AfterDawn: News

Warner Music reports 17% revenue drop in second quarter

Warner Music Group's revenue for the second quarter of 2009 is down more than $100 million dollars compared to the same period last year. A statement from the company blames the decline primarily on worldwide economic conditions and a release schedule weighted heavily toward the last part of the year.

WMG's one semi-bright spot is digital (internet-based) revenue, which accounted for $173 million of the $668 million total. Unfortunately that's a negligible increase from the $171 million brought in a year ago.



With CD sales continuing their freefall, that 26% of their revenue is arguably the most relevant to future performance.

Unless someone at WMG comes up with a way to greatly increase income from music downloads it looks like they are in for a very rough year. And maybe that's not a bad thing for the music industry.

So far the major labels have proven inept at the online music business to say the least. You don't have to look any further than the recent switch to variable pricing for song downloads to see how bad their track record is.

The labels insistence on tiered pricing, implemented recently by all the major online music stores, doesn't look any more promising than previous efforts. In fact it seems to benefit resellers and consumers at the expense of label profits.

Add in the troubled economy and you may have a recipe for the labels to either create a new online music industry or be taken over by someone who will.

Written by: Rich Fiscus @ 7 May 2009 12:31

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• 9 comments

• jos22

  Warner Music reports 17% revenue drop in second quarter
  
  so whats the bad news. this headline brought a smile to my face.

  7.5.2009 16:21 #1

• Hopium

  ITS THE PIRATES FAULT OH NOSE WE GONNA GO BROKE

  7.5.2009 17:41 #2

• DTN107

  I am surprise they didn't scream out "IT IS ALL BECAUSE OF PEOPLE WHO PIRATE MUSIC!"

  7.5.2009 22:04 #3

• KillerBug

  "CD sales continuing their freefall" - I didn't know anyone still bought CDs! Honestly, it is a technology left over from the early '80s, and they sound terrible...no better than an MP3. If I buy a CD it is only because I cannot find it for sale online, and the first thing I do is convert it to MP3.
  
  If they refuse to go to 5.1/7.1 audio, I say let them go out of business...they might as well be selling cassettes.

  8.5.2009 00:31 #4

• DaGuru77

  I don't know where these dummies think they are coming from, but when you sue your customers for millions of dollars we stop buying your products. It's the old cliché: you are not doing us a favor by selling us your product. We don't need you, you need us. And when we are treated like dirt we will take our business elsewhere. These fatcat executives need to wake up and smell the coffee before it's too late. They need to stop listening to their bottom feeding lawyers and change their tune. This is another example of greed, pure and simple. This is just another example why our economy is in shambles, and you can take that to the bank.

  8.5.2009 11:01 #5

• Ransack

  It true. When you sue customers for your product they don't care to buy it at all in the future which is basically common sense. What Warner Bros should do is look for more commercial sounding unsigned artists and help the ones who are helping to promote themselves. They should also concentrates on selling the artists who are signed CD's at concert venues and design the some sort of EP CD release that can be only sold at concert venues. This would help generate more sales for the artists and more profits for Warner Bros. New ideas for CD sales is obviously needed in these times in order of benefiting on a profitable margin in these times because sales of CD's have become the minority of music sales in these times.

  8.5.2009 12:16 #6

• hermes_vb

  Well, for those who wonder who's buying CD's...I am. Unless the download is offered as Lossless, I prefer the CD. It's better quality, and you can rip it to the format of your choice.

  9.5.2009 01:02 #7

• Mr-Movies

  Originally posted by hermes_vb: Well, for those who wonder who's buying CD's...I am. Unless the download is offered as Lossless, I prefer the CD. It's better quality, and you can rip it to the format of your choice.Absolutely correct a CD is better then an MP3 and typically cheaper as well, if you want all of the songs and not just the top 40 tunes. I typically look for DVD-A's but still buy CD's too.
  
  CD prices are WAY TOO HIGH make them resonable and sales will go up. Do you think that all of the monies they have waisted fighting Pirates Bay is a contributing factor to their slump? The negative publicity can't help.
  
  I would like to see more of the free sites promoting bands so that the band gets the revenue and not the RIAA & music manufacture companies. I've bought CD's at live concerts for local bands and preffer to support the band not the studio's.

  11.5.2009 22:19 #8

• mamal8de

  I've been immersed in both music AND the industry ALL of my life. I have friends in undiscovered bands, and former classmates in upper-level industry positions.
  ...support the bands, not the companies....
  Amen to the ten to that!!
  
  As for WB, they would do better if they leaned more on their movie/DVD making, since they are the customer-preferred choice there. But like most of the biggies they undersell their best products and can't understand why their junk doesn't sell.
  

  "...better Wake up...pay attention...otherwise you dead cabbage stew!"

  8.7.2009 20:06 #9