Warner Music Group is losing a lot of money, according to Reuters. The company said in a statement:
“This (revenue) decline was driven by a challenging recorded music industry environment as the shift in consumption patterns from physical sales to new forms of digital music continues,” the company said in a statement. “Declines in our physical … revenue were only partially offset by increases in music publishing and digital recorded music revenue.”
So, shoppers, why is that? Crappy music? DRM? Is music too expensive? Do you not enjoy music anymore? Are you broke? Are you buying games for the Wii instead of a CD? Are you a bunch of pirates? Avast.
Solve this mystery for us, we’re all ears.
UPDATE 1-Warner Music quarterly loss widens [Reuters]
Warner Music Group Corp. Reports Third-Quarter Results For The Period Ended June 30, 2007 [WMG]
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@mac-phisto: i stand corrected.
@GreatMoose: I’m waiting for someone to put the soundtrack in their special edition DVD set. Has this happened without me noticing? Because it seems to me to be the most obvious thing to do.
@mac-phisto: …pay a few artists to jazz up the cover art…
Haha! Do you remember for a while they had those Deluxe Gold editions of classic albums? How to tell them apart from a plebian regular edition?? They put a 1/2 inch gold border around the original album art. Ooooh, exclusive. Well worth the 20 bucks for an album I already own.
I haven’t bought a cd in I don’t know how long… no value in it.
For me I have bought two albums since napster was shut down. That is $35 in the last decade.
I don’t pirate music, I have taken a few free digital downloads and purchased one online track. I don’t like the whole Clear Channel domination, sue everyone else for my problems model of business.
However I believe the REAL reason that they are loosing money is Walmart and Best Buy. By selling the CD’s at cut rate prices they have driven down the perceived value of physical media. Many times popular disks are sold at a loss. Most Cd’s I see now are $10 or less for popular new releases. Given the inflation rate that is about 1/3 to 1/4 what I used to pay for a music CD. Cd’s without drm are available in stores for $9.99 and people STILL think they are too expensive.
In terms of price now is the best time to buy CD’s for a collection. In terms of satisfaction of business practice not so much.
1) DRM/crippleware
2) That isn’t the only way they screw customers. I’m old enough to remember all the price fixing, etc.
3) I refuse to be treated like a disobedient slave by companies that are too arrogant to want my business.
4) Did I say BOYCOTT?
5) I have a piano and a voice and I’m not afraid to use them!
6) I cultivated a taste for classical music when I was 5. There are lots of classical CDs for a song… sorry, I sort of had to do that
My girlfriend thinks that the record industry should try to make vinyl cool again. (We already think vinyl is cool.) They could bundle the LP with a free, DRM-free high quality download. People get the digital music and also the record. Every time we have people over, they comment on the record player and our extensive collection of current (mostly indie) records. Oh, and vinyl looks better signed.
@COWBOYS_FAN
How should this free music be funded? Who will pay for the studio time? What about the manufacturing of the media? There are plenty of people who work on great records with great bands who aren’t rolling in the dough.
For example, a good friend of mine is a producer/engineer. He is not rich by any means. ~$80,000 a year if he is lucky and gets jobs continuously. Between $40k and $50k otherwise. Oh, and he works with some major players in the industry. I can’t say who exactly, since you could easily find his name by looking at the album sleeves, but we are talking bands along the lines of Rancid, Sufjan Stevens, and Def Leopard (back in the day). Not the biggest names in the world, but certainly well above average acts in terms of sales and popularity.
Producers, for the most part, make no more money than any band they work with. There are exceptions to the rule, such as guys who turn out beats and tracks for the next Timberlake album, but that is certainly not the norm.
The major labels take the cash, when its available. Most productions lose money these days. The majors rely on their top 15 acts to bring home the bacon, while operating at a loss with half of their artists.
“So who pays for the engineers, musicians, producers, and marketers”, I ask?
@Jalynn: You should know that a lot of indie labels are doing just this.
