With many companies’ reportedly lobbying music labels not to renew contracts with streaming giants Spotify, the head of Warner Music Group has come out in defence of streaming services offering free streaming subtractions.
After his company Time Warner recently announced that their download sales have officially been taken over by streaming revenue, Stephen Cooper has warned rivals “to think very carefully”. WMG has shown in increase in the first quarter of 2015, with the labels revenue growing to $677 million – a 4% year on year increase, giving a profit of $19 million.
The amount of income from streaming has increase a massive 33% showing that the change in the market is very apparent. As Cooper states:
“The rate of this growth has made it abundantly clear to us that in years to come, streaming will be the way that most people enjoy music. Not only that, we are also confident that streaming’s on-going expansion will return the industry to sustainable, long-term growth.”
Streaming services such as Spotify have been a hot topic in the music industry of late, with many calling out just how viable it is for these companies to make profits. This can be thanked to the free streaming service tiers that many offer along with ad free subscriptions. Many want these free tiers removed, such as head of Universal Music Group Lucian Grange, with more emphasis paid to the much more profitable paid subscriptions.
“The ad-funded part of the music ecosystem – that’s on-demand, ad-funded – as I’ve said before, is not something that is particularly sustainable in the long term,” said Grainge at the Code/Media conference earlier in 2015. “Ad-funded isn’t a sustainable business for them … or for us. That’s why people get restless.”
This is thought to spurned on by rumours of companies such as Apple lobbying these music labels not to revenue and endorse companies with free tiered subscription options, with Beats streaming service ready for realise in the Summer.
Yet Cooper has come out in defence of these free based subscriptions. As he goes on to explain
“With respect to going to a strictly subscription world, I think that you can find evidence that when music is not generally available, people will seek out sites on the Internet that will offer up that music for no charges, and in many instances, with no economic model.
“Before people conclude that freemium should be burnt at the stake, we should think very carefully about the consequences.”
Whilst a fan of the free based option, Cooper clearly realises the importance of these upcoming negations, which could very ell change the face of music streaming across the globe. With an increase in paid subscriptions, so too would profits for TWG, along with other big hitter labels such as Sony and the aforementioned Universal
“We are working with a number of our digital partners to see if there are ways in which that adoption, that is the movement from the ad-based model to a subscription … can be turbo-charged through modifications of service offerings or more sophisticated approaches to the consumer market,” said Cooper.
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