Bid for Warner Music Group Surprises Many Who Believe the Music Industry is Dead

“Could a record company still be a good investment?” this is the opening question posed by Ben Sisario in “Bids for Warner Suggest Faith in Industry’s Future”. The question is prompted by the generous offers for Warner Music Group. So far, the article reports bids for company are around $3 billion. This surprises analysts because 1. They believe $3 billion is too high and 2. the music industry has suffered in CD sales. According to the article,

“Global revenue from recorded music has fallen 42 percent since its peak in 1999, according to the International Federation of the Phonographic Industry. Digital sales have grown steadily, but not enough to stem the losses from CD sales”. 

A possible ending to this bidding is a merger of Warner Music Group with another label becoming 1 of 3 major record companies in the world. With big bids the article is suggesting that many still have faith in the industry. The article doesn’t state the music industry is done but it reports the overall tone concerning the industry is it isn’t a good investment and these bidders are being impractical. But then the question must be asked: If the belief is the music industry is over, doesn’t the industry benefit from MP3 sales and who would represent artists?

MP3 sales are quickly equal the amount of CD sales because CD sales also suffered from illegal downloading. With venues for illegal downloading closing or being seized, MP3 sales are increasing. They will continue to increase because almost everyone can get an MP3 player or use their phone as one. The change and availability of modern music technology guarantees that music will sell, just in a different format. So this means, the music industry has lost money but they have to adapt to changing technology.

The recovery of the industry is going to be slow. But it won’t end. Why? Musicians mostly need record companies. Whether they go to a major, independent, or self label, they still need a label. We might see a drop in major label representation but it can be found in representation increasing on the independent sector. This means labels will find a way to finagle their money from label contracts. Although, with technology aiding in more independent and self label representation, major labels might have to change the amount they take from artists.

I’m sure there are other factors in the recession of the industry; this is the reason I mostly wrote this post. If anyone is going to make the statement that the industry is over, the basis must be on other factors besides MP3 sales. The music industry makes money off of almost anything an artist does; Music sales are not the only indicator of the survival factor of the industry. The industry itself doesn’t just consist of labels. If someone could write about more compelling, comprehensive factors contributing to its fail, I could possibly believe the industry is a dead end. I blog about articles I read so hopefully someone will write that article. As for the bidders, hopefully, they will encourage belief in the industry. And for whoever takes over, they must have a master plan to help turn around the industry, considering they are 25% of it (or 33% if Warner Music Group merges with another label).