@ JALYNN
This is pretty much what LP folks are doing now. Check out any audiophile magazine or catalog and they’ll sell you a crisp vinyl LP with an accompanying CD of the music ripped in very high resolution with NO DRM!
It’s almost worth buying an LP – even if you aren’t going to use it – simply to get the ‘license’ to get the high quality rip without having to do the work yourself.
The record companies/RIAA really need to wake up and smell the Reality.
Good old Edgar Bronfman, Jr. First, he displayed an amazing skill at killing a decades-old profitable company (Seagram), and now is continuing his hot streak with Warner. Good job, Jr!
@Rectilinear Propagation:
That’s a great point. IIRC, a few anime titles have done this, but no hollywood titles come to mind.
Maybe because lately theres been nothing but shitty music with the exception of a few albums. I’ll stick with my oldies for now.
It’s the invisible hand of the market, baby.
With cheap or free substitutes, poor product quality and ridiculous restrictions on product usage, there’s no wonder why they’re having so much trouble.
The record industry needs to realize that this is NOT the same market as 40, 20, or even 10 years ago. Gone are the days of marking up albums to $20-$30. Today, the marginal cost of selling a single song or album is almost zero. It’s simply a digital copy of what they already have- no record press or magnetic tape factory needed. If Warner and others want to survive, they must adjust their prices, marketing and business structure to reflect the modern music market- not the one of decades ago.
Well, I don’t buy online music. The price point set for online music retailing was set at a standard to make the per-song-cost-to-the-consumer similar to buying a CD. Only the costs for online etailing aren’t the same as production costs for physically distibuted material. Quite the contrary, they’re a fraction of the cost of manufacturing CDs for sale. And CDs are overpriced as it is, so, IMHO, they don’t make a good price point scaler.
In all honesty, I used to buy more new music (well, new to me – I love used CD shops) before the RIAA and DRM tidal wave started. Now, I hardly buy anything because I’m, quite frankly, disgusted with the greedy bastards, and I can just as easily listen to my 300+ CD collection from now until I die without getting musically bored. Oh, and thanks to the used CD shops, I would estimate my average price per disc at around $5, which is waaaaaay more in line with a good price point.
@Crushmeguy: I see your point, but exactly why should a record producer be entitled to make a six figure salary? Is he researching a cure for cancer? I’m much more concerned about the salaries of elementary school teachers in this country. If people in the entertainment industry (engineers, producers, and artists alike) don’t feel they are earning enough money, perhaps it’s not society’s problem. Maybe, just maybe, being an entertainer isn’t really that lucrative a career choice. I don’t think it should be. I can think of many, many more people who deserve my hard earned cash in exchange for their services a hell of a lot more than Britney’s wardrobe consultant.
I actually bought a WB album this year, “New Wave” by Against Me. The only reason I bought it was because I knew WB took a huge chance in signing the band, and I like supporting the band since they started off as one guy in a college laundromat… But guess what? It’s disabled from playing in most computers. Crap like that is why I don’t normally buy CDs anymore. Until the record companies wake up, it’s a pirate’s life for me.
@gabi:
Dear GABI,
This is your official pre-settlement offer from the Recording Industry Association of America (RIAA) on behalf of Warner Music Group. It has come to our attention that you downloaded the entire contents of the New Wave album by Against Me! via bittorent. You can avoid having this become a civil matter by sending us a certified check or money order in the amount of $13,372.96.
We are aware that you may have purchased the album via CD in addition to downloading it illegally. If this is the case, you can deduct the amount of your purchase from the settlement amount provided you enclose a copy of your receipt.
Thank You and Have a Rocking Day!
The Enforcers
@Crushmeguy: Your right, I misspoke. I meant the labels get rich, not the producers, and the musicians get screwed.
However there should be no funding, it should be free. Like I said, music has been around for 1000′s of years before anybody thought to profit off of it.
