Cisco Systems (Nasdaq: CSCO) has a different approach to the whole cloud-computing idea. Where Amazon.com (Nasdaq: AMZN) and Microsoft (Nasdaq: MSFT) present comprehensive platforms including the kitchen sink, Cisco specializes in smaller niches. And the networking giant may help the music business survive in the digital millennium.
Cisco and Warner Music Group (NYSE: WMG) just widened a long-standing partnership. Warner landed a license to launch an unlimited number of Cisco Eos social-networking sites around its impressive stable of recording artists.
Eos is a Cisco-hosted media platform, custom-built for large entertainment businesses that want to "create, manage and monetize social entertainment experiences built around their branded content." The "monetize" part of that vision is what's important here. Warner hopes to tap into the power of viral online marketing by creating a miniature version of Facebook or MySpace around artists like Paramore and American Idol alum Jason Castro, where fans can keep up to date and purchase music or band-related paraphernalia.
"Having witnessed such a dramatic shift in the way consumers engage entertainment, we are constantly searching for new capabilities to address emerging digital behaviors," said Michael Nash, Warner Music's executive VP of digital strategy. In plain English, today's music fans are a far cry from your father's hipsters and greasers, and Warner must keep up with the digital revolution.
For Warner Music and rivals like Sony (NYSE: SNE) and Disney (NYSE: DIS), Cisco's sophisticated turnkey platform provides a quick path straight to the fans, where monetization begins through a combination of tightly controlled advertising and direct sales.
For Cisco, Eos is an early step into the computing cloud. The application is hosted and managed by Cisco. Warner simply provides the design templates and content. Once Cisco's clients dip a toe into these waters, Cisco could lead them to larger contracts, such as installing WebEx-based long-distance collaboration platforms or helping Warner build out a private cloud-computing infrastructure. Follow Cisco down that rabbit hole, and you could end up with a social cloud-computing platform that offers far more robust selling options than a potential rival like Facebook, where 1-800-Flowers recently launched a storefront that other companies are sure to follow.
Eos is merely the tip of the iceberg for Cisco -- the real benefits and profits follow later. But it could help the incumbents of the music industry survive the digital revolution. Good on Warner Music for getting on board early, I say. Drop your two cents in the comments box below, dear Fool
Now where are my R.E.M. and Metallica Eos sites? Stay tuned.
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