The fourth-quarter results for Warner Music Group Corp. (WMG) continue to mirror the problems facing the music industry, as net income plunged by 58 percent for the period ending September 30.
The net income came in at $5 million for the quarter, equaling 3 cents a share, a big decline from the $12 million and 8 cents a share they received last year in the fourth quarter.
"As expected, this has been a challenging quarter, reflecting the difficulties in any industry transformation of this scale," said Chairman and Chief Executive Edgar Bronfman, Jr. "But we remain confident for two primary reasons: continued growth in the broader music market that our long-term strategy targets, and the disciplined creative leadership shown by WMG to expand our music business model."
Sales in the U.S. were fairly strong for the company, growing by 8.9 percent, but international sales pretty much took those gains away, declining by 8 percent. Sales in France, the U.K., Japan and Spain were particularly soft.
For the music-publishing unit of Warner, international sales led the way, with revenue increasing by 7 percent. Revenue on the digital side for the unit came to $7 million, 5.1 percent of overall music publishing revenue for the division.
Overall digital sales increased by 25 percent, to total $130 million for the quarter, 15 percent of all sales by the company.
Some of the leading artists in sales for the company were James Blunt, Linkin Park and Nickelback. The company also represents Metallica, Red Hot Chili Peppers and Green Day.
While the usual loss of CD sales and illegal music downloads were cited as the ongoing reasons for the drop in growth, one thing they could have improved in, and which I've heard from other music companies as well, are the declining release schedules for music.
There isn't much the industry can do about the market changes, but there is a lot they can do to come up with strong releases by their artists on a consistent basis. I don't get why they don't take care of the things they can manage, while working and experimenting with the changes they can't.
Encouraging artists and making deals where a steady release of material is put out is the least the industry should do. If that isn't done, what other short-term strategies are there to employ at this time?
I almost feel like the music industry is bowing to the issue of illegal downloading by not releasing more music more often. Declining record sales can't be saved unfortunately (in my opinion). Those who buy CD's immediately digitize them. Digitized music is the culprit and the cycle will probably never end. Even more unfortunate is signed artsist to these large labels aren't given more power over their releases. I'd love to see more music released more often, maybe even more EP's. The more music that's produced and released the more will be sold. I'm certain artists would gladly release more music.
Posted by: Dana | January 15, 2008 10:46 AM | Permalink to Comment