Warner Music, one of the four largest record labels, is upset with just how free their music is online, and they're not talking about piracy: They're worried about legit, ad-supported services like Last.fm, Spotify and Pandora. Uh oh.
Warner execs, who were just yesterday lamenting the (shocking!) correlation between raised iTunes prices and decrease sales, are just as uncomfortable with above-ground free services. Says Warner's Edgar Bronfman Jr, via the BBC:
Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.
"The 'get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price' strategy is not the kind of approach to business that we will be supporting in the future.
The free services he's referring to are only free in the sense that you don't have to pay upfront for music streaming; they're not free in that you're generally being subjected to ads in exchange for listening.
Their problem with services like this seems to be twofold. The first and most obvious problem with a service like Pandora is that their advertising is probably bring in much, much less revenue that a simple digital or physical purchase. The second issue, subtle as it may be, is even more pernicious: to allow services to exist to appear to give away your music at no real cost is to devalue your product, making customers less likely to pay for it in the future. At least, that's the thinking.
Whether Warner will sever existing agreements or just refuse to enter into new ones remains to be seen, but one thing's for certain—the music industry is no happier to dismantle their decades-old business model than the the media is. It's just a shame they're figuring that out now, just as ad-supported music sites are coming of age, in no small part due to major label support. Business!
Update: Though the original BBC article makes reference to Pandora, the company tells reader Ryan Murphy that their service shouldn't be affected:
Edgar Bronfman's comment on the Warner conference call was addressing free on-demand services such as Spotify that are directly licensed. Pandora operates under a different licensing structure and won't be impacted by Warner's apparent decision with respect to free, on-demand services.