Good evening, and welcome to Universal Music Group's third quarter earnings call for the period ended September 30, 2023. My name is Nadia, and I'll be your conference operator today. Your speakers for today's call will be Lucian Grainge, Chairman and CEO of Universal Music Group, and Boyd Muir, Executive Vice President, CFO, and President of Operations. They will be joined during Q&A by Michael Nash, Executive Vice President and Chief Digital Officer. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press Star followed by the number One on your telephone keypad. If you would like to withdraw your question, please press Star followed by Two. Please let me remind you that management's commentary and responses to questions on today's call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may vary in a material way. For a discussion of some of the factors that could cause actual results to differ from expected results, please see the Risk Factors section of UMG's 2022 Annual Report, which is available on the investor relations page of UMG's website at universalmusic.com. Management's commentary will also refer to non-IFRS measures on today's call. Reconciliations are available in the press release on the investor relations page of UMG's website. Thank you. Lucian, you may begin your conference. Thank you, and thank you all for joining us today. I'm pleased and proud to report that Universal Music Group's third quarter was our ninth consecutive quarter of strong growth since becoming a standalone public company just over two years ago. Revenue was up 10% in constant currency, and adjusted EBITDA increased by 11%. These results demonstrate that our plan to create and assemble a broad-based and strategically integrated portfolio of businesses is delivering both commercial and creative success. Expanding our revenue streams positions us to navigate the inevitable ebbs and flows in any particular business, as well as to seize opportunities in new and emerging categories. Our approach produces consistent top and bottom line growth and has done so in light of the highly complex macroeconomic environment and the ever-changing shifts in both technology and media consumption. What today's results don't yet demonstrate, but future ones will, is how our leadership on issues such as AI and streaming economics will benefit not only in UMG and our artists, but the entire music ecosystem. So before Boyd presents a more detailed picture of the numbers, I'd like to talk about five key areas of our business strategy we're especially proud of. The artist-centric approach to streaming model innovation we are fostering with the DSPs. The positive steps we're taking, both in utilizing AI and its monetization, as well as in protecting against its dangers. Recent developments in our global diversification plans and the expansion of our best-in-class distribution partnerships, and last, but definitely not least, of the continued remarkable success of our artists. Let me begin with streaming. Back in January, I talked about how the streaming model needed updating to become more artist-centric. I outlined some of the core principles that we would use to guide our work with platforms to strengthen the artist-fan relationship and better reward artists for the fan engagement they drive. I stressed how important it is to address fraud and the oversupply of content that's drowning out the real music and real artists that fans actually want to hear. Last month, after months of collaboration, Deezer announced the launch of the first artist-centric model. This new model honors real artists by better rewarding them for music that attracts and engages fans, and by protecting against bad actors who deprive artists of their compensation. Based on its own in-depth data analysis, Deezer is integrating several major enhancements to its service that will, one, boost streams of music by what they define as professional artists, as well as the songs that fans actively engage with. Two, replace noise, such as non-artist content, and three, implement a much stricter fraud detection system. In the words of one prominent independent label executive: "For labels who invest every year relentlessly in new talent, this has to be good news." But Deezer's important step forward is only the beginning of this critical evolution in streaming. We're determined to bring an artist-centric approach to every DSP. This initiative will achieve, excuse me, many goals. It will support all artists, regardless of the scale at which they're operating and regardless of the stage of their careers. It will enhance artist discovery, and it will also significantly benefit the DSPs themselves by returning them to their core mission of bringing great music to fans, and in the process, increasing subscriber acquisition and retention, as well as, of course, reducing churn, while reducing costs associated with valueless content volume. We'll have more announcements on this front in the near future as we work with other DSP partners. Next, AI. Last quarter, I said we'd soon have more to say about the commercial and creative opportunities that AI presents. I meant what I said. We subsequently announced that YouTube and UMG have agreed to partner in developing a commercially viable AI component within YouTube's music and video ecosystem. As a further expansion of our artist-centric strategy, this historic collaboration underscores our belief that the best way to ensure responsible AI development is through market-led solutions. Specifically, we agreed that YouTube will embrace a set of AI principles that empower human creativity and embrace artists' interests, and a new AI music incubator co-founded alongside UMG artists and songwriters that will play a key role in the development of AI-related musical tools and products. Let me mention just one important aspect of