Amsterdam – Universal Music Group’s shares plummeted the most since July 2024, after the company’s subscription revenue growth fell short of expectations in the second quarter.The world’s largest record label’s subscription revenues grew 16.6 per cent in constant currency, including the impact of its purchase of Downtown Music Holdings, to reach €1.37 billion (S$2 billion) in the second quarter. Analysts surveyed by Bloomberg had expected a 19.2 per cent increase. Excluding the Downtown acquisition, subscription revenue grew 6.7per cent in constant currency, below analyst expectations and slower than the prior quarter. “Overall delivery on sub streaming and total streaming has been lacklustre,” Barclays’ analyst Julien Roch wrote in a note. “The last time results were this poor” was in the second quarter of 2024, he said. Universal Music’s shares fell more than 20 per cent in Amsterdam on the morning of July 31.Netherlands-based Universal, which owns the rights to some of the world’s biggest artistes including American singers Taylor Swift and Chappell Roan, said “market share headwinds” offset more expensive music subscription prices at Spotify, YouTube and Apple Music. In January, Spotify raised prices for its American premium subscription by 8 per cent, while Apple Music also hiked American prices in July, citing higher music-licensing costs. Universal reported earnings before interest, taxes, depreciation and amortisation of €610 million for the second quarter, including Downtown, missing analysts’ estimates for €643 million. The label said improvements in its Recorded Music and Music Publishing businesses were partially offset by a decline in its Merchandising unit, where revenue fell 10.7 per cent in constant currency, as the poor timing of tours and product releases weighed on sales. Universal has been working to capitalise on the shift to streaming by maximising the value of each subscriber.Its plan, known as Streaming 2.0, involves better monetisation of so-called superfans through paid subscription tiers and opportunities for deeper engagement with their favourite artistes. Universal’s top-selling artistes in the second quarter included American singer Noah Kahan, K-pop boy band BTS, American singer Olivia Rodrigo and Canadian rapper Drake. Music labels have been grappling with the risks posed by a new generation of artificial intelligence (AI) tools that can easily replicate human-made songs.Universal has been quick to take legal action when AI developers have trained models on copyrighted music without a licence, but is simultaneously racing to cut deals with partners from Nvidia to smaller companies, including Klay Vision, in a bid to profit from the latest developments in the technology. In June, activist investor Bill Ackman sold his €1.42 billion stake in Universal Music after the label rejected a €56 billion takeover bid from the hedge fund billionaire’s Pershing Square, which would have involved moving its listing to the US from Amsterdam. Universal bought back about 14.2 million shares from Pershing’s offering.The label said last quarter that it would sell half its stake in Spotify and increase its share buyback programme, addressing some of the issues raised by Ackman around Universal’s undervalued stock. Bloomberg