Hello there and welcome once again to SMCD. Thanks for checking back in after last week’s break in the action.
This past week, there was glaring evidence that the traditional business model of the music business is all but dead. These discussions and debates have been happening for several years now, with myself leading several of them for at least the last year and a half (boo yah!). Much of the discussions have included dropping sales info for the corporate labels, but not much else in the way of hard evidence, admittedly.
Now, we may have just that, as three separate stor—actually, make that two stories. One has a bearing on the matter at hand, but the decision was not made with the label in mind. So, we’ll call it two-and-a-half stories this week that all point to one glaring fact: Warner Music Group is in dire shape—to the point that Warner’s may be selling WMG to cut their losses.
First, the tale that ties in. Or the half story, as it were. Noted technology company Cisco, which has mainly been known for networking resources, has branched out in the past few years to other ventures. This past week, they’ve decided to eliminate those other ventures and go back to straight networking.
Problem is, one of those “other ventures” was its website-building EOS platform, which powered the websites for a lot of Warner Music Group artists. The websites for Lupe Fiasco, Bruno Mars, Travie McCoy, Sean Paul, Plies, Cee-Lo, Flo Rida, T.I., Trey Songz, Christina Perri, Kid Rock, B.o.B., and many others are going away, and Warner’s has no contingency plan for this sort of thing worked out—brilliant move, I know. The cost involved in having to re-build those from scratch (which is the only option they really have) is going to be huge.
As it turns out, it’s money WMG does not have to just throw around out there. The company has turned a profit once in the last 10 years. After taking a look at the books, Digital Music News surmises that the company has lost—Are you sitting down? Good.—$10.14 billion in the last 10 years.