Warner Music Group Corp.
Q1 2021 Earnings Call Transcript

Published: 2 Feb 2021

[Operator:]

Welcome to Warner Music Group’s First Quarter Earnings Call for the Period Ended December 31, 2020. At the request of Warner Music Group, today’s call is being recorded for replay purposes, and if you object, you may disconnect at any time. Now, I’d like to turn today’s call over to your host, Mr. Kareem Chin, Head of Investor Relations. You may begin.

[Kareem Chin:]

Good afternoon, everyone. Welcome to Warner Music Group’s fiscal first quarter earnings conference call. Please note that our earnings press release, earnings snapshot and the Form 10-Q we filed this afternoon will be available on our website.

[Steve Cooper:]

Thanks, Kareem. Good afternoon, everyone, and thanks for joining us, and welcome to our first quarter earnings call. We are happy to usher the New Year and we are excited about all that 2021 has to offer. With a broad vaccine rollout on the horizon, we are hopeful that the world can safely begin to reopen and that will start to see some return to normalcy. In the meantime, we are very fortunate that our core streaming business remains as strong as ever and that music has a rapidly growing presence in new and diverse applications. In fact, Q1 was the highest revenue quarter in our 17-year history as a standalone company. Our revenue grew 4% year-over-year from our previous record high in Q1 of 2020, an achievement that we are especially proud of given that we accomplished this during the pandemic. The strong double-digit revenue growth in digital more than offset the continued disruption in Recorded Music’s artist services and expanded rights revenue and Music Publishing’s performance revenue. Excluding revenue from those areas, our year-over-year revenue growth in Q1 would be approximately 8%.

[Eric Levin:]

Thank you, Steve, and good afternoon, everyone. We are extremely pleased with our financial performance in the first quarter. Fiscal Q1 of last year was a record breaking revenue quarter for our company and was also the last reporting period that was unaffected by COVID. Against that difficult comparison and while still navigating the challenges presented by the pandemic, we are -- we not only returned the company to growth but we have also set a new all-time high quarterly revenue in our history as a standalone company. Our business model has proved to be robust and flexible, underpinned by continued strong growth in digital and our D2C businesses, as well as our financial discipline. And while COVID continues to challenge some of our -- some areas of our business, we have leaned aggressively into other opportunities whose growth prospects were accelerated by the pandemic. We expect this will position us favorably as things return to normal. Moving to our performance in the quarter, our total revenue was up approximately 4% on a constant currency basis and up 6% on an as-reported basis, compared to the previous quarter. Artist services and Recorded Music and performance in Music Publishing were the areas most affected by COVID due to the cancellation or postponement of tour. If you exclude those areas, our revenue grew 8% on a constant currency basis and 10% on an as-reported basis compared to the prior year quarter. Both adjusted OIBDA and adjusted EBITDA saw significant year-over-year increases in the quarter, reflecting the continuing revenue mix shift from physical to digital. Adjusted OIBDA increased approximately 18% to $282 million with margin improving from 19% to over 21%. This improvement was driven by an increase in contribution from higher margin streaming revenue, cost management initiatives and the impact from certain previously announced transactions that closed in the quarter. Adjusted EBITDA increased 19% to $297 million with margin improving from 20% to over 22%. This increase was largely due to the same factors that drove our adjusted OIBDA performance, in addition to higher pro forma savings that we expect to realize from our transformation initiatives and the pro forma impact of those previously announced transactions. Those transactions contributed $5 million to adjusted OIBDA and $9 million to adjusted EBITDA in the quarter. Adjusting the impact of that contribution or excluding the impact of that contribution, our adjusted OIBDA and adjusted EBITDA grew 13% and 16%, respectively.

[Operator:]

Our first question comes from Michael Morris with Guggenheim. Your line is open.

