Is This The Inflection Point? EMI & Universal Sales Up
More good news for the record industry - this via Marketwatch:
Europe's two largest music recording companies, EMI Group and Universal Music Group, reported increasing revenue on Thursday, underscoring the growing importance for both firms of selling music over the Internet.
Label revenues have been falling for years now, suffering from the impacts of file sharing, the use of music as a loss leader by big box stores, competing entertainment choices and, many feel, uninspired, marketing-saturated music. So recent reports of rising incomes (as in my last post) look very significant.
EMI says it expects first quarter revenue to be up 4%, with digital sales up 150% and accounting now for 5.5% of revenue overall. Universal says it took in 8.25% more than in the same quarter last year, and says digital sales now account for 10% of revenues.
Meanwhile UK group Gnarls Barkley recently became the first act to hit the top of that country's pop charts with a digital-only release.
It's not clear yet though if profits are being made. As I've discussed elsewhere, and else-elsewhere, digital profit margins so far are very thin. This is from TheStreet.com:
The online music business is booming, but is anybody making real money at it? If you're doing the actual selling of music -- or music subscriptions -- to consumers, the short-term answer appears to be not much. Competition, marketing expenses, a faulty business model, slow-changing consumer attitudes and the use by some companies of music as a lure to sell other goods and services have all conspired to keep the business largely in the red.
Aram Sinnreich of LA-based consultants Radar Research predicts it will be at least three years before online music becomes profitable. And, says Sinnreich, "Nobody will ever make money from selling 99-cent downloads."
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