Mathew Ingram notes that Warner's music profits look pretty bad:

According to a rundown of the news and the related conference call at PaidContent, Warner’s revenue was essentially flat, while earnings fell by more than 50 per cent to just $5-million -- and that’s on total sales of almost $900-million, which works out to a profit margin of about .5 per cent. In other words, virtually non-existent.

I suspect that the pain is in all the useless layers of management that have been comfortably funded by the previous revenues from CD sales (and before that, tapes and LPs). With digital content, and a return to the 1950's style singles model of sales, those huge margins have evaporated - even more so than the 50's - back then, there was way more central control possible.

It's going to be the same kind of wrenching adjustment that newspapers are making right now - and as Mathew notes, the labels are late to the party, having spent the last few years trying vainly to hold back the tide, King Canute-like.

Technorati Tags: management