I hadn’t realised that music publishing was so profitable, by comparison to record sales.

Well Decca rejecting the Beatles, but picking the Stones (in desperation) speaks for itself. The mistake turned into the better investment, but that wasn’t intentional.

I’d assumed that CD sales had declined recently because CD owners had bought the CD versions of their favourite old albums by 2000. Roughly. most music buying is done by teenagers and young adults: after a point they slow down, if not stop. There was a craze among (relatively) affluent adults for re-buying vinyl albums as CDs, but that had to die out.

I don’t listen to Radio 3 enough. ("Late Junction" broadcasts just about the only music which interests me.) So the internet is where I get news of interesting new music from.

Record companies are being incredibly daft here. The teenage population (in the UK) is falling: ergo record sales fall. But they’re blinkered and are looking for someone to blame.

The only thing people like Simon Cowell had to offer their tame bands was a record deal. If you can record in your garage, and push your music on the net, you can tell these public schoolboys to get stuffed.

Internet 1, Cowell/Waterman and the rest of EMI etc, 0.

WMG, being private, doesn’t seem to publish detailed figures (there are probably some archived ones on the Time Warner site, which I can’t face searching through).

However, similar-but-slightly-smaller EMI made £300m (close to your WB estimate) last year on sales of £2.1bn (again, not far off WMG) – and only £147m of that was on recorded music (with a fairly poor 8% margin). Most of the rest of the profit was in music publishing, which has a margin of around 25% on revenues of only around £400m.

They don’t break down recorded music sales between new and archive content… but my hunch is that new releases provide a lot of volume, giving manufacturing and distribution economies of scale, but don’t directly make a profit (there are an awful lot of overpaid middlemen involved, and an awful lot of new deals and new records that flop). Meanwhile, with new releases covering the fixed costs, the back catalogue is the profit centre with margins approaching the publishing business (which is now mostly back catalogue focused).

So if I were running a record company, I’d look at getting out of the new content business altogether, and using Internet distribution to cut the costs on releasing archive material (while possibly also licensing old content to other companies for CD release). However, I suspect the combination of P2P and iTunes may have made this plan unworkable…

Most of the reason for declining record sales in the US, by the way, is simply that there are fewer new releases in any given year — down 25% or so from highs in the mid-1990s. Since most fans buy only one copy of a given CD, this naturally leads to a ~25% drop in sales.