WMG Gets Kudos For Digital Strategy
Business 2.0 magazine has strong praise for Warner Music’s digital music strategy in its new issue. We’ve praised WMG previously for innovative campaigns like the recent Madonna release which used the internet, cell phones, and other non-traditional avenues to take the release to #1 in most markets worldwide despite significantly less airplay than previous Material Girl releases.
Particularly interesting is Warner’s use of "bundling" to encourage more than the single track 
purchases that threaten to decimate label revenue. According to Business 2.0, "Warner has found that when it adds material, customers are more than twice as likely to buy the entire package instead of a track or two at 99 cents. The version of (Madonna’s) Confessions that’s selling best, for instance, is also the most expensive–the $12.99 bundle that comes with the video and a digital booklet with photos and extra tidbits. In the week after the release of Depeche Mode’s Playing the Angle, 92 percent of its digital sales were for the full album, which came bundled with a digital booklet and a code to receive priority access through Ticketmaster to buy concert seats. Sell the music simply as a digital CD with no extras, the company is finding, and people are more likely to purchase by the track–or potentially grab it for free. "
A key to its chart-topping success: Figuring out how to bundle albums with digital extras like music videos to command higher-than-usual prices.
WMG also seems to realize that the potential audience for digital music is larger and potentially more profitable than the traditional record business ever was. "Instead of worrying about the 1 million or 2 million people who may or may not be walking into the 10,000 or so record outlets in the United States, I now have an installed base of somewhere between 30 million and 40 million iPods, however many additional MP3 players, the coming cell phones, portable devices, and on and on," WMG head Edgar Bronfman says. "And if I can get each of those people to buy a little music, this industry is going to do just fine."
But some are not so convinced that Bronfman is such a visionary. After all the figures all seem to come from WMG and not independent sources. In fact NYC industry blog Coolfer has been critical of the "Cult Of Bronfman" in postings both today and last week.
I’ve gotta hand it to WMG’s Investor Relations people. They’re realling spinning this story well. Pulling out digital album market shares? If only the rest of the company were that innovative. The thing is that digital album sales are not representative of the U.S. digital music market
For now at least, while we’re not joining any Bronfman led cults, we’re going to stay in the WMG is good camp. Anyone who is admitting that the old ways are broken and experimenting with new technologies and techniques to release and promote music diserves some praise. Keep it up Edgar. At least you’re trying.