this historic initiative. Unlike past instances, when new technologies were released into the world and the music community was left to figure out how to develop a business model that would protect artists' rights and compensation, here, thanks to our close relationship with YouTube, we're collaborating on opportunities and solutions and placing artists at the forefront. We will have more to say in the near future as our ongoing work with YouTube develops business models and products that further unlock the creative and commercial power of AI. Also, just last week, we announced an alliance with BandLab, the world's largest social music creation platform. The alliance will advance our shared commitment to the ethical use of AI and the protection of artists and songwriters. As our AI strategy progresses, you'll see more companies committed to responsible AI development working with us on solutions that unlock creativity, explore new commercial opportunities for us, and compensate artists appropriately. The third key area we're especially proud of is the accelerating expansion of our global presence. As I discussed last quarter, we're accomplishing this by signing and developing local artists outside of the established music market, providing local labels and entrepreneurs with global promotion, distribution, and a full suite of artist services, and, of course, M&A. That is acquiring local labels, catalog, and artist servicing, artist services businesses. Here's one example of a recent acquisition in the Middle East and North Africa, where the recorded music market grew 24% in 2022. To complement our current service offering and footprint in the MENA region, in August, we announced the acquisition of Chabaka Music, a UAE-based music company. Chabaka has agreements with more than 150 independent artists and local labels and specializes in digital distribution, marketing, publishing, as well as artist servicing. They will become part of UMG's Virgin Music Group, working closely with the local Virgin and UMG teams in MENA and around the world. With Chabaka's unparalleled regional expertise and Virgin Music Group's creative network and global footprint, the group will be uniquely positioned to reach and build the largest possible audiences for talent from the region. Along with our M&A strategy, we're strengthening our management teams in fast-growing markets. Last month, for example, we appointed Tim Xu as Chairman and CEO of Universal Music Greater China, which includes our operations in Mainland China and Hong Kong, as well as Taiwan. A highly respected industry executive, Tim has had three decades of success in breaking Chinese artists and talents across the region, most recently at Taihe Music Group, China's leading independent music company. We've also accelerated our artist signings in China. Two prime examples, Republic Records China has signed Chinese pop icon Hannah Rebecca Jin, and Universal Music Publishing China has signed a global publishing deal with Chinese singer-songwriter Tia Ray, the first and only Chinese singer so far to reach the IFPI's top ten global singles chart. UMG has the world's leading capabilities in global distribution, best-in-class technology, and a flexible infrastructure to allow us to easily expand our distribution partnerships, and that's the fourth area I want to highlight today. Our global distribution business, in particular, our newly announced relationship with BMG. We're delighted that BMG will be moving the distribution of physical formats to UMG, commencing in the second quarter of next year, 2024. This exciting development marks the start of potential future collaborations between the two companies. Fifth and finally, but always foremost, there are our artists, our brilliantly, creatively creative, and enormously popular artists. I'd be remiss if I didn't talk just about a few of the incredible success stories so many UMG artists have all had around the world during the quarter. For example, Olivia Rodrigo's album, GUTS, which debuted at number one in the U.S., U.K., Germany, Australia, Sweden, Norway, Spain. The list just goes on and on, and on. In the U.S., she became the first female artist whose first and second albums debuted at the top of the album chart since Ariana Grande did nine years ago. In the U.K., in its debut week, GUTS outsold the rest of the top 10 albums combined, and is the country's most streamed album of the year so far. In September, Olivia's opening single, Vampire, returned to the number one spot in the U.S. and became her third number one song in Europe. The Korean quintet, NewJeans, scored their first number one on the U.S. Billboard album chart with their second EP, Get Up. Interestingly, roughly 80% of the first-week sales were actually physical CDs. A phenomenal attributable to super fan-focused collectible packaging, with 14 different iterations individualized to members of the group, with branded merchandise, including lyric books, photo books, and cards. On Billboard's Hot Latin Songs chart, Karol G made history as the woman with the most entries since the chart debuted almost 40 years ago. Her fifth studio album landed nine debuts on the chart, giving her a total of 60 chart appearances so far. To top it off, she won five awards at the 2023 Billboard Latin Music Awards, and brilliantly, that included Album of the Year. I'll mention just one more artist success, someone who you may have heard of recently, Taylor Swift. Taylor's Speak Now, her version launched with the year's biggest week in the U.S. for any album. She became the first woman in history to have four albums in the top 10 at the same time. The album hit number one in the U.K., where Taylor became the first artist in 59 years to achieve six, six studio albums in the top 10 simultaneously. In Australia, where the album also hit number one, she had all