Warner Brothers music set to change its tune on digital links
Music companies can no longer justify investing in artists if they only control their recorded music output, Edgar Bronfman Jr said on Tuesday as Warner Music's chief executive spelled out plans to "redefine [its] role in the music value chain."
Warner would seek to expand in artist management, marketing and digital distribution, he said, highlighting a $110m investment last month in Front Line Management, the largest US artist management company, as an example of the deals it was looking for.
Announcing higher net losses for the three months to June 30, Mr Bronfman also signalled a more discriminating approach to deals with digital music partners, warning that the plethora of music websites had created "a sense that music is ubiquitous, to a degree that's probably not helpful to us".
Warner had been seen as the industry's most aggressive company in pursuing digital deals, and said on Tuesday its digital revenues had grown by 29 per cent in the third quarter to $119m, or 15 per cent of total sales, a higher percentage than any of its peers had reported.
Mr Bronfman said Warner would be "more careful" about choosing online partners in future and may invest in its own digital distribution routes. He expressed hope that Apple's iPhone would trigger growth in the US mobile music market. The group confirmed expectations that continued declines in CD sales had outweighed growth in digital downloads and music publishing revenues to produce a 5 per cent fall in sales at constant currency in its third quarter.
It reported a 6 per cent decline in recorded music revenues and a 1 per cent increase in music publishing sales at constant currencies, as market share gains in the US were offset by a "mixed result" internationally.
Total revenue was down 2 per cent at $804m, but cost-cutting lifted operating income before one-off items by 39 per cent to $39m. The final results, showing net losses up from $14m to $17m, were affected by $38m of restructuring costs and a $52m gain from settling litigation over the former Napster music website.