[Michael Morris:]

Thank you. Good afternoon, guys. A couple of questions for me, the first one is on streaming and those streaming revenue sources that were strong in the quarter. Eric, I am hoping to maybe push you a little bit on some more detail of the contribution from the new partnerships and the relative performance of the subscription side versus the ad side, it sounds like all were strong. But any additional detail you could give us on maybe relative performance and also how those are pacing in the fiscal second quarter? And my second question, there are a couple of things specifically that you have cited as benefiting during COVID. You have had your virtual concerts, Steve, you spent some time talking about EMP. My question is, as we look forward and hopefully see things starting to open up, do you expect some regression in those areas or do you think you can continue to have a strong base and see perhaps a live event recovery? Thanks, guys.

[Eric Levin:]

Okay. Great. So let me tackle your first one. So as we break streaming into kind of a three broad categories of subscription, ad-supported and emerging forms of digital revenue., subscription and ad-supported are, I would say now both in line, both growing similar amounts in double digits and that is great. Subscription has been growing from COVID double digits throughout the whole time but advertising initially took a dip and then has quarter-by-quarter been showing progress, and this is the first quarter that we can say it’s been double digits. So it feels like the ad-supported streaming has really recovered and its growth is really in line with where we would expect it to be. On the emerging forms of streaming, they continue as they have in the past to grow at a significantly faster rate than both subscription and ad-supported. And that’s both because the category and social and gaming and fitness, live streaming are all really coming online and growing at an accelerated rate, but also because there’s new platforms that emerge that we continue to do deals with, so we have a broader array of partners that we continue to add there. We see no reason why these trends across all three of these categories won’t continue going forward as we continue to see strong performance on those categories plus we also have a high degree of confidence in our strong release schedule going forward. As far as the categories, we would expect to see them going forward even as we come from COVID, especially I think you -- Michael, you were referring to the emerging. Look we see this as a growth area even after we come out of COVID. We think that consumer behavior around social, gaming, the real explosion of metaverses, our growth there is going forward, and we see these areas that we continue to see innovation in, new platforms coming online and continued strong growth going forward, both during a COVID-affected era and thereafter.

[Michael Morris:]

Thank you for that. And just to clarify on that second part, on EMP, that physical direct-to-consumer in particular as well. You feel that this is a base that’s growing and will be strong, sort of even post the reopening or do you think there is perhaps a little bit of a trade-off there with perhaps live events, merchandising or anything like that?

[Eric Levin:]

I think it’s -- thank you. That’s a great question. EMP is a business that when we acquired about three years ago that we had real belief in their ability to grow their business long term. Nothing we have seen has caused us anything, but to have increased confidence in the business and the management team running EMP. It’s certainly true that the closure of brick-and-mortar businesses has driven consumers more to ecommerce platforms, and EMP has both been a benefit of that, but EMP has also not been passive. They have broadened their product line, they have innovated their marketing tactics, and continued to sharpen their skills in reaching their customers, but also expanding their customer base across Europe. So, although 30% growth may not be the norm in the future, we see growth and solid growth in that platform as something that we will be managing towards both during the COVID-affected era and thereafter.

[Michael Morris:]

Okay. Thank you.

[Eric Levin:]

Thank you.

[Operator:]

Our next question comes from Alexia Quadrani with JP Morgan. Your line is open.

[Alexia Quadrani:]

Thank you very much. Can you talk about the impact from acquisitions you highlighted on your last call, I believe it was $338 million, and how did that impact your results this quarter and what do you expect the impact to be going forward? And then my sort of follow-up question is sort of a follow-up on your commentary and your answer to Michael’s question. I think he asked about the emerging growth platforms for gaming and fitness and stuff and how you will do there when the economies reopen. I guess my follow-up on that is a little bit different in the sense is, if we do see a pullback in gaming and we do see a pullback in fitness in terms of engagement, is your penetration level so early days that regardless of maybe a pullback in engagement in the broader population, you still can see kind of robust growth on those platforms because you have so much more to kind of grow within the existing platform?

