If there’s one point that Edgar Bronfman, chairman and CEO of Warner Music Group (NYSE: WMG), tried to hit home, it’s that rumors of the music industry’s demise have been greatly exaggerated, contrary to what Leo Hindery said this morning. He kicked off his speech reading from a 1980 Washington Post (NYSE: WPO) editorial warning of the industry’s death at the hands of piracy and falling album sales. So yes, none of these fears are particularly new. And yet, today’s challenges are unique. CD sales are declining rapidly, and there’s no obvious replacement.
As Bronfman sees it, the key is to move beyond the “recording industry” as it is conceived of today. Instead, the industry must focus on non-recording opportunities: fan clubs, music management, concert tickets. This is particularly true in Asia, where piracy makes record sales even more difficult. There the company has really focused on non-album sales, as well as mobile, which Warner sees as a huge opportunity. Just today, Warner is announcing a a 70 percent stake in Japanese artist management firm Taisuke.
On DRM: DRM is mistakenly assumed to be about stopping piracy. Instead, it should be seen as a business model enabler, whether it’s subscription models or fan club album sales. Although Bronfman defended his pro-DRM stance, he left the door open to the possibility that it may not always be best for all business models. Insisted that fans, for the most part, aren’t just looking for free music.
Text of speech (.pdf)