Warner Music profit falls as industry slumps (Dinosaur Media DeathWatch™)

Reuters ^ | November 29, 2007 | Yinka Adegoke

[Zakeet]

NEW YORK (Reuters) - Warner Music Group Corp, the world's third-largest music company, on Thursday posted a 58 percent drop in quarterly profit, hurt by an industry-wide slump in CD sales, as more fans bought songs online.

Although Warner's revenue rose 2 percent to $869 million in its fiscal fourth quarter, it declined 2 percent when taking out the impact of the weaker dollar. The company also posted weaker international sales, particularly in the United Kingdom.

Digital music revenue was up 25 percent at $130 million during the quarter, but this could not make up for the short-fall in compact disc sales.

U.S. album sales fell 14 percent year on year, according to data from Nielsen SoundScan, as more fans bought individual songs through online stores such as Apple Inc's iTunes, or used free file-sharing services to get music.

Warner's net profit was $5 million, or 3 cents a share, in its fiscal fourth quarter, which benefited from a $12 million settlement from Bertelsmann AG regarding music downloading service Napster that was partly offset by $9 million in restructuring expenses.

The results compared with Warner's year-earlier profit of $12 million or 8 cents per share.

[Snip]

Warner's stock price is down nearly 70 percent since the start of the year as evidence of a faster-than-expected deterioration in music sales became more clear to investors.

Executives said their business is restructuring to cope with the rapidly changing economics of the music industry.

[Zakeet]

One half of one percent return on sales -- operating at a loss if not for a one time
lawsuit settlement -- core business off 14 percent -- primary asset (recording
artists) jumping ship [i.e. "not all of Warner's artists would agree to new
relationships"] -- stock price down 70 percent from already low levels.

These slobs are going out of business even faster than their newspaper and
tee vee cousins.

[abb]

ping

[Virginia Ridgerunner]

RIAA’s lawsuits against its customers finally bringing the chickens home to roost?

[DoughtyOne]

I don’t follow the industry close enough to know if Warner is a big problem here (I suspect they are), but I am so tired of the “stuff” the industry is selling to our kids, that I wouldn’t mind them crahing through the floor. If they are destroyed, it would only be fitting. And I might add, the other parts of the entertainment industry need to sit up and take notice. They could be next.

[z3n]

It's amazing how much music you can download these days... and some of it's quite good, if you search.
I'm not talking about piracy, either. There are millions of amateur artists on sites like MySpace-Music in all genres... many of them not very good, but some are. The music giants aren't going to sign tens of thousands of artists just to force consumers to buy plastic discs, so they are stuck trying to convince everyone that only their artists are any good.

[petro45acp]

Sux when decades of reliance on obscene profit margins comes to an end! The dinosaur needs to adjust to a different business model.

...all that bs about thinking out of the box, paradigm shift, and synergy....MBA heal thyself!

15.00 dollars for a CD that costs about a buck to produce...WHAT were you thinking?!?

[PetroniusMaximus]

“40 years of promoting songs that tell kids to break all the rules, and this is how they treat us! How ungrateful!”

- Nameless Record Company Executive Moron

[Signalman]

I download music but I recognize that the quality is much inferior to getting it on a CD. The compression schemes that are used degrades the quality of the music. That’s a fact.

[Slapshot68]

“Warner Music Group Corp, the world’s third-largest music company, on Thursday posted a 58 percent drop in quarterly profit, hurt by an industry-wide slump in CD sales, as more fans bought songs online.”

But that’s ok...just keep going after Limewire users and creating even more ill will instead of trying to find ways to get the music to your customers in the music file format.

[Slapshot68]

“I download music but I recognize that the quality is much inferior to getting it on a CD. The compression schemes that are used degrades the quality of the music. That’s a fact.”

I only get music that’s not any lower 192 kps. you’re right, it’s still not as good as a CD but the portability and fact I can keep my entire music library on one device makes up for the small loss in quality.