Vivendi predicts resurgence in music industry

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The owner of the world’s largest music company is predicting a return to growth in the industry as new ways of making money from legal digital downloading come to fruition.

Jean Bernard Lévy, the chief executive of Vivendi, told the Financial Times he believed his group would soon begin to see strong revenue growth from its Universal Music Group division, home of Amy Winehouse, Metallica and McFly.

Mr Lévy said he had been cheered by a host of new means of raising money from the sale of music, such as mobile phone maker Nokia’s plan to charge a premium for handsets that include its Comes With Music service that allows consumers to download unlimited music tracks to their handset for a year.

Other innovations with potential to increase revenue included possible future deals with companies such as Apple, as well as existing arrangements with the social networking site MySpace, announced last spring.

Until now, the decline of CD sales in the face of an upsurge of digital downloading, mostly illicit, had led to a decline in global recorded music sales from $36.9bn in 2000 to $29.9bn last year.

In a recent speech, Clay Shirky, a new media expert from the City of New York University, described the music industry as “the skull on a pikestaff as a warning to others about how not to deal with the internet”.

He said: “It has the potential to become, when you look back, one of the times where things were changing, one of the events that made things change”.

Mr Lévy said that Universal, which in July reported first-half revenues up 5 per cent at €2bn ($3.1bn) out of Vivendi’s sales of €11.3bn ($17.6bn), “is the next surprise for our investors”.

He said: “I think [in] the music business, there is a strong likelihood that we are getting close to the lowest part of the cycle and we are extremely active in developing new business models, new sources of revenues.

“We are working with all the big names in the field of internet, in the field of telecom equipment companies, big media companies and this is a big opportunity.”

He said Universal had emerged from the downside of the market as a clear leader of an industry that would soon be able to claim it had “reinvented a new era for the music business”.

“I really believe we are at the turning point for the music industry and I didn’t say that two years ago.”

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