WMG posts some scary numbers

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Warner Music Group released their quarterly numbers this week, and it’s not a pretty picture. One of my favorite music blogs, Coolfer, does a great job of analyzing the results. One of Coolfer’s observations:

• Cost of revenues, as a percentage of total revenues, increased to 55% from 51% last year. That number is going in the wrong direction. This is a time for labels to keep a lid on their wallets as best possible.

In addition to the insights from Coolfer, I found the statistic that digital sales actually declined:

“Digital revenue was $100 million…down 4% sequentially from $104 million in the fourth quarter of fiscal 2006.”

While a 4% drop may be in the realm of random error, and not mean much statistically, it is very telling for the simple reason that it didn’t go UP!

There has been lots of rumbling about digital sales sort of leveling off, but not a lot of real information about this. WMG, because it’s a publically traded company in the US, sort of becomes a proxy for the record business as a whole (fairly or unfairly).

So, we now have some empirical data that for at least one of the largest music companies in the world, digital sales didn’t rise.

What to make of this? Hard to know at this point, but certainly something to think about.

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