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
    Alan Gerow (profile), 10 Feb 2010 @ 3:38pm

    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."

    It seems to me that you're an old timer who believes the BS the recording industry has spoon fed you. They don't compensate the artists. The artists get an advance, and the rest of the recording sales goes to paying off that advance. The record companies make sure their accounting makes it so that the advance is never paid off and the artists never make royalties off of the recordings. It's the CEOs of the record companies that get compensated for the artists' hearts & souls.

    Artists that make money making music make the lion's share of their money off of touring and merchandising. This has been the case for decades and isn't changing any time soon (in fact, one could easily argue that touring & live performances have been the only way most musicians have ever made a sustainable living in all of human existence ... this recorded music thing is a fad of the latter half of the 20th century). The only people who are hurt by "this enormously selfish generation" are the enormously selfish CEOs who feel they are entitled to money from everyone for no reason what-so-ever than because they are.

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