Newsletter
May / June 2015 RITCH ESRA STEPHEN TRUMBULL Dear A&R Registry Reader, Welcome to our May/June 2015 issue of the A&R Registry. This year has certainly been the time streaming has finally solidified as a reliable financial factor within the music business. With Jay Zís purchase of TIDAL and its subsequent US launch, streaming seems to be on every one ís collective mind.
Warner Music made an historic announcement that its Q1 revenues have seen its streaming-based income overtake download-based income for the first time ever. We call this an historic event because it is the first time that a Major Label has stated publicly that it is making more money from streaming than from downloads. Universal also stated that its stream-ing income in Q1 had also reached a place where it more than made up for the loss of income in both downloads and physical product.
With a market penetration of less than 3% of the listening public, streaming and its revenues are not going anywhere for a while. Warner Music CEO Stephen Cooper made some telling comments recently about his company ís strategy in regard to digital services. Cooper defended the freemium model which is a unique stance for a Major Label CEO.
First of all, there are any number of models out there, and all of those models ñ ad-based, subscription-based or with both, are better than piracy, he said. Cooper ís point was clear: the idea that freemium automatically equals bad is extremely misguided. Cooper also spoke of Warner ís desire to work with services to ì further encourage the movement of subscribers from ad-based models to subscription-based models over time. We are working with a number of our digital partners to see in fact if there are ways in which that adoption, that is the movement from the ad-based model to a subscription can be turbo-charged through modifications of service offerings or more sophisticated approaches to the consumer market.
Many insiders have remarked that comments such as Cooper ís seems to be a criticism of Universal which has sup-posedly changed its stance (though has not said so publicly yet) with regard to freemium tiers and has sought to reduce the freemium offering whenever possible. Perhaps Cooper and Universal are more closely allied than some would suspect however. We have obviously moved past the thinking of ìIs streaming the future?î as the various services, Spotify in particular, have proven there is real consumer demand for streaming services. The labels must feel confident about streaming ís future especially in light of Apple ís new streaming service launching next month.
The question we have is with the level of debt Spotify has taken on to get to this point (close to $800-Million in seven rounds of financing) and a valuation of nearly $8-Billion, how do you find a buyer for a company valued at this level? It has got to be a question that the banks and investment firms who have financed all of this debt must be asking themselves since we highly doubt they are planning on waiting some 10-15 years for someone to come along.
Apple and Google (who will be launching a streaming service at some point this year) do not have this financial pressure of debt so it will be interesting to see how this all plays out. As we are fond of saying, stay tuned Over the last eight weeks in the A&R world, there are a few changes to report as always. Interscope is opening a new office in Nashville and has hired A&R rock veteran Kevin Williamson. Exiting Interscope is Tunji Balaban. Warner Bros. has also had some significant activity with the hiring of three new A&R staffers; Jon Chen, Quinn Coleman, and Carlos Cancela have all been promoted within the A&R Department along with Cheryl Jenets who is now Director Production Operations at Warner Bros. Over at Epic, Jermain Pegues joins the A&R Department while Sha Money, Jeff Juin, and Isaac Heyman exit the Department. Also within the Sony Label Group, Gary Overton exits Sony Nashville while Adam Fujiki exits Sony Canada.
Shifting gears from the A&R world to the world of must-attend events, be sure to register for the upcoming Driven Music Conference in Ft. Lauderdale as well as the Urban Network Digital Conference in San Diego. Be sure to note that MIDEM is now taking place in June for the first time in its history. You can check out all the upcoming music conferences in our Calendar of Events included in every issue.
Don't forget the new 2015, 7th Edition of the Music Blog Directory is also available. You can place your order by call-ing our office at 800-552-7411 (or 818-781-1974 for our international customers). So, until our next issue, please know that we always try our best to make sure all of our directory information is correct at the time of printing, but if you ever come across a bad telephone number or email address, just let us know and weíll make sure to track down the correct information (if we havenít already!). Until then, we remain. Sincerely, Ritch Esra and Stephen Trumbull
Warner Music made an historic announcement that its Q1 revenues have seen its streaming-based income overtake download-based income for the first time ever. We call this an historic event because it is the first time that a Major Label has stated publicly that it is making more money from streaming than from downloads. Universal also stated that its stream-ing income in Q1 had also reached a place where it more than made up for the loss of income in both downloads and physical product.
With a market penetration of less than 3% of the listening public, streaming and its revenues are not going anywhere for a while. Warner Music CEO Stephen Cooper made some telling comments recently about his company ís strategy in regard to digital services. Cooper defended the freemium model which is a unique stance for a Major Label CEO.
First of all, there are any number of models out there, and all of those models ñ ad-based, subscription-based or with both, are better than piracy, he said. Cooper ís point was clear: the idea that freemium automatically equals bad is extremely misguided. Cooper also spoke of Warner ís desire to work with services to ì further encourage the movement of subscribers from ad-based models to subscription-based models over time. We are working with a number of our digital partners to see in fact if there are ways in which that adoption, that is the movement from the ad-based model to a subscription can be turbo-charged through modifications of service offerings or more sophisticated approaches to the consumer market.
Many insiders have remarked that comments such as Cooper ís seems to be a criticism of Universal which has sup-posedly changed its stance (though has not said so publicly yet) with regard to freemium tiers and has sought to reduce the freemium offering whenever possible. Perhaps Cooper and Universal are more closely allied than some would suspect however. We have obviously moved past the thinking of ìIs streaming the future?î as the various services, Spotify in particular, have proven there is real consumer demand for streaming services. The labels must feel confident about streaming ís future especially in light of Apple ís new streaming service launching next month.
The question we have is with the level of debt Spotify has taken on to get to this point (close to $800-Million in seven rounds of financing) and a valuation of nearly $8-Billion, how do you find a buyer for a company valued at this level? It has got to be a question that the banks and investment firms who have financed all of this debt must be asking themselves since we highly doubt they are planning on waiting some 10-15 years for someone to come along.
Apple and Google (who will be launching a streaming service at some point this year) do not have this financial pressure of debt so it will be interesting to see how this all plays out. As we are fond of saying, stay tuned Over the last eight weeks in the A&R world, there are a few changes to report as always. Interscope is opening a new office in Nashville and has hired A&R rock veteran Kevin Williamson. Exiting Interscope is Tunji Balaban. Warner Bros. has also had some significant activity with the hiring of three new A&R staffers; Jon Chen, Quinn Coleman, and Carlos Cancela have all been promoted within the A&R Department along with Cheryl Jenets who is now Director Production Operations at Warner Bros. Over at Epic, Jermain Pegues joins the A&R Department while Sha Money, Jeff Juin, and Isaac Heyman exit the Department. Also within the Sony Label Group, Gary Overton exits Sony Nashville while Adam Fujiki exits Sony Canada.
Shifting gears from the A&R world to the world of must-attend events, be sure to register for the upcoming Driven Music Conference in Ft. Lauderdale as well as the Urban Network Digital Conference in San Diego. Be sure to note that MIDEM is now taking place in June for the first time in its history. You can check out all the upcoming music conferences in our Calendar of Events included in every issue.
Don't forget the new 2015, 7th Edition of the Music Blog Directory is also available. You can place your order by call-ing our office at 800-552-7411 (or 818-781-1974 for our international customers). So, until our next issue, please know that we always try our best to make sure all of our directory information is correct at the time of printing, but if you ever come across a bad telephone number or email address, just let us know and weíll make sure to track down the correct information (if we havenít already!). Until then, we remain. Sincerely, Ritch Esra and Stephen Trumbull