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Thursday, January 22, 2009

Warner Music To Fold?

Heard this from an astute observer, investor and player in the music business yesterday - we might be missing a major label soon as the odds are getting longer and longer that the fabled Warner Music will make it. With their market share dropping, their debt increasing, and stock down to about $2, it seems like it's only a matter of time until the company is merged or goes away completely.

Once upon a time (like before 2000) this would be an unthinkable option regardless how bad things were, since catalog and publishing income would still continue to chug along even without any big hits. But catalog sales were the first thing hit by digital music, publishing income is down in all forms (even sync fees, which were strong until lately), and the chances of a new company-saving blockbuster hit is as remote as a hotdog on a tropical island.

To most people in the new music biz (except Warner stockholders), the demise of Warners would hardly cause a ripple in the day to day stream of business. In fact, some feel that the sooner the old, tired, dead wood of the industry is cleaned out, the sooner we can find a new business model for the industry that brings a modicum of health back and settles the distribution turmoil.

So start the watch now. It might not be this week or next week, but the prediction here is that we'll have one less major label by the end of the year.

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