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Streaming music has become Warner Music's biggest business

But it would like more from YouTube.

Taylor Hill/FilmMagic for YouTube
Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Another milestone in the music industry’s shift to streaming: Revenue from the streaming business has become Warner Music Group’s biggest business.

The company announced that money from services like Spotify and Apple Music was the single biggest source of recorded music revenue in the first quarter of the year, surpassing both physical sales and sales of digital downloads. That’s the first time any of the big music labels has hit that inflection point.

It also shouldn’t be a surprise, since Warner announced a year ago that streaming revenue had surpassed download for the first time. And if you want the glass-half-empty version of the statistic, you could argue that it means download sales and CD sales continue to fall.

Still, even a music pessimist would have to note that the streaming boom is now bigger than the rest of the industry’s decline. Warner’s streaming music revenue increased $72 million for the quarter — more than half of which came from sales outside the U.S. — while downloads declined by $17 million and physical revenue dropped by $6 million. Warner’s recorded music sales increased by 10 percent overall, and the company’s total revenue also increased 10 percent.

Warner, like the rest of the music industry, would like more than that. And Warner, like the rest of the music industry, is now hammering Google and YouTube to cough up more money — a campaign that coincides with the big labels’ renegotiations with the world’s biggest video service.

"It is imperative that we ensure a fairer correlation between the massive consumption of music via services built around user-uploaded content and the value generated for artists, songwriters and rights holders," CEO Stephen Cooper said during Warner’s earnings call this morning. "We have made our views known through our submissions to the European Commission and the U.S. Copyright Office."

Which isn’t to say that Warner, or the rest of the music business, really wants to walk away from YouTube — it’s simply too big to ignore. Case in point: Last night at YouTube’s big "brandcast" event to woo advertisers, YouTube spent several minutes talking about the importance of music to its users, and then brought out an up-and-coming performer who testified that they had gotten a big boost from the service.

The act? Andra Day. Her label? Warner Music.

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