The music industry will soon reach that fabled tipping point at which digital revenue exceeds lost physical sales, Warner Music Group (NYSE: WMG) CEO Edgar Bronfman Jr reckons.
The top line from WMG’s Q3 earnings today is “Digital revenue approaching half (47.6 percent) of U.S. Recorded Music revenue.”
A 13 percent growth in global digital income to $203 million helped push overall revenue up 5.2 percent to $686 million. Sold to Access Industries on July 20, WMG took $12 million from Limewire’s $105 million industry settlement. Net loss improved to $46 million. Bronfman Jr told investment analysts…
Of course, an acceleration in physical’s decline rate will help get us to the tipping point just as much as digital growth will.
But the thing to take Bronfman there – new models like unlimited access, mobile and streaming. For all the kerfuffle about how WMG was supposedly the main sticking point to Spotify’s U.S. launch, Bronfman Jr, who wants to ween WMG off iTunes, has long been the biggest cheerleader for these new models, including Spotify – as long as they can give labels sufficient income through their paid subscription services.
Asked about Spotify specifically, he showed none of the reluctance which he is often characterised as exhibiting last year.
All of which makes the method by which such services pay labels particularly intriguing, since this increasingly is no longer a per-track-download world.
U.S. downloads of individual tracks (ie. iTunes Store sales) have flatlined. That’s why labels are seeking new models. Not even lowering track prices has worked. “Where we have lowered price on songs to $0.69, it has not driven any real increase in volume,” Brondman Jr said. “If you don’t particularly want a song there’s not a price at which you’re gonna buy it.”