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Wall Street to Warner Music: Drop dead

News yesterday that Warner Music had resolved its months-long spat with Linkin Park (not exactly a surprise) was still met with a Bronx cheer from Wall Street.

BrokenRecord.jpg

And understandably so. Warners’ crowing that its getting along with a top act is like a baker boasting that he didn’t burn the bread. It’s the bare minimum you can hope for.

True, digital downloading record year (even though that would seem to be an oxymoron), but that’s at the expense of the sale of actual records: 2005 saw a 7 percent decline in CD album sales, from 650.8 million last year to 602.2 million for the same period this year.

There was 148 percent increase in legal downloads from 134.2 million in 2004 to 332.7 million in 2005.

The problem here is that while 95% of folks still buy their music on little silver pieces of plastic, at this rate, the death of the album is immminent. incorruptibles01.jpg

And therein lies the big problem: Eliot Spitzer is turning into Elliot Ness of the record business. The mere mention of Spitzer’s name in conjunction with the word “music” means either an embarrasing settlement for record companies, or the promise of a new, painful investigation.

If record companies are employing the same scrupulous, above-board approach to Steve Jobs’ iTunes (which accounted for 80% of all downloaded songs) as they are to radio stations, we should see even more embarrassing settlements, if not outright indictments.

As Variety‘s Steven Zeitchik aptly points, out, the record business can’t win for losing. Even if Jobs does come around to the labels point of view and allow variable song pricing,

“labels risk criticism that they are artificially inflating revenue, as well as pushback from consumers who embrace the simplicity of flat pricing.”

Happy New Year, Warners!

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