Digital music sounds good to Bronfman

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Warner Music Group chief Edgar Bronfman Jr. conceded Tuesday that the music industry is experiencing difficulties but painted a bright future once the emerging digital and mobile revenue streams begin to jell.

The WMG chairman and CEO made his comments during a Q&A at the Goldman Sachs Communicopia conference here.

Bronfman said he still sees a future for digital rights management and physical product in the music industry, though maybe not in their present forms. While he's not sure that the free download, advertising-supported music service can work as currently structured, he still foresees a role for the model.

During an one-on-one with the investment bank's media analyst Anthony Noto, Bronfman also said WMG has abandoned the old model of only exploiting recorded music and will now invest in new and midtier artists with the expectation that it will share in all the artists' revenue streams.

"Our industry is going through a massive transformation, maybe even much greater than any other industry has ever faced," Bronfman said. "But the industry has yet to realize the full implications from the impact of mobile, which so far is just ringtones. The industry has yet to see the implications of what impact digital downloads will have once competitors to iTunes are established. Nor has the industry yet seen the impact of subscription models, which are still in the early stages of development."

While some said that digital growth has slowed, Bronfman said that is inevitably a function of the base getting larger because the industry still enjoys healthy growth. But that growth could become more robust when some online competition to iTunes is developed. He cited Wal-Mart, Amazon and LALA as possible challengers to iTunes' dominance.

Ed Christman is a senior correspondent for Billboard.
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