I would definitely say that Crappy Music is my #1 reason for not spending much money on music any more. There is so little coming out lately that is even likable, let alone good. I find myself listening to more and more podcasts because the music on the radio stations just annoys the crap out of me. I have found my favorite artists and I am loyal to them. I buy their stuff and enjoy it. Unsurprisingly, the artists that don’t make my ears bleed almost never get any radio play.
Screw the RIAA and record labels. They are obsolete. People can do for themselves what it used to take a label to do. They can record, mix, master, and distribute music completely independent of the tyranny of labels. And the best music is often done this way, now.
Long live good music! Down with the RIAA and record labels! Yo ho, yo ho!
The new culture is to buy single songs. It should have always been this way for crappy non-artistic “entertainers” and their albums of pablum. Now that it is possible the system is becoming more, er “efficient.” No more 600% extra for the music company.
I’ve always been an “album” man myself, and I’m not having much luck in the new millennium.
I don’t buy anything from crappy lables warner. I only buy music from smaller lables, and if it were a big company like this one…yarrrr scurvy dogs!
Even if the music industry didn’t have to contend with piracy or DRM, they would still be tanking. Investing in no-talent hacks and charging the public $20 for their CDs is a bad business plan.
@Cowboys_fan: Are you sure musicians weren’t paid before 1900? Beethoven and Liszt weren’t doing stuff for free.
I just can’t get over how this company continually screws it’s customers over and over and over. And then expects profits not to fall.
Someone needs to get fired.
A few disconnected thoughts:
Low sales
Music costs a lot, it still doesn’t travel well for the average listener (lack of digital convergence + DRM), and there are other entertainment options competing for our money.
Diminishing excitement
Hip hop music and every form of branding related to it is a top seller, but the whole genre is facing a backlash of resentment, even by those who continue to buy music. The formulas are showing their age and everyone is waiting for something different.
To those who talk about eliminating music labels…
I’m not sure what the deal is. No one forced any of these artists to sign on the line. If they wanted, they could make music in their spare time, give it away for free or sell it on iTunes, and continue going on with about their lives. Many do this and we can all enjoy their music just the same… provided we have a way of discovering it. But most people, given the choice, would jump at the chance to work on music full time. And that requires a change in philosophy.
Shifting to full-time music production costs money–a lot of money. Living expenses aside, you have instruments, equipment, studio time, all personnel related to high-caliber recording, and production. All of those professionals cost big dollars because they also do this full time and their equipment costs big dollars and the expertise required to work with them requires significant investments of time. And that’s just the music. Once you’ve invested a bunch of money into creating a product, you want to market it, just like anything else. So there is a whole firm full of people working full time to get the music in front of consumers. People moving money around, people working on the artist’s image and arranging photo shoots and getting the artist on the radio. People setting up concerts and tours and arranging music videos (and hiring all of those people… on and on. Creating an entire brand built on a single CD costs a ton. It’s like any other investment… it just happens to be more exciting and fun than buying Verizon stock.
You try making a quality CD working only in your spare time with spare money and see how far it gets you. Then, when you actually commit to making music, see how willing you are to make it and simply post in on a website or *gasp* sell it without spending some time and money to make sure people know about it.
I agree that the structure of the recording deals can be terrible, but in principle the idea is not that outlandish.
@Rectilinear Propagation: now that would be worth my $$
used to d/l a lot of all kinds of music when napster was around. neither bought nor d/l much since. at least with nap i could try it for long enuff to see if it was worth owning.
i really don’t mind paying a reasonable price for music. so long as the artist gets paid – art is work don’t ever think otherwise; & i get to play/store it however & wherever i please.
I know that where I’m spending my money. I’ve given up on CDs and now am mostly download-only from eMusic and a couple DRM-less iTunes tracks. Last time I bought a CD was to pre-order the upcoming New Pornographers Album because it came with all these free goodies. And there’s also the concerts I go to. Guess what, they’re the same artists that release their music without DRM.
