Major music labels who have taken a blow from shrinking CD sales are diversifying their business portfolio hoping to boost profits.
Typically Major Corporations focus on the core business. The Core business for major music labels is the CD. But since the CD has fallen, major labels like Universal Music and Warner Music Group announced investments in companies specializing in artist management or Web networking.
Major record companies have traditionally acted like venture capital firms by seeking out unknown talent, taking a risk in developing artists. If an artist has a HIT album, the record company can usually make a profit through CD sales. If the artist flops — no dice.
Although the record company cultivates the artist they make no money from the artist’s touring, personal appearances, advertising and merchandising.
With that said — Warner Music has invested around $110 million in the artist management company Front Line Management, whose clients include Jimmy Buffet, Neil Diamond and Christina Aguilera. Warner also has formed a joint venture called Brand Asset Group with Violator Management whose clients include rapper 50 Cent.
Universal Music has taken a stake in Loud.com, a hip-hop social networking site which offers competitions to win cash and recording contracts. The deal follows an $88 million deal by Universal to buy British management and merchandising firm Sanctuary, whose artists include James Blunt and Elton John.
There is no doubt that major music labels need to broaden their business to offset the decline in CD sales. But major corporations who choose to stray beyond their CORE business must be cautious.
Are labels familiar with artist personal management? How will they work with NEW and OLD talent? what will the percentages look like?
Although the road map in question, at least the future of music is in progress.(Reuters)
The first leg of the Police reunion tour has grossed $107,592,002 from 38 shows that drew 929,941 people.
Shares of Warner MusicÂ surged as much as 21 percent after a newspaper reported that it may be taken private and an analyst upgraded his rating. Warner’s owners may take the company private, the New York Post reported today.Top Current Records…….
Lies for the Liars
Overall, album sales are down 14% and Digital tracks are up 48%.
According to sources Britney Spears has hired former Kelly Clarkson manager Jeff Kwatinez in attempt to help resurrect her career. (TMZ)
CLICK HERE to view the list of nominees for the 2007 MTV Video Music Awards.
Korns new ‘unititled’ disc is expected to sell 125-150k first week. I didn’t see much promotion on the new record. The record was produced by British programmer/remixer Atticus Ross with The Matrix.
Sirius CEO Mel Karmazin announced a plan to offer a la carte programming for the post-XM-merger. NAB calls the pricing scheme a SHAM.Â According to the NAB’s results, under every programming package offered with a la carte pricing, consumers will pay out a higher per-channel price.
Warner Music claims a net loss of $17 million…….
Warner Music Group posted a wider third- quarter loss because of expenses tied to job cuts and a drop in compact disc sales. Revenue from recorded music fell 3.7 percent in the quarter as albums by Linkin Park and Michael Buble didn’t drive sales as much as new releases from Red Hot Chili Peppers, James Blunt and T.I. a year earlier. Increased sales of downloaded music and mobile-phone ringtones failed to make up for the decline in CDs.
The international recorded music decline was worse than we expected,” Tuna Amobi, an equity analyst at Standard & Poor’s in New York, said in an interview.
“The market expected a price from us we could not justify,” Bronfman said on a conference call today.
Digital revenue alone gained 29 percent to $119 million, accounting for 15 percent of total sales compared with 11 percent a year earlier.
Warner made deals during the quarter with companies including Joost.com and Snocap to put videos online and sell downloads.Â Warner also created a unit, Den of Thieves, to make original music programming to promote artists on TV and the Internet and on mobile devices. Warner also made a $110 million investment in Frontline Management, a talent agency run by Irving Azoff, in order to diversify its revenue. (Don Jeffrey; Bloomberg)
Amazon has funded Music download site Amie Street that prices songs according to their popularity. Amie Street was created by in 2006 by Brown University seniors. Amazon Sr. VP Business Development Jeff Blackburn said: “The idea of having customers directly influence the price of songs is an interesting and novel approach to selling digital music.”
Warner Music Group stock hits a new low of $10.15….
Universal Republic wants to Sue, Sue, Sue..Retailers says No, No, No: Universal Republic has threatened to sue retailers and merchandisers that continue importing and selling import copies of Amy Winehouse’s 2003 debut album, “Frank“. Retailers of course are arguing that, in the age of downloading, it’s absurd for a record label to take Universal’s approach. “We are selling physical product that the customers want, and they are trying to stop us,” one merchandiser said. “In the meantime, it is flowing freely throughout the world over the Internet through the (peer-to-peer) sites.”
Universal Republic plans to issue Winehouse’s earlier album “Frank” on November 7 stateside and wants to prevent imports from cannibalizing potential sales. (Reuters)
Monterey Peninsula Artists and Little Big Man will merge into one company called Paradigm Talent Agency.
Universal Music has purchased Sanctuary Music Group for Â£44.5 million ($90.7 million)
Universal Music puts Zomba on the block potentially worth in excess of $150 million. Sources expect initial bids will start coming in by Labor Day with a deal hoped to be in place by Thanksgiving. (NY POST)
Check out the new track Rise Today from former Creed members Alter Bridge.
Prince has been known for his demanding requests, but this time, he demanded his biggest yet — a house. It looks like negotiations to have a luxury five-bedroom home built for him within the grounds of London’s O2 Arena, formerly the Millennium Dome. It actually looks like someone is going to foot the bill.
During his London stay, he has reportedly demanded an oxygen bar – which enables participants to inhale a higher than normal concentration of oxygen though nasal tubes – for his entourage.Â It was claimed that he asked everyone to avoid eye contact with him, and demanded a special mirror to magnify his reflection.Â (TheDailyMail)
Elton John wants the internet closed down.
He claims it is destroying good music, saying: â€œThe internet has stopped people from going out and being with each other, creating stuff.
â€œInstead they sit at home and make their own records, which is sometimes OK but it doesnâ€™t bode well for long-term artistic vision.
â€œItâ€™s just a means to an end.
â€œWeâ€™re talking about things that are going to change the world and change the way people listen to music and thatâ€™s not going to happen with people blogging on the internet.
â€œI mean, get out there â€” communicate.
â€œHopefully the next movement in music will tear down the internet.
â€œLetâ€™s get out in the streets and march and protest instead of sitting at home and blogging.
â€œI do think it would be an incredible experiment to shut down the whole internet for five years and see what sort of art is produced over that span.
â€œThereâ€™s too much technology available.
â€œIâ€™m sure, as far as music goes, it would be much more interesting than it is today.â€
He said: â€œIn the early Seventies there were at least ten albums released every week that were fantastic.
â€œNow youâ€™re lucky to find ten albums a year of that quality.
â€œAnd there are more albums released each week now than there were then.â€
Bottom Line: Elton John is known for his off the wall rants, but this time he madeÂ some sense. KOAR talked about the creative drought and its main contributer–the internet. Creativity holds third place. The drought will continue unless artists make some drastic changes…