Sony-BMG Struggles; Rick Rubin Can’t Help


Privately-held Bertelsmann, which owns half of music label Sony-BMG, released financials for the first half of 2007 this morning. Unsurprisingly, the label is struggling, and “the strong growth seen in digital formats proved unable to compensate for the decline in physical sales of roughly 20 per cent.” Bertelsmann’s half of the JV posted an operating EBIT loss of 2 million Euros on revenues of 632 million euros. Last year the unit posted revenues of 705 million euros during the same time period.

On a related note: Sunday’s New York Times magazine features a profile on legendary producer Rick Rubin, who is now an exec at Sony-BMG’s Columbia unit and wonders whether he “can save the music business.” The answer is no: If he does his job well at best he’ll be able to pick a couple of winners for the label.

Rubin and other Sony execs are quoted pining for the ascendancy of subscription services, where consumers get unlimited access to music for a monthly fee. That’s a big shift from a couple of years ago, when labels worried that subscription services like RealNetworks’ Rhapsody would cannibalise CD sales. And it’s a pretty good concept — except that consumers have so far shown little interest in the idea.  Bertelsmann release, NYT