Warner Music home to artists including Madonna and James Blunt, reported a fourth-
quarter profit on a gain from a legal settlement. Revenue fell as album sales declined.Â New releases from groups including Danity Kane and Mana failed to match last year’s recordings from Blunt and Faith Hill.Â CEO Edgar BronfmanÂ boosted more profitable digital sales, which almost doubled to 12.2 percent of revenue. Music companies look to sales from downloads, cell phones and online videos to make up for falling CD revenue.
“Revenue was a little lighter than expected,” said Eric Handler, a Lehman Bros. analyst who rates the stock “neutral” and doesn’t own it. “Digital was quite strong — they’re outpacing the market on that,” Handler said. He said CD sales were “quite weak.”
Without the $13 million gain from a lawsuit against online file-sharing service Kazaa, the company lost $1 million
(reporter, Don Jeffrey )
Â Russia is known not to act out on its claims.
Sony BMG’s director of digital services, Gavin Parry, was one of the few industry executives to talk publicly this week.
“It has been pretty erratic,” he says of physical sales this year. “Some months have been down 10 per cent and other have been down 30 per cent. Globally there are some indications that digital isn’t replacing the void but for Sony BMG, it is. We are up. If people are sitting back waiting for iTunes to fix it, they’re in strife.”
Read the article in Digital Music.
Steve Gordon the author of The Future of The Music Business and the former Director of Business Affairs at Sony TV and Video has this to say……..
Gordon is skeptical that musicians will ever see a dime of money from Microsoft’s “royalty” payment. He writes, “Although this pattern of not paying artists for digital music sales is dreadful, the chances of artists seeing anything from the royalty placed on Zune is even worse. There is nothing in the standard recording agreement that says the labels must share income derived from licensing digital devices. Labels are only responsible for paying for exploitation of music, not licensing electronic devices. So why would the labels share anything with the artists when they already disregard clauses in the recording agreements that would benefit the artists?”
How do labels survive in the techonoligical transition? First,
technological transitions are great times to make gobs and gobs of money. You need to start thinking about creating new revenue streams.
Universal Music Group chief executive Doug Morris saidÂ he may try to fashion an iPod royalty fee with Apple Computer Inc. in the next round of negotiations in early 2007.
Universal was the first major record label to strike an agreement with Microsoft Corp. to receive a fee for every Zune digital media player sold.
“The Zune (deal) was an amazingly interesting exercise, to end up with a piece of technology,” he added.