This story was written by Staci D. Kramer.
Warner Music Group (NYSE: WMG) signed on for the Cisco (NSDQ: CSCO) Eos white-label social networking service in a dip-the-toe way in January. Now the label is putting the whole foot in the water by expanding its deal beyond sites for two artists to five, promising to add a dozen by the end of the year in an expansion announced Wednesday from the top of the companies in a high-profile show of support by Cisco CEO John Chambers and WMG CEO Edgar Bronfman, Jr. Warner can add an unlimited number under the terms of the rev share deal. No specifics on numbers though, either the financial kind or the the traffic variety.
I couldn’t make the TelePresence press opp with Chambers and Bronfman but spoke with Cisco’s Dan Scheinman about where Eos stands and why having only one partner so far works—for now.
—The pitch: Scheinman, who has been responsible for Eos since it was just a PowerPoint deck in January 2007, has it down pat: “This is about content and tech coming together trying to create value. Too often it’s about technology destroying value and competing with content.” Eos is designed specifically for media and entertainment.
—WMG’s potential revenue steams: Cisco announced Warner Music as its first partner for Eos at CES in January with two sites, what Scheinman calls a “let’s see if we like each other” phase. It gave hardware-centric Cisco a chance to launch the software-based service with a high-profile media and entertainment company while testing the technology and how it would scale and Warner a chance to experiment. Now that WMG is scaling both in traffic per site and in the number of sites, the major label sees four potential revenue streams: an enhanced site experience, ticketing with enhanced experience, subscriptions, and advertising/sponsorships. Bronfman says a limited edition CD Paramore’s site for $40 is outselling the standard 13-1. The edition of brand new eyes includes the CD plus bonus tracks, Hayley Williams’ 40-page handwritten journal of lyrics, exclusive photo cards, a deluxe vinyl 7”, an album booklet, poster, numbered certificate and a “making of” DVD. (I don’t think Bronfman said how much it costs WMG to produce the enhanced edition.)
—More partners?: When I asked about WMG still being the only partner, Scheinman said they’d always viewed Warner as an “early adopter” and that they’re in “active discussions” with others. “On the customer front, we clearly want to be across media (not just music). Our goal is to be able to work with folks in movies and sports and TV.”
—Eos, VeVo and the social net ecosystem: Bronfman sees upcoming music video site VeVo and his EOS-based sites as complementary, not competitive, the idea being that VeVo is about aggregating video, not about the artists. For Scheinman, Vevo, Facebook, MySpace and other social nets are all potential playmates. “These things all can live together and the key is about making them all live together. Potentially Eos could become a distribution hub into these things or videos in a single player. Facebook and MySpace both are open platforms that allow for apps. We could build an app from the artist site that lives in Facebook.”
—Competition: Cisco has competitors at two extremes for Eos:white-label social net Ning and the kludge companies have cobbled together. What’s the difference between Ning and Eos in his view? “The best analogy—Ning becomes the factory. They control the customer data, they sit between you and the user. We let customers build the factory.” Companies own all their own consumer relationships, copious data and create the look, the feel, the customization. Warner says it’s five times faster than their in-house solution to build an Eos site.
—Timeline: While it may look to the outside like Eos is moving slowly, for Scheiman it’s as lighting fast as a mega-corp can get. Nothing but Powerpoint in January ‘07, acquired engineers soon after and 20 months later had sites up and running. Pushed about what’s next, Scheinman says it’s still early innings—and those early innings include adding customers. The middle innings are for increasing the value of each user. No real timeline though.
By Staci D. Kramer