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WMG Call: Bronfman: We’re Not Doing As Bad As The Rest Of The Music Industry

Edgar Bronfman, Jr., Warner Music Group’s Chairman and CEO, began the call offering a set stats designed to show how the company is outpacing the rest of the music industry—or at least doing less worse. However, major successes came from albums by Frank Sinatra and Madonna, not exactly rising young artists. On the digital front, ringtone revenue remains small and was flat in Q2, especially in Europe and the U.S., but Bronfman has expectations that mobile revenue growth will grow soon as western consumers have been gradually adopting the portable music listening and purchasing habits that are entrenched in Japan.

In terms of other experiments designed to grow digital, Bronfman pointed to Jason Mraz’s album We Sing. We Dance. We Steal Things. The album release was preceded by sales of bundled tracks over three months. Ultimately, WMG was able to offer two versions of Mraz’ album on iTunes, with the premium release eventually outselling the basic one on Apple’s (NSDQ: AAPL) download store. WMG is also working with Nokia (NYSE: NOK) on its “Comes With Music” feature, which is slated to launch later this year and Bronfman is hopeful about the benefits. He also emphasized short-term business deals for digital to maintain flexibility and see what works and what doesn’t.

Not playing games: Bronfman calls current video game licensing fees on a per song basis “paltry for video games, such as Guitar Hero. But the actual royalty derived from the use or download of individual songs remains far below their true value. Unless there is a real partnership among game marketers and artists and labels, WMG will be hesitant about going further to license its music for video games.

All digital cost structure: Nokia’s plans to include music on handsets before their sold has huge potential, Bronfman said. “But we’ll have to wait at least a year to see what the results are.” Asked about when WMG will have an “all digital cost structure,” Bronfman said that the company is closing in on the day when digital is 50 percent of the balance sheet.

Amazon (NSDQ: AMZN) and iTunes: Bronfman said that Amazon’s sales are largely additive to iTunes. Interestingly, Amazon seems to sell more full albums, whereas iTunes is more about singles.

Pic Courtesy: Spcoon

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Aug 7, 2008 7:30 AM ET

Posted In: Entertainment, Music, Money, Earnings, Companies, Time Warner, edgar bronfman, warner music group

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Comments (3)

Aug 7, 2008 9:31 AM

So Bronfman is banking on Nokia to salvage his revenue streams in over a year!  Does he have any other tricks up his sleeve or is he also banking on Verizon’s download systems, too?  Sounds like a dicey investment:  bank on guitar hero , Nokia and amazon to grow a struggling business…

digital bear

Aug 7, 2008 1:31 PM

The Nokia deal appears promising as the prevailing sentiment online among music lovers is that there needs to be a “catalog access fee” type option for fans who want to pay but not per track or album anymore.  I don’t understand the logic to tying this type of access to a hardware manufacturer.  Why not create a license model that any hardware maker can leverage?  That way you can maintain control and provide widespread access.

K Lewis

Aug 21, 2008 3:22 AM

Get ur favourite mobile phone at very attractive rates

Mobileshop

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