Warner Music Group

Solving the mobile music malaise

Jason Ankeny — Tue, 09 Sep 2008 15:59:17 -0400

While acknowledging the mobile subscriber population represents "the largest market the entertainment industry has ever had," Warner Music Group EVP of digital strategy and business development Michael Nash argued the current a la carte premium model does not work, pointing to subscription-based services like Nokia's Comes With Music effort as the future of mobile multimedia. Speaking Tuesday at the Mobile Entertainment Live! event, Nash--joined onstage by Nokia's head of major label relations Paul Smith--said the mobile content segment is flatlining, blaming the divide between consumer demands and existing business models. "Digital connectivity is all about accessing data and content," Nash said. "The a la carte model doesn't make sense to consumers. It's a disconnect to have a business model completely disassociated from consumer behaviors."

Needless to say, Smith agreed with Nash's assessment. Last week, Nokia announced its Comes With Music all-you-can-eat subscription service will launch in the U.K. in next month. "There's a real need for new business models," Smith said. "Giving the consumer a choice is really important. The idea of keeping your music is hugely compelling. Consumers don't want to see their music disappear."

Content bundles are also essential to the growth of mobile music, Nash said. "There's no reason why network operators can't create interesting propositions around the bundle--bundling content and connectivity is a logical equation," he said. "We're at the beginning of the evolution of this space--we need different approaches to the content and connectivity equation." Nash contrasted the Japanese mobile music market with its U.S. counterpart, noting that while sales of mastertones have declined in both regions, Japan enjoys a 34 percent compound annual revenue growth on mobile music, compared to just 5 percent CAGR in the U.S. "Bundling the full track and the mastertone [in Japan] has livened up the proposition," Nash said. "It's a simple element of the equation: We've got to make a relevant product for our consumers."

The U.S. market nevertheless remains a major proposition for Nokia, Smith said. "It's a key market for us," he said, and said a U.S. Comes with Music service is in the planning stages. "We want to be able to secure the right content deals--our mantra is all about localization," Smith said. "We have a dialogue with [U.S.] carriers going on. We'll be there when we're ready to be there."

Mobile entertainment at a crossroads, again

Jason Ankeny — Tue, 19 Aug 2008 18:26:47 -0400

Billboard's semi-annual Mobile Entertainment Live! conference, taking place September 9, introduces a new format this time around, promising an event shaped in large part by audience interaction. In addition to staples like keynote interviews and presentations as well as in-depth tracks emphasizing mobile content tentpoles like music, video and advertising, Mobile Entertainment Live! will spotlight product demonstrations, Q&A sessions and moderator-free open feedback forums. Another significant change: The conference is produced in association with handset giant Nokia, whose head of major label relations Paul Smith is among the keynote presenters. Other scheduled keynoters include Warner Music Group's executive vice president of digital strategy and business development Michael Nash, MySpace's senior director of mobile business development Brandon Lucas and MediaFLO's senior vice president of programming and advertising Jonathan Barzilay.

But conspicuously absent from the Mobile Entertainment Live! presenter roster are executives from any of the major wireless carriers, which underscores one of the major questions heading into CTIA Wireless I.T. & Entertainment 2008: What role do operators play in the fast-evolving mobile content marketplace, anyway? Given the expanding mobile web presence of major media brands and content providers, the continued emergence of off-deck mobile storefronts, and the growing profile of device maker retail platforms like Apple's iTunes and Nokia's Comes With Music, operators are in more danger than ever of finding themselves relegated to dumb pipe status. No less a surefire CTIA Wireless I.T. conversation starter: The economy, and the impact the recession will have on consumer spending on mobile data. According to a recent report issued by advisory firm Chetan Sharma Consulting, the U.S. wireless data market grew 40 percent in Q2 2008 compared to year-ago totals, generating $8.2 billion in data revenues--average data ARPU also increased $0.50 during the most recent quarter. Will subscribers continue shelling out for mobile data in the face of economic hardship? And if not, what does that mean for a wireless industry increasingly dependent on data revenues? Those are the Q's--we'll see if anyone has the A's.

