EMI Results Awful: Digital Up, But Not Enough.


It’s big music’s recurring refrain: CD sales are plummeting. But one day digital sales will make up for that.

That day cannot come soon enough. EMI Music Group reports that revenue dropped 5% in the last quarter, even though digital sales increased by double digits (EMI’s release doesn’t provide exact sales and earnings numbers for divisions, just percentage increases and decreases). But that doesn’t do justice to a very ugly picture: EMI Music – the company that makes and sells songs — saw revenue decline 13.4% in “difficult market conditions”.

“Difficult” is an understatement: EMI’s Physical revenues dropped almost 20%. Digital revenue was up 26%, but from a small base: In its last fiscal year EMI’s digital revenue was less than 10% of its $3.5 billion sales. The only thing that kept the company from outright collapse was its music publishing group, which owns the underlying rights to songs. That unit saw revenue increase 11.9%.

So what about EMI’s much-ballyhooed deal to sell DRM-free tracks on iTunes, which kicked off last spring? Results are “encouraging”, the company says. But they’re going to have to be better than “encouraging” to save the day. Again, we’re not quite sure what Terra Firma thinks it is getting for its $4.9 billion purchase here, but it had better be a pretty neat trick.

Meanwhile shareholders at Warner Music Group had better hope the company has a trick of its own — it announces earnings tomorrow morning.

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