Warner Music Remains Optimistic on Streaming Music, as Long as It's Paid

warner_music_logoAmid the explosion in popularity of streaming music services, Warner Music Group continues to support the concept, as long as subscribers are paying for the music to which they are listening, reports Re/code. Warner's CEO Stephen Cooper spoke about the company's growing interest in streaming music during the company's latest earnings conference call which was held last week.

Streaming music is increasingly important to Warner, with revenue from online music up 74 percent year over year. In the same period, revenue from downloads plummeted 12 percent, echoing a similar downward trend also seen by Apple's iTunes music download service.

To offset the loss from downloads, Warner currently accepts the freemium model of ad-supported streaming music, but only as a means to convert users to paying subscribers. Paid subscriptions and not freemium plans are the future of the industry, states Cooper.

In our view, right now, enabling meaningful global growth in the number of paying subscribers is the best option for artists, for songwriters, for copyright owners and for the services themselves. Subscription streaming is not only a fantastic offering for music fans, it will propel the long-term health of the music industry. We look forward to continuing to work closely with our partners to turbo-charge the adoption rate for subscription streaming.

Warner's emphasis on paying subscribers may not bode well for Apple's reported plan of slashing monthly costs for its Beats Music service. The Cupertino company is rumored to be pushing music labels to cut current subscription prices in half to $5 per month as it negotiates the terms for its recently acquired Beats Music streaming service. Apple argues that lowering the monthly cost will encourage significantly more users to sign up for the paid service, but labels are obviously considering whether those gains will outweigh the lower per-user income that comes with the cheaper pricing.

Along with a goal of lowering consumer pricing, Apple is also said to be working on an early 2015 refresh for the Beats service, likely integrating it into the iTunes brand. With iTunes Radio and Beats Music, Apple offers both ad-supported and paid streaming service, although the two are not currently integrated. iTunes Radio is currently tied to Apple's traditional download offerings, offering easy access for users to purchase individual tracks they hear on iTunes Radio. Even so, iTunes Radio has seen a tepid reception and international expansion has been extremely slow with the service available only in the United States and Australia.

Top Rated Comments

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74 months ago
Of course the labels want us to rent-to-play. That has a potentially endless revenue tail tied to it.

Here's the problem: until we got to the ripping stage, there was a regular re-buy model. Vinyl & Cassettes wore out. CDs solved much of the problem of wearing out and ripping from CDs meant you had a pristine copy of your music for up to forever. Music ripped from CDs I bought way back in the 1980s still sound exactly as good as they sounded when played the first time.

Then you have the generational problem. Kiddies grow up and leave the nest. They might like some of their parent's music. In the past, it was either take some of it with them or buy new copies of the same music. Digital copies meant the music could both go and stay- no obvious need to buy anew.

Then you have the singles problem. The music industry originally revolved around the single. But there was a golden period where one just about had to buy a whole CD to get the 1-2 good songs they actually wanted. iTunes and similar brought back the ability to buy just the good songs.

Then you have the used market problem. Used CDs that are playable will play the music as good as new CDs. So one could either lay out the $XX for a new CD or maybe 10%-20% of the new price for a used copy. End result is exactly the same. However, reselling a CD doesn't show as new revenue for the Music Studios.

Basically, digital (CD's) ended much of the natural push to re-buy. And once you have enough favorites in your own library of owned music, you can shuffle to keep the ears pretty stimulated with favorites.

Renting is usually spun in support for new music discovery but I suspect the ability to play 90 seconds of any song in iTunes, availability of music videos, classic (free) radio, online (free) radio, VH1 & MTV, etc offers much of that same benefit without the subscription fee. The problem may not be that people don't want to buy (or re-buy) new music (that will show as music studio revenues); the problem is probably that either the market has accumulated much of the music it wants and/or it has a multitude of cheaper ways to get new music it doesn't own vs. buying a new CD or a new digital download.

In my own experience, when I discover a new song I'd like to have, I check digital sources like iTunes (where it will usually be $1.29). Then, I'll check used CD prices and find that I can get that song plus other "best of" in collections like the "Now that what I call music" or similar or in "greatest hits" anthology (along with a number of other good songs) for close to that or maybe a few dollars more. Unless I spend the $1.29 or buy a brand new CD, the studio gets no new revenue even though I end up with the same net result. So they gripe about declining music sales but music still sells- just not in ways that show in their revenues.

Personally, I just don't see streaming as the salvation. If it's ad-driven, there's free radio that is ad driven (not $10/month and not $5/month). Instead, I think iTunes and similar largely got it right with the single purchase model. The problem is that now a lot of music buyers probably have a lot of the music they want to own. It will be pristine forever so they won't wear out that music by enjoying it.

If the studios want to grow revenues, what is needed is a lot of brand new music that the masses deem "must have". With somewhat rare exception, I still find myself favoring "oldies" over modern music. Give me some new music that sounds as good as the old stuff and I'm interested. Otherwise, I already have lots of great music synched to my iDevices: shuffle play, no commercials, $0/month.
Score: 17 Votes (Like | Disagree)
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74 months ago
I will never support Spotify with my money. They claim they give 70% of revenue back to artists/songwriters/musicians, but this is just marketing propaganda to make you feel good.

http://thetrichordist.com/2014/11/07/but-spotify-is-paying-70-of-gross-to-artists-isnt-that-fair-no-and-heres-why/

For big artists, they don't care (mostly, yet some have taken their music entirely off streaming playoffs, which I totally support). They earn millions with tours, album sales and merchandise. However, not everyone is Taylor Swift or Beyoncé. The biggest indie stream was paid 3k from Spotify. That's nothing!

If you want to support artists, especially indie or lesser known ones, buy their music and go to their shows. Don't stream it from Spotify. It's not a sustainable business model for anyone in the music industry that hasn't a big label behind them.
Score: 6 Votes (Like | Disagree)
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74 months ago
I've never understood why people would pay to stream music. Just put your music collection in iTunes and synch to your iPhone or Google Music on Android. May be a little time consuming, but it's free and you get to listen to what you actually want to hear.
Score: 6 Votes (Like | Disagree)
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74 months ago
I'd rather give my money to the artists directly than support greedy music labels on the way. Go **** yourselves Warner Music.
Score: 5 Votes (Like | Disagree)
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74 months ago
Personally, I like to own my own stuff and still purchase and download. My wife goes back and forth between Spotify and my music library, but hates having to wade through my 14,000 songs.

I think that streaming could work if --
1. Better options for selecting music; I still find that it plays a lot of junk for me.
2. Better options for listening when not connected to Wi-Fi.
3. Reasonable prices.
4. Protects the artist - if they don't make money, they can't create the product we want to hear.

None of the options out there seems to do this right now.
Score: 4 Votes (Like | Disagree)
Avatar
74 months ago
Album sales mostly benefit the labels. Musicians make most of their money from touring and merchandise sales.

So of course a big label like Warner wants to promote a subscription model. They are going to make more money that way then with free or freemium models.

I try to support smaller artists and go to their shows and buy merchandise and CDs there. Though then again, how much of the money you pay to get in actually goes to the artist, and not to the venue. You know the ticket broker is getting paid, they always list their fee separately. But $4+ for one ticket is just outrageous when it is all done electronically and you print your own ticket at home.

Thankfully the internet and sites that promote indie or unsigned artists exist. And any band or person can create their own site and distribute their own music. Cut the labels completely out of the equation (or at least minimize the amount of money they take from the artists).
Score: 2 Votes (Like | Disagree)

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