Warner Music CEO Changes Tune About Spotify
Thus far, Warner Music Group CEO Edgar Bronfman Jr. has gone on the record as being against Spotify and others like it because they are "clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed."
In yesterday's earnings call, Bronfman changed his tune, saying that, "We do see Spotify, and services like Spotify, as ever-more meaningful for our results." This is quite the switch.
Bronfman's change of heart comes as a new IFPI report reveals that Spotify is the second single largest source of digital music revenue for the record labels.
Commenting on this development, Spotify CEO Daniel Ek relayed that one of the reasons behind this growth and success has been their partnerships with ISPs.
From Ek's perspective, IPSs are starting to see partnerships with music services as "as a marketing tool and integrate them into their core operations."
In an age where the young and the digital are viewing phone lines and premium TV packages as less necessary, ISPs, which often sell these amenities too, are searching for ways to differentiate their Internet service from competitors.
Suddenly, offering people extra speed in their connection and HBO is no longer enough to appeal to an interestingly wired youth. This is why ISPs are growing interested in music services like Spotify because it increases their appeal.
Such partnerships will allow music services to gain a wider subscriber base and cause consumers to see music subscriptions as just another small fee on their monthly bill – which is on autopay anyway. It's a win-win situation for everyone.
ISPs want in. Time will tell if WMG does too.
You guys need to update this post. The source article in Arctic Startup re Spotify’s contribution to label revenues has been corrected to reflect reality:
“Update 4.20 GMT, February 9th 2011: A few clarifications regarding the article have been made; Spotify is the second largest source of digital music revenue in Europe after iTunes (however, it is questionable that there are larger single sources of revenue comparable to iTunes and Spotify). Secondly, Spotify is the largest digital music retailer in Sweden and Norway.”
Thanks for the tip. I've updated.
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