Warner Getting Big Gains from Spotify, Pandora, YouTube and other Streaming Services

Warner Gets A Quarter of Digital Revenue From Streaming
Warner Music Group is getting good growth from streaming services, which now account for 25% of its recorded music digital revenue. The other important news in the company's Thursday earnings call is the recorded music segment's digital growth offset its decline in physical sales. That merits a trumpet sound or two.

If there's a problem, it's that the recorded music division is not getting much help outside of downloads and streaming. Artist services and revenue expanded rights contracts -- which are included in the recorded music segment -- were a drag on revenue, falling 25% to $58 million in the quarter. Performance royalties fell 8% and sync royalties grew 1%, so neither helped Warner gain ground.

Warner did not break out the revenues generated by its artists' expanded rights contracts, but based on information in the earnings call I estimate expanded rights revenue in the quarter totaled $18 million (artist services revenue was another $40 million). In other words, 360 contracts are not providing big revenue or growth. Those numbers are hardly disappointing -- that's an annualized $72 million that didn't exist before 360 deals become the norm. But it goes to show 360 deals are still a small piece of the puzzle. 

There's more good news inside Warner's digital revenue. Subscription and streaming services accounted for 25% of the recorded music division's digital revenue in the quarter (which works out to $54 million) and grew at a "significantly higher rate" than download revenue, which is not surprising given the relative maturity of the download market. Subscription and streaming revenue for the music publishing division were characterized as "strong" but no more information was given. 

MediaMemo's Peter Kafka called it the Spotify Effect, but one could just as easily call it the Pandora Effect or the YouTube Effect. Included in that $54 million are royalties from on-demand audio services (Spotify, Rhapsody, Muve Music and others), non-interactive digital transmissions (SiriusXM, Pandora and other webcasters) and on-demand video streaming from the likes of YouTube.

But even that good news about streaming seems a little empty. Streaming is still a small part of Warner's recorded music revenue -- just 10.3% -- and can make up for only so much hemorrhaging. Downloads, streaming and expanded rights revenue are doing the heavy lifting. It would be great to see growth in other areas.

A few years ago, then-CEO Edgar Bronfman, Jr. would have been talking about the number of artists Warner has signed to expanded rights contracts, or 360 deals, in order to show how the company was diversifying its business model and adjusting for the future. Streaming is a better story now and that's why it was highlighted during Thursday's earnings call. It will continue to be a good story as long as the bottom doesn't drop out of CD sales and download sales continue on their current trajectory. And it's likely to get better as services get into the hands of more consumers.

Spotify Radio Improves With Thumbs-Up (or Down) Function

Spotify has added thumbs to its desktop radio, allowing listeners to fine tune an artist station by giving a song a "thumb up" or "thumb down."

This is the latest in what's sure to be a lot of tweaking to its radio product. Spotify has long offered a radio service on its desktop application, but the company got more serious about radio when it launched a free radio service on its iOS app - with thumbs - in June. But Internet radio is difficult to do well, and Spotify's song selection will occasionally leave a bit to be desired.

 

Every thumb will help. Internet radio is a competitive space with more well funded companies and greater innovation than meets the eye. TuneIn, for example, which l ast week announced $16 million in fresh funding, got some attention over the weekend for live streaming the Outside Lands music festival from San Francisco. While TuneIn lacks the personalized features of Spotify and Pandora - it lacks thumbs, in other words -it does have an easy-to-use mobile app and a ton of content.

A couple recent cases in point show how Internet radio is making an impact. One is last week's Warner Music Group earnings report. The company's recorded music division now gets 25% of its digital revenue (not total revenue, just digital revenue) from subscription, on-demand and webcasting services such as Spotify, YouTube, and Pandora (all of which allow users to "thumb" songs). Warner didn't break out the lump of revenue by company type, but the message was clear: fractions of pennies from streaming services add up with enough volume.

Business Matters: Warner Getting Big Gains from Spotify, Pandora, YouTube and other Streaming Services

The other example was a breakdown of musician Zoe Keating's revenue over a five-month period. Now, Keating gets almost all of her recorded music revenue from purchased music - not a surprise for an independent artist. But she does make a small amount from digital performance royalties, too. As a spreadsheet she posted online shows Keating made $1,278.19 as a performer and rights owner over two quarters (almost all from Pandora).

