DVDs Lose Their Shine

Warner Music Group's (WMG) Edgar Bronfman Jr., whose industry has arguably borne most of the brunt of technological change in recent years, said at the UBS conference this week that he sees the media business falling into three buckets as things sort themselves out: content providers, aggregators and distributors.

Bronfman says that content producers, like Warner music, will get proprietary margins, while aggregators (he cited NBC as an example) act as a service and will get service margins. But he warned that distributors like phone companies and cable operators will be stuck with commodity margins.

For the consumer, the choice of paying $4 to watch a movie through a cable system vs. $19.99 to own it on DVD might increasingly compromise the historically high margins enjoyed by the DVD producers, aggregators and distributors looking forward.

>To order reprints of this article, click here: Reprints