While consumers continued to opt for less expensive digital music and shied away from live events in the third quarter of 2010, one company found a way to entertain and thrill its customers: Apple. Although Apple does not create musical content, promote concerts or manage artists, its technologies are an integral part for all three aspects of the music industry. Content may be king, and there may be no replacement for the live experience, but Apple’s technology has trumped them both in this quarter.

Apple had another blockbuster three months that showed where consumers are willing to put their money during this prolonged economic slump. While recorded music and ticket sales sagged, consumers showed little hesitation in spending billions of dollars on the latest Apple hardware. The company posted incredible sales numbers for its iPads, iPhones and Mac computers.

Warner Music Group
Warner finished its fiscal year with a 7% drop in revenue and a net loss of $143 million. In its fiscal fourth quarter, the company had revenue of $752 million, down 13%, and a net loss of $46 million. For the full year, recorded music revenue dropped 9.2% and music publishing revenue was down 4.5%.

Warner’s non-traditional revenue (from things such as merchandise, promotion and artist management) accounted for 10% of the company’s annual revenue and 14% of its fiscal fourth quarter revenue. Yes, non-traditional is still a small piece of the pie. But it has grown from nothing in just a few years, will continue to grow in absolute value and will grow even faster as a share of Warner’s total revenue (as recorded music revenue drops, other revenue become relatively bigger).

Live Nation
Live Nation followed a disappointing second quarter with a third quarter that reflected a challenging environment for entertainment spending. Third quarter revenue was $1.84 billion, 14.3% lower than the combined companies’ individual revenues in the same quarter last year (Live Nation and Ticketmaster merged in January 2010, making year-over-year comparisons difficult without combining the results of the then-separate companies).

Operating income was $115 million, down 20%. Concert revenue was down 14.5%. Revenue from the Artist Nation division, which is prone to fluctuation, was down nearly 27%. Total concert attendance was 16.45 million, down just under 16%. The number of tickets sold across all events was down over 4% to 32.27 million.

On the positive side, two higher margin areas performed well. E-commerce revenue rose 2% to $25.8 million. Sponsorships held strong, with revenue down just 6% while average revenue per sponsor was up 5.5%.

Universal Music Group
In the third quarter of 2010, the company’s revenue was up 6% (down 3% at constant currency) to 1.03 billion euros ($1.39 billion). Earnings before interest, taxes and amortization (EBITA) was up 47% (up 34% at constant currency) to 85 million euros ($116 million). In the first nine months of 2010, UMG’s revenue dropped just 1.7% (down 6.3% at constant currency) to 2.9 billion euros ($3.99 billion). EBITA was down 9.3% (14.7% at constant currency) to 244 million euros ($332 million). Digital sales in that period increased 18.5%.

Sony Music
Sony Music’s revenue dropped nearly 11% in Sony’s fiscal second quarter ended September 30, 2010, showing just how much Michael Jackson contributed to the company’s 2009 performance. Revenue was $1.33 billion and operating income was $98 million. In the first six months of Sony’s current fiscal year, revenue is down 5.2% and operating income is up 11.4%.

Apple
In its fiscal year, Apple posted sales of $65.2 billion and net profit of $14 billion. (According to an IMF list of countries’ 2009 GDPs, if Apple were a country it would have the 64th largest GDP in the world – one spot behind Iraq and one spot ahead of Libya.) In the latest quarter, Apple had sales of $20.3 billion and sold 14.1 million iPhones (up 91%), 9.1 million iPods (down 11%), 4.2 million iPads (at $645 apiece on average) and 3.9 million Macs (up 27%). iTunes had over $1 billion in sales during the quarter.

Trans World
Third quarter sales dropped 20% to $129 million but comp store sales (stores that have been open at least a year) dropped only 5%. Net loss was $16 million, an improvement from last year’s $22 million net loss. Net loss for the first nine months of 2010 improved to $43 million from $54 million last year. Trans World’s comp store CD sales were down 7% in the third quarter while comp store video sales were up 2%. The biggest losses were experienced in video games. Because Trans World stopped selling games in 212 stores, the game category dropped 41%.

Madison Square Garden
In the quarter ended September 30, MSG Entertainment revenue grew nearly 25% to $38.2 million in Q3 from $30.6 million in the same period last year. In the nine months ending September 2010, MSG Entertainment’s revenue is up over 15% to $126.4 million from $109.6 million in 2009. Parent company Madison Square Garden increased revenue 18% to $191 million and raised its operating income 39% to $50.3 million. However, the entertainment division’s operating loss was $13.9 million in Q3, an improvement over the $18.8 million operating loss in Q3 2009 and the $22.8 million operating loss in the previous quarter. Through the first three quarters of 2010, MSG Entertainment’s net operating loss was $53 million.

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