As free streaming music services such as Pandora and Spotify take off, Warner Music has decided it no longer wants to be a part of the action.
The record label said it will stop licensing its music to these services, which are often supported by ad revenue and offer paid services with ad-free streaming and other perks. Warner chief executive Edgar Bronfman Jr. said these services are "clearly not net positive for the industry," the BBC reports.
"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," Bronfman said.
Instead, Bronfman is hoping there's a market in paid streaming services, either requiring a regular subscription or a charge that's built into another service, such as mobile broadband or home Internet. This kind of offering, he said, could even have more profit potential than iTunes' pay-per-track model.
It's easy to see why Warner is looking for alternatives: sales of digital music on iTunes fell, year-over-year, for the last three quarters in a row. Still, I can feel my blood boiling as Warner Music cuts off new revenue streams and new ways of listening to music in a desperate attempt to save its sinking ship.
The problem with Bronfman's logic -- kill the free streaming music services by not participating -- is that it only works if everyone agrees. Unfortunately for Warner, that's not the case. Last month, Universal Music Group vice president Rob Wells remarked that Spotify was earning money for record labels and proving itself to be a sustainable business model. If other record labels latch on to free streaming services and figure out how to make their paid counterparts more attractive -- say, by including mobile streaming, as Spotify does with its mobile phone app -- Warner will look even more foolish for missing the boat.