I haven’t bought a CD in over a year. Several reasons but the main one is its not worth spending the money for maybe one or two good songs. The other reason is music today is simply not that good. I am tired of the Spear clones and the like where looks is all that matters and the talent will be covered in post production.
I miss the days from the 70s and 80s where the musicians where real musicians that had the ability to create music themselves rather then buy someone else’s work as its done today.
Until the cookie cutter one size fits all if the singer is hot approach remains, CD sells will decline.
other than NIN i have not bought a CD in years, might be closer to a decade now. its all crap out there. i don’t even pirate the music, the space on my hard drive/ipod is worth more empty than putting that sh!t on there. seriously, most everything out there sucks. i am pretty happy with my previously owned cds that i have ripped. i will occasionally buy a song here and there on itunes, but even that is rare for me. with work, wife, daughter, triathlon, friends, sleep, food, when do i have time to even go to the stores and look for more crap to buy?????
BTW i have Depeche Mode playing in my ears right now.
old school Depeche Mode, 
Enjoy the Silence. 
:):):)
(you know you are singing the chorus to yourself right now)
I get most of my music from the library. It’s a really BIG library, and I like a lot of not-quite-bleeding-edge (ie old) music, so it’s a good source for that.
Otherwise? I’m sick of feeling victimized by liking one song on a new record, paying $20 for that record and realizing the rest of it is total crap. Hate to sound fuddy-duddy, but mostly, they don’t make ‘em like they used to.
There are a few notable recent exceptions where I’ve loved the new music so much that I’ve bought ALL of the records on CD when I could have easily downloaded them for free. Because guess what? When you make a quality product, most normal people will want to buy it, legitimately.
But good luck with that, you greed-blinded arseholes.
piracy accounts for about 10 percent of the decline. the other 90 percent is based specifically on poor management. sic semper tyrannis.
@Cowboys_fan: That is the most embarassing argument that I have ever seen.
From 1995 (when every single band I liked released shitty albums) to 2000, I bought a grand total of one CD (Rammstein’s “Sehnsucht” in 1998).
From 2000-2004, I bought dozens. The difference? File sharing. I wasn’t relying on the utter FAILURE that is commercial and most college radio to introduce me to music anymore.
Since 2004, I swore off new CDs (breaking down once for the new Dragonforce CD), and then off RIAA material entirely, because of their lawsuits. That’s a couple hundred dollars a year they aren’t getting from me until they completely cease suing people for file sharing at least…and probably forever.
@dugn:
Also try Hot-Topic they usually have a shelf (the span of a wall) below the CDs and band shirts filled with vinyl records at really reasonable prices!!!
@peggynature: Try Inter-Library Loan (ILL). So long as a CD is over a year old, your library can probably get it from anywhere in the country. I found some pretty rare rockabilly albums through ILL.
I personally think Warner Music has some great artists on their label. They’re just all on Warner Japan (Rip Slyme, Mariya Takeuchi, Bonnie Pink, Tatsuro Yamashita, Cornelius, etc). Even better, there’s no crapware on their Japanese discs (Japan is always ahead of the rest, even when the company in question isn’t Japanese). I buy the stuff and support them. It’s just that there’s no good way to get the stuff in the US other than from online stores (the last time I tried ordering online the store got my order to me 1 hour after I had to leave for a weeklong trip to Boston even when they said next-day; I had ordered 2 weeks in advance of my trip). Oh well, at least I go there every so often.
