EMI Music has just purchased Digital Stores Limited, a company which provides online stores for artists including The Beatles, Queen & Oasis.
The acquisition is a logical one for EMI, which is in need of revenue streams outside of physical and online music sales. Although the business has been improving since the 2007 purchase by private equity firm Terra Firma, they still lost more than 600 million euros last year.
It also dovetails nicely with the recent trend of labels signing artists to 360 deals. These deals give the label a cut of everything from merchandise to tour revenue, and are becoming an increasingly important part of the modern music business.
Owning a company like Digital Stores also has a lot of potential for selling services to artists not otherwise affilliated with EMI. Both artists on other major labels and those who wouldn’t be signing with any major become potential revenue sources.
If they manage it well, this could be a key part of EMI’s transformation from a traditional label to an all around music marketing and artist services company. Of course any of the major labels could have done that already.
The stumbling block has never been capability. What they’ve lacked has been the will to change. As long as executives are fixated on preserving a dead business model that will remain a problem.
This purchase seems like a good move, but the follow through will determine just how successful it is.
Result for: revenue stream
Netflix has expanded its Watch Instantly streaming catalog today, striking a major content deal with Relativity Media.
The deal will allow Netflix to compete more directly with premium TV channels such as HBO and Starz, as Relativity Media films will be “licensed directly and exclusively to Netflix for streaming to its subscribers during the “pay TV window.”‘
Many of the blockbuster films will hit Netflix months after they become available on DVD, just like they hit premium stations.
Netflix says “it will be the first time that studio quality theatrical feature films will be streamed via subscription by Netflix instead of being broadcast by the traditional pay providers, and it opens up a new revenue stream for such movies.”
Some of the first movies available under the new deal are “The Fighter,” and “Skyline,” both of which are set for a 2010 release date in theaters and set for a Netflix streaming launch in early 2011.
Relativity has completely financed or co-financed over 200 features, including new films such as “Robin Hood,” “Get Him to the Greek” and “Grown Ups.”
Result for: revenue stream
Nintendo will be joining up with the ad agency Dentsu to start a video distribution service for the popular Wii gaming console in an effort to establish a new revenue stream.
New entertainment content and cartoons will be available on the service, differentiating it from current content delivery services.
The service will be available in Japan starting the Q1 2009 then moving to Europe and North America after.
