Bryan Castellani: Ben, it’s Bryan. Nice to talk to you. I just want to comment on the streaming growth and loop back to my remarks where Q4 over Q4, we had a really strong Q4 ’22 and had subscription streaming growth there of 13%. And I think we were 400, 500 basis points above some of our competitors. So that comparison may be muted the quarter a little bit, and we’re set up as Robert said, with the second half momentum that we continued and a stronger release slate in ’24, particularly in the second half. And so, we feel good about that. And just a reminder on the price increases, that there’s a lot that goes into those and those take time to roll through the industry. There’s — from announcement to implementation, geography, product mix, so there’s a lot there as it works through our numbers, but we’re set up well for ’24. Thanks for the question.
Operator: Our next question comes from the line of Sebastiano Petti with JPMorgan. Please go ahead.
Sebastiano Petti: Bryan, welcome aboard. Eric, congratulations again on your retirement. Just wanted to ask on the — Bryan, if you could clarify the margin expansion target for the year. Is that 100 basis points on a reported basis? Or is that ex-BMG? And additionally, just help us think about the phasing. I think you said most of that is back-half weighted, but you do also have a pretty substantial licensing coming through in the first half? So just trying to better understand that. And then a question for Robert. Robert, can you tell us about the AI feature you announced this morning with YouTube and more generally, how you’re thinking about AI impacting the industry seems to have been — become less of a fear than perhaps a couple of quarters ago?
Robert Kyncl: Sounds good. Bryan, why don’t you?
Bryan Castellani: Yes. Sebastiano, thanks. On the margin expansion, as I said in my remarks, that 100 basis points a year target remains for us, and we had a strong over-delivery on an organic basis of a couple of hundred plus basis points in ’23. And so that is an organic target ex-BMG for us and that will, particularly as we work through the year, it will be gradual as we work through and get the benefit, I think, of many releases in the second half. And that margin would also be excluding the catalog license sale in Q1. We continue to challenge ourselves in that regard, and we feel good about it as the team continues to be, I think, really active and vigilant cost managers and disciplined on the financial front. So we continue to keep focused on that target.
Robert Kyncl: Let me take the second part of the question on the beta that was announced this morning with YouTube, the AI beta. So first, I’d like to actually point out to the significance of this, which is imagine in early 2000s, if the file sharing companies came to the music industry and said, would you like to experiment with this new tool that we built and see how it impacts the industry and how we can work together. It would have been incredible. Obviously, that didn’t happen. So this is the first time that a large platform at a massive scale, that has new tools at his disposal is proactively reaching out to its partners to test and learn. And I just want to underscore the significance of this kind of engagement and the sort of the orderly fashion in which this is happening.
And I really applaud YouTube and DeepMind all of Google and our counterparts in the industry for participating in this because this is the right way to engage this. Whenever I say responsible engagement with our partners, this is precisely what I mean. And so we’re excited about it. We’re excited to learn from it. And together, we then develop a great blueprint for how things should work, but develop it based on learnings. More broadly, the way I think about our engagement on AI and what we practice is along the following lines. We have three constituents. One, which is degenerative AI engines, right? So whether it’s DeepMind, Anthropic, Lambda, et cetera. And there, that’s — obviously, that’s where it begins. And there, our efforts in the music industry are focused on making sure that they’re licensing content for training, they’re keeping records of inputs so that provenance can be tracked and then there’s water marketing of the content.
The second group is the platforms where most of the content, irrespective of where it will be created and by which tools will end up because people who are creating will want views or streams or lots of user engagement. And with so YouTube, TikTok, Instagram, et cetera, obviously those are the platforms Spotify. We’re focused on three things, which is control, attribution and monetization. And all of those wrapped in choice for artists, artist and song writers making sure that they have a choice. And we have a blueprint from all of our work on user-generated content over the past 15 years or so, which created a multibillion-dollar industry on an annual basis for the music industry. So, we just need to now write the fine print for the AIH together with them.
And then the third set of constituents is government. And over there, we are both through our trade organizations as well as ourselves working hard to make sure that regulation around AI respects the creative industries, music industry, specifically from our standpoint that licensing for training is required and also that name image likeness and voice is afforded the same protection as copyright. And I, myself, I personally have spent time over the last month with leading politicians on these issues and regulators in London, Brussels, Tokyo and a few others in D.C. and a few other cities around the world. So, lots of effort underway, but I’m really excited and positive about the YouTube beta.
