Borders, which accounts for about 2% of the U.S. recorded music market, plans to dramatically reduce the number of CDs its stores will carry and seeks revised payment terms from vendors. As Billboard's Ed Christmas termed it, Borders is "threatening" to reduce inventories. Judging from the email that was forwarded to me that was written by someone on the conference call, and judging from the quotes Christman got from a Borders manager of corporate affairs, there is no threat. Borders is making the reductions.

According to the source, 97% of existing locations will reduce inventories by 70%. All stores will carry top new release and catalog titles, an inventory level that could be as low as 50 titles in about 200 stores. Borders is not seeking lower wholesale prices but wants revised payment terms. The retailer has floated the idea of receiving extra dating or moving to a consignment model. Extra dating is, in effect, a reduction in invoice price. A consignment model would help labels emphasize fast-moving, popular titles in order for them to receive payment as promptly as possible.

It would not surprise me if labels granted extended payment terms but got Borders to rein in a bit their reductions. It would be a small victory for a group of companies with very little leverage. Borders has been lowering emphasis on CDs since last year. The day was coming when the chain all but gave up on the format.

Not that Borders is key in developing artists, but there are dramatic implications in this planned reduction. Other major retailers will reduce CD inventories -- it's only a matter of time -- and reduce opportunities for new artists to gain a foothold at retail. Labels are going to find their chicken-and-egg situation get even worse: To break a new artist they need retail to carry the title, but retail will only carry popular titles. If not for the top-seller charts at Amazon.com and iTunes, who will know what to carry?

Posted by Glenn at 8:36 AM | Link
|Brick-And-Mortor Retail|

Circuit City announced today it will close 155 underperforming, domestic stores in 55 markets and reduce the number of stores it opens in the future. The move, which will take Circuit City out of 12 U.S. markets, is part of a restructuring strategy intended to improve the company's liquidity position and brace the company for an economic downturn.

The stores to be close amount to approximately 20% of the company's total number of stores and account for about $1.4 billion in net sales. For entertainment companies, this means a considerable number of locations will no longer sell their CDs and DVDs. Because of the titles typically carried by Circuit City, major labels and studios will be disproportionately affected. CD and DVD sales at Circuit City have regularly been down by double digits in recent quarters.

According to NPD Group, Circuit City was tied with Borders, with 2% market share, as the eighth music retailer in the country as of January 2008.

Posted by Glenn at 1:52 PM | Link
|Brick-And-Mortor Retail|

National retailer Circuit City reported a horrible Q2 yesterday. Net sales dropped 9.6% and comp store sales dropped 13.3%. The net loss was $239 million on net sales of $2.39 billion. The press release's only mention of music sales was in a sentence that read, "comparable store sales of video software and music software declined by double digits." Even comp store video games dropped "by a low-single-digit percentage." Store traffic declined by low double digits.

During the conference call, acting president and CEO James Marcum blamed the "entry of mass retailers into the CD market," among many other shifts, for the company's challenges in recent years.

According to NPD, as of January 2008 Circuit City was the tied (along with Barnes & Noble) for the country's eighth largest music retailer with a 2% share of the market.

Posted by Glenn at 3:06 PM | Link
|Brick-And-Mortor Retail|

It was announced this morning that retail giant Best Buy will buy Napster for $121 million. Given Napster's $67 million in cash and short term investments, the net price of the acquisition is $54 million. Best Buy will offer $2.65 per share, a 94.8% premium over Friday's close.

In today's press release, Brian Dunn, President and COO of Best Buy, pointed to stronger relationships with its customers. "Over time we hope to strengthen our offerings to consumers, who we believe will increasingly seek devices and solutions that enable them to access their content wherever, whenever and however they want."

There is a good deal of head scratching going on over this deal. TechCrunch proclaimed that "Best Buy just wasted $121 million." It's far too early to say that with much certainty, but at best we're looking at coin toss odds. Subscription services have to overcome years of miscalculations and losses, stagnant products and increased competition from free services.

There are two key points in this acquisition. First, it is part of a larger plan to increase Best Buy's presence in the mobile market. By the end of the year, Best Buy will launch a $4.2 billion joint venture with British mobile giant Carphone Warehouse. Second, the Napster service can be sold (individually or maybe bundled) with products sold at Best Buy retail locations. It is this hands-on salesmanship that offers the most potential for Napster. Napster currently has about 700,000 subscribers. It would not take a huge increase in the number of subscribers to earn back the net purchase price in just a few years. And I do not think Napster has maxed out the number of subscribers it can have.

Posted by Glenn at 11:10 AM | Link
|Brick-And-Mortor Retail||Napster|

Borders issued its Q2 2008 earnings release today. For the quarter ended August 2, the company had a loss of $2.6 million on revenue of $758.5 million.

The company didn't offer many specifics in the release but a bit more information was available in the conference call. Music sales at Borders domestic superstores fell by $12.9 million in Q2 (music was responsible for a 2.1-point drop in comp superstore revenue). Based on last year's numbers, I estimate the year-over-year drop in total (not comp) music sales in Q2 in the 19 to 20% range.

According to the conference call, music now accounts for less than 7% of company revenue (it was 7.3% in fiscal 2007) and is its lowest-margin category. Borders did not specify the percent drop in the music category. CEO George Jones said inventory levels for all product categories have been reduced over 14% and has seen its market shares hold up well on new releases. (Most of the reductions in book inventories came from eliminating titles that sell fewer than one copy per year per store. No similar strategy for CD inventory management was mentioned.)

The only other part about music from the Q2 earnings release is:

The music category continued to experience negative sales trends resulting from declines in overall demand, and as planned, a reduction in inventory and floor space devoted to the category.

Here's the part about music in the Q1 earnings release:

To address declining sales in the music category, as well as increasing space available for improved merchandising presentation and expansion of higher margin categories, the Company has begun reducing inventories and reallocating floor space in its stores.

Those reductions and reallocations, combined with the CD market's natural sag, resulted in a 25.8% Q1 2008 drop in music sales. In fiscal 2007, comp store music sales were down 15.1%.

Also mentioned by Jones during the conference call was Borders' plan to roll out interactive kiosks to all Borders Superstores later this year.

Posted by Glenn at 2:00 PM | Link
|Brick-And-Mortor Retail|

Entertainment retailers are having mixed success in lessening their dependence on CD sales. Hastings reported lower earnings earlier this week. Its comp revenue was up 0.6% and gains in other product categories helped make up for an 11.7% slide in music sales. Gross margin was up slightly, and SG&A as a percent of revenue was up a bit over a percentage point.

Yesterday, Trans World reported a loss of $19.2 million on lower total and comp sales. Through the first six months of the year, Trans World has lost $31.1 million, up from $19.1 million last year. The retailer, which operates chains such as f.y.e., said it was "on plan for the quarter." Some fundamentals, however, weakened. Gross margin decreased and SG&A as a percent of revenue increased. Inventory reductions are a positive step toward using capital more efficiently, but much of that reduction can be attributed to the closing of 174 stores since the end of Q2 2007.

For labels, there most positive aspect of Trans World's Q2 was its commitment to the CD. The company expanded it stock of secondary and tertiary CD titles. While a third of the open orders are yet to be received, Trans World said it is "already seeing an improvement" in catalog sales and it is committed to improving its market share.

And there was word today on the company's longtime struggle to incorpore digital downloads into the brick-and-mortar shopping experience. Two stores currently have a download kiosk that works with most devices (including the iPod) and offers over two million tracks. Forty stores will have the kiosks by fall. The company has for years clung to the idea that kiosks can be successfully integrated into its stores. These new kiosks are an improvement on the mix-and-burn kiosks currently in stores, but they are likely to have limited appeal and limited success.

In spite of a few positives, labels should look at Trans World's Q2 with a bit of trepidation. Even though Warner Music Group said in a conference call last week that none of its accounts are in or near a state of financial distress, one must wonder how long Trans World's transformation will take. The company is constantly in the red, and it is downright stubborn in its goal of incorporating digital kiosks (it has been going on, with few results, for years). Labels cannot afford for such a large retailer to stumble much further.

Posted by Glenn at 11:27 AM | Link
|Brick-And-Mortor Retail|

Entertainment retailer Hastings reported a 0.2% slip in revenue in Q2 2008 (press release). Total revenue was $125.7 million versus $125.9 million in Q2 2007. Comp store music revenue, which comes from CD sales, fell 11.7%. That was an improvement over the 14.2% decline a year ago. Hastings reduced CD floor space in 22 of its stores in the first half of the year. Through the first six months, Hastings' comp music sales decreased 14% versus 13.6% in the first half of 2007.

Hastings' music sales mirror the trend in CD sales. In the first half of 2008, CD sales in the U.S. dropped 16.3%, an improvement over the 19.4% drop in 2007. CD sales were down 18.7% in 2007. An improved release schedule and a flurry of shelf space reductions in 2007 are two of the reasons 2008 has seen an improved, although still considerable, drop in CD sales. Hastings has not cut CD shelf space but not as dramatically as have some other retailers.

These numbers show a few important things. First, CD sales continue to sag but consumers have not given up on the format. There has not been the sort of mass migration away from the format that would lead to its extinction any time soon. Declines have been due to reduced retail involvement in addition to the more celebrated reasons (digital downloading, piracy). Second, retailers still have the desire to sell CDs and are successfully altering stores product mixes to make up for lower CD revenues. Hastings has done what Tower Records and others could not do: Its electronics sales were up 25.7% in Q2 ("strong sales of refurbished iPods, MP3 players and related accessories, as well as increased sales of third-party gift cards.") Hastings' and other retailers' ability to make up for lost CD revenues means there will be shelf space in the future instead of closed stores and liquidated inventories. Less shelf space is obviously better than no shelf space. Third, any double-digit decline offers more than enough incentive for labels to speed its transformation. The market is changing whether or not labels change with it. Digital download growth is slowing and other business models (ad-supported, subscription, mobile) do not offer a clear path to the future.

Even though retailers are keen to stock CDs, some are being more proactive than others in breathing life into the format. In the July 5, 2008 issue of Billboard, Hastings CEO John Marmaduke called on labels to lower wholesale CD prices in order to "extend the life of the CD and profit streams it generates for artists, labels and retailers."

