Warner: No More Ad-Supported Music Deals

Warner Music Group CEO Edgar Bronfman Jr. recently stated that the company would not sign any new licensing agreements for ad-supported music.

“Free streaming services are clearly not net positive for the industry, and as far as Warner Music is concerned will not be licensed,” Bronfman announced in a phone interview. He then stressed out the fact that, from his point of view, promotion of free music is definitely not a successful business strategy when the real goal is to convince customers to actually buy something.

Bronfman’s position comes as a surprise, considering the strategy of offering free music to boost sales has proved to be very effective in the past, and has been employed by music companies with positive results, including Warner Music Group.

According to Bronfman, the music industry should focus instead on encouraging subscription-based services provided by mobile phone providers, which use DRM-laden files. The chairman of the Warner Music Group also considers the closing of 360 deals a priority, to supply the company with revenue streams from merchandizing and additional profits from concerts.

However, to fully exploit these profit opportunities, it wouldn’t make sense to reduce the availability of free music, as both merchandizing and concert attendance mostly depend on bringing as much music to the public as possible.

The effort to force free music on the path to extinction, corroborated with an unrealistic price model for digital music sales could spell disaster for the industry on the long run. Rather than tap these unpromising directions, record labels and other music companies out there should better try to reassess the value of the music sold, as well as recognize the promotional benefits of free music and actually increase its availability.

(via AfterDawn)