For Music Where’s The Gain from the Internet Pain?

Posted on October 9, 2006
Filed Under Commercial Trends |

The Register recently commented that nobody is making money from music downloads. They’re making money from hardware.

Then I came across this from IT News.

On average, 4.1 million, or 2.1 percent of the 190 million US cellular subscribers, used their mobile phone as a music player in August, according to M:Metrics. The research firm estimates that number slides in Europe to 649,490.

At Sony BMG, digital music sales contributed 19 percent to US revenues during the first six months in 2006. Korea led the way with 32 percent; Japan, 11 percent; Italy, 10 percent; United Kingdom, 8 percent; France, 5 percent; and Germany 4 percent.

The rub is many of those sales are of ringtones and other accessories rather than strict track downloads. Still I think there’s some confusion over exactly what is happening.

I found this from 2005 over at paid content, from the same guys at Sony BMG: Sony BMG’s Thomas Hesse calls the quasi-standard 99 cent fee “an introductory offer” — “a fair way to begin the business” but, at 99 cents, it’s difficult for all of us to make a decent living. … In the longer term, we believe music is worth more.”

And this from The Times in Feb 2006: “A Christmas Day surge of music downloads on to new iPods helped Warner Music Group nearly double its first-quarter profits, the company said today.”

Music companies over the past twelve months have tried to secure a share of the ad revenues on video upload sites - for example if you search for a Madonna track why should Yahoo get all the contextual ad revenues that go with the return?

Though Steve Jobs has called music majors greedy, they’re trying to work out which business models work - a wider group of smaller businesses might benefit if they hit on the right formula. Still, it doesn’t answer the question are they making money or not from downloads?

Comments

2 Responses to “For Music Where’s The Gain from the Internet Pain?”

  1. keith bohanna on October 9th, 2006 6:57 am

    Hiya Haydn

    Presume you are aware of Rafi and his http://www.paidcontent.org blog - both for the above subject and also your coming piece on bloggers and their work he is worth a look. I have had some contact with him in the past and he is great to deal with - friendly and helpful

    keith

  2. haydn on October 9th, 2006 9:51 am

    Hi Keith. I took a look at paidcontent alright. It’s a great site and I think now used by many top execs in the media business. How to get there from here?

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