five of the top five albums in the country. Other number one countries were Belgium, Canada, Ireland, Netherlands, New Zealand, and Spain. On the U.S. singles chart, Taylor became the first artist since The Beatles, to have singles from three separate albums in the top 10 at any time. She is a phenomenon. This level of performance can only really be described as truly astonishing. Astonishing, I suppose, is an understatement when it comes to describing Taylor's breathtaking talent, popularity, and career, and of course, her version of 1989 comes out tomorrow. Continuous worldwide phenomenal artist successes like these, are one reason Universal Music keeps attracting new talent to its roster. New talent is indispensable for our future growth and success. Our relentless leadership in pursuing progress and evolution for the industry, is yet another reason why we've become such a powerful magnet for label and artist partners alike. It's how we keep producing, and we will keep producing remarkable results like those that we're reporting today. Now, before I hand it over to Boyd, I would be remiss if I didn't mention the historic event that occurred earlier this morning. No, I'm not talking just about our earnings. I'm talking about the announcement of our forthcoming release of the last Beatles song ever recorded. The song, titled Now and Then, written and sung by John Lennon and worked on by Paul McCartney, George Harrison, and Ringo, will have its global premiere on November the second. The fact that more than four decades after its original recording, we can use the latest technology to bring this recording to fans everywhere, is truly remarkable and something that we're very proud of. And on that basis, Boyd, I'd like to hand over to you. Thank you. Thank you, Lucian. I'm pleased to be reporting on another quarter of solid revenue and adjusted EBITDA growth at UMG. As usual, all of the growth figures I'll discuss today will be in constant currencies. While I recognize one-time items complicate modeling, they are a reality of our business, and there are a couple that I need to mention regarding this quarter and the prior year. As we had previewed last quarter, the third quarter of 2023 includes an accrual for a catch-up payment from certain DSPs related to the Copyright Royalty Board, Phonorecords III ruling, and music publishing. The accrual is larger than we had estimated when we spoke last quarter, and amounted to EUR 53 million in revenue and EUR 11 million in EBITDA. Note that the cash receipt for this accrual is not expected until the back end of 2024. As disclosed last year, the third quarter of 2022 included a recorded music settlement from a copyright infringement lawsuit with an internet service provider, which was included in other digital, and amounted to EUR 71 million in revenue and EUR 52 million in EBITDA. I will present figures, both including and adjusting for these items in my remarks, and all the details are also laid out in today's press release. UMG's revenue for the quarter of EUR 2.75 billion grew 10%, and adjusted EBITDA of EUR 581 million grew 11%, leading to margin expansion of 0.3 percentage points. However, excluding the one-time items I just mentioned, revenue grew 11% and adjusted EBITDA grew 20%, driving margin expansion of 1.8 percentage points on an underlying basis. I'll come back to this in a moment. Our revenue growth continues to be broad-based, with an expanding array of opportunities ahead of us. This drives our confidence in the outlook for the business as we play an increasingly important role to artists at each stage of their career. In the third quarter, recorded music revenue grew 5%, but underlying growth was actually 9%, excluding last year's legal settlement. Subscription revenue grew 13%, driven primarily by the continued solid growth in the number of subscribers. Subscription revenue benefited from the same price increases in the third quarter that benefited the second quarter, including those from Apple and Amazon. It's worth pointing out that our third quarter did not benefit from the recent Spotify price increase. We expect the fourth quarter to benefit from the Spotify and YouTube Music price increases. As a reminder, each of these services raised prices in certain markets and on certain plans, not across all subscribers. In particular, with regard to YouTube, the price increases were announced for the U.S. to start with, followed by several other markets a few weeks later. But YouTube has a particularly global subscriber base, so the benefit will initially be more limited. In the third quarter, ad-supported streaming had a similar growth rate to Q2, up 5% again. Right now, what we are seeing in our ad-funded streaming revenue is that the recovery is not uniform across all partners, nor all markets. In addition, our ad-supported streaming revenue comes from a mix of both fixed and variable deal structures, so the results in any given quarter are not solely a reflection of trends in the advertising market. We remain cautious on the level of growth in ad-supported streaming in the upcoming quarters. We do, however, continue to see opportunities for improved deal terms and product innovation, driving higher levels of growth in this business over the medium term. Physical revenue grew 20%, driven by strong vinyl sales in both the U.S. and in Europe. Physical revenues in Japan also grew across all formats, including CDs, DVDs, and vinyl. Physical sales came from artists including Taylor Swift, Seventeen, New Jeans, and Olivia Rodrigo, to name a few. License and other revenue declined 7%, as it faced a difficult comparison against a prior year quarter that grew 30%, due to live touring and stage productions, activities where we participate in certain markets. Licensing revenue in itself continued to grow in the quarter. Download and other