Whatever reservations Warner Music may have had about Spotify seem to be ancient history. During a call with investment analysts this morning (August 4), CEO Edgar Bronfman Jr. gushed about the service's U.S. launch and the future of cloud-based music.
"It's something we have been calling for and has taken much longer, frankly, than anyone would have hoped," Bronfman said, according to PaidContent. "With the advent of the cloud, you're going to see significantly broader music service introduction, strategic distribution and, I hope, a reacceleration of overall digital growth beyond the growth of digital downloads, which is what the industry has really been living on since their introduction in 2004."
As for Spotify, he expanded upon the positive remarks he's been making since late last year.
"We're very pleased with the arc of Spotify's growth. Their traction has been very encouraging. We're very pleased with the progress so far," he said "The kinds of levels that Spotify is achieving in Europe with regard to moving free users to premium paid subscriptions is also encouraging. If that keeps up, they will be a very profitable company themselves and will generate significant profit to Warner and the industry."
Of course, Warner and other labels have a vested interest in the service's success, since combined they own 17-18% of the operation, according to multiple reports. "We receive a certain percent of the revenues from Spotify and a certain percentage based on a per-stream rate from Spotify," Bronfman said. "That industry pool is then apportioned on a share rate based on what's being streamed on the Spotify service. Spotify pays advances which we recoup against the revenue that is earned."
He declined to discuss arrangements with iCloud, citing confidentiality agreements, but said, "We have a retail-wholesale agreement for iCloud that is not dissimilar to the way it works for download."