Link: Coolfer's "State of the Compact Disc" report

Posted by Glenn at 10:14 AM | Link
|Brick-And-Mortor Retail|

The CD format showed to be of waning importance for Borders as the company issued a press release for its Q1 2008 results. Music sales dropped 25.8% versus the previous year. The company attributed the decline to negative sales trends as well as a planned reduction of inventories. No data was given for same-store results in the music category. The filing does indicate there were no closings of Borders stores during the quarter (14 Waldenbooks stores were closed during the period), so it is likely same-store sales represent all or nearly all of the 25.8% drop in music sales.

Borders' same-store music sales dropped 13.1% in Q3 2007, 14.2% for fiscal 2007 and 15.1% in fiscal 2006.

The company is attempting to reshape its digital footprint, though I'd bet music companies are not likely to feel much difference. Yesterday Borders announced it has stopped outsourcing its online store to Amazon.com and re-opening its own online storefront. In addition, Borders is testing concept stores that will have digital centers where customers can download music and books, research family histories and print photos.

Posted by Glenn at 9:13 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

Trans World, which operates f.y.e., Suncoast and other retail chains, posted a $11.8 million first quarter loss. Total sales dropped 19% to $233 million and same-store revenue dropped 6%. Same-store music sales dropped 23% on a comp basis while sales from the top 50 titles dropped 30% on a comp basis. CD sales accounted for 37% of revenue, down from 44% the year before.

During the conference call, president and COO Jim Litwak said the company is committed to improving its music market share. CFO John Sullivan said stores have reduced by 10% the square footage of CDs and they see an opportunity in "secondary and tertiary genres."

The company has been searching for success with in-store digital kiosks. It will soon test a music download service at stores in Albany, NY and the Mall of America in Bloomington, MN. The service, which has yet to have tracks from all four major music groups, will reportedly download music to iPods and other portable music players. Although the article does not mention formats, the implication is the service will offer MP3 files.

Trans World has tried to get its Mix & Burn kiosks off the ground for a number of years but has appeared to have little to no success. A year ago the company said the kiosks were showing "promising, but still inconclusive results." Monday's article in the Albany Business Review says the Mix & Burn kiosk at the Albany store "was shrunk and moved to a corner as part of a recent downsizing of the store."

Go here for the 8-K filing with a transcription of the conference call.

Posted by Glenn at 12:45 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

Entertainment retailer Hastings reported improved Q4 earnings and slightly lower revenue for fiscal 2007. (Read 10-K filing.) Comp-store music revenue was down 15.3% in fiscal 2007 (compared to a 9.3% decline in fiscal 2006 and 2.9% decline is fiscal 2005). In fact, music was the only one of the top eight product categories to decline in fiscal 2007.

The bad news for labels is that falling CD sales will result in fewer titles being stocked -- a painful double whammy -- that will result in even lower CD sales. For fiscal 2008, the company has budgeted $5.3 million to reformat 35 stores to reduce the retail space dedicated to music by 15-20%.

Posted by Glenn at 6:11 AM | Link
|Brick-And-Mortor Retail||Earnings Releases|

Seems like I'm the only person who thought Sony BMG's download cards were a good idea. Little plastic cards that are redeemable for music downloads? At least one other person likes the idea. On its blog, Phonelopie, Toronto Montreal indie record store Phonopolis encourages labels to sell download codes -- not cards, but codes -- and offers a rough sketch of how it could work.

Stores would stock a larger number of codes than they would CDs (they would of course still stock CDs). They would not immediately pay for these codes, however. The lack of immediate cost, and small amount of space that these codes would take would allow small record stores to carry a wider selection of stock and larger numbers of individual titles. The stores would validate the mp3 codes at the point of sale. During the validation process (which would be on a distributor or label website), the store would pay for the product.

For the stores, they could carry a wider selection in a smaller amount of space. Having a larger number of codes for each individual title, they would hopefully avoid running out of 'indie hits' after an especially good Pitchfork review. ...

For consumers, there are benefits to going to a record store, the first of which is getting away from your computer, getting out of the house, and talking with someone who is knowledgeable and enthusiastic about music. ... There are other possible benefits, perhaps labels could print extra copies of the CD booklet that could be included with sale of the code.

I'm sold.

Lables that have their own download stores and include download codes with their vinyl releases could throw this together more easily than others. Everybody else would need a third party (DiscRevolt comes to mind). If payment could come at the time of purchase, stores would be more likely to take a risk and carry a slow-moving title. After all, it's just a code. There is zero risk.

One has to wonder how exactly these codes would be merchandised. Hand-embroidered cards? Written on napkins? Compiled in the sort of catalog that used to grace every record store's counter? But this is an indie store recommending the product, so you have to figure it has a snowball's chance.

(Thanks to Sean from Said the Gramophone for the link.)

Posted by Glenn at 3:12 PM | Link
|Brick-And-Mortor Retail||Digital Distribution|

Coolfer is taking a day off from digital and mobile news items and issues.

• CBC Radio 3 has announced its shortlist for Canada's best record store. (Exclaim)

• A profile of Minneapolis retail legend Electric Fetus, which is celebrating its 40th anniversary this year, and Treehouse Records. Said the owner of Fetus, "It's always been a challenge. You just have to change with the times." (Star Tribune)

• A Place to Bury Strangers has issued a limited edition 7" box set through Vacancy Records. (Pitchfork)

• Best Buy reported earnings two days ago. Not much was mentioned about music sales other than CD sales were down. "A double-digit gain in comparable store sales of video gaming software and hardware, which was constrained by an industry-wide hardware inventory shortage, was partially offset by comparable store sales declines for DVDs and CDs." (Best Buy SEC filing)

• Schoolkids Records in Chapel Hill has closed. (Chapel Hill News)

• Sign of the times: In Portland, a record store has been replaced by a sports bar. (The Bee)

Posted by Glenn at 10:46 AM | Link
|Brick-And-Mortor Retail|

Update: Tesco denies it has pushed labels for lower wholesale costs.

Powerful retailers sure do have a knack for perfectly timing their requests to labels. UK grocery and merchandising chain Tesco, which represents about 13% of British music sales, is putting pressure on labels to drop their wholesale CD prices. From Financial Mail:

Tesco is using its considerable retail muscle to press leading music groups into cutting their takings from CD sales. One source said it was looking to keep up to a third of the retail price it charges for CDs. ...

The industry estimates that on an average-priced CD selling for £9.99, about 30.5% will be kept by the retailer - though for supermarkets this is likely to be considerably less - 44% will go to the record company, 8% to the musicians and composers and 17.5% in tax.

(Note that the 8% that is said to go to "musicians and composers" is the royalty paid to the publisher. In the U.K., the statuatory mechanical rate is 8.5% of the published price to dealer or 6.5% of retail price. Artists royalties from their record labels are separate.)

The article says Tesco can represent up to 40% of sales for a high charting album. Placement alone is reason for some sales, but there's no doubt hit albums benefit from the chain's small markup.

In the U.S., Wal-Mart, the nation's leading music retailer, is pressuring for a significant drop in wholesale prices.

Posted by Glenn at 2:35 PM | Link
|Brick-And-Mortor Retail|

A post at Silicon Alley Insider talks about Borders' hiring of JPMorgan and Merrill Lynch to explore strategic alternatives. The company has liquidity issues and will suspend its quarterly dividend.

Peter Kafka hints the previous strategic plan, the digital kiosk, isn't going to turn things around. I agree. It's the kind of quick-fix band aid that doesn't address deeper and more fundamental issues. A month ago I posted about the company's new hybrid stores that hope to use kiosks to get digital sales out of brick-and-mortar shoppers.

Kakfa also made mention of Barnes & Noble's lower quarterly profit.

Posted by Glenn at 10:30 AM | Link
|Brick-And-Mortor Retail|

The old way of selling CDs looks to be dying faster than overall CD sales. Trans World's fourth quarter revenue dropped a whopping 23% and 2007 sales revenue dropped 14% (read press release and 8-K, which has a transcript of the conference call). Net loss for fiscal 2007 was $99.4 million. Comp store sales dropped 8% on the year.

In the conference call, President and COO Jim Litwak said Trans World's comp store music sales dropped 28% in Q4, the top 50 titles 35% in Q4 and the top 50 video titles were down 12%. For the year, comp store music sales dropped 23%.

Store closings and one less week in Q4 definitely affected sales, and the company admitted that its "transition to a full entertainment retailer is taking longer than expected."

Posted by Glenn at 11:50 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

USA Today has a look at Borders' first of 14 concept stores set to open in 2008. The stores have digital centers where customers can download music and books, research family histories and print photos. The first opened in Ann Arbor; 13 other stores are set to open in ten states.

At the Borders concept store, new themed book islands are built around lifestyle genres, including travel, cooking and health. The digital centers, meantime, are geared to welcome people of all levels of tech know-how. Staffers will guide customers through the process of burning music to CDs, downloading songs to most digital music players (except iPods, which, for now, work only with Apple software) or books to a Sony digital reader.

The hubs' incompatibility with iPods is the obvious roadblock here. I have to wonder how much demand exists for CD burning. I can't imagine using somebody else's computer to download music. Would I go elsewhere to use a computer to buy concert tickets or book a flight? No, and I wouldn't use Borders' computer to get music I can get at home. There are too many steps to get it from point A (Borders) to point B (my hard drive).

The kiosk (or hub) idea has struck out a few times. Not that I hang out in f.y.e. stores a lot, but I've never seen anybody within ten feet of the mix-and-burn digital kiosks in the two stores I have frequented in the last year, and Trans World has stopped mentioning their tests in conference calls (which leads me to believe they're not successful). Starbucks gave the mix-and-burn thing a shot and ditched the program after two years of testing. Turns out download cards are far more popular there.

HMV is testing similar digital hubs at a few stores in England. Time will tell if somebody can figure out a way to make the kiosk work.