revenue declined 53%, primarily due to the legal settlement included in last year's figure, as well as the continued format shift away from downloads. Moving on to music publishing. Revenue grew 25% in the quarter, and 11% when excluding the Phonorecords III catch-up accrual. Within music publishing, digital revenue grew 34% and grew 10%, excluding the accrual, driven primarily by the growth of streaming and subscription. Performance revenue grew 22%, reflecting the continued COVID recovery, particularly in Europe and in Asia, and synchronization revenue grew 4%. In merchandising and other, revenue increased 28%, driven primarily by the growth in direct-to-consumer sales. Touring revenue also increased, thanks to higher activity in the U.S. and the U.K., while retail, excuse me, while retail revenues declined. As I mentioned at the start of my remarks, third quarter Adjusted EBITDA grew 11%, but grew 20%, excluding the one-time items in both years. Also excluding these items, Adjusted EBITDA margin improved 1.8 percentage points to 21.1%, compared to 19.3% in the third quarter of 2022. Part of this year-over-year margin improvement is related to an easier comparison. As we discussed on last year's third quarter call, A&R expenses were elevated in the third quarter of 2022 due to timing. While the incremental A&R expense last year was EUR 40 million, it would be inaccurate to consider this as a one-time, as the amount for the nine months and for the year were not unusual. In addition to the easier comparison on A&R expense, on A&R expense, margin expansion was driven by the revenue growth and operating leverage, as well as by cash compensation savings of EUR 21 million related to our equity plan implementation. This was partially offset by revenue mix, as revenues in the third quarter of 2023 were more heavily weighted towards merchandising and physical, which carry a lower EBITDA margin than digital sales. We saw strong growth in line with our expectations across all of our segments, and especially strong growth that exceeded our expectations on our lower margin physical and merchandising businesses. That drove strong EBITDA growth, but limited the amount of margin expansion across the entire business. Even with the mix impact from higher physical and merchandising revenue growth, we expect to meet our guidance for more than one point of adjusted EBITDA margin expansion in 2023. Moving on to share-based compensation expense. The total impact was EUR 103 million in the quarter, compared to EUR 14 million during the third quarter of 2022. We now expect our share-based compensation for 2023 to be just over EUR 550 million, below the EUR 630 million we anticipated when we announced the details of our equity plan earlier this year. About half of these savings are permanent, while the other half are timing-related, with the cost likely coming in 2024. Lastly, we are currently conducting a careful review of our cost base, which we will complete over the coming months, and we will update you, when appropriate, about an anticipated cost savings program to commence in 2024. We remain focused and optimistic as we continue to execute on the growth prospects that lie ahead for UMG. We see enormous opportunity for value creation, both for our artists and for the company, as we advance our Artist-Centric initiatives and work to further capture the value of the engagement being driven by our unparalleled roster of artists and songwriters. Thank you. Lucian, Michael, and I will now take your questions. So operator, please open the line for Q&A. Of course. Thank you. If you would like to ask a question today, please press star followed by one on your telephone keypad. If you choose to retract your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. Please note we will take two questions per person. And our first question goes to Silvia Cuneo of Deutsche Bank. Silvia, please go ahead. Your line is open. Thanks very much for taking my questions. Good evening, everyone. My first question is related to the growth trends, and looking into Q4 in particular, since you mentioned there will be the contribution of more price increases, especially from Spotify and to some extent, YouTube in certain markets. Can you help us think about the potential contribution of these price increases comparing the Q4, at least, versus Q3, if possible? The second question is on the margin. Like you mentioned during the remarks, you are still comfortable with the full year guidance of over 1 percentage point for the full year. In the first nine months, you delivered 95 basis points. Can you please tell us about, you know, the areas of improvement in Q4, probably coming from the price increases drop-through, but just wondering if you could say any more thoughts about this? Thank you. Sure. Thank you. Thank you very much. Look, I mean, just firstly, kind of turning to, you know, to price increases. You know, as I mentioned, you know, a few minutes ago, you know, our Q3 did not include any price increases from Spotify nor from YouTube, and we expect to actually see those price, you know, increases falling into Q4. But I would like to, you know, to point out that, you know, the price increases impact different geographies and different plans in a way that, you know, giving you specificity right now is not really going to be, you know, particularly helpful. I mean, we're encouraged by the price increases. You know, the value-... You know, for the value proposition for, you know, for music is an incredibly, you know, compelling one. So, you know, it's, we're encouraged by the developments that we're actually, you know, seeing with regard to price increases. And clearly, as the platforms are communicating, you know, the level of churn is de minimis, which, you know, which is also very, very encouraging. You know, just turning to your question