Monday, January 15, 2007

Dump those EMI shares!

Alan McGeeAlan McGee, founder of influential indie label Creation, thinks that you should sell your record industry shares:

"It's a great time for music. But the record companies have finally worked out they're on the losing team. Whether you do it yourself through MySpace, or on a label, the record is just the smallest part. It's all based on a model born of the 1970s and 1980s. It doesn't apply to 2007."

This, just before EMI fired two of its top executives over falling revenue and saw shares plunge 7 per cent.

Regardless of their competence, the rise of the legal download market will be a big problem for any company that relies on album sales. In the past, they managed to charge upwards of £15 for an album. Now most consumers will instead pay 79p for the two or three tracks they like. There goes the music industry's ability to price discriminate using bundling. Fortunately it will also reduce the monopoly power of the existing majors commented on in Bernt Hugenholtz's recent report to the European Commission.

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