[Eric Levin:]

So, on the M&A one, the M&A that we are talking about that we acquired for $338 million. In Q1, it had a $5 million incremental OIBDA impact and a $9 million incremental impact to adjusted EBITDA. Note, as we look at it on an annualized basis -- and those numbers are in line with our expectations, that the kind of run rate OIBDA on an annualized basis was about $37 million and you can see how that’s kind of consistent with these numbers and these businesses performed right in line with expectations. As far as emerging platforms, what I would say is we see music becoming more and more integrated across social gaming, metaverses, the various places where live streaming is integrated, and we see it as being very early days and we see the ubiquity of music across so many different forms, both existing and new, really kind of just finding a stride that we would be -- we fully expect to be managing that line for growth both during COVID and thereafter.

[Alexia Quadrani:]

Thank you.

[Eric Levin:]

Thanks, Alexia.

[Operator:]

Our next question comes from Ben Swinburne with Morgan Stanley. Your line is open.

[Ben Swinburne:]

Thanks. Good afternoon. I want to hear from Steve on the strategy for these emerging digital platforms and what I mean by that is the press reported you guys signed, I think, a second TikTok deal in a relatively short period of time, I think, the first one was in April and then this most recent one just in January and I know you can’t talk about specifics. But as these agreements evolve and you renew them, what other than trying to maximize your revenues are you trying to accomplish? How do these agreements and the business models behind them in your eyes evolve over time? Do they eventually look and feel like kind of streaming, so it’s a rev share and relatively predictable or do you think these are going to be quite different? And also specific to TikTok, hopefully, you can comment, they reported that there were 70 artists -- over 70 artists that broke on TikTok and were signed by majors last year. I am just wondering how you guys are ensuring that you are able to find and sign the artists you want ahead of your competition? I’d love to hear your thoughts on those things.

[Steve Cooper:]

Thanks, Ben. So let me start first with kind of how we see the shape of the world. Our revenue falls into, what I would call, four buckets. First is, I am going to put aside for the moment physical and touring related revenue and talk about really digital. So, in the four buckets, we have got the traditional streaming. And we see, as Eric has said, a lot of runway both with the established services in the more mature markets, as well as emerging markets. The second bucket are really the social platforms and, Facebook, Instagram, Twitter, they are using more and more music, not because they are pushing it, but because their users are pulling it. And so, with respect to the social platforms, we continue to shape and/or reshape our deals based upon how mature they are relative to their growth curve and what support we believe they need from us to blossom into very substantial sources of revenue. And I think as we mentioned to people during our IPO, the average startups we typically give breaks in exchange for futures and so far that approach has worked very well for us. The third bucket are, what I would call, these interactive business models. You have got Fortnite, you have got Roblox, you have got in certain respects some of the fitness models. And we see ourselves as being part of those universes or metaverses, where we establish ourselves and our business as an integral part of those universes. Roblox, in particular, has a very interesting model where you can create your own business, your own world, in our case, our own music entertainment world inside of their metaverse. And our intent is to continue to work within these interactive digital worlds to create a strong presence for the Warner Music Group, where we are able, whether it be on a transaction or a sharing basis, able to work with them not only to optimize our revenue but help them build their models. The fourth bucket is frankly all other and those are new models and new opportunities that are literally emerging day-in and day-out. And I can’t tell you yet, exactly how we are going to handle them, but we do know is that we see a constant stream of opportunities to both partner risk and to invest in for the foreseeable future and we plan on continuing to do that. With TikTok, specifically, we have a very close relationship. One of our recent acquisitions, IMGN, was recently named as one of their top-five creators and we have very good relationships with the collective known as influencers on TikTok and with people that utilize our music. In fact, you may have seen, I don’t know, a month or two ago, that Dreams, it’s a 40-year-old song and it was used on TikTok and came back into the top-10 on radio and the top-10 on streaming services. So we work through our labels and through our affiliates, our local affiliates around the globe to ensure that we have a strong relationship not only with the service itself, but the creators and developers on those services that wish to utilize our music and we wish to utilize their talent. So, hopefully, that answers your question.

[Ben Swinburne:]

Yeah. Thanks. Even I heard of the Dreams thing on TikTok. That’s how big it was. Thank you for the color.

[Steve Cooper:]

Yeah. Yeah.

[Operator:]

Thank you. Our next question comes from Heath Terry with Goldman Sachs. Your line is open.

