Peter Kafka

Recent Posts by Peter Kafka

Warner Music Still Pining for Google. But What About Spotify?

The good news for Warner Music Group: Digital revenue growth, anemic earlier this year, has perked up a bit. The bad news: It’s still not enough to counter dropping CD sales, which continue to account for the majority of the industry’s revenue.*

And while Warner, and the rest of the industry, had been hoping that Google might launch a music service that would give sales a boost this year, that doesn’t look likely. The new hope: Google arrives sometime next year.

That’s the line from Warner CEO Edgar Bronfman Jr. during his company’s earnings call this morning. Bronfman said he’s hoping that Google and other services “will come online in calendar 2011,” and that they’ll create “very significant opportunity both for consumers and the music industry.”

Any more detail than that? Nope.

But Bronfman did have a few nice things to say about Spotify, the much-hyped music service that has yet to launch in the U.S. Warner has renewed its European licensing deal with the service, which offers both free and subscription options, and Bronfman murmured some hopeful things about getting something done in America.

In Europe, the new Spotify deal “was a long time coming, [and] was not easy for us, and not easy for them,” Bronfman said, and says he’s “hopeful” the two companies can reach an agreement.

As I’ve previously reported, music sources say that Spotify and Sony have essentially reached an agreement for a U.S. launch. And the consensus seems to be that the service is close to getting something done with Universal Music Group, the world’s largest label.

So the question for Spotify is whether it needs to get Warner on board before it can launch in the U.S., something it continues to insist it wants to do this year.

Spotify officials have previously said that they’d only go forward with three of the big four labels on board, which makes sense–no point in launching a service that doesn’t have lots of the music people want to hear.

On the other hand, if the Spotify guys wait to get Warner–or EMI Music Group, the other major label–on board before launching, they could get held up for quite some time.

Speaking of EMI Music, what does Bronfman think of the label’s deal with Apple that brought the Beatles to iTunes? He thinks what most of you think: “I don’t know how impactful, after 10 or 12 years of digital business, their coming to iTunes will be,” he said.

But it does give Apple the ability to run a very cool marketing campaign, and that will get more people into iTunes. And that’s good for Warner–and everyone else who sells stuff there.

*You really can’t stress this point enough: We’re a decade past Napster, but the music industry still runs on CD sales. In Warner’s case, digital now accounts for 25 percent of overall revenue.


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