Warner Music, Cisco Expand Web Partnership

Warner Music Group announced Wednesday that it has expanded its partnership with Cisco Systems, using the tech company’s software platform to power more websites for its artists.

The updated deal, which builds upon an existing relationship unveiled early this year, utilizes Cisco’s Eos entertainment software and network expertise to provide a platform for musicians. For Warner Music it’s an opportunity to use its expanded online presence to create new revenue streams.

Its a bold move for Cisco; jumping into the entertainment game by way of providing service for developing and maintaining websites adds a new wrinkle to their traditional business of building routers, switches and other related networking equipment for the Internet.

Overall it’s a deal that could possibly help bring the music industry and Silicon Valley closer together; the ongoing relationship between new technology and the music biz’s more traditional business model has been rocky at times, to say the least.

“We clearly see the entertainment industry in a phase of tremendous transition,” Edgar Bronfman, chief executive of Warner Music, said during a press conference Wednesday. “Business models are being challenged.”

Cisco CEO John Chambers said, “This reinvigorates a whole industry. What they’re doing will change the music industry forever.”

The expanded web presence for artists in the deal includes videos, chat functions and social-networking features — all meant to help drive lots of Internet traffic, which furthers demand for Cisco’s networking gear. The company’s hope is that other entertainment mediums embrace its platform.

Warner Music, the world’s third largest music company, is the only customer that Cisco has publicly spoken about.

The market is potentially lucrative, but only if Cisco can get a slice of it. Chambers figures the value of the entire media and entertainment industry at $1.3 trillion and believes these changes can expand the market.

Warner Music sees improved websites as a way for artists to reach out to customers, creating potential new business models. Other ideas being kicked around include offering backstage passes, promotions on tickets and the sale of merchandise.

Warner Music intends to use an advertising model for some of the artists’ sites, Bronfman said, noting that their fan bases are typically passionate and more attractive to sponsors.

Bronfman added, however, that he doesn’t see advertising making up the lion’s share of the revenue.

“We understand that there is a need to fundamentally change the way content is created and monetized,” Bronfman said.

Four artists, including Paramore and Sean Paul, have Eos-powered sites, with more expected by the end of the year.

Chambers called the announcement a “tipping point” on how the music and technology industries work together. He added that he believes rival music companies and the film industry will follow suit.