Warner Music Group’s chief financial officer has welcomed the “successful” round of subscription-price increases by music streaming services over the past year. But Eric Levin says the label group is encouraging DSPs to go further by planning recurring increases, rather than just one-off rises.
“I grew up professionally at HBO, where price increases were something we did every single year, and where the cable industry did every single year, while growing subscribers,” said Levin in an interview at yesterday’s J.P. Morgan Global Technology, Media and Communications conference.
“I think, and I am hopeful, that now the industry has done a round – or at least much of the industry has done a round – of rate increases successfully, and continued to grow, that they start to understand that the industry can bear it,” added Levin.
“That they start to have confidence in the ways to do it successfully. That they continue to look at the price value of music relative to what consumers pay for other products, and understand that there’s more room for increases.”
Levin stopped short of saying that music streaming services should increase their prices every year, like HBO and the cable-television industry did. But he said increases “could become and should become a normal part of the industry”.
“Certainly in our conversations with our distributors [meaning DSPs], we are doing what we can to try to encourage not just a price increase, but a recurring set of price increases as part of the industry.”
During his appearance at the conference, Levin also talked about WMG’s optimism for the growth of ’emerging streaming’ revenues – by which he meant those from new partners in areas like social media, gaming and fitness. He suggested that this side of the business could grow faster than traditional subscription and ad-supported streaming services.
“Emerging streaming is the interesting one. because that’s not really limited by a TAM [Total Addressable Market]. With subscription streaming, people are generally going to have one subscription to a streaming service and that gives them the product that they need,” said Levin.
“But with emerging streaming you have the potential for multiple products in a home. Multiple products per person in a home. People use multiple social media products, they play games, they have fitness products. All can be within that same home,” he continued.
“So you have the ability as products develop and products rollout for emerging streaming to become two, three, four use cases within a home, and therefore it has the potential to grow faster.”
Levin also talked about WMG’s strategy in emerging music markets, citing its past blend of DSP deals, catalogue acquisitions and label launches in China, central Europe, south-east Asia, the Middle East and Africa, while citing India, Vietnam and Turkey as examples of current expansion.
“What we have always prioritised is financial return. What we haven’t done is invest in emerging markets that are still riddled with piracy, and where streaming is not yet ramping up,” he said. “Because you can invest a lot of money in creating music that’s not going to generate a return. We’ve been very hesitant to do that.”
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