Posted by Glenn at 11:22 AM | Link
|Brick-And-Mortor Retail|

On the heels of news that it would drop DRM from its downloads, Sony BMG has announced it will sell artist-branded gift cards redeemable for MP3 files. Consumers will redeem cards an initial run of 37 different cards at Musicpass.com. Though its catalog will eventually be available at the proven digital retailers, Sony BMG's move shows a desire to develop its own solution. Not all of the money will not be kept in-house, though, as the cards will be available at 4,500 brick-and-mortar retailers (Best Buy, Target, Fred's, f.y.e., Winn-Dixie) buy the end of the month.

"We see MusicPass as a great way to bring digital music to the physical retail space," said Thomas Hesse, President, Global Digital Business & U.S. Sales.

The cards will cost $12.98 and will get the owner the album as well as bonus tracks and a digital booklet.

The $12.98 price tag leads me to believe a few things. First, Sony BMG is counting on cards being purchased as gifts for others; this is implied by the press release as well ("According to the 2007 American Express Gift Card Survey, Americans plan to spend 25% of their total gift spending on gift cards, up from 13% in 2005.") Two, Sony BMG must believe many people would spend more on a gift for others than they would on a purchase for themselves. At nearly $13, an album download with no resale value and no tangible nature doesn't compare well to the CD format. In addition, judging from a couple of the accounts (Fred's and Winn-Dixie) I would assume there is a hope that these cards will reach mainstream consumers who are not yet part of the digital crowd (what's another $13 on top of a huge grocery bill?).

This is a promising and positive development -- but just one of the many developments needed to breath life into music retail products. What should be remembered is this product was made available by the removal of DRM from Sony BMG's downloads. Not only do labels get to launch new products and services while circumventing iTunes, they get to develop many more sales channels than in the DRM days when Apple was the only viable option.

Posted by Glenn at 9:30 AM | Link
|Brick-And-Mortor Retail||DRM||Sony BMG|

• Roadrunner Records and music exec Tom Lipsky, formerly the CEO and president of Sanctuary Music Group's North American operations, have formed a joint venture that will release music by classic rock artists. Almost three-quarters of Roadrunner Music Group, the parent company of Roadrunner Records, was purchased by Warner Music Group in January 2007. (Billboard.biz)

• Last week Borders released its Q3 2007 earnings. Same store music sales were down 13.1% over Q3 2006. That's a big drop but not as bad as Trans World's Q3 music sales decrease (21%), and not as bad as the overall CD (about 20%) and album decrease (about 14%) in 2007. (Borders Earnings Release)

• Ben Sisario has an article on the growing number of Western acts performing in China. It's a well-rounded look at an emerging market that may offer clues of the future of the music business (the ubiquity of corporate sponsorships, for example, and labels' acceptance of piracy). (New York Times)

• A profile of Koch Distribution. (Newsday)

• The Winnipeg Sun started a four-part series on the changing music industry. The first installment looks at CD sales in Canada. CD sales dropped 19% from January to August of this year. The cause of that decline is definitely up for debate, and the article examines a few possibilities: piracy, the "today's music is no good" explanation and a consumer backlash against "overpriced" CDs. To no surprise, the article didn't even mention 2007's extremely thin release schedule. Whether compromised of future classics or pop fluff, a busy release schedule would have helped sales this year. (Winnipeg Sun)

• Although there is much debate over file-sharing's impact on sales in Canada, the Canadian Recording Industry Association is not happy with the country's digital laws and wants new laws to encourage investment and improve consumer education. (London Free Press)

• A profile of legendary music exec Frank Dileo, who moved to Music Row in January 2007 and is now starting a management company and plans to launch a publishing company. (Nashville Scene)

Posted by Glenn at 9:28 AM | Link
|Brick-And-Mortor Retail||Earnings Releases||Warner Music Group|

Entertainment retailer Trans World posted a net loss of $14.3 million in the third quarter of 2007. Revenues dropped 12% to $260.6 million from $297.7 million last year. The company operated 13% fewer stores during the quarter, and same store sales were down 4% year over year.

Said Robert Higgins, chairman and CEO, in the press release, "We continued to achieve positive comparable store sales in home video, video games, electronics and boutique during the third quarter, however, these results did not offset the decline in music."

During the conference call (read transcript), president and COO Jim Litwak revealed that same store music sales had declined by 21% (same as the Q1 decline, see below) and that music had comprised 40% of total revenues for the quarter (versus 48% last year). Video game sales increased 29% on a comp basis while home video increased 8%.

Trans World's problems mirror those of the music industry, to which it has tied a great deal of its fortunes over the years. As record labels try to offset the slide of the CD with other revenues, Trans World is shifting its focus to other products and away from the CD. The company's transformation is painful, but at least there are other physical formats to replace the CD.

Earlier this month came news that Trans World had received a buyout offer from its CEO, the company's largest shareholder. The $5 per share offer represented a 29% premium over the price at the time. Trans World closed today at $5.19. Said Sherwood Investments' Julian M. Benscher of that offer, "We are highly confident that an auction of the company would result in a sale in excess of $8 per share." Sherwood owns about 4.3% of Trans World's shares. The market obviously has its doubts that a bid of $8 per share is forthcoming. Some may want to take a lower amount and run. The proper restructuring of Trans World will be a process better suited for the long-term outlook and intestinal fortitude of private ownership.

Previously: Trans World's Q1 2007 earnings was a $9.1 million loss. "Music sales were down 21% on a comp basis, and the company's top 50 experienced a 32% drop on a comp basis. Music represents 44% of sales, down from 52% last year."

Posted by Glenn at 4:55 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

• Trans World, owner of such music retailers as f.y.e., received a buyout proposal from its largest shareholder, Chief Executive Officer Robert Higgins. The offer of $5 per share is a 29% premium over Thursday's closing price. Privately-owned companies are well suited to make the kinds of turnarounds that are needed in entertainment retail these days. But Trans World is going to turnaround and become what? f.y.e. is a retailer without an identity, and any plan to bring more digital into brick-and-mortar is automatically suspect. (Reuters)

• Jeff Leeds does a solid story on the majors' new thang: the 360-deal artist contract. Leeds talks to a few detractors, who not surprisingly are in the lines of business labels are currently entering. It's way too early to say much about the deals other than the fact that labels will sign more and more of them. At the root of the issue is a very basic question: Wouldn't it be good for everybody -- artist, label, fans -- if labels put less pressure on album sales? Follow that with another question: Should the artist feel comfortable lumping together so many revenue streams? It's gonna be a fun couple of years until we get a lot of solid case studies with which to form a better opinion. (New York Times)

• It's official: Radiohead will release In Rainbows on CD through ATO Records. The band will release the album on its own imprint, TBD Records. Maybe this isn't a good time to cue all that "The CD is Dead" talk, huh? (Billboard.biz)

• Microsoft has entered into talks to acquire Musiwave SA, maker of software that allows mobile operators to offer various paid products to their subscribers. Microsoft says if the acquisition goes through it will integrate Musiwave into its line of products (such as Zune and Windows Live). (Information Week)

• Koch has inked a physical and digital distribution deal with Fat Beats Records. Upcoming Fat Beats albums will be by Akrobatik and Black Milk. (All Hip Hop)

• The Guardian has an article on mobile music services and how jazzed up labels are about them. The head of digital at Universal's international division believes such services could offset falling CD sales without one year. Analysts aren't so sure. One thing they may be overlooking, unless they've happened to buid it into their industry revenue models: As these kinds of subscriptions take off, it's very likely the rate of CD sales decline could actually increase. Subscriptions may substitute for music purchases rather than instigate an up-sell. (The Guardian)

• EMI Group has added food executive Pat O’Driscoll to its investor board. O'Driscoll is the former chief executive of Northern Foods. I see a trend here. Former EMI CEO Eric Nicoli was previously the chairman of United Biscuits. (Variety)

Posted by Glenn at 12:22 PM | Link
|Brick-And-Mortor Retail|

• HMV Canada has a different promotion for the upcoming Bruce Springsteen album. Not only will the purchaser get a free video and ringtone of the first single, as well as a limited edition lyric booklet, but HMV Canada president Humphrey Kadaner will offer a personal money-back guarantee. (Media In Canada)

• Sony BMG has licensed its music to social networking imeem.com. It joins Warner Music Group as the two (of four) majors to license their catalogs to imeem.com. (Variety)

• For whatever reason I find this really interesting: Jay-Z wants to rename New Jersey's Continental Arena after his Rocawear clothing company. The arena is currently home to the New Jersey Nets basketball team and the New Jersey Devils hockey team. What's odd is that Jay-Z is part of the ownership group that will take the Nets to Brooklyn soon (probably in time for the 2009-2010 season). Why would a part-owner of a Brooklyn-headed NBA team want his name on an arena in Jersey? Beats me. That horrible arena should be bulldozed ASAP, by the way. (Billboard.biz)

• Universal Music Group has acquired Belgian indie ARS Entertainment. (mi2n.com)

Posted by Glenn at 11:09 AM | Link
|Brick-And-Mortor Retail|

Yesterday U.K. retailer HMV announced its next-generation retail strategy. One store in the West Midland will be the test store. From the Times Online:

"After six months of refurbishment, HMV today unveils its solution – a 'compelling multi-channel social shopping space and experience' designed to attract the wifi-enabled shopper. The store, which measures 8,000 sq ft (750 sq m), contains digital kiosks that enable customers to download songs and video clips for free. Shoppers download the content on to a memory device, such as a USB memory stick, which they can then transfer to a PC, mobile phone or MP3 player."

A "social hub" will have iMacs while a "mini Apple store" will replace CD racks. A juice bar will sell smoothies and interactive screens will be found throughout the store.

Though Apple is mentioned throughout the article, there was no mention of one of the most important factor in HMV's in-store downloading success: the file format. Another important factor is whether or not consumers will bother using HMV's computers to do what they can do at home.