on margins. You know, our guidance for more than a point of Adjusted EBITDA margin for 2023 still stands. However, I would like to point out, you know, that as we continue to see revenue growth beyond our expectations and guidance, which is what we are seeing, the revenue growth is beyond our expectation and guidance. The revenues that are incremental to our expected growth are actually coming from lower margin areas of our business, for instance, merchandise and physical. In Q3, 75%, three quarters of our revenue beat compared to consensus, came from merchandise and physical. These incremental revenues are not substitutional to our core revenue growth. They are EBITDA accretive, but margin dilutive, but they're business segments that we must pursue. And so, you know, I'm going to encourage you to focus on absolute growth rather than solely focusing on margin improvement. Thank you. Thank you. The next question goes to Lisa Yang of Goldman Sachs. Lisa, please go ahead. Your line is open. Yes, good evening. So two questions as well. Just on the artist-centric model, I think Deezer has implemented it, I think this month in France. Could you maybe share the sort of initial impact you are seeing on the market share in France? And also comment on the discussions you've had with other players. I think you announced a deep data partnership with Spotify. There's been some press reports that, you know, they might also be looking to move to the artist-centric model. So that's the first question. And the second one is on your potential cost-cutting program for next year. I just wondering what's the sort of triggering this sort of review of the cost base? How meaningful this could be? Will the savings be reinvested? Is that also part of the ambition to reach your midterm margin targets of being 20%? Thank you. You want to do- Yeah. Artist-Centric first, and... Lisa, thank you for your questions. Let me tackle the question regarding artist-centric. So it's a little too soon with Deezer having announced that they were rolling out the artist-centric model at the beginning of the month, for us to have any readout from the implementation itself. But as Lucian discussed, we're very encouraged by the approach that's being taken there. The three different buckets that they're going after in terms of rewarding real artists, authentic fan engagement, with the plan to boost qualified artist streams and active engagement artist streams. You know, we see the platform's push to reward real artists and the fan engagement associated with that content being elevated above anonymous content that's being served up by an algorithm, being an excellent approach that embraces the artist-centric core tenet around rewarding real artists, authentic fan engagement. And then the moves that they're taking to remove noise, and to clean up clutter, and to attack fraud, I think are very important complements. And so taken together, we think that this is an excellent example of a model that embraces the principle. So we're looking forward to following the progress of the implementation as they, you know, take on additional, you know, partners, and as they move from France to more broadly roll the model out. The CEO of Deezer, in public remarks, you know, talked about their ambitions to scale their implementation into and through the end of 2024. So I think it will be important to enable the implementation of the model to give us the readout in terms of the results. But with respect to the embrace of the principles around artist-centric, we're very encouraged by what Deezer has done. I think that what you're also hearing is that the DSPs have a shared interest in addressing fraud and the flood of content that adds absolutely no value to fans. Mm-hmm. Yeah, Lisa, on the- Thank you, and the next one is... Oh, sorry, I... Hopefully, I'm still live. But, I mean, Lisa, just to touch base on cost cutting. You know, this is something that we do, you know, from time to time. So, you know, this is a good time for us to, you know, to look at our cost base. You know, I think in particular, you know, we've added, you know, resources and, and to really position us to capture the opportunities that we're seeing in the marketplace. I think really what we do need to look at now is to look at, you know, perhaps those resources that are more focused on, you know, on the legacy business, in order for us to actually ensure that- that we actually do have the right level of resources to execute and benefit from all of the opportunities that you know we see ahead. So, you know, it's just a heads up for now. You know, we'll come back to you when you know we've got something with greater specificity you know a little bit later, a little bit later on. I'd also, I would add to that, that as a management team, we've got decades of experience in executing cost-cutting programs, in the various cycles of the industry, right back to the piracy days and the file-sharing days. And we're seeing a change in the business, which, as Boyd said, in terms of there's not only legacy costs. It's we've always had a program called Where We Cut to Grow. And Cut to Grow is we will cut overheads in order to to grow it elsewhere. And we do have experience in managing the business and managing the teams and the businesses within that make up the group. And we've got a plan. Thank you. And the next question goes to William Packer of Exane. William, please go ahead. Your line is open. Hi there, and many thanks for taking my questions. So, two, please. So firstly, you've been actively communicating your perspectives on AI regulation, and we saw the UMG general counsel spoke before the Senate Judiciary Committee, and I suspect you've been in active dialogue with European and UK legislators and regulators. So could you outline the areas you see as most important in this first stage