Axe Yields Sony BMG Profits. Are Cuts The Only Way Forward?
IS CUTTING COSTS ENOUGH?
Sales at SonyBMG dropped almost 4% in the fiscal year that ended March 31st, but before tax profits nearly doubled rising from $135
million to $257 million. The company report also hinted that higher restructuring costs and more job cuts ahead.
The NY Post is making its usual doom and gloom predictions based on a few facts wrapped on a bunch of rumors. What is clear is that Sony BMG and the other three major label groups are desperately trying to find new structures that are both profitable and designed to fit new industry realities. Thus far, however, none of the big four have offered any grand plans beyond cost cutting.
Early next week Hypebot will offer Sony BMG, Universal, EMI and WMG a few suggestions. Until then: What drastic moves and bold initiatives do you think the four remaining majors need to embrace?
bronfman got $5 million last year.. let him come up with something
Great comment bestman333.
Regardless of the record companies’ ever increasing efforts to stop it, their existing business model is in an ongoing state of decline. To regain some of their former financial stature and growth, record companies, majors and independents alike, along with unsigned artists, too, must cultivate and create, as quickly as possible, a new digital marketplace where competition can flourish and where some semblance of control over music discovery and distribution can be exercised. In this brave new world, record companies must immediately combine their forces together and move quickly to consolidate as much of their depleting customer base into a single digital location where decisions can be made about new music. This new DRM and royalty free, digital location must be organized into a new business model that allows anybody trying to build a career as a successful musical artist to be discovered, exposed, branded and monetized. Additionally, record companies must take advantage of the clout their remaining legacy artists have, while they still have control over them, to help them get a foothold in this new digital world.
In the old business model, all of a record company’s distribution, marketing and promotion efforts were centered terrestrially and, up until recently, these channels of distribution were strictly controlled by the record companies and their close friends at radio. Now with the Internet and the advent of digital music distribution, this axiom is no longer true. In the digital world, record companies can no longer exercise the level of control over the marketplace they once had. Unfortunately, there are a multitude of Internet sites that use music as some part of their mix of activities. This limits the ability of record companies and independent musical artists to easily promote their music in any kind of truly effective or meaningful way. However, if artists and labels were to consolidate their support and efforts into one digital environment on the Internet with a global reach, they could foster the development of a much more promotable community than they now have and thereby have a great deal more control over the exposure and financial fate of their music.
Just think how much more effective it would be for record companies and artists in general to have one destination on the Internet where people went to find their new mainstream music and where people could influence and be influenced to make decisions about that music. Both the cost effectiveness and efficiency of new music discovery could be scaled down and become more manageable for record companies, independent labels and unsigned artists. Artist development and branding could be focused into one place. By developing an array of special tools to promote and consolidate a base in this major new digital music world, record companies, artists and managers could much better maintain and retain the attention and interest of the average music consumer. Think about it. This is not just a sensible and practical decision for record companies, artist managers and artists to make and emotionally own, but it is a sound business decision that can potentially solve many of their current problems dealing with music discovery and financial scale.