‘There is talent everywhere. But we have to make the effort to break that talent.’

MBW’s World Leaders is a regular series in which we turn the spotlight toward some of the most influential industry figures overseeing key international markets. In this feature, we speak to Alfonso Perez-Soto, President, Emerging Markets at Warner Recorded Music. World Leaders is supported by PPL.

With a combined population of some 160 million people and some of the fastest internet speeds in wider Europe, Eastern Europe is a buoyant emerging market for the global music industry.

In spite of subdued economic forecasts for much of Europe over the coming 12 months, due to inflation and an energy crisis fueled by conflict in Ukraine, key Eastern European territories such as Poland and Romania have seen YoY GDP growth of 4% and 5.8% in 2022, respectively.

Warner Music Group has been making strides in Eastern Europe in recent years, having struck deals in the likes of PolandSlovakiaSerbia and Romania.

In April this year, WMG promoted Izabela Ciszek-Podziemska to the newly created position of General Manager of Warner Music South East Europe to oversee its activities in the region.

Commenting on Ciszek-Podziemska’s appointment at the time, and on Warner’s strategy in the region, Alfonso Perez-Soto, President, Emerging Markets at Warner Recorded Music, noted that, “We want to partner with local experts from the region and help them develop a new generation of international superstars”.

And in our interview below with Perez-Soto, he doubles down on this mission statement: “Hits can come from everywhere”, he explains, and points to the likes of pop star Minelli as a notable global success story.

Minelli, an artist from Romania, has been released by WM Poland/South Eastern Europe for the last two years.

She has generated more than 200 million streams via Warner Music, with her biggest hit so far being Rampampam, which reached the Top 5 on the Global Shazam chart.

Warner Music signed and upstreamed Minelli via its partnership with independent Romanian label Global Records.

Perez-Soto also cites Roxen as a notable case study from Romania. Roxen has been released by WM Poland/South Eastern Europe for the last two years, having generated more than 40 million streams, with her biggest hit so far being UFO, which reached the Top 3 on Poland’s airplay chart.

“We can make significant changes and [offer] substantial support to artists that come from a small market,” says Perez-Soto.

Other partnerships struck by Warner Music in Eastern Europe include a minority stake in prominent Poland-based hip-hop promoter BIG IDEA in May 2022. WMG also co-hosted the Big Idea-promoted Clout Festival in Poland in July, which featured a performance from Jack Harlow and local acts like PlanBe, Sir Mich, Smolasty, White Widow, 2sty, Milu and Oliwka Brazil.

In Czech Republic, which has a population size of around 10.7 million people, Warner Music and indie label MIKE ROFT Records have seen success with Calin, whose track Hannah Montana has been No.1 for a total of 30 weeks in the market since its release in March. It’s streamed over 17.5 million times on Spotify alone.

In Slovakia (population size 5 million), the track topped the charts for 21 weeks. In both cases, according to Warner, it broke the records for longest-running No.1. WM Czech Republic is also currently seeing success with hard rock act Kabát, who’ve had the No.1 album in the marekt for the last two weeks with EL PRESIDENTO.

“Czech Republic and Slovakia have been always very solid countries in terms of growth and performance,”  explains Perez-Soto. “If an artist is from a country with a population of five million, it’s not an obstacle for [us] in providing [them] with a proper artist value proposition, with proper support.”

In addition to having an emerging markets brief for Eastern Europe, Perez-Soto, who was promoted to President, Emerging Markets at Warner Recorded Music in March 2021, covers Sub-Saharan Africa, the Middle East and North Africa, India and South Asia and the Eastern Mediterranean.

These markets are home to 3.2 billion people, some 40% of the world’s population. Commenting on Eastern Europe specifically, Perez Soto says the region shouldn’t be overlooked by the global music industry.

“There is talent everywhere,” he says. “But we have to make the effort to break that talent. That’s part of what we’re doing in Eastern Europe. It doesn’t matter if you were born in Croatia or Romania or Slovakia, you could have a chance [at global success].”

Here, Alfonso Perez-Soto, President, Emerging Markets at Warner Recorded Music, outlines Warner Music Group’s strategy in Eastern Europe and his predictions for the market in years to come…

Why would Eastern Europe be overlooked by the global music industry and what is Warner’s strategy there?