Posted by Glenn at 7:07 AM | Link
|Brick-And-Mortor Retail|

• The FCC has set September 20 as the date for a media ownership hearing in Chicago. It will be held at Operation Push National Headquarters on East 50th Street, from 4-11 p.m. This will be the fifth of six such town hall meetings. Here is my post on the hearing I attended last year in Nashville. (Radio Ink)

• Brit retailer HMV has experienced positive sales growth over the last 18 weeks. Total sales rose 12.2% over the period while same store sales grew 5.8%. Strong sales of DVDs and video games -- not music sales -- were behind the increase. (Billboard.biz)

• Ad-supported download site SpiralFrog has licensed the IODA catalog. That deal pushes SpiralFrog's catalog up about 1 million tracks to roughly 1.7 million (from 700,000). (Press release)

• Universal Music Group, which was preemptively sued by video site Veoh last month, has returned the favor by suing Veoh. The video site company, which counts Time Warner as an investor, has been blamed for "rampant infringement" and for following in the footsteps of "other recent mass infringers such as Napster." (Bloomberg)

• Some CD Baby stats posted by president Derek Sivers: 194,385 albums in stock; 170,379 (or 87%) have sold at least one copy; 129,014 digital albums offered; 123,168 (or 95%) of those digital albums have sold one or more units. Here's my favorite: 12% of CD Baby artists account for 90% of its sales. (CD Baby, via Digital Audio Insider)

• Jeff Leeds on how MTV is trying to remake its Music Video Awards as it's in a four-year ratings slump. "In shaking up its showcase event, the channel is not only aiming to reverse declines in the awards show's viewership, but also to generate buzz about several new efforts to connect with tech-savvy young viewers drawn to upstart brands like YouTube. ... MTV's own correspondents, as well as fans at the awards show, will snap candid camera-phone moments and post them on a new area of MTV's Web site called "You R Here." The most compelling photos or video recordings from Las Vegas may be presented during the channel's news segments." (International Herald Tribune)

• Eighteen Grateful Dead tracks will be available for download via the video game Harmonix video game Rock Band. Harmonix is a division of MTV Games. (The Escapist)

• Former FCC chaiman Mark Fowler supports a Sirius-XM merger. "If the two satellite radio companies, each only several years old, need to combine to be more effective competitors in an audio entertainment marketplace teeming with technological change and innovation, the government should not stand in the way." (Radio Ink)

Posted by Glenn at 9:25 AM | Link
|Brick-And-Mortor Retail||Online Stores/Services||Satellite Radio||Universal Music Group|

• National retailer Borders Group reported a 10.4% increase in sales for Q2 2007. With the help of the latest Harry Potter book, U.S. comp store sales were up 4.6%. Music sales "continued to decline," though no hard number was given in the release. I listened to the conference call, and unless I zoned out at some point, music sales were not mentioned. (Earnings release)

• Music and video distributor Handleman reported a loss of $17.7 million for the quarter ended July 28, 2007. Revenues were up 14% even though last year's loss was only $5.9 million. The company's music category revenues decreased by $13.8 million versus last year. (Press release)

• Sony has another rootkit problem, this time from a USB drive that contained software that installs a hidden directory. (The Register)

• Jupiter's Mark Mulligan on Nokia's new mobile music store, Ova: "So was it worth the wait? Well the devices were, the latter two Xpress Music devices in particular from a music perspective. The three way sync is also a nice, innovative alternative to dual delivery. But beyond that, the music service is a disappointment. The music subscription service is a PC only streaming service that does not support portable downloads and as such is a generation behind current offerings. And it begs the question, why is a mobile handset manufacturer launching a music subscription service which does not support portable downloads or mobile streaming? Similarly the download service is essentially a ‘me too’ offering, based around 99 cents, windows DRM wrapped single track downloads." (Mark Mulligan's blog)

• Ween has signed to Rounder Records.

• Curb Records has signed 16-year-old Ashley Gearing, who is in studio with producer Bryon Gallimore. (Country Standard Time)

Posted by Glenn at 11:33 AM | Link
|A&R||Brick-And-Mortor Retail||Mobile Music|

I spent some time looking over Trans World's Q2 earnings release and the transcript of the earnings call. The documents show a music-based retail chain that is struggling to retool is product mix and store design in a fast-changing market. Music sales continue to fall so fast that other products are not filling in the void.

The company lost $10.1 million on sales of $267.3 million, which was worse than the Q2 2006 loss of $7.7 million on sales of $298. million. In the first half of the year, Trans World has lost $19.1 million on sales of $553.6 million. In the first half of 2006, the company lost $14.8 million on sales of $568.8 million.

• Comp store sales decline 6%. Total sales dropped 10% and Trans World operated 12% fewer stores.
• Comp store music sales declined 19% and represents 43% of total revenues. In Q2 of 2006, music represented 51% of total revenues.
• Comp store sales of electronic, accessories, and boutique increased 16% and represent 13% of total revenues.
• There are a few positives. Gross margin increased to 36.6% from 35.6%. SG&A as a percent of sales declined to 39.5% from 40.2%. Cost of sales dropped to 63.4% from 64.4%.
• Trans World has closed 29 stores to date and has plans to close another 45 to 50 stores by the end of 2007. Right now the company operates 963 stores.
• The 27 remodeled, prototype stores have performed well but more remodels are on hold until after Christmas.

There was no mention of the in-store, mix-and-burn kiosks in the earnings call. In May, president Jim Litwak said the in-store kiosks had given "promising, but still inconclusive results." I had a chance to see one of those kiosks in person a few months ago at a Manhattan f.y.e. store. The kiosk's interface and entire user experience was so poor that I cannot imagine Trans World giving the product a broader roll-out.

Additional reading: Coolfer post on the 2007 Q1 earnings release and call.

Posted by Glenn at 3:33 PM | Link
|Brick-And-Mortor Retail|

• Related Companies will purchase the 11 North American Virgin Megastores from Virgin Entertainment Group. Not familiar with Related? The company develops, finances and owns real estate properties around the country. It developed the Time Warner Center in Manhattan as well as numerous residential properties in California, Florida and the Midwest. Related owns the Equinox chain of fitness clubs, is part of the investor group that took resort & hotel chain Kerzner International Limited private, and manages the high rise residential building at Astor Place in Manhattan. (Press release)

• Eighties pop band Dodo and the Dodos won its distribution rights case against Sony BMG in a Danish court. The ruling stops Sony BMG from selling the band's music downloads without the band's consent. The ruling's greater impact is yet to be determined. (The Copenhagen Post)

• The Russel Simmons-backed GlobalGrind, a hip hop-oriented start page, has received about $4 million in funding. (paidContent)

• News.com's article on artists' lawsuits against online music stores, such as the copyright infringement lawsuits filed by Eminem's publishing units. "Don't expect these lawsuits to go very far. To start, Apple is likely indemnified against such lawsuits, according to copyright attorney Jay Rosenthal. But Rosenthal speculates that the real target of the lawsuits isn't Apple or iTunes. What the musicians and writers really want is to challenge the claim by record labels that they have the right to negotiate Internet sales on their behalf." (News.com)

• Here's an article on the greening of the music industry. Much of it has come on the touring end. Said Neal Turley of Sustainable Waves, which builds eco-friendly concert equipment, "It's really amazing in the last three years where this has come. When we were trying to make this happen 10 years ago, it was a pretty tough sell. Five years ago, it was starting to turn the corner, and now it's just amazing." (McClatchy Newspapers)

• In Tony Sach's post about Matador Records' "Buy Now, Get Early" early bird offering, this line really stands out and explains why such a program can work for an indie and might fail for a major: "The New Pornographers' fan base is a lot smaller than, say, Rihanna's or Daughtry's, but it's also a lot deeper. New Pornos fans want those B-sides and other ephemera that the 'Buy Early Get Now' program is offering, and they're happy to pay to get them. Most major label acts, however, live and die by their latest single; their fan base is wide but shallow." (The Huffington Post)

• An analyst believes a judged block of the FTC's attempted block of a merger of Whole Foods and Wild Oats is a good sign for Sirius and XM and beyond. "While mergers are very fact-specific and the judge's opinion has not yet been made public, we suspect the Whole Foods decision will give XM-Sirius and Google-DoubleClick some new legal ammo to argue for defining their relevant markets broadly, which could reduce antitrust concerns about potential anti-competitive effects. At a minimum, it gives the reviewing agencies some food for thought." (Radio Ink)

• Dove Award-winning band Switchfoot has left Columbia Records and plans to put out future releases independently. (Breathcast)

Posted by Glenn at 9:23 AM | Link
|Brick-And-Mortor Retail||Legal||Publishing|

• Garth Brooks' catalog will once again be available through all retailers through his own Pearl Records. For two years Brooks had an exclusive deal with Wal-Mart. His next release will be a three-CD, "best of" box set with a $12 wholesale cost (which puts it in the $20 list price area). His catalog will be reissued as well, with a $7.85 wholesale cost. Wal-Mart did not report Brooks' sales to Soundscan, but publicly Wal-Mart boasted that Brooks' six-CD box set quickly went platinum and "achieved Wal-Mart's highest volume of sales ever for the first day of a musical release." (Hollywood Reporter)

• LiveNation has introduced tools to help people search for and buy tickets. The Exclusive Concert Tools page has three items: a concert search module that can be inserted into personal web pages, a venue widget and a search bar add-in for Internet Explorer 7 and Firefox. Also available s a LiveNation Google Gadget, a U.S. concert and ticket search. (Press release)

• ASCAP and BMI have launched RapidCue, a website that allows members to enter cue sheets online. (Billboard.biz)

• Parallel Entertainment is launching a record label with Jeremy McCombs as the first artist. The production and management company is known for its work on the Blue Collar Comedy Tour. On Parallel's talent roster are Jeff Foxworthy, Bill Engvall, Larry the Cable Guy and Reno Collier. The company already has a record label, Jack Records, a venture with Warner Bros. Records that has released mostly comedy albums. (Music Row)

• Hypebot has a brief interview with RealNetworks about Rhapsody's plans for Universal Music Group's DRM-free downloads. Tracks will be 256kbs, DRM-free MP3s. Unlike the way iTunes sells EMI's DRM-free files, Rhapsody will offer only a DRM-free version and will not sell a protected version. Rhapsody subscribers will pay $0.89 per track for UMG's MP3s while non-subscribers will pay $0.99. (Hypebot)

• Clear Channel will host a shareholders meeting on September 25 to allow investors to vote on its $19.6 billion privatization plan. Two private equity groups already very involved in the music business, Bain Capital Partners, LLC and Thomas H. Lee Partners, will offer $39.20 per share. (Radio Ink)

Posted by Glenn at 10:13 AM | Link
|Brick-And-Mortor Retail||Rhapsody|

• Universal Music Group has invested in Loud.com, a hip hop-slanted portal and networking site. (paidContent)

