Robert Seidman over at TVbyTheNumbers says that being a hit on the Internet doesn’t matter. He cites that the scope of iTunes is completely dwarfed by that of radio and TV:
Does being a hit on iTunes matter when it comes to how TV networks view the show’s performance? Someday, perhaps, but not right now. We’ve been running this web site for almost 18 months, and despite increases in downloading and watching TV on the Internet during that time, the needle of how much it matters to the television industry hasn’t really moved any in those 18 months. I doubt that it will move much in the next 18 months either.
With all due respect, though, Robert is wrong.
Let me quote something I wrote in October of 2007:
Warner Music Group CEO Edgar Bronfman, Jr. led the earnings call this morning showcasing the “music-based content company’s” extremely meager profits (profits, by the way, that wouldn’t exist if they hadn’t won a settlement from the old Napster lawsuit). Warner was only able to bring in a profit by a scant $5 million on a total revenue of $869 million. The cause of the gap is obvious: Warner hasn’t adapted well to online music sales.
If my entire record label made the same as or possibly even half as much as a single “pay if you want to” initiative from crazy band out in the UK, I might be a little unsure of my business strategy as well. That’s right, even by the most critical of earnings estimates, Radiohead made between half as much as twice what the entire Warner label made in profit this year.
Get that? One band, completely unrepresented and independent, made half as much money giving away their album as one of the biggest record labels out there made on their entire catalog.
No scale indeed.