RUMOR MILL
"It's clearly margin and volume. It's no longer the days of 1995 CDs and the packaging 10 to 12 songs. Those days are over. The consumer has chosen and they want to pick what they want."
——Rob Wiesenthal
Thursday, December 8, 2011
SONY BIGWIGS ON THE RECORD
Sony’s Wiesenthal, Bandier and Schaff Gaze Into Their Crystal Balls
Speaking at the UBS Media Conference in New York earlier this week, Sony Corp. of America CFO Rob Wiesenthal predicted the major labels will operate more like music publishers than record companies in the future, CNET’s Greg Sandoval reported. Wiesenthal also predicted that subscription services will thrive once their costs to consumers are bundled into mobile-phone bills.
On the music side, Sandoval wrote, Wiesenthal made a pretty articulate pitch for making record companies operate more like pubcos. He downplayed the label's traditional "pick, pack and ship" business for the bigger margins and light overhead of publishing. He said only 17% of publishing revenues are associated with record sales, and that means publishing is "immunized from piracy."
That led to a prediction from Sandoval himself regarding a certain seemingly vulnerable mogul: “EMI CEO Roger Faxon should be happy to hear that since he's been pushing EMI toward becoming a rights-clearing house for years now. Can't hurt to have the new employer on the same page.” We’ll see about that.
On sub services, Wiesenthal said he supports the strategy of bundling music into mobile-phone plans. One of things he liked was the ability to tuck the costs to the consumer into a phone bill. He suggested that tying music to a mobile plan will make people less likely to dump their subscriptions and make their cellphone plans "stickier" too, knowing that they could lose the music. But the CFO also seemed to acknowledge that the price has to be low enough so that subscribers don't think about it. The music costs has to be just another line item on their bill.
"This is where it's going," Wiesenthal said. "It's clearly margin and volume. It's no longer the days of 1995 CDs and the packaging 10 to 12 songs. Those days are over. The consumer has chosen and they want to pick what they want."
Meanwhile, Sony/ATV chief Marty Bandier was interviewed by Music Week about his company’s acquisition of EMI Music Publishing; Sony owns 38% of the pubco. When asked how successful the new Sony/ATV offshoot would be, Bandier said, “I’ll let you know in about two years! [This acquisition] could be ranked as the greatest accomplishment, or it could be the worst”.
Finally, Tim Schaaff, head of the struggling on-demand content platform Sony Entertainment Network, gave his take on the far more popular Spotify this week in London, saying he didn’t believe Spotify would come to dominate the streaming content sector in the way iTunes dominates the download biz.
“It’s certainly not in the labels’ interest to have one company dominate everything,” Schaff stated. “That’s not likely to happen, that doesn’t happen in general. Spotify has been one of the first companies to be able to really make a statement about subscription services that has made sense to the consumer, but it’s early days and we used to think that MySpace was going to dominate everything in social networking, and they’re gone. Things change very fast in this environment, and fashion changes quickly in this environment, and it’ll be interesting to see how that plays out. We really are at the early stages here, and the question is how will the companies hold up over the long run.”
On the music side, Sandoval wrote, Wiesenthal made a pretty articulate pitch for making record companies operate more like pubcos. He downplayed the label's traditional "pick, pack and ship" business for the bigger margins and light overhead of publishing. He said only 17% of publishing revenues are associated with record sales, and that means publishing is "immunized from piracy."
That led to a prediction from Sandoval himself regarding a certain seemingly vulnerable mogul: “EMI CEO Roger Faxon should be happy to hear that since he's been pushing EMI toward becoming a rights-clearing house for years now. Can't hurt to have the new employer on the same page.” We’ll see about that.
On sub services, Wiesenthal said he supports the strategy of bundling music into mobile-phone plans. One of things he liked was the ability to tuck the costs to the consumer into a phone bill. He suggested that tying music to a mobile plan will make people less likely to dump their subscriptions and make their cellphone plans "stickier" too, knowing that they could lose the music. But the CFO also seemed to acknowledge that the price has to be low enough so that subscribers don't think about it. The music costs has to be just another line item on their bill.
"This is where it's going," Wiesenthal said. "It's clearly margin and volume. It's no longer the days of 1995 CDs and the packaging 10 to 12 songs. Those days are over. The consumer has chosen and they want to pick what they want."
Meanwhile, Sony/ATV chief Marty Bandier was interviewed by Music Week about his company’s acquisition of EMI Music Publishing; Sony owns 38% of the pubco. When asked how successful the new Sony/ATV offshoot would be, Bandier said, “I’ll let you know in about two years! [This acquisition] could be ranked as the greatest accomplishment, or it could be the worst”.
Finally, Tim Schaaff, head of the struggling on-demand content platform Sony Entertainment Network, gave his take on the far more popular Spotify this week in London, saying he didn’t believe Spotify would come to dominate the streaming content sector in the way iTunes dominates the download biz.
“It’s certainly not in the labels’ interest to have one company dominate everything,” Schaff stated. “That’s not likely to happen, that doesn’t happen in general. Spotify has been one of the first companies to be able to really make a statement about subscription services that has made sense to the consumer, but it’s early days and we used to think that MySpace was going to dominate everything in social networking, and they’re gone. Things change very fast in this environment, and fashion changes quickly in this environment, and it’ll be interesting to see how that plays out. We really are at the early stages here, and the question is how will the companies hold up over the long run.”