of generative AI regulation? Is it governments confirming LLM training data needs copyright owner permission and remuneration, or is it carving out AI-created music from copyright? And as a follow-up, how do you think the regulators are responding to your priorities, and when should we expect to hear about new rules in the E.U. and U.S.? Thank you. Thank you for your question, William. So with respect to, you know, our view, on AI and, the role of government, government obviously does have an important role to play. I think first and foremost, effective enforcement of current copyright law is at the top of the agenda. We believe that generally speaking, in most territories, copyright law is fit for purpose with respect to our interests, in terms of AI as it implicates copyrights and the work of our artists. And, you know, I would emphasize, although your question is really kind of focused on the role of government, our core philosophy on AI, we hope, becomes the vantage point from which various governmental oversight is considering the issues. Our perspective is focus on artists, defend their interests, and protect their rights, and from that basis, establish market-led solutions that enable us to establish new commercial opportunities and the development of new tools. You see an example of that approach with what we've announced with YouTube, that Lucian outlined in his remarks. I would note that there are issues with respect to improper exploitation of artist name and likeness, what has been characterized as right of publicity. We do think that some shoring up in terms of law, and especially, you know, current legislation being considered in the U.S. with respect to a federal right of publicity, could be very helpful in addressing the sort of fake artist AI issues that have materialized. Because by and large, more anonymous content that provides very low value to the services is not going to impact market share for the artists that are driving the business model of the platforms. But when that content makes a false association by invoking the name or likeness of the artist in the metadata, confusing consumers, you have a problem. And so that's why we would call out Right of Publicity as an area of important consideration. But again, the top priority is working on effective enforcement of current copyright law. Thank you. The next question goes to Adrien de Saint Hilaire of Bank of America Merrill Lynch. Adrien, please go ahead. Your line is open. Thank you very much. I've got two questions then. So, maybe my interpretation was wrong, Boyd, but it sounded like you said that the price increases made by Spotify or YouTube would not have a particularly helpful impact in Q4, but maybe I heard this wrong. And then, maybe a question for Michael, or Lucian. We've seen a lot of price increases in the video world recently. Do you think the cadence of price increases in the streaming audio world will increase going forward, i.e., we're gonna see perhaps more price increases around a shorter window of time compared to the previous cycle? Adrien, it's Boyd. You know, we are going to see a benefit in Q4. Sorry if I, you know, if I didn't make that clear. All I was really trying to say is that, you know, the impact that we will see in Q4, it's not across the entire subscriber base for both YouTube and Spotify. That. So we will see a positive impact in Q4. Then, Adrien, with respect to your second question, regarding the cadence, it's important, you know, first and foremost to emphasize that pricing is up to the retailers. We don't control retail price, and so those decisions are being made by the DSPs with respect to the question on the recent subscription price changes. We are, of course, encouraged to see these pricing moves. We think that they are a recognition of the incredibly compelling value proposition of streaming subscription. We have previously cited estimates that suggest that, at a cost of $0.10 per hour of premium content consumed, that music subscription is dramatically underpriced with respect to, for example, online video or online gaming or other forms of entertainment. So, you know, we believe these pricing moves are a recognition of the compelling value proposition of music being underpriced. You know, with respect to the question on cadence, we don't currently foresee calendar-driven price increases. We think the price increases are most likely to be based on individual platforms' decisions to optimize customer value, and we see them potentially tied to product offerings in the future. The last point that I would make to your question is, it's encouraging to hear from the DSPs that have increased prices, that they have not experienced any material churn. So I think that that suggests that the moves that have been made have been thoughtful moves and the benefit of those moves is playing out in the marketplace reaction. Thank you. The next question goes to Douglas Creutz of Cowen. Douglas, please, your line is open. Hey, thank you. I saw an article last week that you guys have launched a subscription service, which is a claims-free service, allowing content creators access to some of your catalog of music and sound effects. Can you talk a little bit more about what's the driver there and what kind of opportunity you see with that? Thank you. This is our B2B business. Douglas, thank you for your question. So, yes, we were happy to announce, Universal Music Group's production music company has developed a special offer for creators. So they're enabling, you know, creators to utilize, you know, sync music, you know, for the purposes of the content that they create. I think that is an important and interesting market segment for us to address, and our production music company has been very creative and innovative in looking at market opportunities for their business. So, we appreciate