July 23, 2007

Thinking Hard, Working Hard In The Music Biz [9:56 am]

The evolving business model: Oops! …They Did It Again

Since the sale, Zomba, which includes Jive Records and the gospel label Verity, has managed to defy the industry’s troubles by discovering new artists, like the R&B singer Chris Brown and the rockers Three Days Grace, while keeping costs down — a tough task in a field given to financial excess.

Johnny Wright, a talent manager overseeing acts including Mr. Timberlake and the Backstreet Boys, remarked, “They overanalyze every penny that’s spent to make sure it’s not just frivolous money being thrown away.” He added: “As a manager of an artist, you want a $2 million video budget. Do you really need one? At the time that you’re involved in it, you’re feeling a little frustrated,” but “at the end of the day you’ve made a decent video, and you have an artist that’s actually getting a royalty check.”

There is little argument that the label’s sales and market share have slid sharply from their pinnacle during the teen pop sales surge; the industry itself has buckled under the weight of widespread piracy and other woes.

But if any of the corporate-owned labels can be described as succeeding these days, Mr. Weiss’s is one of the few. Zomba has increased its share of new-release sales almost 20 percent so far this year, even as sales of new albums industrywide have dropped 16.5 percent, according to Nielsen SoundScan data. It has remained consistently profitable, having generated more than $40 million in profit last year on well over $200 million in revenue, according to executives briefed on the label’s business.

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