For a decade and a half, recorded music has been the poster child for an industry that resisted and, consequently, was decimated by the Internet.
Now, finally, according to Doug Morris, current CEO of Sony Music and the past CEO of other mega-labels such as Warner and Atlantic, the recorded music business is back, having finally made the transition to digital. Profits are up, and there is still a place in it for the suits at the labels:
Now Morris says the profits are returning and the thrill is back. “The industry is transitioning itself into something that will be very valuable, unless we screw it up,” he says. “There’s big money coming in from videos. Huge money. There’s a transition from ownership to access personified by something like Spotify. We’re making a lot of money from this explosion in Internet radio, the Pandoras of the world. You can see Apple getting ready to get into it.”
What’s more, the cost of distributing digital music is lower than CDs or vinyl albums. “It’s a better business,” Morris says. “The margins are higher.”
The numbers support him. Industry analyst Alice Enders expects annual music sales in the U.S. to hover at around $5.5 billion over the next three years as declining physical sales are replaced by the digital variety. That’s a relief for an industry that was in free fall for the past decade. Moreover, Enders argues that guys like Morris are more relevant than ever. “I think the suits win out in this transition,” she says. “This is a much more complex business than people often realize. You have to find artists and keep the right ones. But you can’t waste money like you could 10 years ago. You have to control costs with an iron fist.”