The Best Record Label For Your Style Of Music

We are having a discussion today around the office about what are consideration the best record labels around, and it created a storm of opinions that were all across the board with no clear winners. What we did find though, was some of the factors that should go into determining what the best record labels are for your music.

If you’re a musician looking for a deal, you probably asked yourself a few times: what are the best record labels that I should be approaching for a possible recording contact? If you’re anything like me, that list includes an entire page worth of possibilities, only leaving you more confused.

To determine what the best record labels are for you, you’re first going to need to decide on what factors make a label great in your opinion. For instance, do they develop the acts they sign, do they make their acts sign a 360 contract, have they had any success with their acts, who runs the labels, are the artists they have signed in the past happy with that labels performance, and so on.

Once you got your factors down, now it’s time to research and find the best record labels that best fit the type of deal you’re looking to get. Once you have your list of labels down, you can now consider these to be the best record labels for your music.

USA Men’s Basketball team pose

The USA Men’s Basketball team pose following the medal ceremony at the London 2012 Olympics Games at North Greenwich Arena.

'Talk That Talk' Tops UK Charts With Lowest-Selling No. 1 Album

Rihanna's "Talk That Talk" (Def Jam/Universal) returned to the top of the U.K. album chart on Sunday (Aug. 12), as "Heatwave" (One More Tune/Warner Bros./Warner Music) by British rapper Wiley featuring Ms D started a second week at No. 1 on the singles survey.

Though "Talk That Talk" is now nearing one million U.K. sales, according to the Official Charts Company, its sales this week of 9,578 copies breaks the lowest weekly sale for a number one album. The previous record, as the UK's Music Week noted this morning, was set just 11 weeks ago by Emeli Sande's whose "Our Version of Events sold only 13,430 copies when it too returned to the pole position. Though Great Britain might have had its mind and pocketbook on other things -- such as the rather spectacular London Olympics - the dwindling numbers for No. 1 UK albums points to a larger trend of falling sales. The last two quarters have seen albums sales drop by 15% and 13% in the first and second quarters, respectively.

Malcolm X' actor Al Freeman Jr. dies at 78

LOS ANGELES — Albert "Al" Freeman Jr., the veteran actor who played Elijah Muhammad in Spike Lee's epic film, Malcolm X, has died. He was 78.

Howard University in Washington, D.C., confirmed his death Friday night but details weren't immediately available. Freeman taught acting there for years and served as chairman and artistic director of its theater arts department.

"He was a brilliant professor, a renowned actor and a master director who made his mark in the classroom as well as on stage, screen and television. ... He has mentored and taught scores of outstanding actors. He was a resounding voice of Howard and will be missed," university spokeswoman Kerry-Ann Hamilton said in a statement.

Freeman earned an NAACP Image Award for playing Malcolm X's mentor in Lee's 1992 biography.

He also received an Emmy nomination for his role as Malcolm X in the 1979 miniseries Roots: The Next Generations. He won a best-actor Daytime Emmy that year for his work as Capt. Ed Hall on the soap opera One Life to Live.

Dr. Conrad Murray HARASSED in Jail

Dr. Conrad Murray no longer feels safe behind bars, TMZ has learned -- after jailers mistakenly allowed a complete stranger to visit him in the clink ... a woman posing as the mother of MJ's children ... and now, Murray's afraid of another security breach.

Murray's lawyers tell TMZ, the woman -- who appeared to be in her 40s and of Eastern European descent -- visited Murray in jail Thursday, saying she flew in from Nevada just to see him.

Murray didn't recognize her and insisted there must be some mistake -- but she replied, "I've seen you before and you've probably seen me before. I'm the mother of Michael Jackson's kids."

FYI -- Debbie Rowe is the biological mother of MJ's two older children. The mother of the youngest child (Blanket) is reportedly a Hispanic woman in San Diego.

So needless to say, we're told Murray called the visitor an "impostor" ... then told her to scram, which she did.

Now, Murray's upset ... because a recent change in the L.A. County jail's visitor policy -- which lets visitors sign up online without verifying their identity -- has left him exposed to crazies from the outside world.

Under the new policy, prisoners don't even get notified of their visitor until they're sitting face-to-face with them in a tiny cell -- separated only by glass -- which is what happened to Murray.