July 13, 2006

CNNMoney.com writer Paul R. La Monica makes a case against a merger of EMI and Warner Music Group. His rationale: Greater consolidation would result in a greater likelihood of higher digital prices, and the financial fundamentals just aren't there.

Coolfer's thoughts: First, I do not believe there's great risk in prices rising much higher on the typical digital album. Look at iTunes this very second. As of the time of this writing, 18 of the top 100 titles were above $9.99 and there's hardly a consumer backlash. The trend in recent years has been toward lower prices. If prices stay constant or rise slightly there will probably be additional content bundled with the album.

Second, La Monica is right about the financials. Neither company is burning up with revenue growth, and rising stock prices is due to pre-merger speculation.

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Posted by Glenn at 2:32 PM | | | EMI | EMI WMG Merger Talk | Warner Music Group