Wednesday, October 29, 2008

Sony Music: The losses turn from drain to vortex

The Sony Corporation as a whole is suffering right now - pricing stuff in Yen doesn't do it any favours - but in a sweating company, it's the now wholly-owned music division which looks like the plague victim:

Sony BMG losses ballooned from $8 million to $57 million “due to the timing of new releases combined with the continued decline in the worldwide physical music market not being offset by growth in digital product sales”. Sony reckons buying out Bertelsmann’s half of the JV will cost $600 million.

If you think you can hear Teutonic giggles at the idea that they've been given millions of dollars to sell off twenty-five million bucks' worth of loss, you might just be imagining that.

It's interesting that the division is trying to explain away its performance in ways that don't make sense. Sure, not having any big releases hurts the bottom line, but equally, you're not shelling out for promotional work, manufacturing and what-have-you. Not having a record to sell doesn't instantly turn you into a loss-maker.

And still blaming the decline in physical sales? Has this year's decline really been so huge as to explain away such a massive increase in the amount of cash spunked away for nothing? And given that physical sales have been dropping year-on-year for about a decade now, shouldn't a company have a grip on how to manage the decline?