[Heath Terry:]

Great. Thank you very much. Steve, I am wondering how you are -- as we hopefully kind of come closer to the light at the end of the tunnel here. I am wondering how you are planning for Warner’s position in live music. Is there work that can be done now, is being done now around preparing for the return of live events sort of positioning your artists as best as possible, as we are kind of thinking about what the second half of 2021 could look like? How do you see this opportunity kind of playing out for Warner to get a faster start?

[Steve Cooper:]

Well, I actually see several things. First of all, I hope that the second half of calendar 2021, I hope that the vaccine is being broadly distributed. I hope that we get clarification on its efficacy rates relative to the new strains and that businesses can open and we can begin the, what I think is going to be a longer path to get back to some semblance of normalcy. So what we are doing in the interim is a couple things. Number one, we are taking advantage of live streaming to continue to promote our established and our emerging artists and we are doing that with any number of digital streaming partners that are operating successfully in the live streaming world and in the virtual reality worlds. So what we are continuing to do is work in a variety of ways to grow the fan bases for established and emerging artists. We obviously continue to roll forward plans for our live activities, our promotional touring. But as you know, for our emerging talent, much of that relies on the opening of smaller venues and while we are hopeful that that’s going to happen sooner as opposed to later, we also know that the way we schedule this and the way we return to live has to be carefully crafted so that our artists don’t get lost in a traffic jam. But our label operators are looking at this on a regular, regular basis, because they know that when the gates do open, we have to be in the right lane so to speak. What we also believe and I think that Eric touched on this as well is peoples habits are changing and we are looking to, frankly, capitalize on that by establishing a sound foundation in live streaming and working on establishing live foundations in these interactive worlds, Heath. So we are aware of it. We continue to roll-forward our plans. But we are looking at other ways in which, frankly, to capitalize on what’s been a -- for the planet, broadly speaking, a horrendous situation.

[Heath Terry:]

Great. Thanks. Thank you, Steve. I appreciate that.

[Operator:]

Thank you. Our next question comes from Jason Bazinet with Citi. Your line is open.

[Jason Bazinet:]

Hi. This is maybe a dumb question but I am going to ask it anyway. When you guys talked about EMP, I sort of thought about it as a bit of a side show and with this IMGN media asset that you bought and your stake in, I think, you have a stake in Roblox. I am starting to think we sort of are seeing the early outlines of a strategy to almost vertically integrate in a new way, not by buying a traditional streamer or anything like that. But is that the right way to think about how you are thinking about using your excess cash flow?

[Steve Cooper:]

Well, I think that you should look at it in a couple ways, Jason. I got the name right, I hope it. I am…

[Jason Bazinet:]

Yeah.

[Steve Cooper:]

I am doing this on an iPhone, so sometimes it’s a little scratchy. We are doing, I guess, you could look at our strategies, our growth strategies in a couple ways. The first is, we are going to ensure that our core businesses, Recorded Music and Music Publishing, that we continue to build thoughtfully with the right financial discipline those businesses. So we intend on over time continuing to increase our A&R budgets and the related budgets of marketing and promotion. We also plan on enhancing the footprint of those businesses on the Music Publishing side, primarily through catalog acquisitions, on the Recorded Music side, primarily through the acquisition of going concerns or opening new offices. But what streaming has shown us is that it is more important than ever in our core businesses to be global and not Anglo-centric and that’s been one of our goals over the last eight years or nine years and we are going to continue to pursue that.

[Jason Bazinet:]

Yeah.

[Steve Cooper:]

So that’s number one. Number two, some of the moves that we have made have to do with not only revenue diversification, where we see the world of musical entertainment in the next five years or 10 years, Jason.

[Jason Bazinet:]

Yeah.

[Steve Cooper:]

And where we see the intersection of social, of gaming, of God knows, everything else are in these metaverses, where people come to them for any number of reasons and we want to make music a far more compelling reason to come to these alternative worlds.

[Jason Bazinet:]

Yeah.

[Steve Cooper:]

So that is where we see much of the future and we intend on investing in a future that we believe is figuratively and almost literally around the corner. So your observation is accurate.

