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
    Paul (profile), 10 Feb 2010 @ 1:59pm

    From the article, "New media has to give the consumer what they want and the consumer is in a world where they want things right here, right now - and if you don't give it to them, they'll steal it."

    What a stupid way to put it. More accurately, there isn't much of a barrier between what a consumer demands and what a consumer can have. Far and away, most people will pay a reasonable fee for the option to simply have access to content, be it music, movies, books, news, whatever.

    Increasingly, we as consumers know we can easily access all of these content sources on a host of platforms. Like mobile phones, game consoles, laptops, touch pads (assuming that the iPad actually sells, and gets some competition), etc. We hardly have to do anything to get the features we want. We can rip DVDs to get content into our iPods; we can record streamed music to put it into our MP3 players; We can print online books into PDF files. We can OCR scanned books to make them searchable.

    If I can't get content in the form or mode that I want, I can legally buy the content, legally buy the computer, legally download the software, and (it seems) "steal" it from its legal form into the illegal form I want.

    Time Warner is betting that they can put up a thread between the legal sources of their content, and nobody is going to walk walk through that thread to get that same content in the from they wanted in the first place.

    We are not far from having Terabytes of storage in our mobile phones. Streaming is really only a solution that will attract customers as content providers are willing to make it better and easier than forcing customers into putting music themselves onto their mobile device. But train the market in that direction, and they will get good at it.

    I am 98% converted to podcasts. Content is available and easy and legal without labels. Others I know are in gray areas, moving legal content perhaps against contracts of service to devices where they want it. And I am sure there are plenty of people that simply download content as they see fit.

    This is the world as it is.

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