SendMe Mobile adds Warner Music content

Jason Ankeny — Wed, 16 Jul 2008 10:29:23 -0400

Mobile media firm SendMe Mobile announced an agreement with Warner Music Group to offer content from the label's artists and create custom premium SMS subscription products. Per terms of the deal, SendMe will offer thousands of WMG ringtones, video ringers and wallpapers. The firms also plan to debut additional mobile products as well as offer artist-related experiential prizes and content via SendMe's mobile game and contest site SoLow.com.

For more on the SendMe/WMG deal:
- read this release

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Warner joins Nokia's Comes With Music

Jason Ankeny — Tue, 01 Jul 2008 08:45:44 -0400

Nokia announced that Warner Music Group has officially joined the handset giant's Comes With Music initiative. Warner joins fellow major labels Universal Music Group and Sony BMG Music Entertainment in Comes with Music, which enables consumers to purchase a year of unlimited music downloads via mobile handsets bundled with Nokia's Ovi web services platform--while EMI Music remains a holdout, Nokia has said it is confident deals will be in place with all four majors prior to Comes With Music's late 2008 launch. In addition, WMG content will now be available via the Nokia Music Store download and streaming service, which Nokia said will expand to new international markets in the near future.

For more on the Nokia/WMG deal:
- read this release

Warner Music Group mobile revenues slip in Q2

Fri, 09 May 2008 06:59:58 -0400

Warner Music Group reported its mobile music revenues slipped from $56.4 million in the first quarter of 2008 to $49.2 million in the second quarter. The music giant reported a $37 million Q2 loss, compared with $27 million losses a year earlier--revenue grew 2 percent to $800 million, from $784 million a year earlier. Overall recorded music sales rose only 0.6 percent year-over-year to $652 million, but WMG's total digital music sales grew 48 percent to $164 million versus $111 million a year ago, a swing the company credited to increasing music download purchases. Digital sales now represent 21 percent of WMG's total revenue.

"Approximately 65 percent of our total digital revenue was generated in the U.S. and 35 percent in the rest of the world," said Warner Music Group chief financial officer Michael D. Fleisher during Thursday's earnings call. "Our worldwide digital revenue stands at about 70 percent online and 30 percent mobile. In both the U.S. and internationally, online is a larger share of our digital business than mobile. Mobile remains soft as ringtone sales fell year over year in the U.S. and remained flat sequentially internationally in the quarter. Newer mobile products, such as ringback tones, full track downloads and other more innovative offerings remain too small as yet to meaningfully impact mobile results."

For more on Warner's Q2 results:
- read this release

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Virgin Mobile, Burger King team on ringtone deal

Thu, 01 May 2008 06:59:57 -0400

Virgin Mobile USA announced a deal with Burger King and Warner Music Group to introduce the fast-food giant's BK Value Menu concept to the mobile platform, offering subscribers a selection of ringtones for $1.00 each. The ad-supported Virgin Mobile Ringtone Value Menu initiative enables the MVNO's customers to purchase value-priced ringtones from WMG acts including Buckcherry, Casa De Leones and Danity Kane via the VirginXL WAP deck or online--Burger King will support the promotion by sponsoring WAP banner ads and mailing SMS blasts to Virgin consumers.

For more on the Virgin Mobile Ringtone Value Menu:
- read this release

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MySpace Music officially announced

Fri, 04 Apr 2008 07:59:59 -0400

Social networking giant MySpace officially confirmed its much-rumored MySpace Music retail effort, teaming with Universal Music, Sony BMG and Warner Music Group to offer consumers free, ad-subsidized streaming content as well as premium downloads a la Apple's iTunes. The New York Times reports all three major label partners will own minority stakes in MySpace Music, and will offer up their complete content catalogs--holdout EMI is widely expected to join the venture in the near future. In addition to full-length, DRM-free tracks, MySpace Music will also offer ringtones, concert tickets, t-shirts and related merch--MySpace CEO Chris DeWolfe said a subscription-based unlimited access model is also under serious consideration. Pricing details were not disclosed. "This is really a mega-music experience that is transformative in a lot of ways," DeWolfe added. "It's the first service that offers a full catalog of music to be streamed for free, with full community features, to be shared with all of your friends."

