why it must suck to be a music label

Posted on November 27, 2009


I really dont feel sorry for these guys, especially after the spew of music they promote which is just inane…

warner brothers are in the red, but their digital and consumer spend is actually up. In fact, in sweden they are claiming its becuase of new pircay laws, which i greatly doubt. Its probably because its so much easier to buy music now and so convenient that people are buying. The shopping experience has always been critical, it was the start of the Virgin empire. first a mail order business and then the virgin stores and megastores – they did well because they focused on giving people a good experience – the digital version is itunes, spotify etc.

a key Warner brothers music group whinge is that they arent seeing the licensing they would like for music games (guitar hero etc) yet. I think they have a good point here, but rather than try to charge per song or a flat once off fee, charge a premium for monthly song updates. Learn from World of Warcraft that subscriptions are your friend and that people would love to pay a monthly fee to have the latest songs available.

a summary of the WBMG financials are below

mid WMG’s general weakness in Q3, digital revenues continued to rise. The segment’s revenue was $184 million, a 10 percent gain year-over-year. Digital comprised 21 percent of total sales in the quarter – up five percent from the previous quarter. Over the full year, WMG has now made $703 million from digital, also 10 percent up from last year.

Recorded music: Just as EMI Group has found, consumer music sales are actually up 0.3 percent – but that’s thanks to an offset from 16 percent overseas growth (especially Europe and Asia); domestic U.S. sales were down four percent. Digital made up 24 percent of this (£171 million), over a third of which ($105 million) is from U.S.

Music publishing: A 3.8 percent increase to $162 million, with digital growing even faster, by 46 percent to $16 million—likely the result of increased licensing by online services and other users of music.

3Q 2009 3Q 2008
EPS -$0.12 $0.04
Net Income -$18M $6M
Revenue $861M $854M