AOL's Music Division Posts Increase In Revenue & Profits, Despite Piracy

by , 1:15 PM EDT, April 30th, 2002

The RIAA has been screaming its blackened heart out about how piracy threatens the recording industry since Napster showed itself to be a haven for those wanting to steal music. The organization has often touted declining CD sales in 2001, while not deigning to acknowledge factors such as the slumping economy during that same time (as the article quoted below notes). What they aren't touting are the increased profits and revenue claimed by AOL Time Warner's music division during the last quarter. AOL didn't tout it either, it took Business 2.0 magazine to find that little nugget. In an article title "AOL's Music Group Sings a Happy Tune," journalist Eric Hellweg had this to say:

You have to dig deep to find the good news buried in AOL Time Warner's (AOL) most recent quarterly results. With a $56 billion write-down -- one of the largest in corporate history -- dominating the headlines, the picture looks bleak. (Full disclosure: AOL Time Warner is the parent company of Business 2.0.) But sifting through the numbers reveals some interesting news: Warner Music Group actually saw a 5 percent increase in revenue for the quarter.

Amid all the red ink, why is that noteworthy? If you read all the press releases issued lately by the recording industry, you'd think that online music swapping was killing the business. But the most recent filings by the five major labels actually look pretty healthy when compared with the general malaise that plagues so many tech companies these days.

On April 16, the International Federation of Phonographic Industries released a report stating that in 2001, global music revenues fell 5 percent while overall unit deliveries dropped by 6.5 percent. Instead of attributing this decline to obvious factors such as the global economic slump, growing competition for entertainment dollars, and curtailed consumer spending, the IFPI took the opportunity to pin much of the blame for the downturn on "the increased availability of free music via mass digital copying and the Internet."

There is additional information and commentary in the full piece, and we recommend it.

The Mac Observer Spin:

It probably chaps the RIAA's hide to see any of its members making any money right now. It can be so annoying to see reality getting in the way of your delusions, of which the RIAA is full. We abhor piracy and the entitlement attitude that so many digital thieves seem to have, but the RIAA's attempts to curtail all of our fair use rights, including those of us who do not pirate music, is even more wrong. We would also like to congratulate AOL's music division for posting increased profits and revenue in the face of such trying and difficult times. Note the intended sarcasm of that last comment. It will be interesting to see how the other corporations do as well.

Business 2.0 Article