iPhone success drives digital music sales – Warner Music boss

Apple’s iPhone is “substantially expanding” digital music markets on a global scale, Warner Music boss, Edgar Bronfman confirmed yesterday during the major label’s financial results call.

Bronfman said strong sales of the iPhone (and conceivably, the iPod touch) are acting to “raise the profile of music in the mobile world,” delivering on a mobile music promise the majors have been praying for for a very long time.

“For example, iTunes was launched in Mexico earlier this week – the first new territory addition to the iTunes footprint in nearly three years,” Bronfman said, adding, “This launch is indicative of the opportunity Apple and its content partners have to follow the expansion of the iPhone into additional mobile-oriented countries.”

The effect of Apple’s device success has helped the label raise digital revenues by 11 per cent, despite the impact of the credit crunch.

The Warner Music chief exec also said the initial impact of tiered pricing in iTunes has been “very positive” so far. He pointed out that sales haven’t been much impacted, and indeed they are beginning to raise more revenue, a manifestation he described as a “net positive impact” on his company’s digital revenues.

“The download business remains the primary driver of our global digital business today and we remain very positive on Apple’s April introduction of variable pricing for single track downloads on iTunes. It’s early days but the variable pricing strategy is beginning to show a net positive impact on our top line digital revenue results. More importantly, this model gives us the flexibility to offer consumers more choice and provides us an opportunity to differentiate our offering,” he said.

Otherwise, things remain bleak, with an 11 per cent fall in CD sales, tough currency markets and more, leading the company to file net losses of $37 million (up from $9 million in the same period last year) on total revenues of $769 million.

Bronfman also hinted that merger negotiations between Warner and EMI may be back on the agenda, suggesting regulators may be open to such consolidation among recorded music businesses, but not likely among music publishers.