Blog Post

MidemNet Mobile: Keynote: Warner Music Group’s Alex Zubillaga

The next keynote was an engaging and relevant exchange between Alex Aubillaga, EVP of Digital Strategy and Business Development at the Warner Music Group and Ralph Simon, Chair of the MEF Americans. In my opinion, Warner is testing the envelope of what you can sell to the music fan via mobile – and I mean that in a good way.
Zubillaga’s candid assertion (and one that has been true until very recently) that the music industry has no real product innovation when it comes to mobile and digital (and I would add physical is not exactly a hotbed of innovation) – that “all we do is chop up existing content” and put it out to the marketplace, and that the industry must do more to maximize the potential of revenue growth by innovations and diversification. Following are two cases in point.
In addition to the aforementioned bundling of content as witnessed in Japan, the company is also looking towards other innovative products as the “SMS Tone” – basically a downloadable master tone specifically for the purposes of creating an SMS alert. And, while this has been done with services from minor players, this represents the first time a major label has decided to branch out to new product based around SMS alerts. Expect a launch this year first in the German market with others to follow.
One of the other significant issues Zubillaga touch upon was the need to evangelize to artists and manager as to both the revenue opportunities and need to develop mobile-centric products. This is one of the points that he stated as part of the process of the industry properly leveraging digital to re-establish growth – meaning the more diverse content offerings and innovation, the better the possibilities for new revenue streams for the labels and artists.
Another area of innovation at Warner is the develop of bundles of musical content (digital booklets, full tracks, videos) on iTunes and other distribution outlets – which have resulted in higher sales and higher volume than non-bundled products. The $12.95 bundles of products sold on iTunes have outsold their music-only $9.99 counterparts, proving innovation can lead to greater profitability in the music business. Also, the company as started Cordless Recordings, an e-label run by the legendary founder of Elektra Records Jac Holtzman and President of Cordless Jason Fiber. The label’s stated aim is to break artists via digital and mobile media.
At the end of the day, this is an impressive list of innovations that seem to be bearing real fruit in terms of consumer outreach and the bottom line. It will be interesting to see whether Warner expands significantly on this foundation in 2006 and is able to create an environment that will allow WMG to innovate towards growth.