[Jason Bazinet:]

Okay. Thank you very much.

[Operator:]

Our next question comes from Brian Russo with Credit Suisse. Your line is open.

[Brian Russo:]

Hi. Thanks for taking the question. This is a follow-up to a couple of the earlier questions either for Steve or Eric. When you look at the impact the shutdown had on the subscription streaming in calendar ‘20. It didn’t look like the subscription piece was really negatively impacted. When the world sort of returns to concerts and live events, hopefully, later this year, do you think we should expect to see the subscription streaming benefit at all, maybe with the notion that you have a lot more new music coming and new concerts might encourage consumers to subscribe? Thank you.

[Eric Levin:]

Well, I am happy to help answer that. So the return post-COVID for subscription streaming, we think the environment is growing solidly now. There are opportunities for that to grow potentially. We could break it into developed markets and emerging markets. In developed markets, we continue to see subscriber growth. We think we are still relatively early innings and there’s ample room for subscriber growth. What we are starting to see with the DSP is there’s some experimentation with price increases and we think as that we hope and think there’s a strong opportunity for that to gain traction. So whether it’s Spotify, which has in selected markets increased the price of family plan, or Amazon and we hope other platforms looking at high resolution as a tier that can support increased pricing. So we think that has the potential to be a positive impact on developed markets as their ARPU has the opportunity which really hasn’t increased in the past 10 years to go up. And we think emerging markets are really just starting to find their stride. It is really very, very early days and we think that the growth there has the potential to really accelerate brands that they will be lower ARPU. However, those markets in the past were relatively light revenue contributors overall and as subscription streaming and ad streaming find their way into emerging markets, really has an opportunity to be incremental growth at very high rates. So we do think that subscription streaming and ad-supported streaming have an opportunity to really continue to grow strongly going forward using those combination of factors. Hopefully, that answers your question, Brian.

[Brian Russo:]

Well, Eric, just a follow-up.

[Eric Levin:]

Yeah.

[Brian Russo:]

I think in a prior call, you were talking about back half weighted this year in terms of your release schedule, lot more artists are releasing and that’s kind of what I was asking about, if you have a sort of like a push for lots of new releases and the artists will support this by touring, fingers crossed. Is that something that sort of moves the needle for the subscription streaming or is it all just sort of more based on the overall number of subscribers and some of the other ARPU opportunities you talked about?

[Eric Levin:]

No. It’s a combination, Brian. I mean, certainly, subscribers and ARPU are a huge part of the equation, but also market share is and market share can be driven through a combination of things. Obviously, new releases and having a strong release schedule is part of the formula continuing to mine our catalog and continuing to make sure that new audiences are discovering our catalog. We are continuing to keep that robust. So, yes, as releases continue to come out, and hopefully, we expect to have a strong release schedule, which we continue to work towards the second half the year, we would obviously expect that and hope that drives streaming opportunities. So, yeah, we do think that is certainly something we are striving for.

[Brian Russo:]

Terrific. Thank you.

[Eric Levin:]

Thanks, Brian.

[Operator:]

Our next question comes from Rich Greenfield with LightShed. Your line is open.

[Rich Greenfield:]

Hi. Thanks for taking it. I guess two questions. One, you have been -- Steve and the total team, you have been talking so extensively about gaming. I haven’t counted the number of times metaverse has come up but it’s a lot. Like as you think about how much gaming has played into it, where does Twitch fall into this, I know that they have gotten -- you all, as an industry, gotten a lot harder on takedowns and sort of making sure that copyright is respected. Where are they in terms of licensing music from Warner Music, is that a 2021 goal to get something larger done? And then the second, it’s sort of a bigger, broader topic, but we are seeing all of the major subscription streaming platforms and even ad-supported streaming platforms for that matter, get a lot more focused on podcasting. And I have certainly seen podcasters start to integrate more and more premium audio content -- music content into podcasts. Is that where the opportunity lies, is it a risk that podcasts start to eat into music time spent? Like, I guess, just how do you look at the overall podcast equation, I guess, is the multi-layered question as part two?

