I met a representative from Warner Music in charge of digital music within the group yesterday at a brunch . He told me Warner gets more than 50% of every revenue generated by legal music downloads. He thinks it is the fair price because "Warner owns the masters and Warner is not going to shrink and break its margins in this new business model". Obviously, he reflects what we can read and hear from music entertainement groups. If you read a book about strategy, one of the basic topic would be "when you start a new business, don't break your margin because it could be your next business model for growth", which is quoted above by this Warner representative. Good to hear once again what I knew since a long time (and I am sure you too :) : music majors don't get it. They don't understand that legal music platforms are not what books call a "new business". P2P file sharing softwares have created "free music", not because worldwide downloaders are all bad guys, but as an answer to majors monopoly and expensive music offering. Free music is the grass roots business model of legal downloading platforms. Music majors should not consider they are entering a new market but that they are competing in an established market where competitors are pushing this "all for free" very powerful business model.
Internet is a real threat for unaware business people. It is also the best monopoly breaker. Keeping their "old school" way of thinking in mind might not bring music majors revenue growth back.