Ringtones, Music Publishing, and the State of an Industry Giant.

Bands looking for new ways to make money may want to try to get into the lucrative ring tone market.

Bloomberg reports the following financial information on Warner Music today, including this bit about ring tone profits.

Warner Music, whose best-selling act in the quarter was rock band Linkin Park, said digital revenue from downloads and ring tones rose 25 percent to $130 million, representing 15 percent of total sales. The increase helped offset declining CD demand. Reflecting the industry wide drop in CDs, Warner cut 400 jobs this year, resulting in $9 million in costs in the quarter.

Ringtones generate income upon purchase/download. Both midi and sampled ringtones fall under the copyright law, and so it's possible for the copyright holder to make income on both versions of the song.

Publishing, following a strong recent trend, was also called a "bright spot" for Warner

"...publishing revenue, which comes from songs used in recordings, movies, ads and video games and on TV, rose 7 percent to $137 million on higher royalties from performances in international markets."

This also goes with the recent trend of publishing houses taking over more and more of the regular responsibilities once associated with record companies. Traditionally, Record Companies did the recording and collected monies generated by product, while the music publisher collected the royalties owed on the copyright (especially overseas). One of the things that has changed with the technology of the last few years, is that artists can sell their product on-line directly, and thus avoid the "middleman" (and large cash advance/debt system) of a record company. Collecting on copyright (performance and mechanical royalties) is still very much an issue for musical groups, and smaller publishing agencies (sometimes self publishing) are springing up to fill this need.

If you read carefully however, you'll see that Bloomberg reports that even with all these "new" sources of revenue, profit actually fell in the fourth quarter by 58 percent.

And in business, that's never a good thing.

So, you may ask, how far will these changes go, and where will the industry end up?

No one knows yet, but more and more, the power to decide what happens to the industry is in the hands of everyday consumers...and today's entrepreneurially minded musicians.

These are exciting times.

Stay tuned.

JG