Warner Music Group have announced their numbers for the first quarter of 2010. Warner Music Group cut its loss to $25 million compared to $68 million a year ago. Recorded music sales were down 5.5% year-on-year to $534 million, but global digital sales were up 11.2% to $189 million, with the UK singled out as a particularly strong market.
Digital sales now account for 30.1% of WMG’s total income. CEO Edgar Bronfman praised Apple – “No-one’s gotten very rich betting against Steve Jobs – and I don’t want to be the first to do it” – although he refused to speculate on whether it’s about to launch a subscription model for iTunes.
Record industry trade Hits Daily Double has gone through the numbers for Q1 of 2010 to see how the major label marketshare is shaping up. Sony has been gaining some great marketshare from Universal, Im guessing that is mainly because of the huge success of Simon Cowell’s record label. Hits has more analysis. Free registration is required.
In a report to shareholders this morning, Warner Music Group revealed that in the quarter ending June 30th, 2009, total revenue decreased 9.3% and operating income from continuing operations declined 51%. Total losses from continuing operations swelled to $37 million from $9 in the prior year quarter.
WMG improved its financial position during the quarter with a $1.1 billion offering of secured notes which the company used to pay off previous loans. But the new new notes carry a hefty 9.5% interest rate and come due in just 7 years
This morning’s SEC filing showed:
- Total revenue of $769 million decreased 9.3 % from the prior year quarter.
- Digital revenue was $175 million or 23% of total revenue in the quarter up just 1% from the second quarter and up 5%f rom $166 million in the prior year quarter.
- Operating income from continuing operations declined 51% to $25 million compared to $51 million in the prior year quarter.
- Operating income before depreciation and amortization (OIBDA) fell 22% to $90 million from $116 million in the prior year quarter.
- Loss from continuing operations was $37 million or $.25 per diluted share compared to a loss from continuing operations of $9 million or $.06 per diluted share in the prior year quarter.
- Interest expense this quarter included $18 million or $.12 per diluted share of previously unamortized deferred financing fees related to the company’s senior secured credit facility. These fees were written off in the current quarter when the company repaid the credit facility in full in connection with its senior secured bond offering.
Read the full filing here.
CNET and the Wall Street Journal are both reporting that Universal Music Group and YouTube are in final negotiations to create a new music videos website, with the working title of Vevo.
The site is intended to feature music videos, artist-related content and interviews. The aim of course is to bring in more high profile brands who arent necessarily interested in advertising on YouTube because of its user-generated content.
It has been mentioned by CNET that the three other major labels have all been approached to join the Vevo service. Im sure this would all work in the same way as Myspace Music in which the major labels all have an equity stake. Myspace Music has amazed me that so many independent labels have come on board with the solution, because they should realise that part of their profits are still going to the major labels. However, with Myspace Music most independent labels need to have their music on the site, so why not make some revenues in the process.
Amazon has just launched their
Mp3 Music store in the UK. The store can be found at
http://mp3.amazon.co.uk. The simple-to-use digital music store offering over 3 million DRM-free (Digital Rights Management) songs which will work on any MP3 player including the iPod™- with top-selling albums from just £3 and individual songs from 59p.
Amazon Mp3 UK has all four major labels signed up, SonyBMG, Universal Music, EMI Music and Warner Music – and leading independents such as Cooking Vinyl, Harmonia Mundi, Beggars Banquet, The Orchard, Concord and IODA.
In 2007 P2P music downloads were worth a staggering $69 billion, and all other forms of movie/television piracy are on the rise.
Techcrunch has been talking a lot about using music online as a free promotion tool, because eventually music will be free online. If record labels do use music online as a free promotional tool then they need to have other revenue stream. Warner Music is signing their new artists to 360 deals, in which allows them to have all revenues streams.
Somebody over there needs to put their thinking cap on, quit screwing around and just give the damn music away for free with no lawsuit strings attached.
The whole industry is aware that traditional, physical music sales are threatened by new mobile and internet methods of music consumption, and lot of suggestions for the way that music will be paid for in the future have been discussed. One such is the idea that ISP’s and other big service providers could be made responsible for the music that their clients download, charging a flat premium on their service contracts to be passed on to the music copyright owners.
Danish company TDC have teamed up with Warner, Sony/BMG and EMI to take a step in this direction with their new Play package delivered in co-operation with multi platform cable provider YouSee (Danish language). Their ‘Nordic’ users can make unlimited, DRM protected downloads from a catalogue of approximately 1 million tracks, including REM, James Blunt and The Red Hot Chili Peppers.
“When our customers wake up tomorrow, we will have changed their everyday lives. They will experience that through PLAY they are suddenly able to download all the music they wish as a part of their subscription from TDC or YouSee, legally and without extra charges,” says Jens Alder, President and CEO of TDC. (from TDC press release).
I’ll be very interested to see how this innovation works out, and I think that it’s only by a process of learning from what users do and don’t adopt from new packages like this that the new model of paid-for music consumption will evolve (obviously with RouteNote at the forefront of development:).