It’s funny to see that such a failed concept, such as the RIAA attempt to make bucks off the backs of hard-working people who sampled before buying CDs and other audio media are, no matter how you spin it, the very cancer that we all said they’d be. Add this to the shill that radio stations that are commonly owned by Clearchannel and CBS Radio, regurgutating the same old crap (Since well before the “ripoff artists” like “Pee Dribble”), along with other annoying little brats telling me that that they don’t like my girlfriend every 15 minutes on the radio that completely convince me NOT to visit a record store, or pick up anything new that is mainstream (I still like some of the newer stuff from some of the more original outlets, though)
I can only imagine how shaken up the A&Rs are out there, realizing that the masses think that their tastes in music is SHIT! (though most are still in denial, much in the same way that Bush thinks he’s doing an awesome job in the war on terror… I digress though…)
So, I blame it on a mixture of Craptastic “music”, Craptastic “Musicians”, Craptastic A&Ring, Craptastic DRMing, Craptastic Radio playing the same shit over and over again, and THE EVER CRAPTASTIC RIAA!!!
May they all burn in Hell!
And myself? Meh, I’ll stick to my vinyls… They sound better, anyways…
Since around 1997 I’ve only bought a handful of CDs. Why? Because my previous collection was stolen, when my friends car was broken into [left the CDs in his car]. The insurance company wouldn’t pay for anything that wasn’t bolted down. SHADY
So I used FTP sites to rebuild my collection, why should I have to pay for the same thing twice? According to that scum RIAA I own a license, not a CD. If I own a license for that music in digital form, then I’m entitled to it regardless of what happened to the physical media. IF you loose your Windows install CD, your COA sticker still entitles you to own and operate Windows.
From there, I just gave up on music CDs. Why should I have to deal with that BS a 2nd time? And thanks to DRM, they’ve stripped my rights and ability to freely duplicate my legitimately owned music to prevent losses from theft.
And I don’t listen to the radio much, so I’m not constantly hearing new music. Can’t buy what you don’t know exists. MTV? Not a chance, I’m tempted to use the ‘v-chip’ for the sole porous of blocking access to that station.
a bigggg problem I see with the music industry is it’s inability to manage ‘promo copies’ that ‘leak’ on the internet weeks or months before the album comes out.
By the time the album is released, and the magazine reviews based on the promos come out, all the fans have heard the album and passed judgment on it.
It’s worth remembering, all you posters complaining about the quality of today’s music, that 99% of all music has ALWAYS been crap. Go back and check out some “forgotten music” blogs, or go check out the release schedules of big companies going back to at least the 60s. The whole industry is miss-or-hit and always has been. The only reasons you perceive things to be worse today are: the rewriting of history by demographically-oriented “60s hits” stations (or 70s, or 80s, or 90s or “classic rock” or you-name it), the relative LACK of hegemony by big groups (there are no Fleetwood Macs, Eagles or Bee Gees having long strings of hits anymore – that doesn’t happen in the singles-oriented world everyone keeps describing, there’s no longevity at all, no support form major labels, as in “if your first album flops, you’re out” and no albums to choose more songs from), and the fact that, contrary to popular opinion, there are more inroads to hear new music (that you don’t like), not less – witness filesharing, satellite radio, blogging, and the ascendancy of smaller (yet unsuccessful) labels.
The problem is both in the music itself, though there’s still great art out there, and in a failure of our collective memory to recall things as they actually were, not how various sources would LIKE us to recall them.
Basically if the music industry and the RIAA wants to make it so hard for me to enjoy music in formats that work on all of my home and auto devices…all while charging me an arm and a leg, I’ll spend my money elsewhere. I don’t do illegal downloads or anything, but with DRM, CDs costing $15-$18, bullying by the RIAA, and lack of new, original music…I simply haven’t felt like buying any new music. They wanted a lockdown monopoly on music? They got it…enjoy! And I don’t buy for a second it is “pirates” that are hurting their sales…they are alienating their customers, and I feel a majority of people probably feel like I do.
I abhor commercial music. I would pay to not hear a large amount of what is pumped out by talentless people backed by a talentless organisation.
@lindsaynagle: I agree with you completely. My comment was in reply to Cowboys_Fan’s statement, “producers get rich…music should be free”. I was making the point that producers aren’t rich and it does cost money to create records.
Perhaps it might not have crossed their minds that level headed investors have realised that suing your own customers isn’t a very sound business plan.