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Friday, May 15, 2009

For Some, The Music Business Holds Its Own

The sky is falling for most artists and companies in the music business, but not all. Universal Music Group (UMG) announced earlier this week that their gross income was about even with last year at this time. Given the economy and the fact that a 20% loss is actually considered good, UMG had a great year.

The company had sales of a bit over a billion dollars, with digital sales comprising about 28% of gross revenue. What's more, digital sales were up by almost the same amount over last year. Although CD sales fell by a bit more than 9%, the loss was offset by an increase of the same amount in artist services and merchandise sales (from 360 deals?).

As a Universal exec said to me in private, "We still sell an awful lot of CDs, and we have a lot more income sources than we used to."

So what does this mean? Say what you will about UMG, but they seem to have figured something out. The rest of the industry's income takes a bath and theirs stays flat (which is a win in this economy). Digital sales stay flat for the rest of the industry while theirs is up 28%.

I'm a big proponent of Music 3.0 (have a book coming out about it, as you know if you read this blog regularly), and believe that it's a big part of the new music business, but the fact of the matter is that not many artists have broken out of the noise of the Web despite the advantages it provides. And, the vast majority of artists selling even the meager numbers of units that we see on the charts every week are still tied to a major label or large indie.

So who will be the first artist to really take Music 3.0 to the next level and break out big? It will happen some day, the question is only, when?

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