updated 12:25 pm EST, Wed February 10, 2010
Warner CEO rejects streaming without pay
Warner Music Group chief Edgar Bronfman has cautioned that his label is likely to avoid free streaming music services. He expects to only offer music through paid services and says that free streaming services are "not net positive." He stopped short of saying Warner would quit existing services like Spotify or of flatly rejecting future free deals.
The move casts doubt on the fate of very popular free services like Last.fm, Pandora and Spotify, all of whom stream songs for free in return either for ads or content deals. While Spotify in particular has been successful and for now has the support of all four major international labels, it generates less income than either paid streams like Spotify Premium, per-track purchasing like iTunes, or download subscription services like Microsoft's Zune Pass.
Bronfman is also convinced that subscriptions will potentially be much more popular than pay-per-track and imagines attracting "hundreds of millions if not billions of people" who either buy music only occasionally or don't buy it at all. Subscriptions often cost as much or less than a full album, at $10 to $15 per month, but as 'guaranteed' revenue earns more for the label than occasional permanent copies.
"The number of potential subscribers dwarfs the number of people who are actually purchasing music on iTunes," he claims.
Paid subscriptions have previously been considered failures relative to permanent downloads and create an uphill struggle for Warner. Despite Spotify's popularity, only about 250,000 users or 5 percent of the entire base is actually willing to pay for content. Nokia's Comes With Music had just over 107,000 users in its first year of service, and RealNetworks had had such little success with its nine years old Rhapsody service that it has split Rhapsody off to cut its losses.
Some of the troubles stem from copy protection that prevents the subscription from transferring to more popular devices like the iPod as well as a lack of permanent downloads that won't disappear when the subscription ends.