EMI boosted by rapid growth in downloads
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The rapid growth in digital downloads and mobile music services is almost offsetting the decline in CD sales, EMI Group declared on Wednesday as the UK music group’s interim results showed revenue growth for the first time in five years.
Eric Nicoli, chairman, said EMI’s 4.6 per cent growth in turnover at constant currency rates compared with a decline of 0.9 per cent in the global music market. Much of the growth came from a 142 per cent jump in digital revenue to £44.6m ($77.3m).
Digital music now accounts for 4.9 per cent of the group’s sales - slightly below the industry average because of EMI’s relatively small market share in the US, the largest digital market.
After five years in which piracy and illegal file-sharing have cut CD sales by almost a quarter, “we remain confident that digital music will return the industry to growth in due course,” Mr Nicoli said. Digital may grow to 25 per cent of industry revenues by 2010, he estimated.
EMI was “on track” to deliver full-year results in line with its expectations, thanks to a strong release schedule including new albums from Kate Bush, the Beastie Boys and Robbie Williams, whose Intensive Care album has sold 3.5m copies in three weeks.
The big four music companies have been in dispute with Apple Computer over its flat-rate pricing policy for singles on its iTunes online music store. Alain Levy, head of EMI’s recorded music business, said he expected that variable pricing would be introduced in the next year, allowing EMI to charge more for new releases and longer tracks, or to discount new artists’ music.
EMI Music increased its global market share from 12.5 per cent to 13.1 per cent, driving a constant currency revenue increase of 4.3 per cent. The arrival of delayed albums from Coldplay and Gorillaz, which sold 7.4m and 3.5m units respectively in the period, complemented strong sales from artists in continental Europe to produce a 34.9 per cent rise in operating profit to £38.3m.
EMI Music Publishing, which manages a catalogue of more than 1m songs, increased revenues at constant currencies by 5.8 per cent thanks to releases from songwriters such as James Blunt and higher revenues from ringtones and ring tunes. Publishing’s contribution to operating profits fell 0.4 per cent to £48.4m as more overheads fell further in the first half.
An unchanged 2p dividend will be paid from reported earnings of 2.9p per share. On an adjusted, diluted basis, earnings per share rose by 17.6 per cent to 4p.
The shares closed up 4.6 per cent at 220p on Wednesday.
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