Warner Music Group, one of the big four major record labels, announced this past week that it will no longer be licensing its music to free streaming sites. According to the brilliant minds at WMG these streaming sites are “clearly not positive for the music industry” to quote a BBC interview with CEO Edgar Bronfman Jr. This is quite simply an absurd reactionary position for a major music label to hold in the new era of music.
Ever since the advent of Napster and even more so since the growth of legal digital music sites the face of the music industry has been changing. Gone are the days that bands needed record labels to get anywhere, the only way to purchase music was in album form, and the only way to find new music was the radio. Its been proven that bands can use the internet to gain enough fans to become chart-toppers. Digital stores allow consumers to pick and choose the songs they buy (encouraging artists to make each song that much better!) And its been shown that the internet is a great place for fans to find new music!
In order to find new music fans need to listen to it. In order to listen to it they have to play it. Why would they pay for music they’ve never heard?
It would appear that WMG does not understand this concept. Instead they blame these free streaming services for declining revenue. They apparently have yet to realize that the age of printing money in the form of CDs is over. The digital era will simply not be as absurdly profitable as the last. Get over it. The goal has changed. The way to earn as much money as possible these days is to make contact with fans and to encourage them to explore as much new music as possible. Something these sites that WMG is kneecapping do very very well! I’ve found more bands through Pandora than any other method and thats including a lot of very music oriented friends! It would seem as though I shall no longer be discovering WMG bands if they continue with this.
One of WMG’s problems with these streaming sites is that they don’t pay enough to make them worth the label’s while. Ars Technica has a write up on the situation wherin they make the great point that the radio is a free streaming source, that doesn’t pay royalties… So apparently the money being paid to WMG from streaming sites like Pandora is somehow worth less than the nothing they’re paying paid by the radio stations. Interesting.
My last point, but my favorite one, shows that not all is lost. Only weeks ago the CEO of Universal Music Group said that Spotify ( a free streaming service) was a “very sustainable financial model.” I would be very interested to see a break down in numbers showing how what is not good financially for one label can be great for another. Although I am very happy with UMG, this just goes to show how messed up the current industry is.
Currently, WMG has given little information as to how they will begin the process of “not licensing.” Still, it seems that unless this policy is changed WMG bands will begin disappearing from sites across the web and will instead be behind subscription walls, safe from fans and new consumers alike.
Now, I should say that I’m not necessarily against subscription models. There are some that have promise. All I am saying is that they are not currently working well nor do they seem to be the future. This seems more like WMG needing something of a scapegoat to explain why they’re not earning as much as they want.
I’ve heard its dangerous to startle an ostrich with its head in the sand so I guess I will now leave this one alone. Warner: thanks for the memories and you just go ahead thinking that this is a smart move.
In the mean time I’ll be sampling and buying music from Universal.
