Former Warner Music Group Chairman/CEO Edgar Bronfman Jr., who stepped down from the post in 2012 after selling the company to a group led by Ukrainian-born billionaire Len Blavatnik’s Access Industries, has always been a believer in the music industry, putting up his own fortune to prove it.
Now, the emergence of subscription streaming services has him even more optimistic about the recorded music industry’s future. Bronfman told CNBC’s “Squawk Box” that he favored a subscription or streaming model even in the 1980s and ’90s “when we were selling albums.”
Bronfman acknowledged while each individual consumer may spend “a little bit less than fanatics who were buying albums,” he insisted the new model “broadens the distribution base” and sets up the industry for future prosperity.
The most recent report from IFPI indicated the global music industry had a year-to-year gain of 6%, driven by streaming revenue growth of 60%. That’s the highest rate since the world organization began tracking revenue in 1997, with a total of 112 million of paid music streaming services.
Bronfman said the music industry was the first to deal with the disruption of unbundling content (allowing consumers to buy individual tracks instead of full albums), which is currently “undoing a lot of the media business plans and business models.” Bronfman noted that music is “back to a healthy growth,” even though he said there are still potential roadblocks.
“The artists do make more of their money on the road these days. Spotify complains that it pays too much to the content companies. And content companies aren’t making a whole lot of money,” he said, adding, “I think this is a fixed-cost model and until that subscription model grows further, it’s going to be tough to turn a lot of profits.”
Bronfman concluded by echoing one of the Recording Academy’s favorite lines in reiterating the power of the music industry’s enduring catalog of songs. “People think back and have a soundtrack to their lives. And songs mean stuff to people,” he said. “In a way, it’s the most compelling consumer content.”
Earlier this year, Bronfman, who is currently Chairman of Endeavor, an international non-profit development organization that supports entrepreneurs, was reportedly involved in a group of investors, along with Meredith, Inc., kicking the tires on an acquisition of Time, Inc.
Watch a clip on the interview below: