Record labels still have plenty of options

Two weeks ago, Warner Music Group Corporation announced their fourth-quarter results and the numbers weren’t positive. According to Wall Street Journal, Warner reported a $18 million loss with the recorded-music business revenue dropping 9.4% and digital-recorded music revenue rising 9.5%.

In the article, Chief Financial Officer Steve Macri blames the transitioning in the music industry and the economy for the revenue slump and this decline is expected to continue into the new fiscal year. (Source)

It’s no surprise, really. As I said in my post on September 19th, the record industry should have seen this coming ten years ago when Shawn Fanning created Napster. Music corporations tried to fight the industry changes and now they’re feeling the heat. Allegedly WMG was “surprised” by the results, considering the success of comeback albums such as Jay-Z’s The Blueprint 3.

CDs aren’t a dead format; last week Susan Boyle’s album “I Dreamed a Dream” debuted at #1 in CD sales (over 700,000 copies sold,) trumping Rihanna, Adam Lambert, Lady GaGa, Shakira, Tom Petty, and Tom Waits, all of whom had new-releases in the same week. “I Dreamed a Dream” also beat first week sales of Eminem’s “Relapse” and took the #1 spot from John Mayer’s “Battle Studies” which dropped to #13. (Source)

I get excited when I see news stories like this because it proves my point: if an artist with pure talent has a strong album release, it is going to fly from the shelves. Susan Boyle is a breath of fresh air. She doesn’t need audio sweeteners or auto-tune and people want to hear something new. That, along with thanks to Britain’s Got Talent and YouTube, is why the album is doing so well.

If record labels such as Warner Music Group were to focus on releasing albums with less filler and trendy production techniques, they’d have a better chance of selling albums. And if record labels came up with ways to reinvent the compact discs, those would sell better too. Back in 2005, the DualDisc was invented. It was a double sided CD with the traditional audio on one side and video on the other. The video side often included a making of featurette, the album in surround sound, links to exclusive web content, etc. If record labels were to continue finding ways to make CDs appeal to the audience, chances are the sales will increase.

Last month, Warner, Universal and Fox Studios were talking with Netflix about delaying new release movie rentals a month so DVD sales would pick up. (source). Imagine what could happen with CD sales if record labels made a similar agreement with businesses like iTunes and Amazon music. iTunes and Amazon cannot release music without the label’s consent, so as long as a deal that both parties benefit from is drawn up, the new policy could be easily adopted.

There are plenty of options record labels have to fix their situations, but they need to brainstorm quickly or Steve Macri of WMG will be right in saying their revenue will continue to drop.

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