For more on MySpace Music:
- read this New York Times article

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A sour note on Sony BMG's digital future

Fri, 28 Mar 2008 08:00:00 -0400

The crowded digital music marketplace grew still more claustrophobic this week when Sony BMG Music Entertainment announced it's planning a new digital subscription service, promising consumers unlimited access to the label's catalog across a wide variety of portable media devices, including Apple's iPod. In an interview with German newspaper Frankfurter Allgemeine Zeitung, Sony BMG Music CEO Rolf Schmidt-Holtz declined to speculate on when the service might launch, but said the label is currently mulling pricing schemes and leaning towards a flat-rate subscription offer that would charge consumers around $9 to $12 per month in exchange for unlimited access to its complete music archive. Schmidt-Holtz said it is "even possible that clients could keep some songs indefinitely--that they would own them even after the subscription expired." He added Sony BMG is in talks with other major labels as well as mobile operators, but declined to divulge specifics.

In light of how little concrete information Schmidt-Holtz actually gives up to Frankfurter Allgemeine Zeitung, it's impossible to guess whether Sony BMG would continue its existing licensing relationships with digital music service providers like Apple and Amazon, or if it would instead restrict distribution of its catalog to its own branded site. And while Schmidt-Holtz may be in talks with the other majors, it seems highly unlikely a rival label is going to license its catalog for sale on a Sony BMG-owned retail storefront, effectively limiting the site's available catalog to Sony BMG acts--a roster that includes artists including bestsellers ranging from Elvis Presley to Simon & Garfunkel to Celine Dion, of course, but that's nevertheless missing countless superstars from the EMI Music, Universal Music Group and Warner Music Group holdings.

To get a rough sense of what a Sony BMG-branded mobile service might offer in terms of content availability, I checked out the website of its nearest antecedent: The BMG Music Service, the mail-order subscription service that supplanted the venerable Columbia House Music Club in mid-2005. Following a series of searches for some perennial favorites, it appears BMG Music Service offers only one CD by Bob Dylan (a recent hits compilation), four CDs by the Rolling Stones (albeit their best albums, like Let It Bleed and Sticky Fingers), just two CDs by Bruce Springsteen (a hits collection and the lackluster Magic) and five CDs by Miles Davis (including the landmark Birth of the Cool, but not Kind of Blue, Sketches of Spain or Bitches Brew). It's a spotty inventory at best, especially considering BMG Music Service faces no real competition from other traditional record subscription services. Compare it to iTunes, which boasts virtually complete back catalogs from all four above-mentioned artists--there's really no contest.

But the biggest argument against a branded Sony BMG digital service is that consumers don't purchase music the way they do automobiles or soda--except for diehard fans that collect everything a small independent puts out, labels don't engender brand loyalty, or even brand awareness. Most listeners don't know and don't care which label signed their favorite new artist--they just want the music, and with so many popular acts of the past and present nowhere to be found in the Sony BMG catalog, customer dissatisfaction would run rampant. Sony BMG may wish to assert control over its own digital destiny, but like the Stones once sang, "You can't always get what you want"--and until that song and the rest of the band's recorded output is in the label's content portfolio, Sony BMG has no business taking on Apple, Amazon or anyone else. - Jason

P.S. Check back all next week for live coverage of CTIA Wireless 2008 in Las Vegas. And if you're heading to Vegas for the show, be sure to join me and my colleagues Sue Marek, Brian Dolan and Lynnette Luna at the annual FierceWireless bash, taking place April 1 at The Palms. Click here to RSVP.

AT&T debuts customized ringtone service

Thu, 27 Mar 2008 07:59:59 -0400

AT&T announced an agreement with mobile music solutions provider mSpot to launch a pair of new music applications, Make-UR-Tones and Remix--in addition, the operator said it plans to significantly expand its Napster Mobile over-the-air download effort. According to AT&T, Make-UR-Tones enables subscribers to customize ringtones via mobile device, creating one- to 30-second ringers from more than 250,000 titles from labels including EMI Music, Universal Music Group and Warner Music Group. The mSpot Make-UR-Tones service is available for a monthly subscription of $6.99 for three ringtones--additional ringtones may be purchased a la carte for $2.99 each.

