New Study Confirms: Internet Is Contributing To Massive Profit Levels At Legacy ...

[Mike]

Our own research has shown this over the past few years, but contrary to the doom-and-gloom stories from the big entertainment companies about how awful the internet has been for their business, the truth is that it's enabling tremendous growth and profits. A few months ago, a study of the major record labels showed that they remained tremendously profitable.

There's some up and down in there, but there's fairly consistent profitability, with pretty massive profitability from the two biggest ones, Universal Music and Sony. The report also notes a big increase in the profit margins that these companies are making, able to squeeze a lot more money out of existing resources.

A new, much larger, study from Ernst & Young shows that this is true across the media business these days -- and that a lot of the profitability is coming... from the internet. A quote from the report's lead author sums it up:

“We are seeing that digital is very much driving profits now, instead of disrupting it. Companies are figuring out how to monetize the migration of consumers to a variety of digital platforms, and this insatiable demand for content is fueling growth throughout the industry.”

Remember how the internet was supposedly killing music? Yeah, about that:

The music sector is driving record growth in profitability from the expansion of licensed digital subscription and streaming services, growth in music publishing and rising smartphone and tablet penetration in emerging markets.

Film?

Film and TV production companies are driving their profitability through increasing revenues from digital platforms and investments in franchise-based films and higher-margin television shows.

But, wait, just weeks ago, one of the copyright maximalist talking heads was telling us that franchise movies were being killed off due to piracy? Maybe not.

Either way, this goes back to the point that many of us made during the SOPA fight. Despite the desire of Hollywood and certain politicians to make this into a "fight" of Hollywood vs. Silicon Valley, it's a bizarre kind of "fight" when it's Silicon Valley providing all the "weapons" to Hollywood that's making them so profitable.

Originally Published: Wed, 17 Sep 2014 19:20:00 GMT
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