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.

Is a blurb and a link on a well-read mp3 blog is more valuable to small indie band than modest airplay on a small- or mid-size college station? Read full article here, via coolfer.

Shares of Warner Music  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…….

Korn
Untitled
TW 123,142

White Stripes
Icky Thump
TW 24,784
Total 499,426

Starting Line
Direction
TW 20,207

Paramore
Riot!
TW 15,555
Total 144,767

Flyleaf
TW 10,181
Total 663,549

The Used
Lies for the Liars
TW 6,207
Total 216,650

The Almost
Southern Weather
TW 6,255
Total 144,909

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.  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.  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)