November 29, 2017:WMG’s Stu Bergen: ‘I would caution us not to get drunk on two years of growth’ (#SlushMusic)

WMG’s Stu Bergen: ‘I would caution us not to get drunk on two years of growth’ (#SlushMusic)

As CEO, international and global commercial services at Warner Music Group, Stu Bergen has become one of the main spokespeople for WMG’s strategy in the streaming age.

At the Slush Music conference in Helsinki today, Bergen appeared in a session with the event’s co-founder Kalle Lindroth – a WMG-signed musician in his own right – to talk about some of the market trends both globally and in the Nordics.

Bergen looked back to his times as a radio plugger in 1989, trying to get Nine Inch Nails played on US commercial radio, finally succeeding with a station in Boston – which quickly led to record sales in the city. “That was our version of big data back then: the guy in the mailroom coming out and saying he was shipping lots of 12-inch records to Boston, and he didn’t understand it!” said Bergen.

How have things changed since then? “In very profound ways. Now, obviously the media channels have changed, they’ve fragmented, there’s social media, there’s influencers, all sorts of different avenues to the consumer,” he said.

“The other thing that’s worth noting is our big commercial channels are some of our biggest marketing channels, be it Spotify, Apple Music, YouTube. Those are not only great commercial channels for us as a business, but they’re also our strongest marketing channels in many cases. Before it was more segmented: you’d work the media then hope to sell the record in the shop.”

Bergen talked about people management, some of which he learned from colleagues at Warner Music Finland. “One: no assholes allowed. And number two: hire attitude and teach skills,” he said. But WMG has also been learning from the early adoption of streaming in Finland and other Nordic countries.

“I remember distinctly, it was 2012 call it, at a big Warner leadership conference. Our head of BD [business development] at the time, Stephen Bryan, gave a presentation when we were still in a reasonably dark time in the business, 12 years into the decline. And the presentation was ‘What if the world were like Sweden?’ And he basically articulated hope,” said Bergen.

“For those who were watching double-digit declines in their markets, it brought them to a new equilibrium, but as a company we were starting to invest heavily again, thinking the recovery was around the corner. And it certainly fortified that we made a number of investments on the back of that… So it [the region] has certainly been a positive beacon.”

How is 2017 looking for streaming? “The streaming story is a continuing positive story. I would caution us not to get drunk on two years of growth. We have to stay vigilant, continue to drive the adoption of paid streaming subscription,” said Bergen.

“It’s important that we recognise that not every market and not every genre has benefited equally from the emergence of streaming. Three of the top five markets in the world are still heavily physical. That transition will still happen over time. Classical and country music haven’t made the jump to streaming, so they aren’t seeing the full boost of the streaming recovery.”

“As things like voice activation take hold, whether you’re three or 103 you can say ‘play Ed Sheeran’s Perfect’, so I think that will broaden the adoption and demographics of the paid streaming models.”

Bergen also talked about emerging markets. “Yes, we believe in the opportunity in emerging markets. We’ve made some pretty significant bets in that regard,” he said, citing the acquisition of Chinese music catalogue Gold Typhoon as one example. “Streaming entering these markets is really opening up new opportunities. And not just opportunities on a macro level because it’s growing the business, it’s opportunities for our artists on a very personal level.”

“I think that China, for instance, is a market that artists will start to aspire to breaking much like they want to break in the United States or the UK or Germany. It is a huge opportunity and there are others. Indonesia, 250 million people and just starting on its recovery in the streaming space. Africa…”

Is streaming ‘the final format’ asked Lindroth. Is there something else to come? “We’re just starting to scratch the surface of what streaming can mean. Again, voice activation opens up use cases, it opens up the car… and then it could shift to more experiential, whether it’s augmented reality or virtual reality. Theres’ a lot of opportunity,” said Bergen.

“The canvas for artists to create is bigger. It’s audio-visual, we’re starting to invest a lot in non-audio-only opportunities for our artists to express themselves. There’s a lot that’s still unfolding even amongst the services or platforms we have available now.”

Lindroth wondered who’s the boss in a streaming world. “That sounds so hierarchical! I feel it should be more of a partnership. When an artist signs to us they have one career and we take that responsibility very seriously. As record companies we’re the caretakers of that career,” said Bergen.

“We have to evolve our company so that we can meet the ongoing needs of the artist community, whether it’s their creative needs, their promotion and marketing needs… That’s where we sit in the value chain. No business has a right to exist, and we are no different to that. We are in a perpetual state of evolution to meet our artists’ needs.”

Bergen also talked about possible future changes for WMG. “We will look different, because we will be changing to better adapt to the needs of the market and the needs of our artists at that time,” he said.

“Four years ago we were stuffed to he brim with video promotion and physical sales people. In South America over the last four years we’ve licensed all our physical distribution to our manufacturers. Our headcount has gone up, but we’ve assigned it all to A&R and marketing… we’ve grown our staff, but put it into areas that we feel better serve the artist community.”

He also accepted that Chance the Rapper’s success outside the label system, albeit with a strong team around him, may offer inspiration for other artists to follow suit. “Surrounding yourself with the team that is important to you, that services your needs is vital.”

The 360-degree contracts model came up. In some markets, WMG does get involved in the live businesses of its artists, but it’s not a rule.

“It’s not something that applies or is practical in all markets. The US touring market is unlikely to develop in a way that we would enter the touring business or the promotion business, so it’s really a country-by-country proposition,” said Bergen.

“Our first goal is to be a great partner and company for our artists. Wherever that can take the relationship. We do a lot of our artists’ merch on a global basis, but the live business is more of a local thing.”

Does Bergen have any regrets or mistakes from his career? “I’d definitely wear earplugs in my 20s to all those rap shows,” he joked, before giving a more serious anecdote from when, aged 24 he went to see Reverend Horton Heat supporting a band that Sony Music was hyping as “the next coming of the Messiah”.

Being a “24 year-old punk kid” Bergen decided he was going to see Reverend Horton Heat then walk out one song in to the hyped band. When they turned out to be good, he almost rethought his plan.

“I made it through four songs and then did walk out. That band was Pearl Jam. I regret that I ultimately walked out! But I was fortunate enough to see them about 60 or 100 times after that,” he said. “It taught me: keep your mind open. Some things that are being hyped are great, some aren’t. Basically just keep an open mind.”

Advice that serves as well for technologies and digital trends in 2017 as for grunge bands…

Stuart Dredge
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