[Steve Cooper:]

Well, let me deal with Twitch first. I believe the industry is in deep conversations with Twitch about licensing, because you are right, there has been this kind of aggravated back and forth. I am relatively confident that will be resolved in 2021. And what it does show is the utilization of music in the gaming world is a critical element to gaming. It provides the beat in the game so to speak. So I am confident that that will get resolved and it will get resolved to everybody’s satisfaction. On podcasting, I get torn about podcasting. We do dozens upon dozens upon dozens of podcasts at the operating level and they are aired on Apple. They are aired on radio. They are aired on, I think, we got a deal with Spotify. They are aired on a number of services. But I believe that people come to the streaming services primarily to listen to music and listen to podcasts. So those who come for podcasts will also listen to music and I believe that it will be beneficial in both directions. What I have seen is that podcasts have smaller followings and there are dozens upon dozens upon dozens of niches. And people -- at least the people I know, don’t listen to the same podcast 5 times, 10 times, 15 times, 20 times, 30 times, which they will do with their favorite tracks of music. So the way podcasting, at least again in my view, has to be serviced is with just ongoing, ongoing levels of content to smaller crowds and while we are doing that, providing content to these services and these narrow niches, ultimately, I see them as a gateway, particularly as people use more and more music in podcasts as a gateway to just listening to more music in general on a streaming, Rich.

[Rich Greenfield:]

So you think that ultimately podcasting can actually help be a way to introduce music to different audiences than just traditionally just listening to music as a starting point?

[Steve Cooper:]

Yeah. Yeah. Absolutely. Look, it’s -- if you think about all of the regular broadcast TV programs that used to introduce new music to the world, whether it’s the contests, American Idol or The Voice or Glee, podcasts for some people will be a source of discovery and to the extent they like what they hear, that will lead them to listen to music that they discovered these to be the broad podcast and music that’s similar, because it now gets curated on all of these services. So I think the answer is, yeah, that podcasting will benefit music.

[Rich Greenfield:]

Thanks for the thoughtful answers. I really appreciate it.

[Operator:]

Thank you. Our last question comes from Jessica Reif Ehrlich with Bank of America. Your line is open.

[Jessica Reif Ehrlich:]

Well, thank you. Thanks. Two, I guess, topics, one is streaming and the other is just artists or talent. On streaming, you kind of touched on this earlier, but Spotify is testing price increases in seven markets and it’s been going on for -- to several months now. Have you seen anything in terms of changes in dynamics given the price changes and is there a way for you to incentive -- if it’s successful, is there a way for you to incentivize other DSPs to follow on, I mean, Amazon has a different offer. And then also within streaming, where do you think you will see meaningful growth going forward in terms of new markets, Spotify just launched in South Korea, Russia was one of their biggest launches and there’s talk of DSPs going into Africa, which is a market I can imagine you guys monetized well in the past? And then kind of switching gears, you mentioned in the press release, as well as on the call a few times, your upcoming release schedule for new -- I think you mean new and established artists. Is there any color that you can give us in terms of visibility of what will be coming? Thank you.

[Steve Cooper:]

Well, Eric, let me make a couple of comments, and you may want to chime in. So just about streaming broadly and the monetization, Jessica, our view is that there’s still an enormous gap between the monetization of eyeballs and the monetization of ears. And ultimately, we think that all of the streamers, as they add new features, new functionality, by way of example, you cited Amazon with their high res. You are right Spotify is experimenting with price increases. Ultimately, we think that all of the services over time will increase prices. We encourage them to do this and when we think about the tens of millions of tracks that people get for a few dollars a month, our expectations every day grow that the services will begin to raise prices for functionality and features and Spotify is experimenting. We hope they broaden that experiment relative to pricing. As we have said, we think that there’s a lot of runway still, not only in the more mature markets but in emerging markets. And as they launch in new markets, even when they begin with free offerings, it exposes people to more and more music. You mentioned Russia. Well, in Russia, even before the advent of Spotify, there are a number of streamers that we and others have partnered with, and Russia is a nicely growing market. The same is true in South Korea. You mentioned Africa, where we have partnered with Africori, which is one of the largest music streamers and distributors in Africa. So while these markets, by way of economics don’t look overly meaningful at the moment when you compare them to the U.S. or Japan or the U.K., they are growing. People are being exposed to curated music. People are being exposed to some of the world’s greatest artists, both global artists, as well as local artists. And so our view is that while the circumference of the globe is only 25,000 miles with respect to the circumference of music, it’s a lot more. So that was streaming in new markets. What was your third question?

