That’s what Pali Research media market analyst Richard Greenfield thinks. He recently downgraded his rating of Warner Music stock from Neutral to Sell.
I’m no Wall Street trotter, but this is clearly not happy news for WB.
I personally believe in the appropriate monetization of digital music so that artists can, you know, get paid. But Greenfield seems to think that you can make all the money you need by simply hitting the road and selling T-Shirts.
“Artists make the vast majority of their money on touring and merchandise, not CDs,” he notes. “In turn, it is increasingly logical to believe that artists want to have their music reach the widest possible audience at the lowest possible price. . . meaning free.”
In Greenfield’s universe there would be no Beatles albums after Revolver, when the band quit the road to more fully concentrate on their studio work.
I do agree with him on the basic point that the music industry needs to develop a new business model — one that enables and entices consumers rather than alienating them. Here’s more of Greenfield’s spiel:
“No matter how many people the RIAA sues, no matter how many times music executives point to the growth of digital music, we believe an increasing majority of worldwide consumers simply view recorded music as free. . . a new model for music consumption must emerge and that model most likely involves DRM-free downloadable music at no cost to consumers, fully supported by advertising. . . the music industry is not ready to endorse such a move at this point, and even if it was, the economic model transition will be incredibly painful.”
Painful doesn’t even begin to describe it. Read more at Seeking Alpha.