• GodTube.com is a new, Christian-oriented video site now in beta. (Billboard.biz)

• Music Row points out that country album sales are down 29.3% this year, a hit album by Taylor Swift notwithstanding. (After Carrie Underwood and Rascal Flatts had such a huge year, a drop was inevitable.) The end of the year, though, will have some big names: Kenny Chesney on September 11, Rascal Flatts on September 25, Brooks & Dunn on October 2 and Carrie Underwood on October 23, plus unconfirmed rumors of a Keith Urban greatest hits package. (Music Row)

• At the Marketing to Men 18-34 conference in New York, the big topic was branded entertainment, i.e., music with a ton of product placement. (Billboard.biz)

• Judging from the information in Rob Mitchum's article on concert first aid stations, indie rock shows are far safer than metal shows. Only one Pitchfork Festival attendee required transport to a hospital, while a mid-July Ozzfest concert saw "two people with stab wounds, numerous people with dislocated shoulders, facial trauma, sutured up a lot of faces, that kind of stuff, especially from mosh pits." Because of the age of attendees, classical music concerts actually have the highest mortality rate. The winner for highest rate of medical tent visits goes to gospel/Christian events. (Chicago Tribune)

• From 2003 to 2006, the percent of U.S. camera phone users who emailed/transmitted photos wireless dropped 22 points. Is there a parallel with over-the-air music? "People will download music OTA while it is a novelty then they will sideload all their MP3s to their music phone (sideloading is primary way to get music on a music phone). Just like people expect a camera on their phone they will expect an MP3 player, but the carrier will not see any revenue from the use of this feature." (Ad-Supported Music Central)

• Univision is facing another bribery lawsuit, this one brought by Los Angeles-based Platino Records. A previous lawsuit alleging the bribing of radio stations was brought by a former VP for Univision's Fonovisa Records. The company's equity partners are interested in selling some non-core assets, such as the music division, to help pay off debt. (Los Angeles Times)

• Long Gone John has put his label, Sympathy for the Record Industry, up for sale. John Reis (Swami Records) has put in a bid of 30 very expensive llamas. (LA Weekly)

• Localism works in music retail. In Fort Lauderdale, Radio-Active Records is within five miles of Borders, Target, Circuit City, Barnes & Noble and Best Buy, and yet it is growing. "Our biggest strategy is community involvement. It's why Virgin [Megastore] couldn't survive down here: They don't pay attention to what music locals are interested in. I go to the clubs, I see what people are dancing to, and I order that stuff in the store." (Broward Palm Beach)

Posted by Glenn at 8:06 AM | Link
|Brick-And-Mortor Retail||Marketing||Mobile Music||Universal Music Group|

• Album sales were down 2% last week and were 13% lower than the same week last year. For the year, album sales are down 14% (a number that is improving as the months pass). Digital track sales were up 1% last week and were 39% higher than the same week last year. For the year, digital track sales are up 48%.

• Terra Firma gained approval from 91.5% of EMI's shareholders and finally has control of the music group. (The Guardian)

• Virgin Entertainment Group North America posted a 15% comparable store increase last quarter. That's what shutting down underperforming stores will do for you. CEO Simon Wright says the chain's new-ish loyalty program has 150,000 members. The only thing I have to add about Virgin is that the Union Square store was practically a morgue when I walked in on an early Saturday afternoon a few weeks ago. (Billboard.biz)

• Douglas Wolk has an article on the inevitable Internet leak and how labels approach them. Its facts are almost correct, but I've heard from one label that Wolk got some of the details wrong. Doesn't change the main thrust of the article, though. I have a completely unproven theory that a leak does less damage the farther it is from the album's release date. When awareness of the leak comes near the album's release date, I think there is a convergence of awareness (album promotion plus leak hype) that is more detrimental to album sales. (Spin, via Idolator)

• PureTracks is the first Canadian retailer to offer EMI downloads in unprotected MP3 format. Even though the tracks will cost CDN $1.29, the press release does not indicate if the downloads have a higher sound quality than the standard DRM'd, WMA downloads. I really think it would be a mistake to raise the price and not raise the bit rate in tandem. (Press release)

• Epic signed Alkaline Trio. As Kings of A&R points out, major labels are attracted to bands that have done the dirty work and built up a following (not a make believe Internet following, mind you, but a real following based on years of touring and recording). There's less risk, less tour support and a better payoff at the end of the day. (Press release, via Kings of A&R)

• Good news for the concert business: The Eagles are planning to tour extensively in 2008. (Hollywood Reporter)

• Lots of articles have been written about iTunes reaching three billion downloads. All of them missed a few key points. First, iTunes is not just an American store. It has stores in many countries, and they all contributed to the sales of three billion. Sales have picked up as more iTunes store have launched. Second, it doesn't matter what profit Apple makes from iTunes (yes, there is a profit in there). The iPod would not be as successful without the iTunes store. They're a package deal. If you're going to look at profits of one, include the profit of the other.

• I'll be back in Nashville in two weeks and will have to check out the city's traffic lights that play country music. (The Tennessean)

Posted by Glenn at 12:23 PM | Link
|A&R||Brick-And-Mortor Retail||EMI||iTunes|

• Mobile carrier Amp'd, which counts MTV and Universal Music Group as its investors, has shut down its service and owes over $100 million to creditors. The company had filed for bankruptcy last month. (Variety)

• Sanctuary has sold its 49% share in the Rough Trade label to the Beggars Group for £800,000 (US $1,651,507). (The Guardian)

• XM and Sirius promised that in the event the two satellite companies merge, the companies will offer a variety of subscription packages. The lowest-priced package would get 50 channels and cost $6.99 a month. Said an analyst, "If the Department of Justice approves the merger, it will be difficult for the FCC to say no." (Reuters)

• Dallas-based hip hop label Clout Records has inked a distribution deal with EMI. Cloud will release Lil Prince's Young and the Wreckless on September 25. (Hip Hop Elements)

• Kansas City-based rock band Vedera has signed with Epic Records. (MySpace, via Kings of A&R)

• Oklahoma state representative Randy McDaniel has proposed a study to find out what incentives Nashville and other cities offer musicians. McDaniel sits on a committee that deals with Oklahoma's tourism, arts and culture. (The Journal Record)

• Ted Cohen, a former EMI exec and now part of TAG Strategic consulting, is on the board of advisers at Txttunes. The company just announced the launch of its text-based distribution and social networking service. Fans can use their cell phones to purchase and download MP3s. Artists can use Txttunes to send text messages to fans. (Press release)

• A profile of Ventura, CA-based Salzer's, where vinyl sales are up 20% this year. (Ventura County Star)

• AllHipHop.com got a makeover and has some new features. The site has partnered with Amazon.com to create an e-store that uses Amazon.com's technology and content. AllHipHop is working with iTunes on a Black Music Month promotion. The site will give away 250,000 promotional codes that can be redeemed for a free mix tape at iTunes. (Press release)

Posted by Glenn at 8:03 AM | Link
|A&R||Brick-And-Mortor Retail||Mobile Music||Sirius||XM|

• Hallmark has launched its "Use Music Summer Tour." The seven-city tour coincides with the launch of 100 new Cards with Sound. In addition, the retail chain now offers iTunes gift cards at most of its stores. (Press release)

• The advocate general for the European Union of Justice said ISPs are not required to identify subscribers in civil copyright infringement cases. Promusicae, Spain's music trade group, had sued Spanish ISP Telefonica to force it to turn over information on subscribers suspected of sharing music via KaZaA. (Ars Technica)

• Blockbuster had its credit facility trimmed by $50 million and is thinking about reducing the footprint of some stores. (Video Business)

• What does Terra Firma have in mind for EMI? The Independent puts forth some good ideas. (The Independent)

• Universal Music Group chairman and CEO, Doug Morris, was elected to the board of directors of Columbia University's National Center on Addiction and Substance Abuse. Morris is a Columbia graduate. (Earth Times)

• The worst prediction of the week comes from Music Week editor Martin Talbor. On Prince's direct marketing campaign he told Time magazine, "If we keep moving down this particular route, companies will only release records that are sure home runs. That means either stuff by established artists or unknown artists doing cover versions. There is the danger that it will no longer be worth it for companies to invest in new, up-and-coming artists. And if record companies don't invest in them, who will." (Time)

• The British press is really eying the opening of a new Rough Trade store. BBC News has another article on the indie retailer's expansion plans. I suppose it is newsworthy given that the new store will have ten times the floor space of the old store, and this comes as so many have written off physical formats. Rough Trade believes the selling of music has been lost. "If anything, the people I talk to appreciate vinyl and CDs more than ever in this digital age. It's just that they've gone off the way it's sold. The High Street has, unfortunately, commoditised music. When you walk into a High Street record, or entertainment, store, it's about three-for-two and the price message is what hits you. And if you're interested in music, it's quite a demeaning, quite demoralising message to hit you." (BBC News)

Posted by Glenn at 7:49 AM | Link
|Brick-And-Mortor Retail||EMI||P2P|

Maybe it's because I miss posting about Tower Records (oh the bankruptcy drama) that I'm posting about R5. Yesterday I did some searching for some news on R5 Records, the new music store opened by Tower founder Russ Solomon. The Sacramento Bee has nothing, but there is one blog post about the new store.

Song With Orange posted about the store on Saturday and has a few pictures.

"The store itself occupies the location of the original Tower Records at 16th and Broadway in Sacramento, which wasn't large, but it seems they plan to maintain a healthy inventory. The jazz section looked a bit thin, but there were signs throughout the store asking for suggestions of titles to carry, and there were carts of new albums waiting to be shelved, too."