you pointing that out. And, you know, we think that that is, you know, a positive indication of innovation in that area. Thank you. The next question goes to Julien Roch of Barclays. Bernd, please, your headline is open. Hello, this is Julien Roch of Barclays. I would probably mix the code with Bernd. Sorry about that. My first question is coming back on the cost savings program. Boyd and Lucian said that, you know, the philosophy was that you had a lot of resources, but you needed to capture the opportunities, so you wanted to maybe cut the resources on legacy business to be able to grow in the new opportunities. Lucian mentioned cut to grow. So that cost savings program, will it result in net savings and higher margin, or it's just basically cutting the kind of lower growth business to invest into the faster growth business and the net impact is not too much on margin or cost? That's my first question. And then the second question is, I know we don't have any cash flow data on this call, but you spent EUR 95 million on net content investment ex catalog in the first half, and now the Q3 numbers. So could we have some indication of the spend for full year 2023? Thank you. Well, I mean, just to... It's Boyd. I mean, just to deal with your first question, yeah, the cost savings program will lead to an improvement in margins. It will be real, you know, real cost savings. And, you know, the comment that we made about cut to grow, it's just really about how you align the business to be best placed to execute and capture all of the opportunities that we see in front of us. But it will actually lead to real savings. You know, and then, you know, just really on the catalog, we don't actually disclose, you know, that information on Q3, but just by way of background is that, you know, there was very little activity in Q3 to bring to your attention. Thank you. The next question goes to Tom Singlehurst of Citigroup. Tom, please, go ahead, your line is open. Thank you very much for taking the question. Tom here from Citi. Yeah, the first one, you made the point very loud and clear that, you know, some incremental revenue just comes with incremental profit, and we shouldn't obsess about the margin, which makes perfect sense. Just wondering, with the BMG distribution deal kicking in from Q2 next year. I know this is a 2024 comment, but, I mean, should we just steel ourselves for the idea that margins won't move an awful lot next year? Is that, is that something that, you know, it's possible as we see you sort of broaden the array of things that you do, in particular with respect to distribution? That was the first question. And then the second question, you know, some of, some of the peers don't appear to be quite as positive about the Deezer artist-centric model, and I'm just interested in, I suppose, really why that is. You know, it doesn't seem obvious it's something that one should sort of disagree with. But the question is, if there isn't sort of consensus amongst the industry, is that something that can go ahead without all stakeholders, and all your, you know, competitors buying into the same model? Thank you. I just before the team, you provide a little more color. On margin, maybe I'm a little old-fashioned, profit is profit. And we will always pursue businesses with various and varying margin profiles based on their value to the business and also their strategic value. Very often, in an industry like this, where networks are crucial, the relationships with artists, I suppose labels, entrepreneurs, et cetera, evolve over time. Some of the most profitable partnerships we've had today started as low-margin deals in one form or another, whether or not they were distribution deals or ventures, et cetera. And entrepreneurs, labels, artists see the value that UMG bring to their table, and we are extremely positive about how we together, over periods of time, expand those relationships with us across multiple businesses and rights. And it's at that point that the margin grows. So we're fermenting an entrepreneurial culture where long-term network relationships with partners is crucial. And that's how we will always see our business and the things that we do with some of our distributed labels and partners, Disney included. HYBE is another example, where we invest and JV and partner in new opportunities, in new markets, as business opportunities evolve, and it's something that we'll continue to do. Did you want to add anything else, Michael? Yeah, you know, specifically with respect to the receptivity to the Deezer model, to amplify the comments that Lucian made about the virtues of the model, we really see the model benefiting professional artists and their music kind of across the board at the expense of fraud and clutter. We expect, as it receives close examination and careful consideration, that it's gonna receive widespread support from all professional content owners, whether major label or independent. Deezer's made public statements about their expectations to gain support. In fact, they subsequently announced signing up a major French indie, Wagram, earlier this month, and an artist-centric cooperation with SACEM. You know, looking at this just from the standpoint of some of the commentary, I think it's really clear that this model is gonna benefit all artists who are engaging with fans at different scales of audience, at different stages of their careers. The model is artist-centric because it's really supporting the interests of artists and the high integrity, high-value artist-fan relationships that they foster. You know, I think it's important to note that there's been, you know, some commentary about thresholds for rewarding artists. You know, I think that those have been very thoughtfully constructed, but keep in mind that there's also a lot of effort here in terms of decluttering the