Warner Music Shoots Self In Head; Says No More Free Streaming

from the you-can't-be-serious dept

A few years back, it seemed like Warner Music actually had a better handle on where the music industry was heading than its 3 major label rivals. In the last two years, however, it seems like WMG has consistently gone further and further in the opposite direction. It may have hit a new low today with the announcement that it will pull out of all free streaming music licensing offers. Yes, Warner Music just told the one thing that was effectively competing with unauthorized downloads to shove off. Brilliant.
"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."
And thus, WMG will go out of business that much more quickly. That is the model that the market is moving to, and Bronfman and WMG appear to have decided to ignore what the market wants, to cover their eyes, stick fingers in their ears and go down with a ship that could easily be righted. Incredible.

Now, Warner may be a bit gun-shy after its investment in iMeem (a free online music streaming service) became a total disaster, but what Warner doesn't seem to realize is that a big part of why it failed was the ridiculous demands Warner put on iMeem in terms of how much it demanded in payment per stream. The problem is that WMG has totally unrealistic expectations of how much money should be paid per stream, and that's because the company's top execs still don't seem to handle basic economic modeling particularly well. And thus, the company will fail.

You don't compete with "free" by taking your ball and going home. You don't compete with "free" by pretending that old artificial scarcities are coming back after the wall has been broken down. You don't compete with "free" by suing customers. You don't compete with "free" by shunning those who have business models that work. You compete with free by offering a better product and a better business model. WMG is choosing to go in the other direction. Best of luck to them...

Filed Under: business models, edgar bronfman jr., free, licensing, music, strategy, streaming music
Companies: imeem, last.fm, spotify, warner music group, we7


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  1. icon
    Kelledin (profile), 11 Feb 2010 @ 5:24pm

    Re: Streaming and Warner...

    It seems to me that this enormously selfish generation does not understand that the labels compensate the artists that pour their hearts and souls into a production. Apparently, they believe that EVERYTHING should be free.

    Major corps like WMG are in this business for their own enrichment, not for the sake of the artists. In fact, they routinely end up screwing the artists they're supposed to be supporting. Artists just about sign away their souls to major record labels, then historically end up getting a piddling fraction of a dollar every time a consumer spends $10-20 on one of "their" CDs. Considering how the labels treat the artists that depend on them, claiming this play is all about "compensating the artist" is nothing more than a sad, hollow joke.

    The labels are whining because they spent a decade riding the wave of of vinyl-to-CD conversion, using a few good tracks to sell bundles of garbage, and growing fat off the profits. They got left with an entitlement complex even after the bubble burst. Now they feel like they automatically deserve some minimum profit margins that are neither justifiable (given the quality of their product) nor practically sustainable (given the easy availability of pirated music).

    Oh, and advertising revenu? Do you really think that sooner or later the advertisers are going to catch on a realize that we mostly ignor internet ads, completely.

    Funny...how many billions has Google raked in, solely in ad revenue? And how many years have they kept that up?


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