Warner Music profits nearly double on surge of Christmas iPods

“A Christmas Day surge of music downloads on to new iPods helped Warner Music Group nearly double its first-quarter profits, the company said today,” Rhys Blakely writes for The London Times. “The group, home to artists including The Darkness and James Blunt, said underlying profits for the three months to December 31 rose to $69 million, from $36 million during the same period a year earlier… Digital sales rose to $69 million, up 30 per cent from the fourth quarter to record a near three-fold rise from a year earlier, boosted by iTunes, Apple’s online music store, and Napster.”

MacDailyNews Take: By Napster. The guy wrote “boosted by… Napster.” No proof, no source. Given that iTunes holds the lion’s share of the market, the inclusion of Napster strikes us as some sort of politically-correct attempt to include names of services other than iTunes. Let’s face it: iTunes filled Warner’s digital sales bucket and Napster likely added just a drop.

Blakely continues, “Our digital revenue was up dramatically year-on-year, especially after MP3 players went live on December 25,” Michael Fleischer, chief financial officer, told Reuters. The United States accounted for 70 per cent of digital music sales, which were split evenly between downloads and ringtones, he added… Warner Music was part of Time Warner until March 2004, when it was bought by private equity investors, led by Thomas H Lee, supported by Mr Bronfman, heir to the Seagram drink fortune.”

Full article here.
Lately, Warner’s Middlebronfman has been strangely silent in public about wanting to raise iTunes prices, wanting a cut of iPod profits, and iTunes Store decapitation strategies. Perhaps he’s been too busy making bank deposits.

[Note: MacDailyNews coined the term “Middlebronfman,” a combination of “middleman” and “Bronfman,” in an article on Monday, October 03, 2005 with the sentence, “Eliminate the middlebronfman.” Full article here.]

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Related articles:
Warner’s Middlebronfman: ‘We sell our songs through iPods, but we don’t have share of iPod revenue’ – October 05, 2005
Apple’s iTunes Music Store dominates as digital music sales more than triple – October 03, 2005
Dvorak: record companies’ biggest concern about Apple’s iTunes is clear and accountable bookkeeping – September 29, 2005
In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants – September 29, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels – September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels – September 22, 2005
Record labels accuse Apple CEO Jobs of ‘double standard’ as they seek to force iTunes price increase – September 21, 2005
Apple CEO Steve Jobs to repel ‘greedy’ record companies’ demands for higher iTunes prices – September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of ‘greedy’ record companies – September 20, 2005
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices – August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? – August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple’s market domination – March 05, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination – May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004


  1. You see, morons. Warner Music Group is a public company, and they simply cannot walk away from profits to make a power play against apple.

    They don’t hold the cards, here, Apple does. I assume that iTunes is now responsible for at least 12% of WMG’s net profits, if not more. What are they going to do, pull their content off of iTunes if the pricing doesn’t increase? What about chart ratings for their performers, they will disappear to?

    The labels gotta play ball here on Apple’s terms, which are great for the consumer, and more legit for the artists.

  2. MDN wrote…

    “the inclusion of Napster strikes us as some sort of politically-correct attempt to include names of services other than iTunes”.

    C’MON fellas, don’t flail-about with the inclusion of ANY other (online) music provider. You know very well what effect (perceived or real) a monopoly would have legally or otherwise. Enjoy the actually numbers, share the stage.

  3. Kool-Aid probably outsells Napster by a huge margin. Especially just before MacWorld SF (kidding, folks).

    Paraphrasing Dana Carvey on the Tonight Show:
    “I just bought the lastest iPod this morning. And Apple had a newer and better one out by noon.”

  4. “The United States accounted for 70 per cent of digital music sales, which were split evenly between downloads and ringtones…”

    if half of all music sales are ringtones, and Apple has 70% of the download market… that means they actually have about a third of the digital music market… all of a sudden, it doesn’t look quite as rosey.

    Napster does Ringtones, how friggin hard could it be for Apple, it looks to me like they are not playing ball in half the market… probably why Napster was mentioned in the first paragraph w/ Apple.

    I don’t know anything about it, so what format is a ringtone… why do they cost so much more, and why can you not just turn any song into a ringtone?

  5. I’m pretty sure ringtones are a proprietary formate based on cellphone service or model, they const so much more because you CAN’T just turn any old song onto a ringtone, because they’re a ginormous profit center for cell providers, “Motto: we’d charge you per minute for breathing if we could!”

  6. I don’t have any problem with Napster being credited with their real contribution to Warner’s profits.

    All that I ask is that Napster actually publish how much money they pass on to the content creators and owners. We know that Apple pass on about 70%. Why can I never find a figure that shows exactly what percentage of their revenue Napster has paid so far ?

    Napster do seem rather coy about this issue.

  7. Take a look at this photo ( leader of Real Networks )

    He doesnt know how to shave, he didnt properly trim his nose hair before the photo ( or the eyebrows ).

    He put on an executive blue shirt with no tie, trying to look like a leader

    Clearly, this guy has no interest in quality or peoples needs.

    How can anyone expect the 4th quarter to be good?

    Conference call starts at 5 pm pst ” width=”19″ height=”19″ alt=”smile” style=”border:0;” /> I expect their stock to decline 35%.

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