[Jessica Reif Ehrlich:]

Sorry, I was on mute. Well, first of all, on Spotify, I mean, have you seen any change in consumer behavior because of the price increases? And then my second question and my last question was, more about your -- talent is such so important for you and you alluded in the press release, as well as in the call you guys have talked about your release schedule. Is there any color that you can give us or visibility for the rest of the year on new or established artists? And then if I could just follow up on something you just said, Steve, very interesting. Well, it’s true that local artists will drive part of the market in addition to the international artists. What is that developing artist, and you said, you want to be more global as time goes on, less Anglo. How about bringing those local artists to the Anglo markets?

[Steve Cooper:]

Well, all right, so I will do that. And then, Eric, can talk about any change in behavior. So we do that. We cross our artists wherever we can and where we see the potential in both directions. By way of example, one of the most prominent Chinese artists, JJ Lin, in one of his latest albums in China, we featured our artists from the west and vice versa. We look for crossover opportunities whenever we can and we do it because one of the things we have observed. And I think we have mentioned this before, is global hits can come from anywhere and resonate everywhere and we are seeing more and more examples of that every day and we run our Recorded Music business in a way that not only are we global but we are also very local. You will see in the Grammy nominations, Burna Boy, who has put out, I don’t know, I think maybe three or four albums now with Atlantic. He’s the first Nigerian homegrown artist to be nominated for a Grammy and we have successfully worked with him, because he’s such a talented kid, to take him global so to speak. So we do see that, and we do actively work on that. We have taken Anitta from Brazil and blown her up over all of South America, Central America and Mexico, the Iberian Peninsula and other parts of the world. With respect to our schedule, we -- schedule of releases, we typically don’t give a forward look on that. I will just say that when Eric characterized it as a very strong release schedule from both our superstars and our emerging artists, he was spot on. So, Eric, you want to comment on changes…

[Eric Levin:]

Yeah.

[Steve Cooper:]

… relative toward or behavioral changes?

[Eric Levin:]

Yeah. Well, yeah, well, I would say, it’s -- I would be cautious in us characterizing how Spotify’s consumers responded to their family plan rate increases. There are some things that we can say. One is, we think this is a natural progression that there would be experimentation and getting data on how customers respond and then using that data to determine if, when and how to continue a progression of rate increases. I think there’s been some reports today that Spotify has raised the family plan prices in both Canada and France, additional markets. We think that’s very encouraging and indicative of a continued momentum of growing family plan increases to additional markets. So we think there is momentum that is starting to pick up on price increases and we would continue to -- you also asked that how we are incentivizing. Look, we think are our deals incentivize both sides to be supportive of rate increases, they are purely accretive. We are in constant discussions with the DSPs not just when we are having negotiations and talking about what we see and what they see as opportunities, and obviously, price increase would be one vector we are having conversations and we are seeing some positive movement across DSPs in that direction. And we do think as some of the influential, larger DSPs start to have positive feedback on their rate increases that certainly will encourage others to follow suit. And we don’t control that happening. But we certainly are encouraging of it and we are seeing early signs of what we think could be that movement directionally. Thank you.

[Jessica Reif Ehrlich:]

Great. Thank you both.

[Eric Levin:]

Thanks, Jessica.

[Operator:]

Thank you. I’d now like to turn the call back over to Steve Cooper for closing remarks.

[Steve Cooper:]

Well, I want to thank everybody again for taking the time to join us today and I just hope you all stay safe and stay sane. So thanks again and we will talk to you in a few months. Bye now.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.