Ouch. Bad year for the music industry. (Or just record company propoganda :-).

Check out:

Labels Singing the Blues Over Expensive
Failures
by Jeff Leeds for the L.A. Times.

“I’ve never seen this kind of damage,” said Michael Nathanson, a media analyst
at Sanford C. Bernstein & Co. “You had these tent-pole releases that didn’t
carry their weight this year. And it’s going to get worse.”

The major music companies report financial results differently, but most of the
labels are struggling.

EMI posted a loss of $77.6million for the first half of its fiscal year–the worst
first-half results in at least five years. Bertelsmann’s BMG Entertainment
reportedly had a loss of more than $70 million this year.

Warner Music, once the industry leader, has been posting lower pretax
earnings for three consecutive quarters, and Sony Music reported operating
losses of $91 million for the last two quarters. Universal Music is the only one
of the Big Five record conglomerates to post gains this year.

Record executives say the fickle marketplace is making established performers
seem a liability. Much like Hollywood’s movie studios, the major record
companies find themselves forced to pay stratospheric sums–even at the risk
of losing money on the deals–for the industry’s top stars.

Swept up in a free-agency frenzy, record labels during the last decade spent
hundreds of millions of dollars to sign such acts as Carey, R.E.M., Bruce
Springsteen, Janet Jackson, Prince and ZZ Top.

Record labels sign blockbuster pacts with hopes that mega-stars will at least
pay for themselves and provide momentum for the company to sign new talent.
In a business in which some 90% of the 6,000 CDs released domestically each
year are unprofitable, according to major-label executives, stars are seen as
safe bets–particularly when corporate parents are pressuring music labels to hit
quarterly earnings targets.”