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The Orchard + DMG. Can Two Losers Make A Winner?

An SEC filing related to the merger of The Orchard with Digital Music Group reveals two digital music distributors loosing money. (SEC)  In 2006 The Orchard, which as a private company did not have reveal financial details, had a net loss of $5.97 million on revenue ofOrchard $14.9 million for an accumulated loss of $16.5 million.


Can two losers combine to make a winner or is this just an investment shell game?

Digitalmusicgroup_2DMG does not have a very impressive catalog for a publicly traded company and often seemed to overpay to get it. Much of The Orchard's business model is based on higher than industry standard distribution fees at a time when competitors are slashing commissions.

How can "combined cost savings" cure those ills?