Posted by Glenn at 3:22 PM | Link
|Brick-And-Mortor Retail||Tower|

• If you want to bid on EMI, you have until this Thursday to put in a bid. (Reuters)

• An interview with Barnes & Noble Borders chief executive George Jones, who has aggressive digital strategies that include in-store downloading. "There are tons of people 35 and older who don't own an MP3 player, or if they have one, they don't know how to operate it. These are people who just won't take the time to learn how to do it. I'm like that myself. I love music, but I don't download music onto my iPod. We think there is a place for a retailer to offer a comfortable environment that offers guidance and the opportunity to discover products that provide knowledge and entertainment. We'll show you. Bring in your MP3 player and let us know what you want. We'll download it for you." He speaks a bit more about music later. Check it out. (Wall Street Journal)

• Starting Wednesday, Starbucks will offer exclusive EPs in a branded section of the iTunes music store. Rissi Palmer, Alice Russell and WinterKids will receive airplay in Starbucks locations as well as placement at the iTunes page. (Digital Music News)

• S-Curve Records will be re-launched by founder and CEO Steve Greenberg. To fit with the times, the label will branch out to publishing and artist management. Greenberg stepped down as Columbia Records' president in June of last year. (Billboard.biz)

• Microsoft's Zune portable media player will be on show at Live Nation venues around the country. Zune Spots, held in converted freight containers, will allow concert goers to try the Zune device. Consumers can also win a trip to see a band at a Live Nation venue through the Zune Zoom Away competition. If you're looking for a signal about Microsoft's commitment to the Zune's development, I think a series of converted freight containers is a good place to start. (Press release)

• Sony BMG and Dada have launched a joint venture called Dada Entertainment. The venture will offer "direct-to-consumer entertainment services with integrated mobile and web offerings." I wish I had an example of what that means exactly. (Press release)

• Nominees for the Mercury Prize were announced this morning. On the list are Jamie T, Arctic Monkeys, Bat for Lashes, Klaxons, Fionn Regan, Amy Winehouse, The View, Dizzee Rascal, Maps and Basuiat Strings. (XFM)

Posted by Glenn at 7:24 AM | Link
|Brick-And-Mortor Retail||EMI||Sony BMG||Starbucks||Zune|

• AEG, one of the largest entertainment presenters in the world, has opened an office in San Diego that will be headed up by two former employees of independent promoter Viejas Entertainment. AEG is now the exclusive booker of the San Diego Sports Arena. (Billboard.biz)

• The Telegraph details the upcoming changes at HMV and Rough Trade: "The stores will include so-called refreshment hubs where shoppers can browse the internet. HMV is also considering introducing a manufacture on-demand service, allowing shoppers to burn their own CDs in store. ... Rough Trade is also aiming to be more than just a record store: it is planning a series of regular events about the music industry by insiders, including an art exhibition by Pete Fowler, the sleeve designer behind Welsh rockers Super Furry Animals." (The Telegraph)

• An updated FairUse4WM claims to strip DRM from Vista and Zune software. I haven't tried it but will take their word for it since the last version worked like a charm in my very limited test. (Engadget)

• NME has a track-by-track review of the Price CD that was available for free as a Mail on Sunday covermount, while The Guardian has a better, broader critique. (NME.com and The Guardian)

• The Guardian says Prince's CD was distributed in "about three million" copies of the Mail on Sunday. That means an additional 700,000 to 800,000 or so newspapers were distributed above normal circulation numbers. That also means way, way more people got Prince's new album than bought his previous one. (The Guardian)

• And now Prince's Planet Earth has made its way to the Internet. (BBC News)

• I hate to pass along rumors, but....there's discussion of Apple starting a record label with Jay-Z and Beyonce. (MacRumors)

Posted by Glenn at 7:56 AM | Link
|Brick-And-Mortor Retail||Live Music|

• Private equity firm Terra Firma has extended its deadline for its offer for EMI again, this time for one week. (BBC News)

• Universal Music Group has extended to July 26th its offer to buy the Sanctuary Group. UMG has offered $87.7 million. Last month news broke that investment bank Crosby Capital Partners was preparing a bid for Sanctuary, but the firm has not yet made an official bid. (Billboard.biz)

• Microsoft has applied for a patent titled "Off-line Economies for Digital Media" that is system for paying a commission to Zune owners for sharing music. Owners would be paid only if the other user who received the song purchased it at the Zune Marketplace. (ZuneScene, via Engadet)

• Music retail legend Music Millennium in Portland, OR is going to close down one of its two stores after 30 years. The combination of declining music sales and increasing rents was too much for owner Terry Currier. Since last August, the store has lost $93,000. (The Oregonian)

• Michael Geist, professor Law and columnist, helped create a video that aims to show how the media's reporting of piracy has helped lead to movie piracy legislation and two government committees that seek tougher action on piracy. The movie addresses claims of music piracy made by the CRIA with statistics and info on Canada's music market. Not all of Geist's rebuttals actually rebut the often-made claims. Rather, they try to present a more balanced view. The video is almost nine minutes long, spend some time with it if you can. (Michael Geist)

• Inside Digital Media has an podcast interview with Jim Burger, an attorney who discusses the recent WIPO meeting and the issue of fair use of acquired media in home networks. (Inside Digital Media)

Posted by Glenn at 7:09 AM | Link
|Brick-And-Mortor Retail||EMI||Podcasts||Universal Music Group||Zune|

The Guardian's Adam Webb has an article that argues much of the talk about the death of the record store is exaggerated. (Some stores, mainly larger chains, are dying off at a good clip. Smaller stores that know their role are blossoming.) A good portion of the article focuses on thriving indie retailers in London. Those stores can't dabble in the same titles that are found in supermarkets, though. Their role is to break new artists and satisfy niche tastes.

A few good quotes:

"If Radiohead brought an album out 5 years ago, I'd know that I'd need 1,500 copies to last me a month. We'd sell that many copies. But if Radiohead brought an album out tomorrow, I reckon 50 would last a couple of weeks, and that's because they're now a supermarket band. I'd sell more copies of a Sunn0))) album, but we are still here, so we must be doing something right, and we're still positive and buying more deletions and putting stuff in front of people that they can't get anywhere else."

"The point of an independent retailer is to pass the baton on. As soon as a band hits the mainstream then they are no longer your market - the role of the independent is to break new acts. This is what is so important about this store, you'll discover the artists that even labels are yet to find out about. The back catalogue is important but breaking new artists is the most important thing and that is done face to face over the counter."

Posted by Glenn at 2:08 PM | Link
|Brick-And-Mortor Retail|

• According to figures just released by the IFPI, the global recorded music market shrank by 5% in 2006. Digital accounted for 11% of shipments (odd that the word is used for a product that really isn't shipped) versus 2% in 2004 (ringtones are not included). Labels' income from performance rights collections rose 8% to $728 million. (Billboard.biz)

• Feisty Russian download store AllofMP3.com has been shut down. The site was singled out by U.S. trade representatives as Russia sought entry into the World Trade Organization. The same company that operated AllofMP3.com has already launched a similar site called mp3Sparks.com. (Times Online, via paidContent)

• The Kelly Clarkson saga continues. The singer has left The Firm and joined Starstruck Entertainment for management. (Bilboard.biz)

• T-Mobile has launched a mobile service in the U.K. that offers over 500,000 tracks at £1 each. The dual download service is called Mobile Jukebox. Each purchase results in an AAC file for the mobile device and a WMA file for the PC. (Mobile Choice U.K.)

• It probably won't have any effect on physical music, but the majors old Minimum Advertised Pricing (M.A.P.) came to mind when I read about the Supreme Court's decision that allows for minimum pricing by manufacturers and retailers. In a case that put Leegin Creative Leather against Kay's Kloset, Leegin defended its minimum pricing system by arguing in part that smaller retailers would be able to compete against discounters. Sounds just like majors labels' argument for their M.A.P. that denied cooperative advertising funds to retailers that advertised below a certain price. After the F.T.C. forced labels to drop M.A.P., mass merchants began their predatory pricing practices that has, along with digital downloading and the accompanying shift in listening habits, has helped put thousands of music retailers out of business. (AP)

• The final 700 or so employees of U.K. music chain Fopp were dismissed today. The company owes £10 million to suppliers who are not interested in extending new terms. Good call. Maybe they learned something from keeping Tower on life support as it failed to adequately update itself for a changed market. (Times Online)

• Napster issued a statement to investors about the possibility that the iPhone, with its lack of compatibility with Napster software, could harm its business. Pretty standard disclosure for a public company, in my opinion. And besides, Napster was always going to have to hitch its wagon to another device. (Information Week, via Engadget)

• At the Huffington Post, music writer Paul Bonanos on Beggars Banquet for its download scheme for vinyl copies of The National's Boxer album. Each vinyl LP comes with a code that allows for up to three album downloads (one for yourself, two for your friends). While "home taping" is hurting the recorded music business, wrote Bonanos, those extra copies benefit other revenue streams. "We're seeing CDs turn into promotional tools for the live tours," Festival Network head Chris Shields told Matt Miller in an article at The Deal. (Huffington Post)

• European antitrust regulators are stepping up their investigation into high-definition DVDs and possible anticompetitive practices in the format war. (Wall Street Journal)

Posted by Glenn at 11:11 AM | Link
|Brick-And-Mortor Retail||Mobile Music||Napster||Research|

• Pop singer Fergie will reportedly make $4 million in product placement and endorsement fees for including fashion company Candie's in the songs on her second solo album. The Interscope Records artist will also appear in Candie's television commercials. (The Post Chronicle)

• Digital distributor TuneCore will distribute the next Public Enemy album, How Do You Sell Soul to a Soulless People Who Sold Their Soul. Said Chuck D, "I knew I had a fan base and I wanted to go directly to them. What good is a label? All they do is give you money. And in the area of digital distribution, they can’t do anything better or faster than anyone else." Of course, his label helped make him a star who can then take a more profitable D.I.Y. route, but a labe can't do anything for him at this point in his career. (New York Times)

• MusicRow now has a link to a country Internet chart provided by BigChampagne. (BigChampagne Country Chart)

• The Guardian has an interview with Slim Warrior, who just played Secondfest in the Second Life virtual reality site and (according to her) the first female musician to perform in Second Life. "I don't feel personally it will take over from MySpace, but I do think that it has tremendous potential for ANY musician signed or unsigned. You have not only the listening experience but also the real time interaction which you don't get unless you gig to a real audience." (Guardian's Game Blog)

• L.A.'s indie retail scene loses a few more stores. Sea Level Records, in Echo Park, will soon close for good. House of Records, in Santa Monica, will shut down as well. (Billboard)

