Warner to quit free music streaming

Record label Warner Music is to stop licensing its songs to free online music streaming services.

Companies like Spotify, We7 and Last.fm offer free, legal and virtually instant access to millions of songs.

Warner, one of the four major labels, whose artists include REM and Michael Buble, said such services were "clearly not positive for the industry".

That raises questions over the future of free streaming, which is popular with fans but not lucrative for labels.

Spotify has seven million users in six European countries and is in negotiations to launch in the US.

Ninety-five per cent of those fans use its free service, hearing adverts between songs, while 250,000 pay a monthly fee to get it on a mobile and with no ads.

Two-and-a-half million people in the UK use We7's free offering, while Last.fm is also free in the US and UK.

Other popular audio services include Deezer, Pandora and Grooveshark, while YouTube, Vevo and Muzu offer music videos for free.

Warner chief executive Edgar Bronfman Jr said: "Free streaming services are clearly not net positive for the industry and as far as Warner Music is concerned will not be licensed.

"The get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price strategy, is not the kind of approach to business that we will be supporting in the future."

It is not clear whether Warner will remove its music from existing services or decline to do deals with new outlets.

He said the focus would be on promoting streaming services that require payment, which could appeal far beyond those who currently pay for downloads in stores such as Apple's iTunes.

"The number of potential subscribers dwarfs the number of people who are actually purchasing music on iTunes," Mr Bronfman said.

Fans could pay a monthly fee direct to a streaming service, as with Spotify, or get access to the music as part of a deal to get a new a mobile phone, broadband connection or another gadget.

Such subscriptions could be taken up by "hundreds of millions if not billions of people, most of whom are not today either buyers or certainly heavy buyers of music", Mr Bronfman said.

And they would be much more profitable than per-track downloads in the long term, he added.

The main legal streaming services have deals with most major and independent record labels and pay royalties for each song played.

But the amount is far less than a label would earn if that song was downloaded or if they got a slice of a listener's monthly subscription fee.