Warner Makes Oz Downloads Deal

Warner Music Australia has become the first major label Down Under to offer repertoire for downloading.

The company has struck a deal with Australia's largest Internet service provider, BigPond, which claims a subscriber base of 1.5 million. The ISP is owned by Australian telecommunications giant Telstra, in which the Australian government holds a majority stake.

Downloads are expected to be made available from BigPondMusic at bigpond.com/music, which already hosts a streaming service at thebasement.com.au.

new digital models

Negotiations with Telstra began in January, according to Warner Music Australia chairman Shaun James.

"At a time when the new digital models continue to emerge, we believe this partnership solves many of the digital issues we face," he says.

An initial offer of 80,000 Warner tracks is expected when BigPondMusic launches Dec. 1.

Downloads are part of Telstra's strategy to boost its broadband customer base to 1 million by 2005 from the current total of 360,000.

James suggests that Warner is now placed to "see the benefits of being the first through the door and being a startup partner with Telstra for their service."

Warner Australia is negotiating with six other companies that plan to launch download sites within the next 12 months. They include retailers, mobile-phone manufacturers and Internet services.

James says that "offering music DVDs for download will be the next phase, as broadband penetration grows."

BigPond managing director Justin Milne says tracks will be available in the Microsoft-developed WMA format, and billing will be through standard Telstra Internet service bills.

"BigPond broadband customers will also be rewarded with discounts," Milne adds.

The two parties are still negotiating track pricing, but insiders suggest $1.99 Australian ($1.38) per single track is likely, with albums priced at less than the total cost of their individual tracks.

"Record companies have become highly aware how price-conscious online buyers are," says Rob Appel, CEO of online music retailer ChaosMusic.

The Australian industry has yet to decide on standard digital royalty rates. The Australian Record Industry Assn. (ARIA) wants it to be a percentage of the download price, while the Australasian Mechanical Copyright Owners Society (AMCOS) is arguing that it should be 12% of gross income made by a site.

But an interim agreement between ARIA and AMCOS that is already in place permits transactions to go ahead.

Since being named Warner chairman in 1999, James has aggressively pursued digital services as revenue streams.

One of his most successful initiatives was Song Shop, set up in November 2001 to assist advertising agencies and film/TV companies in sourcing music for productions and campaigns.

The initiative was subsequently adopted by Warner affiliates through Asia and Europe.