From Lukas Graham’s breakout success to the acquisition last week of Swedish playlists experts X5 Music, Warner Music Group is having an interesting 2016.
Today at the Midem conference in Cannes, Stu Bergen, the label group’s CEO of international and global commercial services, gave a keynote to discuss its strategy. He was joined by the group’s president of Latin America and Iberia, Iñigo Zabala, and by Brazilian artist Anitta. The session was moderated by Billboard’s Jem Aswad.
Bergen talked about living through the CD boom, the piracy era and now the download and streaming eras. “We’ve weathered a lot of change. I think we have reason to be optimistic right now, the business showed some growth last year. I think we still have some challenges fighting to get the real value of music realised,” he said.
Bergen referred to the ongoing debate about the “value gap” between the amount of music streams on free services like YouTube, and the revenues that those streams are generating. “People hide in the dark shadows of safe harbour. But we’re quite optimistic.”
Zabala talked about his history as an artist, and why that helps current artists respect him, before Bergen talked acquisitions strategy. “Yes we’ve made a number of acquisitions over the last few years,” he said, referring to deals in China, Poland, Russia and other countries. “We believe the stronger we are domestically around the world, the better we’ll be able to serve our global artists. And the more global stars we have, the stronger our local outlets will be.”
That’s not just about acquisition, he said: it’s been about investing more in A&R and marketing around the world. Zabala talked about how that plays out in Latin America. “We at Warner believe in emerging markets, because we think that not believing in emerging markets is like not believing in the future of the world,” he said. “In the last three years we have passed from a more conservative approach in Latin America to a more aggressive.”
That has seen WMG grow its market share and profitability there, while breaking stars like Anitta. “Streaming is giving us the opportunity to invest in international acts in a way that just three years ago would have been impossible,” he said. An artist like Twenty One Pilots can play to a quarter of a million people across the region, even if they would have struggled to get the necessary radio support a few years ago – streaming is the platform underpinning their touring success.
Bergen talked about how the ownership of Access Industries has “freed us up to invest” and take longer, organic investment opportunities and bets. He added that they take a global view: the WMG board of directors is now drawn from a variety of countries. “They share our vision that success can come from anywhere and translate everywhere,” he said.
Zabala talked about the challenges of operating in markets like Spain that are suffering economically. Spain grew 10% last year, and Latin America also saw strong growth. “Even with the economy going very bad, there are reasons – for demographic and technological reasons as the penetration of smartphones and the connectivity of internet – that are pushing up our industry,” he said.
Zabala also talked about how streaming is fuelling growth in some of these emerging markets. “Streaming in Mexico now represents the third [biggest] market for Spotify, and streaming represents 70% of the [overall Mexican music] market. That shows you the potential of this new economy, of this new industry,” he said.
Cue Anitta, who has become one of the biggest stars in Brazil under WMG’s wing. “Two years ago I was happy to be in Brazil and that’s it. But once I started to accomplish my goals in Brazil, I started to create new goals in my mind for my career and my life. Now I’m very excited for my career to grow up and make my music international,” she said.
Anitta manages herself, having dropped her previous manager two years ago. “The manager used to want things to be happening very fast. When we are just a little calm and patient, we can think more, and make the things happen better,” she said. “Stopping, thinking with patience and calm, so I opened my own business. I have my employees and I have other people helping me. It’s not easy because I have to dedicate my life to do this.”
That means she’s having meetings with brands and other potential partners. “I make everything happen by myself. It’s difficult, but I prefer it. When I go there to work, to do something, I know that everything will happen just the way I imagine it,” said Anitta, who studied business for three years before she became a pop star.
What advice would she give to other artists? “I think people should be honest with themselves. When I see something that I’m not able to do, I don’t try to do this. I ask someone to help me,” she said. “Now I have good people with me. This is the important thing, the key.”
Aswad turned back to Bergen, asking about China and India as potential big markets for music. What is WMG up to in those countries? “We see an incredible opportunity in China,” he said, reminding the audience about WMG’s purchase of Chinese music firm Gold Typhoon.
“China is that perfect situation where you have an improving legislative environment that is getting more protective of intellectual property, you have companies that are providing good consumer opportunity, good consumer choice for streaming services. And after the Gold Typhoon acquisition we became an attractive partner.”
WMG is working with Chinese internet giant Tencent, which Bergen said has “staggering” reach in terms of the number of people it interacts with. Now that relationship is opening up opportunities for WMG’s international artists, such as appearing at Tencent’s QQ Awards ceremony.”
What other markets is WMG bullish on? “Latin America and South America in general, the whole region. Certainly there’s some economical turmoil but that market is really ripe for change. And China. We’re incredibly bullish on that,” said Bergen.