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Warner Music’s Edgar Bronfman: Spotify and streaming music revenue to grow in 2011

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It’s a new year, and Warner Music Group Chairman Edgar Bronfman is whistling a different tune regarding music streaming services.

Bronfman, who a year ago said that free music sites such as Spotify ‘are clearly not a net positive for the industry,’ on Tuesday forecast that licensing revenue from these types of streaming services will be an ‘immediate source of growth’ for 2011.

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‘We do see Spotify and streaming revenue from services other than Spotify to be meaningful in 2011,’ Bronfman said during a call Tuesday morning with analysts to announce the company’s first-quarter earnings in which revenue fell 14% to $789 million and net loss widened to $18 million, or 12 cents a share. A year earlier, Warner posted a net loss of $17 million, or 11 cents a share, on sales of $918 million.

Revenue from digital music grew an anemic 1.6% to $187 million in the quarter ended Dec. 31, representing 24% of the New York music company’s total sales.

Bronfman said the vanishing ringtone business and disappointing sales of new album releases were to blame for the quarter’s decline.

With sales of CDs in a continuing state of freefall and revenue from digital downloads slowing as the market matures, Warner is turning elsewhere to seek growth. Bronfman cited three sources, including added services to musicians such as merchandising, international expansion and digital streaming.

Warner, which renewed its licensing agreement with Spotify in Europe last year, has yet to sign an agreement with the music service for launch in the U.S. During the earnings call with analysts, Bronfman declined to answer questions about whether and when it would agree to licensing its music to the Swedish music streaming company for use in the United States.

-- Alex Pham

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