Last week, Warner Music Group reported its latest financial results, with an approving nod towards the importance of streaming’s growth. However, CEO Stephen Cooper went further in his comments to analysts, providing a defence not only of streaming music services like Spotify, but of the freemium model in particular – the nub of the recent dispute with Taylor Swift.
“The primary reason we participate in the ad-supported tier is because it provides the means for consumers to discover the advantages of the premium offerings, and thus, leads them to become paying subscribers. There is also the fact that the ad-supported, ‘free-to-the-consumer’ tier – in conjunction with the attractive price-point of paid subscription services – makes streaming a great alternative to piracy,” said Cooper, in comments reported by Recode.
It’s not a shocking statement, as such, but it’s notable to see the boss of a major label chiming so neatly with Spotify’s own arguments – especially at a time when there’s growing chatter within the industry about whether WMG’s two major rivals are cooling on ad-supported streaming at the highest levels. That said, Cooper is just as keen as those rivals to see a better conversion rate from free to paid.
“We continue to believe that the long-term sustainability of the ‘freemium’ model is predicated on high levels of conversion from ad-supported ‘free’ to paid subscription,” he said. “We look forward to continuing to work closely with our partners to turbo-charge the adoption rate for subscription streaming.”
Labels’ attempts to “turbo-charge” conversion rates haven’t always been well received by the streaming services in the past – Spotify’s free caps of 2011-2013 being the obvious example – but constructive, flexible help on boosting the appeal of premium subscription tiers can only be a good thing.
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