Pali Research analyst Richard Greenfield cut his rating on the Warner Music stock to Sell from Neutral.

His reasoning?

“No matter how many people the RIAA sues, no matter how many times music executives point to the growth of digital music, we believe an increasing majority of worldwide consumers simply view recorded music as free,” he asserted in a research report Thursday morning. “A new model for music consumption must emerge and that model most likely involves DRM-free downloadable music at no cost to consumers, fully supported by advertising.” But as Greenfield notes, “the music industry is not ready to endorse such a move at this point, and even if it was, the economic model transition will be incredibly painful.”

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