Max Lousada's Warner Music Group posted strong fiscal Q1 figures including its first $1 billion quarter for recorded music and even an increase in physical revenue.
But perhaps the most striking part of the earnings call was CEO Steve Cooper’s takedown of streaming services for their apparent ambitions to sign up talent.
While Spotify CEO Daniel Ek has denied the DSP has ambitions to be a label, there have been increasing reports of the platform doing direct deals with independent artists and managers. Spotify has also been encouraging emerging acts to launch their career on Spotify with free direct uploads.
Cooper warned that Warner Music expects to see its artists promoted fairly alongside any direct-signed acts on DSPs.
“As the streaming services continue to evolve we should expect to see that they will utilise sources of music outside of the majors in the hopes of lowering their margin,” said Cooper. “We have an expectation obviously that the playing field will always be even and that they will not utilise their ability to direct music through playlisting that disadvantages us.
“We think that it’s also likely that it will continue to look direct-sign artists. It started with exclusives and you can imagine them taking that another step or two.”
We have an expectation that the playing field will always be even
Cooper stressed the level of investment labels make in artists careers, describing WMG’s spend on A&R, marketing and promotion as reaching a “very meaningful” low 10-figure total.
“It’s important to remember that they [DSPs] are not organised to create value for artists, they are not organised to create artist careers,” said Cooper. “We do that not to promote a track, we do that to build careers.”
He added: “I would expect that we’re going to constantly see some nipping around the fringes, I think we will continue to see streaming services try to move to lower margin products. I’m sure you’ve seen complaints already where music is popping up in people’s playlists and they don’t know how it got there.
“Our focus is on artists and their music, not distribution and not other products like podcasts, TV programmes and chat rooms. I think we will be able to continue to compete effectively in the environment long-term, regardless of the left and right turns that the streaming services choose to make.”
Cooper’s intervention comes ahead of Spotify’s Q4 earning call, when it will reveal if it’s hit the upper target of 96 million subscribers in 2018.