Warner Music - confused messages on streaming services
Interpreting what is said by chief executives once comments have been cropped and chopped by the media is always difficult, so one day we get headlines such as "Warner retreats from free music streaming", followed by Warner "won't pull out of free music streaming" the following day.
"Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed. "The 'get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price' strategy is not the kind of approach to business that we will be supporting in the future."Warner Music’s chief executive, Edgar Bronfman Jr
The reality appears that it is linked to contract negotiations for launching Spotify in the US with the UK model of an advertising based free service, and a premier subscription ad-free service. The £9.99 service in the UK effectively gives you access to a massive music catalogue, without being reliant on the playlists that result in radio stations playing the same thirty to forty tracks all day, all week.
It is thought that less than 10% of the Spotify audience subscribes to the premium package, and it may well be the case that advertising income has suffered from the economic downturn just as it has affected many other media outlets. To give some idea of the impact of Spotify though, for the Universal Music Group International the streaming service was the fourth largest generator of revenue from digital sources in 2009.
To have what seem conflicting points put forward by significant players in the music industry does not bode well for their collective success in a digital economy. While broadband can be said to have been highly disruptive, the music industry has had ten years or so to adapt. Perhaps what we are seeing is actually a battle of the establishment against new overwhelming forces, not unlike the original rise of youth oriented radio in the 1960's. Todays file sharing systems can in some ways be compared to the old pirate radio stations of old - perhaps nothing changes.