WMG CEO Robert Kyncl Says ‘Building’ an Indie Distributor ‘Might Be Better’ Than Buying One

Warner Music Group CEO Robert Kyncl says the major is willing to forgo buying an indie distributor if it can achieve the same long-term gains by building in-house what would likely cost hundreds of millions to acquire.

“I’ve looked at all distribution companies over the last 18 months … and what I can tell you is that we’re not willing to grow this at all costs,” Kyncl said. “We have an incredible technology team … and they have been building features already for a year and a half. This way you get to the same outcome much more efficiently.”

The Warner Music Group (WMG) head made the comments during a wide-ranging conversation at a Morgan Stanley conference last week that touched on tech improvements and the motivations for WMG’s management overhaul last September, as well as the company’s deal with Spotify and Kyncl’s conviction that there is still room to raise streaming subscriptions prices in the U.S. and elsewhere.

Kyncl, whose comments on mergers and acquisitions have been under a microscope since WMG abandoned a bid to acquire Believe last April, admitted that building technology in-house will take longer and doesn’t come with the immediate market share gains that accompany an acquisition.

The new hires and organizational changes Kyncl oversaw in the past two years are aimed at increasing WMG’s market share, he says. Under Ariel Bardem, who joined WMG in February 2023 as president of technology, the company has been working to fix the “boring things” in its core tech and digital supply chain to “ensure the stability of systems and [make] sure they could handle much higher volume for the future” without adding staff. It has also worked on WMG’s artist-focused tech services, like its client portal and the pipelines that can accelerate royalty payments.

Several rounds of staff cuts and a full-blown corporate reorganization removed multiple layers of management, giving Kyncl more direct contact with leaders like Alejandro Duque, president of Warner Music Latin America, and Elliot Grainge, the new CEO of Atlantic Music Group.

The company reported in February that these moves freed up money for investments — such as the $450 million acquisition of Tempo Music‘s catalog — and helped Atlantic claim a half-a-percentage point market share expansion.

Another of Kyncl’s hires, Carletta Higginson — the former Google executive who was hired as chief digital officer — was key to WMG’s direct deal with Spotify, which Kyncl says included assurances of more frequent price increases that distributors can profit from.

“In an industry where we are all tied at the hip together, it is important to approach it collaboratively and build for the future together,” he said. “We have a healthy set-up together with incentive to grow.”

Saying that WMG’s market share has improved since he joined the company, Kyncl called out promising upcoming releases from Ed Sheeran and Lizzo that are scheduled to come out later this year. Because more than half of WMG’s revenue comes from outside the U.S., Kyncl said the company’s global market share, particularly in certain countries, is as important as its U.S. numbers.

For the third straight year at the annual Morgan Stanley event, Kyncl sounded an optimistic note on streaming subscription prices thanks to “the incredible resilience of music.”

“I think there’s quite strong evidence that there’s a lot of room to grow on pricing, especially in … mature markets,” he said.