And we have a lot of copyright. Universal has a lot of copyright. Sony has a lot of copyright, and many others, Disney, etc. So it’s really important to have clear rules of the road, not only for the first-party content that they’re creating with their tools, but even more importantly, for content that’s created with other tools that end up there. And I think that’s generally the forgotten thing. That is really important, so it has to govern all of that. So that is why there are squarely all of them in my site. And this is something that we have been working on. I can’t share any details on this, but it is a very top area of priority. This goes into my second bucket on increase in the value of music. Like this is because copyright has to be respected.
The outputs and training on our copyright has to be respected. And eventually the laws will reflect it, but the platforms will run ahead of the laws and it’s important that they do the right thing and I think they will. We just need to make sure it’s also aligned across all of them, not just one and not the others because then we’ll just advantage them. So I can — there’s disputes between, let’s say, Universal and TikTok over that, because these are fast-evolving technologies and the ground is shifting.
Rich Greenfield: Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Batya Levi with UBS. You may proceed.
Batya Levi: Great, thank you. A follow-up on the streaming revenue growth side, can you talk about if you have already started to see any change in trends since Spotify implemented the policy change in the beginning of the year. And on ad-supported, how should we think about revenue growth going forward? Are there any changes in the royalty structure that could impact that trend? Thank you.
Bryan Castellani: Batya, thanks. It’s Brian. I think you’re referring to Spotify’s reallocation of roughly the $200 million over five years. Too soon to say. I think that’s also going to take some time to wrap up. So we have not seen an impact with that yet. On the ad-supported side, again, you saw we broke it out versus subscription streaming, and it includes the emerging platforms like TikTok. And we continue to see favorable stabilization there in the core ad-supporter piece, excluding the emerging platforms. And so that does tie more closely to the overall marketplace where coming off I think easy weaker comps year-over-year, so we’re seeing continued growth of stabilization there as well.
Batya Levi: Got it. Thank you. one more follow-up if I may. On the pacing of margin expansion through the year, how should we think about that this year as you approach the 100-bibs expansion target? Thank you.
Bryan Castellani: As we had called out earlier in last quarter, our back half, just given the release slate, stronger release slate, we will see our margin expansion tick up through the course of the year in Q3 and Q4.
Batya Levi: Okay. Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Sebastiano Petti with JP Morgan. You may proceed.
Sebastiano Petti: Hi, thanks for taking the question. I think Robert, just stepping back for a second, high level multi-year, I guess your thoughts on a multi-year basis, thinking about some of the initiatives you’re driving. I think you talked about catalog again today seems to be a priority for you. Some of the changes or the approach to distribution for independence seems like a longer term kind of priority for you as well. How long does that take to manifest itself perhaps in the recorded music streaming metrics? Maybe just how you’re thinking about the pacing of that, is there additional implementation or changes from an investment perspective that need to go into that? And then also again, Robert, another one I guess, the hunt and harvest, how are you thinking about the timeline perhaps of maybe some of the segmentation changes perhaps that may occur at the DSP level?
Is that going to be bifurcated to some extent between developed markets, emerging markets, and maybe just how you’re thinking about that evolving over time. Thank you.
Robert Kyncl: Perfect. Thank you. So on some of the initiatives, Yes, there are quite a few. They’re in flight already. So this is not like something that we’re just planning. Like one of the reasons that we decided to step on the pedal and accelerate is because we already started to work on our growth levers months back, and a clear vision on what we need to accomplish. And our teams have started to gel, and this goes actually back to one of the earlier questions to how the team is gelling well together. We have work stream, growth streams across technology and the business and we’re focused on those and some of them I think will start yielding results this year already. But think of all of this as continued incremental improvements.
That is my goal. That every year from all of these initiatives, we just drive incremental improvement and just stay and forever. But you’ll start seeing that this year. And I would say on the distribution front, as you discussed, obviously, first we’re focused on efficiencies with our own supply chain. But then, really, distribution is how we externalize that to third parties. So it’s the right sequencing of that. And I would say you’ll start seeing the results of that over the course of, I don’t know, next one to two years. Obviously, on the supply chain internally, that will start to be much faster. And then on the distribution side, it will be on the time frame that I just mentioned. On the DSP hunt and harvest process, so changes like this, if you do them responsibly, usually take nine months, a year to figure out together with partners.
And so this is not something where you go and strong arm somebody. You have to work together collaboratively, do lots of analysis, figure out what the business plan is, and that is the right approach. And we’ve done that several times when I was on the other side. So that is how I think about it. And you have to do it with multiple partners, you have to coordinate. So that is the responsible way to approach it. And I think when you think about the different markets, it is very obvious that dual approach makes sense or discerning approach based on the properties of the market. And I’m glad that some of our partners are already seeing it that way as well, because it is in our mutual interest. So we’re just going to do it right and we’re going to do it together, and be very methodical and analytical about it together.
Sebastiano Petti: Thank you.
Operator: Thank you. One moment for questions. Our next question comes from Kutgun Maral with Evercore ISI. You may proceed.
Kutgun Maral: Great. Good morning, and thanks for taking the question. I just wanted to follow up on the outlook for recorded music ad-supported trends. I think growth accelerated from low single digits two quarters ago to 7% last quarter to now 10%. So clearly encouraging trends. Bryan, you just talked about some continued stabilization in your answer to Batya’s question regarding core ad trends. Can we see that improving further given some of your key partners like YouTube are seeing fairly notable improving trends. And on the emerging side, can we still expect to see some benefits from renewals with those partners later this year? Thank you.
Bryan Castellani: Thanks, Kutgun, for the question. On the renewals, we don’t necessarily comment on our negotiations with partners. And it’s a promising growing platform with the emerging partners, and we’ll continue to work with them collaboratively to grow the space. On the ad-supported, again, there, YouTube, Spotify continuing to see favorable trends there in core ad supported. And we would expect that to flow through over time. It does take time and I think we’re all seeing a stabilization there, although choppy in places across the ad marketplace, but that stabilization we continue to see and based on their results we would look to see that coming in future quarters as well. Thanks for the question.
Kutgun Maral: Thank you.
Operator: Thank you. I would now like to turn the call back over to Robert Kyncl for any closing remarks.
Robert Kyncl: All right. Thank you. Well, what I’d like to say is that, being a year on the job, I feel we’re in a very strong position. It’s incredible to see the amount of work that we’ve done preparing ourselves for it. We have a refreshed team. We know what we need to do. We’re confident to put it out there publicly and we’re going after it. And all of this is truly underpinned by having the right leadership team that gels together really well and amazing teams that we’ve been in investing into all around or delivering results seeing us having success on the charts with great talent that we signed just a few years ago. It’s incredible. So I’m very confident about our continued performance and I have great belief in the team that’s here with me, so thank you very much, and we’ll talk to you in the quarter.
Operator: Thank you. Thank you for your participation. You may now disconnect.
