Reports from the US suggest that concert behemoth Live Nation has put in a bid for Warner Music Group, the latest suitor in a prolonged courtship amongst labels and other music companies. Interestingly, however, the offer is for the Warner’s recorded music division. Live Nation has suffered over the last 18 months after its attempts to gouge punters for tickets, parking, food and drink at stadium gigs left many American fans staying home in droves.
So why would they buy Warner’s Recorded Music division? These are usually the parts of record companies that are most bleeding like stuck pigs. Warner doesn’t differentiate in its profit and loss statements between its recorded music and music publishing divisions. The latter is the only part that has future intrinsic value and if the sale goes ahead it will allow Live Nation to further diversify its income stream.
This is a further nail in the record company business model coffin and shows that in the future we can expect to see record companies broken up and the parts of value incorporated into entertainment conglomerates, while the remaining parts will have to try to survive as niche businesses.
