According to the BBC, Warner Music Group has decided that it has had it with the idea of ad-supported music streaming services that allow users to listen to an unlimited assortment of music.    Considered one of the big four record labels, Warners has decided that the ad-supported model is “clearly not positive for the industry”.

spotifyEdgar Bronfman Jr, chief executive of Warner said,  “Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.”  If this means that existing services such as Pandora and will have to remove the music they currently have agreements for is unclear at this time, or if they are strictly referring to future services that may wish to enter the marketplace.

“The ‘get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price’ strategy is not the kind of approach to business that we will be supporting in the future,” said Mr. Bronfman.

What is curious about this new statement is that streaming services have existed for a long time on the Internet, and some of them date far back before the premium account business model came about.  SHOUTCast has been around since late 1999, Pandora has been around for several years and is getting its software into cars this year and Spotify has been showing strong increases in Europe with even a tiny amount of its users upping their accounts to the premium level.  So why should Warners decide that now is the time to cut off these services?

snidelyThe company claims that it just isn’t making as much money as it should from the services, but yet other music labels such as Universal have stated their commitments to continue working with the companies.  Rumor is that Warners is asking for substantially higher stream fees, and companies are balking at the rate.  While this is unconfirmed, this could be a possible negotiating tactic on the part of the music label that if you don’t pay up, you just won’t even have the option to carry us any more.

While the record label may think its making a positive move, I really can’t see anything but negatives.  Imagine the young user who can’t find the song he wants, when he wants it … oh well, guess it’s back to pirating music for them.  What about the people who listen to these services and hear something they’ve never heard of before and end up buying the album?  Guess Warners is willing to give up those sales.  How do they expect people to discover new music now?

Terrestrial radio?  The record companies are trying to squeeze them for new fees currently, so who knows how long that will be viable for.

Videos on cable channels?  MTV just removed the “Music Television” portion of its logo, where exactly do people go now for consistent access to videos?  YouTube?  If they’ve never heard of the band, since they couldn’t discover them, how will they know to search for them on the video sites?

If I was a musician signed to Warners at the moment, I think I would be calling my contacts in the company and asking them how exactly they plan to promote my work.  Is there a possibility of them licensing their music only for the premium customers, or are they going to pull the works entirely?  If that’s the case, the other big companies should be sending “thank you” notes to Warners for just giving their artists more exposure.