Warner Music posts wider than expected loss; digital music sales rise 6%

“Warner Music Group on Thursday posted a wider quarter loss as recorded music sales declined more than expected,” Sinead Carew and Yinka Adegoke report for Reuters.

“The world’s third largest music company posted a net loss of $68 million, or 45 cents a share in its fiscal second quarter ended Mar. 31 compared with a year-earlier loss of $37 million, or 25 cents a share,” Carew and Adegoke report. “The company booked $33 million in charges for items such as the declining value of investments in digital music start-up companies Lala and Imeem.”

“Excluding the charges, Reuters Estimates calculates that the company posted a loss of 23 cents, compared with an average Wall Street estimate of a loss of 25 cents,” Carew and Adegoke report. “Revenue fell by 17 percent to $668 million, compared with the average Wall Street forecast of of $730.2 million.”

Carew and Adegoke report, “Like other music companies, Warner Music is struggling with shrinking sales of recorded music as fewer fans buy albums in physical CD format.”

MacDailyNews Take: No more free ride. Weaning the business off overpriced forced bundling schemes, facing actual consumer choice, and attempting to sell unbundled products at fairer prices based solely on their merits can be quite the struggle. Like a heroin addict trying to get off the junk, the music cartel is.

Carew and Adegoke continue, “The transition to downloaded music has led to a decline in revenue throughout the industry as fans increasingly buy lower-priced individual songs from Web retailers like Apple Inc’s iTunes Music Store.”

MacDailyNews Take: Individual songs are not lower-priced. The average bundle on plastic and aluminum disc has (had) 12 songs. If they were all good quality songs that people wanted to buy, iTunes Store would charge $1.29 each (thanks to the music labels forcing tiered-pricing on Apple). The average CD offers 12 songs. 12 songs at $1.29 equals $15.48 which is more, not less, than 2008’s average CD retail price of $14.22. The problem for the music cartel is that the bundle has gone the way of the dodo, consumers now have real choice, and the music industry actually needs to produce more good music if they want to sell it all.

Carew and Adegoke continue, “Digital music sales rose 6 percent to $173 million, or 26 percent of total revenue in quarter.

Full article here.

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