platform and addressing fraud, and that enables artist discovery on these platforms. I think that that's a little bit of a forgotten consideration with respect to the full benefit for artists. You know, you look at recent statements by key leaders of the independent label community, you know, including PIAS, Beggars, Secretly, and Because, and they indicate growing support for artist-centric approaches to model innovation. We believe that upon close review and careful consideration, this model, because it clearly benefits everyone that's investing in real artist development, is gonna receive widespread industry support. Also, what we've seen, to add to that, is the adoption of Artist-Centric has moved faster than we'd anticipated. And there's a reason for that, and it's simply that it's good for artists, it's good for the platforms, and it's good for fans. You mentioned peer groups. Those peer groups, and I'm I have a reputation for being blunt, so I'll be blunt. Those peer groups who have expressed a concern about Artist-Centric are, unsurprisingly, those whose business model is based on being merchants of garbage. Sorry, I can't really think of another word for content that no one really actually wants to listen to. So if you're committing fraud or flooding the platforms with content that has no, absolutely no engagement with fans, doesn't help churn, doesn't merchandise great music and professional artists, then I suppose you're not gonna be in favor of artist-centric. So if it's an opportunity for us to call them out, then I suppose that's where we are. It's an approach, it's a set of principles, and the idea is that it can be implemented on each platform in a bespoke way, with all sorts of different platforms and DSPs and companies, and improved over time. I've been in this business my entire career, and if you like the Beatles or the Rolling Stones, which are 2 critical releases for us this week, or if you think that Taylor Swift is one of the most significant generational artists for the last 40 or 50 years, or you believe that the performance on Olivia Rodrigo as one of the artists that we've signed recently and delivered worldwide, if you like listening to Eminem, if you believe in Elton John, if you enjoy Queen, then these are professional artists, and they are not vacuum cleaner sounds or rain on a pane of glass, gaming the system. As you may hear, I believe passionately in this, and I believe passionately in what we've been doing, and I believe passionately in anyone, and anyone within a peer group is not in the same business as we are. Thank you. Our final question today goes to Michael Morris of Guggenheim Partners. Michael, please go ahead. Your line is open. Thank you, and good afternoon, and thanks for all the information. Two questions. First, following up on some of these artist-centric comments and an earlier question, there has been press that Spotify is looking to change their royalty model, starting in the first quarter of 2024. It looks on the surface, at least, like an artist-centric or artist-friendly model. Is that something they're doing in collaboration with you? And could you comment on any places that, you know, that proposed change may fall short of what you think the model should look like? And then second, can you provide a little bit more detail on recorded music subscription streaming revenue? I guess my specific question would be: Is your on-demand music revenue growth within that line keeping pace with the overall number? How do you think about that relationship? And of the non-on-demand music partnerships, what are some of the drivers there as we look forward? Is that accelerating? Is it lapping tough comps? How should we think about that? Thank you. Michael, thank you for your questions. So with respect to the first question, on the Spotify press, we can't comment on press speculation, and we're certainly not going to discuss specific terms of our agreements with individual partners. I think that it's important to reflect back on what we noted on our last earnings call, that as part of our recent renewal, we were pleased that Spotify agreed to work on addressing a number of our concerns with the existing royalty model and are engaging to explore solutions. Beyond that, we can note that we're very supportive of their stated focus on advancing platform integrity, and I think we really should leave it at that. You know, then in terms of subscription growth, you know, we're very pleased that we were able to deliver, you know, 13% year-over-year subscription growth in this quarter, without really having the opportunity to realize the most recently announced pricing benefits. You know, we think that that's a strong performance as indication of continuing expansion in the market. Our consumer research suggests that in the developed markets, there's a consideration set of over 100 million in terms of the total addressable market, in established markets, that are, you know, the consideration set that could constitute the next wave of subscription adoption in the developed markets. And then we see in developing markets, a significant increase in the adoption of the subscription, which is very encouraging. This is the first year where there's actually been more new subscriber additions in the developing markets than in the developed markets, and we think it's an indication of the monetization opportunity. And then reflecting back on Lucian's comments about how we're looking to, you know, develop repertoire, some of the M&A moves that we've made in these fast-growing emerging market regions. You know, we're encouraged by what we see. So, I hope that that general outlook addresses that second question. Thank you. That's all the questions that we have time for today. This now concludes today's call. Thank you all for joining. You may now disconnect your lines.