Radiohead Move Lowers Wall Street Appraisal of Music Majors

Labels fear more artists will adopt direct sales
By Nick McMaster,  Newser Staff
Posted Nov 7, 2007 6:03 PM CST
Edgar Bronfman Jr., Chairman and CEO of Warner Music Group, discusses his company and the music industry at The Paley Center for Media in New York on Monday, Sept. 17, 2007. New York-based WMG is one...   (Associated Press)
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(Newser) – Analysts downgraded leader Warner Music' stock to a "sell" today, predicting greater losses for the embattled music sector, reports. Major labels remain unable to cope with digital undercutting of the CD format, and now fear a second front: the defection of high profile acts like Radiohead and Madonna to an online sales model that cuts out the labels entirely.

The news media has characterized Radiohead’s online sales experiment as a failure since “most” (62%) so far have paid nothing under their voluntary sales system — which ignores the fact that 38% did pay an average of $6, netting Radiohead $2.7 million. Comparable sales under a label contract likely would’ve resulted in a lot less money going to the band.