Case in point: Warner Music Group, which yesterday took a $33 million write-down on its $35 million (combined) investment in LaLa and iMeem, two social music discovery sites, as noted by PaidContent. As CEO Edgar Bronfman put it, that essentially erases its digital investments. The company is now focusing on its artists and letting other folks try to figure out online and see if there are any good ways to compete with Apple.
Particularly disappointing has been MySpace Music. As Bronfman put it bluntly, "MySpace Music has been slow to create monetization tools and to be able to impact in a revenue-generating way the massive audience that they have been able to attract."
He's not the only one. CNET News recently reported, "At a MySpace Music board meeting last month, the company's CEO, Courtney Holt, got an earful from several music label representatives" unhappy about the lack of money they're making.
Yesterday in its earnings call, News Corp. (MySpace's corporate owner) admitted that MySpace costs have risen 7% in large part due to the rollout of music, but ad revenues are down 16%. However the company thinks it has a bright future.
"I think MySpace Music is less than six months old and has a tremendous amount of traffic," president/COO Peter Chernin said on a conference call with analsyts and media. "We're working hard on monetization opportunities that are just beginning to roll out."
Warner's Bronfman seemed optimistic about Vevo, the new musicvideo portal that Universal Music is launching with the support of Google's YouTube. But he's none-too-excited about the prospects of another site built on advertising alone.
"Any premium video model is going to have to include very significant monetization opportunities above and beyond advertising in order to be effective," he said bluntly.
Charging for music videos? Well, good luck with that.