The Remix application promises subscribers direct access to PC-based music collections and playlists from their phones, offering immediate playback while simultaneously downloading the track to the handset's memory card. mSpot Remix is available for a monthly subscription of $9.99, which allows users to download 75 songs a month. A Remix booster pack will offer an additional 10 songs for $2.99.

Meanwhile, AT&T said it will make its Napster Mobile music service available to more than 12 million subscribers beginning this summer. Launched in November 2007 on the Samsung SLM device, Napster Mobile will soon spread to a host of AT&T devices, offering consumers a catalog of more than 5 million songs and 30-second previews.

For more on AT&T's new music services:
- read this release

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Nokia, labels deep into Comes With Music talks

Thu, 27 Mar 2008 07:59:58 -0400

A week after EMI Music said it is in negotiations with Nokia to join the handset giant's all-you-can-eat Comes With Music mobile service, Nokia confirmed it is also in talks with rival labels Sony BMG and Warner Music Group, adding it is confident deals will be in place with all four major labels prior to the service's late-2008 launch. Nokia announced Universal Music Group International's participation in the Comes With Music effort late last year; now Nokia executive vice president of marketing Anssi Vanjoki tells The Financial Times, "We have negotiations and discussions ongoing with all the majors and a number of indies as well. I am hopeful at the time of launch, technically we are able to deliver other labels. Certainly our target is to have other labels on board."

According to Vanjoki, the label talks include discussions of revenue-sharing agreements, and he added Nokia would consider similar deals with mobile operators, emphasizing the revenue potential of ancillary products like T-shirts spotlighting popular artists. Vanjoki also said Nokia is mulling additional acquisitions to bolster its mobile services strategy.

For more on the Comes With Music negotiations:
- read this Financial Times article

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LiveWire Mobile acquires Groove Mobile for $14.5M

Tue, 18 Mar 2008 07:59:59 -0400

Managed mobile personalization services provider LiveWire Mobile announced it will acquire mobile music solutions provider Groove Mobile for $14.5 million. According to LiveWire Mobile, the acquisition will enable the firm to meet its operator partners' demands for managed services including ringtones, ringbacks, full-track music and video downloads. Groove Mobile brings with it a dozen global mobile operator customers including Sprint, 3 UK and Bell Mobility as well as relationships with major labels EMI, Sony BMG, Universal Music Group and Warner Music Group--with the acquisition, LiveWire now boasts service deployments with 42 international operators, with 15 million active subscribers.

"LiveWire Mobile now delivers the industry's most complete suite of personalization services, spanning the traditional service silos that exist today," said LiveWire president Joel Hughes in a prepared statement. "Through our fully managed and integrated service offering, we can empower operators to cross sell and up sell personalization services while delivering a better mobile experience, resulting in higher levels of service adoption, usage and operator profits."

For more on the LiveWire/Groove deal:
- read this release

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Madonna goes mobile via Vodafone exclusive

Tue, 18 Mar 2008 07:59:58 -0400

European telecom giant Vodafone announced an agreement with Warner Music International to exclusively distribute and promote music and content from newly-minted Rock 'n' Roll Hall of Famer Madonna's upcoming Hard Candy to its worldwide mobile subscribers in advance of the album's April 28 retail release. Vodafone will launch its Madonna mobile campaign April 21, releasing a total of seven Hard Candy tracks at a rate of one per day; each cut will remain available for download for 24 hours before it is replaced by the next preview track. Vodafone customers in Spain, Portugal, Germany and Belgium will also enjoy exclusive mobile access to the new Madonna single "Four Minutes", available now--subscribers in all participating territories will have access to a Vodafone live! Madonna mini-site featuring exclusive ringtones, ringbacks and SMS tones. Madonna was unavailable for comment, but let's just pretend she said something about mobile content while speaking in a fake British accent.

