Monday, April 7, 2008


Digital music firms pay heavy price for labels' support

More evidence that elderly big label managers are looking for punitive advances to fund their retirement benefits rather than building a healthy digital distribution chain for their industry.

Here we have an unnamed label executive comparing the new business of online media to opening a bricks and mortar store on Madison Avenue. They continue to be clueless that the physical music sales are dying.

Delivering music online has significant costs, but none that you can visit as a customer. Spinning disks at data centers and CDNs, and developing compelling service software are significant investements. At 15% margins and multi-million dollar advances will fool some Dot Com Bubble 2.0 investors for a while, but once the money runs out, the labels are no further along.

The labels should be enabling in new distribution solutions, not punishing them.

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