• The Times Online looks at how Rough Trade and Fopp are succeeding in the U.K. They stand in contrast to flailing retailers like HMV and Music Zone. "(Fopp) targets '50quid man', who is rich enough to buy a couple of CDs, a DVD and a book on a single shopping trip. The new Rough Trade store is in a prime spot to attract similar browsers with plump wallets." (Times Online)

• The San Francisco Chronicle has an interview podcast with Goodstorm's Yobie Benjamin. Goodstorm's MixTape widget is part of the successful "Instant Karma" album's marketing campaign. (The Tech Chronicles)

Posted by Glenn at 8:01 AM | Link
|Brick-And-Mortor Retail||Digital Distribution|

• Supermarket chain ASDA is the first in the U.K. to exclusively stock an environmentally friendly "Ecopac" CD that is manufactured by Universal Music Group. The package is made from 100% recycled and recyclable paper-foam, and will be made for 42 titles. The really new twist here is that the ecopac does not have a CD sleeve -- that will be available at the UMG website. (Retail Bulletin)

• Music 2.0 site imeem.com has hooked up with Snocap to launch an ad-supported digital music service. The new service filters out uploaded content for which imeem does not have permission to stream; songs for which imeem does not have permission will stream only a 30-second clip. Artists and/or record labels will get a share of the ad revenue. (Reuters)

• Industry vets Bill Hurley and Fred Boenig have launched the Artist Development Co-Op (ADC). For a flat rate of $1,600, an artist can get radio and press support, graphic design services and placement on ADC's music and merch store. (The Artist Development Co-op, via CMJ)

• New York is getting another music venue. The 550-capacity The Music Hall of Williamsburg is set to open on September 4th with a performance by Patti Smith. The venue is part of the growing Bowery Presents empire, recently profiled in the New York Times. (Relix)

• Responding to my post about hip hop sales, blogger Camdemonium looked up BPI statistics for 2006 U.K. album sales. In 2006, hip hop accounted for 3.3% of U.K. album sales. Hip hop's shares in 2004 and 2005 were 6.5% and 5.9, respectively. That's quite a decline, and it mirrors what's happening in the U.S. (BPI, via Camdemonium)

• Country legend Porter Wagoner now holds the record -- 43 years, five months and two weeks -- for longest span between charting albums. (Billboard Chart Beat)

Posted by Glenn at 7:53 AM | Link
|Brick-And-Mortor Retail||Music 2.0|

• Investment bank Crosby Capital Partners is preparing a counterbid for Sanctuary Music Group. Last week Sanctuary accepted a takeover bid from Universal Music Group. (The Guardian)

• In a victory over rival format HD DVD, Blockbuster said it will favor Blu-Ray DH discs. (Reuters)

• Paul McCartney's new album sold 161,000 copies in its first week of release. Over 60% of those sales came from "non-traditional" stores, which includes download stores (iTunes, eMusic), online CD sellers (Amazon.com) and non-traditional brick-and-mortar retail (Starbucks). Since digital accounted for only 10% of sales, the bulk -- roughly 81,000 units -- of the non-traditional number can be attributed to Starbucks sales. (Pop Machine Blog, via Digital Audio Insider)

• How much did ousted EMI Music chief Alain Levy get on his way out the door? £4.6 million (US$9.09 million). (The Guardian)

• David Ring has been named EVP of business development and business affairs for Universal Music Group's eLabs, the division that handles the company's online and mobile sales as well as new media opportunities. (Variety)

• A profile on Belgian label Crammed Discs, home of Bebel Gilberto, Cibelle, Kocani Orkestar and Konono No. 1. (AP)

Posted by Glenn at 7:54 AM | Link
|Brick-And-Mortor Retail||EMI||M&A||Starbucks||Universal Music Group|

Entertainment retailer Trans World filed its 10-Q yesterday, which show its 2007 Q1 earnings. (Download PDF.) Those figures were released last month, and the new filing offers some information that was in the Q1 earnings conference call.

On page 18 we see that music represented 44% of sales in 2007 Q1, as opposed to 52% in 2006 Q1. Music sales dropped 16.7% and sales of the CD format dropped 20.8%. (In the conference call, the COO said comp music sales were down 21%.) Comparable store sales (total) were down a whopping 10.1%. Any way you slice it, Trans World's music story is a bad one.

The company operates over 800 stores under the brands f.y.e., Coconuts and Wherehouse Music.

Posted by Glenn at 10:54 AM | Link
|Brick-And-Mortor Retail||Earnings Releases|

• Classical music distributor Naxos of America has introduced NaxosDirect, a direct-to-consumer online "boutique" that offers CDs, DVDs and audiobooks from Naxos and distributed labels. It offers a blog for daily reading. The site is a throwback...it streams available titles but does not offer digital downloads. (Press release)

• All four majors and some indies have signed deals with Omnifone that will allow mobile carriers to offer its inexpensive MusicStation subscription service. The first carrier to carry the service will be Norwegian operator Telenor. In coming months, another 30 mobile operators in other countries will launch the service. The term "iPod killer" has not been used much lately -- too many products, too little success -- but it's being used for MusicStation. (Tech Digest)

• All those disparaging "pyramid scheme" names that were thrown at BurnLounge over the years look to be true -- at least in the eyes of the FTC. The music download site is accused of operating a pyramid scheme, making deceptive earnings claims and failing to inform customers that most will lose money rather than make money. (ITWorld)

• Sony BMG will close its Sony Music Studios in the Hell's Kitchen area of Manhattan. Some employees will be able to transfer to a different part of the company. (amNY)

• Prince is partnering with Columbia Records for the release of his next album, Planet Earth. (Hollywood Reporter)

• Norfolk record store Relative Theory will close at the end of the month. (Daily Press)

• There have been scores of articles about today's music being overcompressed and too loud. Yesterday I ran across a YouTube clip that audibly and visually explains what those articles are talking about. (YouTube, via Presentation Zen)

Posted by Glenn at 7:44 AM | Link
|Brick-And-Mortor Retail||Mobile Music||Online Stores/Services||Sony BMG|

• Tower Records founder Russ Solomon is readying R5 Records in Sacramento for a soft launch in the next few weeks. "There are things that need to be tried. And since I was preaching against a wall the last two years that what Tower was doing and what the industry was doing was misdirected and wrong, I owe it to myself and to the business to do it my way." (Sacramento Bee)

• Digital sales in India are higher than physical sales, a first in the world according to the article. Soundbuzz predicts that by 2009 Indian consumers will purchase nine times more mobile music (in terms of revenue) than any other format. (Deccan Herald)

• Here's an article about EMI's and Sanctuary's difficulties selling British music in America. Seems this article would have had better timing before KT Tunstall, Lily Allen and Corrine Baily Rae, but whatever. Here are some good stats from the article: U.K. artists accounted for 8.2% of U.S. album sales in 2006, up from 7.6% in 2004. That figure was 32% in 1986 and less than 1% in 1999. (International Herald Tribune)

• A profile on Integral, a UK company that offers marketing and financial assistance to independent labels and rights holders. (The Independent)

• Hollywood is getting more frustrated with YouTube and its continued level of infringing material. "Clearly, this is not a resource constraint," said one executive. "This is a function of will." (News.com)

Posted by Glenn at 7:28 AM | Link
|Brick-And-Mortor Retail||Digital Music||EMI||Marketing||YouTube|

• Over 2,500 Sony BMG videos have been added to MobiTV's service. The first initiative between the two companies is a dedicated Avril Lavigne channel. (Press release)

• Cherry Lane Music Publishing has joined the class action lawsuit against YouTube that was brought by Football Assn. Premier League and Bourne Co. last month. (Billboard.biz)

• Hot Topic, which a few months ago talked about changes in its customers' musical preferences, is getting rid of its goth look. (CNNMoney.com , via Kings of A&R)

• Here's a podcast (download MP3 here, go to post to stream the file) of an interview with eMusic's David Pakman. Pakman talks about how he thinks the other majors will follows EMI's lead, and how EMI's prices are too high. He hints that eMusic will have portions of major label back catalogs in the future, but they "haven't announced anything." (Inside Digital Media)

Posted by Glenn at 8:20 AM | Link
|Brick-And-Mortor Retail||Mobile Music||Publishing||Sony BMG|

• Album sales were down 3% last week and were down 17% against the same week last year. For the year, album sales are down 17%. Digital tracks rose 1% last week and are up 50% against last year.

• Sony/ATV won an auction for the 125,000 song-deep Famous Music publishing catalog for about $370 million. (New York Post)

• iTunes' new unprotected, premium AAC files from EMI embeds the user's account information in the audio file. (Cue the privacy concerns and the debate about what constitutes DRM.) The Unofficial Apple Weblog offers instructions on how to see for yourself. (The Unofficial Apple Weblog)

• Premium music download retailer MusicGiants has partnered with GalleryPlayer to offer the latter's art, entertainment and sports photography to MusicGiants' home theater installations. Basically, the deal will offer MusicGiants customers more HD content through those high-end systems in which MusicGiants is integrated. Should make for a great audio-visual combination. (Press release)

• You may have seen the news about Microsoft's table-top surface device. This Popular Mechanics video shows how the table-top interface allows for wireless file exchanges between portable devices (cameras, music players, mobile phones, PDAs).

• The Toronto flagship store of Canadian music retail chain Sam the Record Man will close on June 30th. The store has been active at that site since 1961. (ChartAttack)

Posted by Glenn at 9:01 AM | Link
|Brick-And-Mortor Retail||Online Stores/Services||Publishing|

Borders announced its Q1 2007 results yesterday (read press release or 8-K). Losses deepened, music sales were down and gross margin dropped. The company reported a 2% increase in consolidated sales and a loss of $35.9 million (compared to a loss of $20.2 million last year).

Comp Borders Superstores sales were down 1.9%. DVD sales were flat and music sales declined (no figures were given for either segment).

The fact that Borders' music sales dropped comes as no surprise. National chains such as Borders and Barnes & Noble have been suffering through slumping sales and a tepid new release schedule. There was no mention yesterday of the company's plans for the music segment, although CDs are generally expected to be playing a lesser role in the chain's plans. In March, Borders issued a press release about its strategy and said it will be incorporating digital centers that will emphasize digital content and hardware.