For more on the Vodafone/Madonna deal:
- read this release

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7digital to distribute Warner MP3s across Europe

Wed, 05 Mar 2008 06:59:56 -0500

Digital media delivery firm 7digital announced an agreement with Warner Music Group to sell DRM-free Warner MP3 downloads to customers in the U.K., Ireland, Spain, France and Germany, becoming the first European music retailer to offer Warner content without digital rights restrictions. 7digital and Warner said they will also collaborate on a range of digital music products such as value-added album bundles containing additional content as well as dedicated artist and label pages which Warner acts and execs may edit remotely. "This deal will offer music fans a new level of flexibility in their use of tracks from our world-renowned artists," said Warner Music Europe president John Reid in a prepared statement. "We believe that providing consumers with this assurance of interoperability will encourage sales of music downloads and ultimately help the development of new digital music experiences." 7digital currently boasts a catalog spanning 3.5 million tracks and a customer base of 1.2 million. It said its DRM-free MP3s outsell rival digital formats like WMA and AAC almost four-to-one.

For more on the 7digital/WMG deal:
- read this release

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Can MySpace become a music mogul?

Fri, 22 Feb 2008 07:00:00 -0500

Not so long ago in this space I posed a question--"Can anyone dethrone iTunes?"--and concluded, at least at that time, the answer is "No." But the challengers keep coming, each with a different and intriguing spin on the digital music retail model. This week, The Wall Street Journal reported that News Corp.-owned social networking site MySpace is in talks with the major record labels to launch a digital music service that would offer both premium MP3 downloads as well as free streaming content. The tentatively-named MySpace Music would be structured as a joint venture between MySpace and content provider partners like Universal Music Group, Warner Music Group, EMI Group and Sony BMG Music; proposals are still in the discussion stage, but MySpace is weighing a premium platform featuring downloads compatible with virtually any portable device, including Apple's iPod, as well as ad-supported streaming content. A music merchandise service is also under consideration, as is a paid subscription service optimized for certain portable devices.

What's interesting about MySpace Music is its tacit acknowledgment that the future of the music business likely lies in selling merchandise, not content. With so few consumers paying for music anyway, an ad-supported streaming service that markets new artists and promotes sales of more viable premium commodities like concert tickets, t-shirts and ringtones makes a fair amount of sense. Of course, this isn't the first time MySpace has attempted to establish itself as a music retailer--in the fall of 2006, the site inked a deal with digital licensing and copyright management services provider Snocap to enable independent artists and labels to sell MP3s directly from their profile pages. The big challenge this time around isn't that MySpace is negotiating with the majors, it's that the site no longer dominates the social networking landscape the way it did 18 months ago. Much as MySpace knocked off Friendster, so now has Facebook usurped MySpace … and it seems likely there are other insurgents to follow. If nothing else, pop music and social networking have this much in common: No one stays on top for very long.

What about the other new digital music services? We're still waiting on the MTV/RealNetworks/Verizon Wireless joint venture Rhapsody America--at this point, Guns N' Roses' Chinese Democracy might actually beat it to market. Nokia Music Store is still smarting from the absence of Warner Music Group content: The label continues to boycott the Nokia service, citing concerns over the handset giant's social networking site Mosh. Amazon.com is now offering millions of DRM-free downloads from all four major labels, often at prices cheaper than iTunes, but without an accompanying must-have device a la the iPod, the e-tailer can't match Apple for consumer cachet. And Sony Ericsson's PlayNow music service is still a few months away from launch. So while it's too soon to dismiss any of them as mere pretenders, it's also a bit early to call them serious contenders, either--for now, at least, the only constants remain death, taxes and iTunes. - Jason

MySpace mulling digital music service

Wed, 20 Feb 2008 06:59:59 -0500

News Corp.-owned social networking site MySpace is reportedly in talks with major record labels to launch a digital music service that would offer both premium MP3 downloads as well as free streaming content. According to The Wall Street Journal, the tentatively-named MySpace Music would be structured as a joint venture between MySpace and its content provider partners, with the possibility of outside investors lending financial assistance. So far, MySpace has approached Universal Music Group, Warner Music Group, EMI Group and Sony BMG Music; proposals are still in the discussion stage, but MySpace is weighing a premium platform featuring downloads compatible with virtually portable device, including Apple's iPod, as well as ad-supported streaming content. A music merchandise service is also under consideration, as is a paid subscription service optimized for certain portable devices. MySpace declined comment.

