Mobile music slump holds back Warner Music Group’s digital growth

Well what a surprise that record labels are feeling the pinch on ringtone sales…maybe they should consider the ringtone model a little more carefully, with fans  creating ringtone content that is remixes of those fans favorite artists…oh I guess that’s what my company does! Warner, EMI, Universal Music and Sony, feel free to get in touch!

Major label Warner Music Group’s digital revenues grew by just 1.6% in Q4 last year, thanks to a slide in ringtone sales.

Warner Music Group reported its latest quarterly results yesterday, and they included yet more proof that the ringtones market has declined faster than expected.

WMG reported digital revenues of $187 million for the quarter, up just 1.6% year-on-year. “Our revenue growth in downloads and streaming services was more than offset by ongoing declines in ringtone revenue,” said chairman and CEO Edgar Bronfman Jr.

However, he said WMG is looking forward to new devices and digital services spurring renewed growth in this aspect of its business going forward.

“Digital innovation will evolve rapidly on many levels, including cloud-based music services, tablet launches, bundles subscription distribution, and connected devices,” said Bronfman.

“I think you’re going to see, I hope, very significant expansion of streaming services in 2011, and the introduction, I hope, of some very significant cloud-based services also in 2011.”

Bronfman was also asked directly about streaming music service Spotify, and while he batted back a question about whether WMG is any nearer to licensing the service in the US, he had warm words for its impact in Europe.

“We do see a very real growth from Spotify and we do see Spotify and services like Spotify as being ever more meaningful to our results, and I think you’ll be able to see that in our fiscal year 2011 and as the calendar year proceeds beyond that,” he said.

WMG’s overall revenues fell 14% year-on-year to $789 million in Q4, so despite digital’s sluggish growth, it now makes up 23.7% of the company’s total sales.


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