Peter Kafka

Recent Posts by Peter Kafka

Why the Music Business Needs a New iTunes–Or Something: Universal Music Sales, Profits Drop Again

As Apple (AAPL) gears up for its music-themed event, a reminder of how the music business is actually doing: Not too well. At least if you use the world’s biggest music company as a proxy.

Universal Music Group just reported a sales increase of 2.8 percent in the last quarter. But if you adjust for currency fluctuations, the company, owned by France’s Vivendi conglomerate, saw sales drop 3 percent. Meanwhile, cash flow, measured via EBITDA, dropped no matter which metric you want to use –either by 9.9 percent or 17.3 percent.

The slightly good news is that Q2 was less bad for Universal than Q1: For the first half of the year, sales were down 5.4 percent (or 7.9 percent) and EBITDA declined by 24.6 percent (or 28 percent).

What happened? The same thing we’ve heard for the last decade, according to Vivendi’s press release: Digital revenues are up, but not enough to counter “reduced demand for physical product.” Perhaps an iTunes overhaul can help….


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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik