Warner Music Laments Deal With Myspace Music

Myspace Music has separate licensing deals with each of the major labels that stream music on its service; they pay fraction of a penny for each stream, but negotiate different rates with each label.  But now, Techcrunch is suggesting that Myspace pays Warner Music absolutely nothing per stream, and instead, they share advertising revenue from the pages where Warner’s artists have their songs.

Warner Music is undoubtedly embarrassed for having such a poor deal in comparison to the other labels, and will probably look to renegotiate the licensing fees soon. What is also worrying is that the advertising revenue hasn’t been as much as they thought it would be. So, if Myspace’s advertising isn’t pulling enough money for Warner, what about other ad-based music services?

Half-a-cent per stream, multiplied by approximately 75 million U.S. users playing billions of songs every month, adds up to a considerable amount, and Myspace has to pay for every song streamed. It would follow that Myspace wants users to stream less, not more. But doesn’t that defeat the purpose of a free streaming service? If a service is to be free, then advertising revenue has to cut it.

Google recently started providing free music downloads in China with revenue based solely on ads, and is known to be strict in their dealings with labels. Spotify has a subscription option, but is mostly based on twenty second ads played every 30 minutes during music. If Warner Music is cutting deals with both of those services, how much are they expecting from Myspace? Warner is simply jealous of the other deals their competitors have with Myspace, and is angry for missing out on a bigger slice of the cake. Do you feel sorry for Warner Music?

Source: Techcrunch