Traditional big media will only really become new media when there is a digital revenue tipping point -- so one theory might go. One music company, Atlantic Records, seems to have hit that mark, now getting more revenues from digital platforms than its traditional businesses. How far behind are TV companies?
Atlantic Records, a unit of Warner Music Group, says more than half of its music revenues in the United States are now from digital sales -- downloads from iTunes, other music services, as well as ringtones for mobile phones. CDs sales now represent less than half of its business.
NBC, as a mostly traditional TV and film company, would tell you it is far behind in this regard. In 2009, digital sales will bring in $1 billion a year at NBC -- or about 7% of the $15 billion in revenue it brings in from traditional media.
TV isn't the music industry -- it's still growing. As we know, the traditional music business has been in freefall over the last several years, showing double-digit percentage decreases in CD sales since 1999, when the business pulled in $14.6 billion. In 2008, CD sales were at a $10.1 billion level.
And while it's good news that at least one music company has found a formula to profit from the new digital age, the song hasn't ended. Digital revenue rose 39% to $639 million for Warner Music Group's most recent fiscal year. But overall, revenue still fell 1%, to $854 million. (The company doesn't break out revenue for Atlantic Records).
What are the lessons TV companies can learn from music companies? That the consumer is always right. Free music? That still sounds like business heresy. Free TV? That sounds like business sense -- the difference being where advertising and big marketing deals can work their revenue magic for TV companies.
Perhaps there is
another music industry lesson lurking: There will be pain as TV companies attempt to steer their analog businesses into easy-travelling digital waters. But these are not speed boats -- more like
massive oil tankers guessing the direction the next big tidal wave will come from.