Thursday, May 08, 2008

Warners: The figures don't look good

There's some good news amongst the gloom in the latest quarter results from Warners - their international revenues have increased by nearly 20%. Unfortunately, what with the way the dollar is, and a massive drop in US revenues, that couldn't help them avoid losing USD28m. Oh, and abandoning their already tiny shareholder dividend altogether.

Edgar Bronfman was bullish about digital sales, although Silicon Valley Insider points out that 30% of digital income comes from mobile phone ringtones - a market which, at best, has peaked; at worst, is on the edge of vanishing altogether.

The gloss on the Madonna album is interesting:

Pushing Madonna's last WMG album with digital deals with Vodafone, Samsung, etc. "Tens of millions" of ad dollars spent by partners to promote album. $13.99 premium CD outsold $11.99 version 8 to 1.

Arguably, persuading other people to fund much of the Madonna marketing campaign is a hollow victory - doesn't her profile deliver much more ad-spend equivalent anyway? - but the much, much higher sales of the more expensive album is fascinating. If nothing, proving again, there are customers who will pay for music, and pay a premium for what isn't even very much of a premium product. Of course, it's not clear how much of the USD2 extra sales price is pure profit, and how much was spent creating the extra material for the record - it might be a bit of a Blue Monday style own-goal if you manage to sell eight times as many copies of an album you're making less money on.

And the question is: How many Madonnas does Warners have? It doesn't even have a Madonna after this record, does it?


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