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pendent artist who might make $5–8 profit
off each disc they sell and have complete
creative control.
For the majority of artists, the main source of
income is live performances and
merchandise. For example, according to the The
Wall Street Journal's figures,
Madonna's four CDs released prior to her split
from Warner Music sold 10.4 million
copies in the United States, while her last
three tours earned $385 million in ticket
sales.
RECORD LABELS ARE NOT DEAD YET
The downturn in sales may look bleak; however,
the music industry continues to
generate profits, and investors remain
interested in the business of selling records. For
example, an investment group purchased the
Warner Music Group in 2004 for $2.6
billion, and EMI was taken over by a British
private equity firm for $4.7 billion in
2007. These big financiers would not spend
billions of dollars to acquire a company
unless they believed the venture would yield
strong dividends.
Record companies are attempting to alter their
traditional business model and
make a concerted effort to develop fresh
marketing strategies and create new sources
of revenue.
· Perhaps record companies are learning
from past mistakes made with Napster.
Instead of filing copyright infringement
lawsuits against YouTube, they struck a
deal. In 2006, the Warner Music Group
Corporation, Sony BMG Music
Entertainment, and Universal Music Group agreed
to license their copyrighted
songs and other material to
YouTube.
· EMI made a bold step in May of 2007 by
allowing iTunes Music Store to sell its
catalog without the copy protection that labels
had previously insisted upon.
· Also in May 2007, Warner Music
Corporation announced the creation of Den of
Thieves, to help drive digital music sales as
the demand for compact discs
declines. The unit develops and produces
original programming for network,
cable, DVD, broadband, and mobile platforms.
Content is distributed in con-
junction with artist's releases.
· Some record labels are negotiating
deals that encompass music publishing,
touring, merchandising, product sponsorships,
and other non-recorded music
sources of income, to offset the increasing
costs of doing business. Some new
artists see any deal with a major record
company as a necessary step to break
through to superstar status.
· After years of legal battles to
prevent music fans from listening to music without
paying for it, Warner Music Group struck a deal
with Lala.com that allows users
to stream music from the record label's catalog
for free. The hope is that con-
sumers will eventually purchase the songs to
download on their iPods and other
music-playing devices.
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