For more on MySpace Music:
- read this Wall Street Journal article

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ALSO NOTED: Warner Music Group reports declining ringtone sales; itsmy.com debuts 100,000 personal mobile TV channels; and much

Fri, 08 Feb 2008 06:59:53 -0500

> Warner Music Group reports declining ringtone sales during Q4 2007. Article

> itsmy.com debuts 100,000 personal mobile TV channels. Release

> GroupM and Celltick ink mobile marketing deal. Release

And finally… Florida man arrested for the 101st time. Article

Sony Ericsson expands PlayNow via 5M new tracks

Mon, 28 Jan 2008 06:59:57 -0500

At the MIDEM conference in Cannes, Sony Ericsson announced an expansion of its over-the-air download service PlayNow, adding 10 new record label catalogs representing more than five million new tracks. Sony Ericsson unveiled deals with major labels Sony BMG, Warner Music Group and EMI along with indies like The Orchard and IODA, adding it is currently in negotiations with a number of regional labels to expand the availability of localized content. Sony Ericsson also introduced the design and URL for PlayNow arena music store and launched PlayNow Uncut, a promotional space for new, unsigned and developing artists.

For more on the PlayNow expansion:
- read this release

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DRM is dead: Amazon MP3 adds Sony BMG content

Fri, 11 Jan 2008 06:59:59 -0500

Sony BMG announced an agreement with Amazon.com to become the fourth and final major label selling its back catalog via the online retailer's MP3 store, effectively heralding the end of digital rights management software in the U.S. market. The move also positions Amazon's digital music store as a legitimate threat to Apple's iTunes storefront, the longtime market leader. "This is such an exciting day for us and our customers," said Amazon vice president for digital music Bill Carr in an interview with The New York Times. "All four major labels will be part of our service. It means our customers will really have access to all the biggest artists in the world."

Launched in September 2007, Amazon MP3 features over 3.1 million songs from more than 270,000 artists--Universal Music Group and EMI Group joined the store at launch, followed in December by Warner Music Group. Beyond the four major labels, the site also features catalogs from over 33,000 independent imprints. While most iTunes downloads are 99 cents and compatible solely with Apple devices, Amazon tracks range from 89 cents to more than a dollar, and may be played on any portable music device.

For more on the Amazon/Sony BMG deal:
- read this release

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What's not: DRM

Wed, 02 Jan 2008 06:59:56 -0500

Following Warner Music Group's late December announcement that it will begin selling DRM-free MP3 downloads via Amazon.com, Sony BMG stands alone as the sole major label still clinging to digital rights management protections. In an e-mail to staffers, WMG head Edgar Bronfman Jr. wrote "We have concluded that both the development and growth of the online store environment are being hampered by the handcuffs which today's inflexible, non-interoperable copy-protection puts on both retailers and consumers…By providing an immediate interoperable solution to retail partners who are committed to working with us to deliver new and more robust music-based experiences, we'll encourage more consumption of existing products while introducing consumers to new and better ones." Once Sony BMG inevitably bows to the pressure and DRM becomes as irrelevant as R.E.M., Apple's stranglehold over the digital music marketplace will face its first serious threats--expect a price war with Amazon as well as increased competition from rival service providers like eMusic and RealNetworks.

Warner Music Group profits tumble 58% in Q4

Thu, 29 Nov 2007 06:59:59 -0500

Warner Music Group announced its fourth-quarter profits declined 58 percent, citing costs to cut jobs forced by a $9 million drop in compact disc sales. Net income fell to $5 million from $12 million a year earlier, while revenue for the quarter rose 1.8 percent to $869 million. WMG's digital revenue totaled $130 million, or 15 percent of overall Q4 revenue, up nine percent sequentially from $119 million in the third quarter and up 25 percent from $104 million a year ago--full-year 2007 digital revenue rose 30 percent to $460 million, or 14 percent of total revenue.

During a conference call Thursday morning, WMG CFO Michael Fleisher said that in the U.S. market, online music sales remain greater than mobile sales, while internationally, sales are split roughly 50/50 between the digital platforms. "Mobile is weaker than we'd like to see, as ringtones as have lost their luster," Fleisher said.

For more on WMG's Q4 results:
- read this release

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