Categories
Old Blog

Take Us to the River – Fast Company

Fast Company tells that WMG’s cup is half full:

Ironically, it is precisely this sort of deal that cost WMG its biggest single star, Madonna, who bolted in 2007 for a $120 million 360 deal with the concert-promotion and ticketing firm Live Nation. Cohen and his boss, chairman Edgar Bronfman Jr., had already decided to focus their 360 investments on up-and-coming bands like Shinedown, so they parted ways with the Material Girl.

WMG’s digital sales were up 11% last quarter, with digital music making up 30% of its revenues worldwide and 47% in the United States. (Sources say that at Atlantic, digital music approaches 60%.) Overall revenue is steady at more than $3 billion annually and margins are up. In comparison, Universal Music’s revenue last quarter dropped 13% and digital music sales dipped 2%. While WMG posted its fifth straight quarterly loss and analysts expect it to post a loss this year, those metrics are somewhat misleading. The deficit comes from a goodwill write-off. Cohen is pumping out cash: Operating profit in the first three months of 2010 was $87 million, up 9%. WMG has enough cash on hand that industry watchers expect it to bid for EMI, a competitor whose own ballyhooed reinvention is seen as a fiasco. “Warner Music is mapping to the reality that consumers with a broadband connection and a search bar can get whatever they want,” says Mike McGuire, a Gartner entertainment analyst.

During a spring visit to Greenwald’s New York office, she pulls out the binder that she uses to track sales data for Atlantic’s 80 current acts. She runs a finger along her Shinedown entry — the same data she shares with Smith and the band. The Sound of Madness has sold 1 million CDs, plus 3.5 million track downloads. Other binders detail merchandise and ticket sales. Shinedown’s 360 deal “made my life 100 times better than being limited to a silver disc,” she says.

… sharing part of a confidential report WMG commissioned to estimate what it would’ve made if its superstars, such as Green Day, had started with 360 deals. The answer: as much as 160% more revenue for WMG. Cohen says that some current 360 acts are outperforming Green Day and Kid Rock financially at the same point in their careers, though they’ll never sell as many albums.

“The artist was like a sugarcane worker, says Devo frontman Jerry Casale of the good old days for the record business, which were the bad old days for many musicians. We’re backstage at the Coachella Music and Arts Festival in April, a traffic-jam-with-soundtrack east of the San Jacinto Mountains near Los Angeles. Casale, pairing a royal blue suit with a black tie and looking very much the new-wave pioneer, has no love for the labels after 30-plus years in the business. But last November, Devo signed a 360 deal with Warner Bros. Records, and he’s here to rebrand his band.

… T-shirt sales can be a leading indicator of a band’s success. Never Shout Never sold nearly $1 million worth of merch before it released its first album through Warner Bros. this past January.

…Whalley has funded a digital dashboard, inspired by Bloomberg terminals, to track all Warner Bros. artist sites, creating more analytics to parse. That dashboard is now being ported to Atlantic.

According to media analyst Bridge Ratings, music listening in the United States has increased 6% since 2005. People listen via YouTube; streaming services like Spotify and Rhapsody; Internet radio programs such as Pandora and Slacker; music cell-phone bundles with Verizon and Nokia; and Thumbplay, which makes iTunes playlists available on iPhones and select Android and BlackBerry devices.

All the deal making and experiments have taught WMG lessons. Cohen’s boss, Bronfman, scion of the Seagram’s liquor fortune, is starting to be more selective about which digital nickels may actually materialize. After early investments in the social-music services iMeem and Lala, both of which failed, Bronfman has said he’s done funding digital-media startups. In February, Bronfman said WMG would no longer support ad-based music streams; they simply didn’t offer a return to artists. An early report from Sweden claimed that Lady Gaga received only $167 for 1 million Spotify streams of “Poker Face.” (Spotify retorted that the data was 15 months old.)

via Take Us to the River | Fast Company. (via Hypebot)

Comment

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s