Feb 09, 2010 at 08:41 PM
Non-traditional Now 10% of Revenue at WMG
For some time, major labels have been securing 360 degree artist deals, which encompass non-traditional revenue streams aside from recording, such as marketing partnerships and merchandising. Warner Music Group's Edgar Bronfman shed some light on their approach during the company's earnings call earlier today. Here's some of what he had to say on expanding the company's non-traditional revenue.
"We continue to transform our business within the music value chain, while broadening our revenue mix into growing areas of the music business, such as sponsorship, fan clubs, websites, merchandising, touring, ticketing and artist management among others. We continue to diversify our recorded music revenue non-traditional revenue included nearly 10% of our revenue in the quarter.."
"Expanded rights deals now account for more than half of our active global roster."
"We have taken a specific approach to sign new recording artists to 360-degree rights, which means it's going to take them some time to develop before we see the real strength of that strategy coming to the fore. So our bigger releases which tend to be artists that have been developing for several years in most cases don't have 360 rights associated with them."
"There's no question that we will see I think significant acceleration of non-traditional recorded music revenue over the next two, three, four years, but it will be as these younger artists develop."
"Our business, on the other hand, is essentially a venture capital business where we're betting on a bunch of unknown artists who have yet to develop that opportunity. And when we sign those artists we sign, as I said, essentially all of them to expanded rights deals which means whether they go through Ticketmaster-Live Nation, when they're eventually touring or through some other form, we're going to partner with the artists in the revenues derived from their tours. So our sense is that these are largely complimentary businesses, not really competitive businesses."
"very religious here about signing 360 rights because quite frankly, given the size of the recorded music opportunity alone, the amount of incremental investment capital that is required for us to break an artist simply doesn't give us the opportunity for appropriate return without ancillary revenues."
For more information, visit www.SeekingAlpha.com