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Cisco, Warner Music expand online partnership
|14 августа 2009|
Cisco Systems Inc. on Wednesday expanded its partnership with Warner Music Group Corp. to further power the media company's online presence.
The deal, which builds upon an existing relationship unveiled early this year, taps Cisco's Eos entertainment software and network expertise to provide a platform for musicians. Warner Music, in turn, wants to use its expanded online presence to create new revenue streams.
"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."
Eos follows Cisco's consumer market ambitions and is among the several different areas the company is dabbling in as it seeks growth beyond its traditional router and switch business. Among its consumer products are Wi-Fi routers, cable set-top boxes and video camcorders. The $40 billion company, however, has struggled with growth as revenue continues to decline at a double-digit percentage rate.
Having an expanded Web presence for artists, which includes videos, chat functions and other social-networking features, drives Internet traffic, which furthers demand for Cisco's networking gear. The company's hope is that other entertainment mediums embrace its platform. Warner Music 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 pegs 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 Web sites as a way for artists to reach out to customers, creating potential new business models. Bronfman noted that the rock band Paramore offers a special box set exclusively on the site that outsells the regular album 13 to 1. Other notions 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.
The music industry faces sliding revenue as songs are often freely distributed on the Web. On Thursday, Warner Music posted a wider second-quarter loss as revenue fell more than 9% on lower album sales. The company said it was working to diversify its business.
"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.
Источник: Total Telecom