that, which is the opposite of what we were doing. And we participate in all of those through our deals, and so great, but we don't necessarily do this one. And three, it was a margin drag. So when you put it all together, it makes sense. We focus on the core of the company, which is music, and make sure we focus on artists and songwriters. So that's really the more immediate thing. The second part of it is that I mentioned us coming up with organizational structures around operating leverage to set the company up well for growth. So we're coming up with investment framework, growth initiatives, and the right organizational structure to underpin that. So that as we grow, there's leverage to that at an increased impact, I'd say, right? So it's quite a few things to manage, but that is really what we focused on. And all of this, like the way I think about it is it's making us stronger, and it's making us leaner and stronger at the same time. And it's giving us optionality and gunpowder for the future to invest according to the investment framework, geographies, assets, risk types and all of that.

And if you're successful in reinvesting in music and tech...

Faster growth, faster and more profitable growth and stability, right? That's what I'm focused on.

Yes, that makes sense. Okay, kind of my last topic that I wanted to ask you about, Robert. Again, a year ago, we were talking a lot about AI. We're in the throes of the fake The Weeknd, fake Drake sort of panic in the market. That seems to have settled down. But AI is not going anywhere as evidenced by this conference and every presentation over the last 3 days. So you have strong views on this. How do you avoid the sort of downside risk of what AI could do to catalog and copyright and turn it into a real tool to drive the business?

Yes, so a year ago, I think some companies put us in a basket of losers.

It wasn't us. We would never do that.

Obviously, that hasn't played out. So first of all, people always want -- when you think about AI, it's a tool. People will use the tool and they'll use sort of branded content. They will always try to emulate somebody famous, famous song, famous artist, et cetera. So us delivering on the core of our business is really important for the age of AI. I think about our constituents in three different ways: the platforms where the content is consumed; the tools that create the content, the OpenAIs of the world; and three, governments. And I ordered them on purpose in that stack rank because that is my prioritization effort. Because no matter what happens, people will want that content to get views or streams. Therefore, our focus is to be on the consumption platforms and to define the rules of the game and what is the attribution, what is the monetization and what are the controls. And the reason I say it this way is because that's exactly what we did with YouTube back with user-generated content. I was exactly in those shoes with the whole world coming after us, and we had to figure it out. So we've done that. This is just the same problem on steroids: different tools, faster speed, maybe greater precision, et cetera, and a little bit more ambiguity. But it's a similar problem. So it's been solved before, we can solve it now. That's why we're focused on that. That's why we're participating in the Dream Track test with YouTube, right? It's allowing us to be under the hood. And secondly, for instance, in case of YouTube, obviously under the same Google roof is, I'm forgetting the name now, DeepMind and Gemini and YouTube. So you have both the generative AI engine and the consumption platform under the same roof. So that's actually quite useful to be engaged with a company like that. But now that's the same thing with TikTok and Facebook, et cetera. So you have companies with large consumption platforms also having the agents together. And on the regulatory front, we're very, very active. And obviously, we think there is a lot to be done to protect not just artist's name, image, likeness and voice. It actually should really apply to any human being. But we're representing artists and songwriters. And so we love the fact that the ELVIS Act just passed in Tennessee. Our team was actually the driving team behind that. So this is the first state legislation they just passed. We're using that for momentum on a national level with the two Acts, both in the House and the Senate that are there. But no matter what happens with regulation, I think it's important to work with the platforms to make sure that they do the right thing. And all of those efforts together will yield the right results.

You always seem like a pretty relaxed guy. Are you worried at all? I mean, what's your level of panic at all on this AI risk conversation? You're pretty confident it can be harnessed versus threatening the business?

I'm pretty confident. I mean I have a response on the plan for whatever scenario there is. There's so many different ways to deal with things. Well, this thing is happening. Well, we'll up the fees this way. If you have a large catalog and you have a lot of artists and songwriters, it gives you quite a lot of power over time. Because no matter what, that wealth, because of the uniqueness of music and the fact that people want to go back and use it over and over, it gives you a tremendous amount of strength.

Maybe we'll end there with the uniqueness of music. And you touched on this a lot already, but I thought it would be a good way to end. You mentioned in the last earnings call, music being a unique asset class, and I sort of like that description. Maybe just summarize that for us as we finish this conversation. Why is it not only unique but maybe uniquely attractive for investors?

So I actually promised to tell you about Middle East so I'll use that example. There are greenfield markets like the Middle East, that will see quite a lot of value appreciation. Why? Extremely young population across very large number of people; two, no collection societies. They're getting important. There's new revenue streams that will come in that don't exist today at all; high GDP per capita in a whole bunch of the countries, which will lend itself to higher conversions and subscriptions, which don't exist today, right? They're very, very tiny. So you look at that market alone, you say, wow, there's so much opportunity to not only drive number of subscribers but also pricing over time and new revenue streams through collecting in ways that doesn't exist today. That's just one little part of the world. Two, before, I mentioned in the beginning, we're in every possible mode of consumption, and we're not getting disrupted by shifting behavior, which is pretty incredible, right? To me, I have lots of different problems that will keep me up at night. But the users love our product, and absolutely, that's the gossip. And three, we have, I don't want to use the word neglected ARPU opportunity because actually, it was the right decision for everybody to do that. But the unrealized ARPU opportunity that's there, that's also incredible, right, versus if I was in movies and TV shows, say, wow, we already maxed it out, now it's going down. So when you look at all of these things, there's a lot to do. The really important thing to think about is that we have to step outside, only think about what has worked in this industry and just look broader and how can we monetize in different ways, how can we change the model, how can we invent new revenue streams? Because we have this incredible engagement with users, it gives us the permission to be innovative and drive new models and new revenue streams. And that's kind of fun to do.

Absolutely. Well, we'll see what the next year holds. Robert, thank you so much for being here.

Thank you for having us. Thank you.

Thanks, everybody.