[Eastern Europe] doesn’t have a [united] diaspora. You have a [large] Polish population in the UK [for example], traditionally a Polish population in Chicago, in the Midwest. But the [wider Eastern European] diaspora is not so [united] in general. They are not united by language. It’s really difficult to have a hit that comes from Poland, in Polish [language] that [breaks] all the way down [in] Serbia.

When you think about how to break through, on the things that we have [broken through on], there has been the same pattern [with genres]. For example, the Urban music and hip-hop scene is rising in all of Eastern Europe.

We make a phenomenal effort in the market [in these genres]. For example, starting with the largest market in Poland, where we just invested in the most important hip hop promoter [in the market], called Big Idea.

But we also partnered and invested in the largest hip hop label called Step Records. That partnership covers a lot [including] merch, and a lot of integration of services.

Traditionally, the artist value proposition has been very challenging in [some] markets, but there is a way to create value by diversifying the services to the artists. We have been doing this, and it’s part of our view, as to how to break [artists from] this region.

You partnered with Global Records in Romania in 2020 – what made them an attractive partner in the market and what was the strategy there?

The reality of what we are trying to do is to have a strong local presence, but respect the local knowledge of our partners at the same time. We try to have the best of both worlds, and not just jump in and have a local presence, while disregarding the experience of our partners on a local level.

We try [meet] in the middle. We are not doing this just with Global Records. We did it with Mascom in Serbia.

We are working on improving the production side, improving the A&R side with [Global] and it’s paying back when you see the results.

which markets are you seeing the most growth currently?

Czech Republic and Slovakia. For the size of the population and demographics, they outperform other countries in Eastern Europe. Even in the size and penetration of the services. Culturally speaking, Czech Republic has been adding a lot to music in the region.

What do you look for in the companies that you partner with? 

There is a mutual interest. They have talent, they have IP. But they also need structure, they need a back office. They need a long-term strategy.

Some of the artists have the potential to reach other markets, and they need investment. When some up-and-coming artists are locked in exclusive distribution deals without that particular support on upstream, it could weaken their capability to succeed [globally].

We have seen this in [Eastern Europe] and in other markets. A distribution [deal] can obviously give you access to supply chains and certain basic retail services, but when you are up and coming, you need this extra push in terms of resources; more promo people, more marketing people, more support and investment.

And you have the ability to go and work with producers outside of your territory [by partnering with a company like Warner]. If you are in a distro deal that’s locked and you don’t have this support, we see this as a fundamental barrier to artists’ careers.

We are trying to solve that problem and we do it in the best interest of the local artists, and also creating and maintaining the culture that we have had at Warner for quite a while, which is, that hits can come from everywhere.

what are the biggest obstacles to achieving growth in Eastern Europe?

Some obstacles are that it is quite close to Ukraine. The threat of inflation in some territories and uncertainty is creating some problems in their economies as it does in the rest of Western Europe.

Barriers have been traditionally [streaming] adoption. [Following] a culture of piracy, it is taking longer.

You mentioned hip hop, and you mentioned EDM doing particularly well in the region. Would you say that follows patterns globally with those two genres,  for example, in Germany and France, where we’re seeing superstar domestic hip hop artists?

Urban is clearly domestic. [With] EDM, already a country like Romania has proven that they can have global hits coming from Romanian artists.  Yeah, they follow more or less the same trends in that sense. Also the impact of TikTok and the impact of Playlisting in the DSPs is huge. It’s populating most of the top of the charts, mainly in Poland, and also now Czech Republic and other areas in the Balkans. There are some local genres, like ‘Manele’ in Romania that has a strong presence in the [local] charts.

we spoke about obstacles to growth LIKE INFLATION And there are ALSO wider economic factors THAT WE’RE AWARE OF like ad spend slowing globally. Are these factors a concern for you in Eastern europe?

In the short term yes. In the long term, some of these countries have been the fastest GDP per capita growth markets in all of Europe. Poland and  Czech Republic have historically been countries where [GDP] growth year over year has been some of the largest in Europe.

Slovakia, Czech Republic, Hungary, Poland and Slovenia: their economies are quite healthy. Others are still a little bit more complex, but I would say the main markets have proven to have strong GDP growth per capita.

World Leaders is supported by PPL, a leading international neighbouring rights collector, with best-in-class operations that help performers and recording rightsholders around the world maximise their royalties. Founded in 1934, PPL collects money from across Africa, Asia, Australia, Europe, and North and South America. It has collected over £500 million internationally for its members since 2006.Music Business Worldwide

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