Posted by Glenn at 8:28 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

Entertainment retailer Trans World reported Q1 2007 earnings today (read press release). Total sales dropped 1% to $286.3 million and net loss increased to $9.1 million from $7.1 million last year. Comp store sales dropped 10%. Said chairman and CEO Robert J. Higgins, "Our first quarter sales remained difficult, while positive comparable store sales in DVD, electronics, accessories and boutique could not offset worsening music results."

Improved margins on music and movies resulted in improved gross margin (36.5% versus 34.8%), but sales of both were down. Music was way down and other segments are being given more emphasis to make up for the decline.

A transcript of this morning's conference call offers some insight into the company's results and strategy.

• Music sales were down 21% on a comp basis, and the company's top 50 experienced a 32% drop on a comp basis. Music represents 44% of sales, down from 52% last year.
• DVD sales dipped 6% on a comp basis and now represent 38% of total sales, up from 31% last year.
• Games dropped 12% on a comp basis and represent 7% of sales, the same as last year.
• The company has expanded space for DVDs, electronics, accessories, boutique and games. It has implemented measures aimed at improving customer service.
• The in-store, mix-and-burn digital kiosk testing has offered "promising, but still inconclusive results." Said president Jim Litwak, "...we want to have the stores increase where they are at right now by about 25 to 30% what they are burning currently."
• The re-branding of f.y.e. stores is on schedule and will be completed in Q2.

A few analyst noted that executive compensation seemed high relative to company performance. The message was pretty clear: Investors want to see the executive team lead by example and keep costs down.

Trans World operates almost 972 retail stores under the names f.y.e., Coconuts Music and Movies, Strawberries Music, Wherehouse, Sam Goody and Spec’s.

Posted by Glenn at 4:37 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

• Warner Music Group's Rhino Records has laid off 15 employees as a part of WMG's greater restructuring plans. (Billboard.biz)

• Multimedia retailer Hastings Entertainment, Inc. reported improved net income on slightly lower revenues for Q1 2007. Overall it was a good quarter that showed the company is properly retooling its product mix. Net income increased 29% to $2.5 million year over year while revenues dropped to $128 million from $131 million. Cost of revenues decreased to 62.7% from 64.5% last year. Comp store revenues dropped 3.9%. Music sales were down 13% while electronics rose 17.5%. (Press release)

• Paul McCartney''s solo and Wings catalog made its herladed debut on online stores and services yesterday...but for whatever reason it wasn't on iTunes. (PC World)

• Pandora, the online music recommendation engine, will be available through Spint Power Vision phones (for $2.99 per month) as well as Sonos home audio systems (as 32 different Pandora radio stations). (MP3.com)

• PassAlong Networks is powering a music download store by MP3Car.com, which offers an in-dash application to discover and purchase songs. (Press release)

• Joost announced a deal with Creative Artists Agency. (Press release)

Posted by Glenn at 12:40 PM | Link
|Brick-And-Mortor Retail||Earnings Releases||Firings||Online Stores/Services||Warner Music Group||iTunes|

• Virgin Entertainment will close two stores (Chicago and Salt Lake City) and open a store at the Hollywood Bowl. (Billboard.biz)

• Warner Music Group cut 15 positions in the U.K. as a part of its "ongoing transformation." (Hollywood Reporter)

• Newsweek has an article on celebrity blogger Perez Hilton. The article looks at the impact Hilton can have even -- though he is not a music blogger per se. "When Perez Hilton talks music," says the title, "people listen." It says he hopes to start a record label and launch a "Perez Hilton"-braded tour. (Newsweek)

• A profile of San Francisco-based indie label Six Degrees Records. Said co-founder Bob Duskis: "We said to ourselves that we could piss and moan about how the business was changing, or we could look ahead to new opportunities, embrace them and try to be one step ahead." (San Francisco Chronicle)

• The Independent has an (often unbearably long) article on The Minpins and how they are at the forefront of a changing, decentralized, Internet-heavy music industry. Looks like the band doesn't use MySpace much -- they've got only 307 friends and 4,634 profile views. (The Independent)

• Indie musicians like Ben Gibbard (Death Cab For Cutie) and James Mercer (The Shin) talk about the mainstreaming of indie rock. (Denver Post)

• The Wall Street Journal's Jason Fry has a lengthy write-up on Yahoo! Music's new Gracenote-powered music lyric service --- and he's got a beef with it. Because the lyrics cannot be copied and pasted (into the MP3's metadata, for example), Fry is all but writing off the new business. "When an interesting new service arrives hamstrung, positions get hardened in the undeclared war between the music industry and its customers." Easy. It's too early to predict a file-sharing-like dust-up between industry and consumers. (Wall Street Journal)

Posted by Glenn at 12:00 PM | Link
|Brick-And-Mortor Retail||Warner Music Group|

• In an interview with Billboard, Paul McCartney said the deal to put the Beatles' catalog online is "virtually settled." The teaser article has no other details. The full interview will be in the May 19th issue of Billboard. (Billboard.com)

• Dimensional Associates, the private equity fund that owns eMusic and The Orchard, sold its music publishing division. (Billboard.biz)

• Talent search promotions are a dime a dozen these days. Here's another: Capitol Nashville is teaming up with Yahoo!'s Bix for an online audio and video karaoke contest called "The Road To Nashville." (AngryCountry.com)

• Silent Majority Group has joined Warner Music Group's Independent Label Group. SMG was founded by Creed manager Jeff Hanson (Press release)

• The Knitting Factory announced digital initiatives for its two venues. Knitting Factory Digital Services will provide to labels the ability to record live audio and video and distribute the content through content partners such as Rhapsody, AOL Music, Revver and Last.fm. (Press release)

• A very good article on the music retail scene in Columbia, South Carolina. The five ways stores are staying relevant: Used CDs, vinyl, catalog, accessories and customer service. (Free Times)

Posted by Glenn at 10:09 AM | Link
|Brick-And-Mortor Retail||Digital Distribution||Marketing||Publishing|

Well...not so much talk as write about future plans in the 10-K annual report filed with the SEC a few days back (read PDF). In a nutshell, the company is shifting some focus to its online efforts.

This would explain its partnership with Napster:

"Circuit City calculates that industry e-commerce sales of the products it sells (consumer electronics; computer hardware, software and peripherals; music and video software; and toys and video games) will grow by approximately 17 percent in calendar 2007, compared with calendar 2006. We expect to benefit from both the overall industry product sales growth and the shift to the online channel where we believe we have a competitive advantage due to our strategic focus on building multi-channel capabilities."

Stores will get smaller. In fiscal 2007, about 30% of Superstore openings were about 20,000 total square feet. In fiscal 2008, about half will be 20,000 square feet. Bad for the CD, good for the digital album (if the retailer can actually sell them).

"As the mix of sales of music and movie software shifts to digital formats rather than physical formats, and as more customers prefer a multi-channel shopping experience, we believe a smaller store footprint can, in many cases, meet our customers’ needs more effectively and efficiently."

Posted by Glenn at 11:00 AM | Link
|Brick-And-Mortor Retail|

• Billboard's Ed Christman reported today that Warner Music Group is planning to lay off 400 employees. The restructure includes staggered layoffs and additional hires in digital areas. (Billboard.biz)

• According to the Financial Times, EMI has interest from three private equity groups: Fortress, Cerberus and the previously mentioned One Equity. All three are expected to make presentations to EMI's board of directors this week. EMI will reportedly open its books to all three and will give them until May 23, the day it announces its annual results, to make full offers. (The Age)

• Billboard is reporting that "at least six" indie labels plan either to pull their catalogs from eMusic or offer only back catalog through the music download service. "I hope they can make it a better value proposition for the labels," said one unnamed label head. "But if they don't, we are planning on pulling out." eMusic offers subscriptions of varying quantity and price. Though popular, the low subscription prices means labels get less per song that they would from sales other download stores. A recent price hike by eMusic appeared to be a move to appease some disgruntled labels. (Billboard)

• Warner Music Group is launching a production unit called Den of Thieves that will create content for video platforms such as television, DVD and mobile. (Variety)

• The Tennessean's Nicole Keiper has a good article on high-tech music marketing -- and I don't think it's good just because I'm quoted frequently. Keiper talked to Nashville musician Jeremy Lister and the manger of Ben Folds -- also of Nashville -- about their experience performing in the virtual reality world of Second Life. MySpace, too, is a topic, as is music-oriented MySpace clone Virb. (The Tennessean)

• An old Tower Records location that former Tower owner Russ Solomon is using to open a new retail site will be called R5 Records-Video and is slated to open in June. (Sacramento Bee)

Posted by Glenn at 9:20 AM | Link
|Brick-And-Mortor Retail||EMI||Marketing||eMusic|

• More talk that Wal-Mart will cut its CD stock unless the release schedule picks up. That move would certainly compound labels' sales problems. (Digital Music News)

• A jury found that Yahoo!'s Launchcast is not liable to Sony BMG for copyright infringement. The heart of the lawsuit was whether or not Launchcast is an interactive service. An interactive service requires a negotiated licensing agreement. A non-interactive service can be covered by a compulsory license. (Billboard.biz)

• EMI's Sparrow signed a deal with Amy Grant that will include the singer's catalog. Sparrow gets all digital and mobile rights. Many of the albums to be reissued have not yet been made available in digital format. (Press release)

• After being dropped by Warner Music, The Crimea self-financed its sophomore album and will give it away for free as a digital download and hopes to make up the difference through touring, merchandise sales and licensing revenue. (The band is selling copies of the CD version.) I find it especially interesting that the publicists, marketers and radio promoters who will work the album have waived their fees in return for a share of future revenue. Secrets Of The Witching Hour will be released May 13th. (The Guardian)

• Hurt by lower orders by labels, CD manufacturer Cinram is looking to high-definition DVDs and video games. (The Times-Tribune)

• A profile on world music label Putumayo, whose growth is in contrast to the industry's slump. Maybe its sales strategy has something to do with it. Roughly 65% of the labels sales come from non-traditional retailers like Whole Foods and Bath & Body Works. (New York Post)

Posted by Glenn at 3:26 AM | Link
|Brick-And-Mortor Retail||EMI||Legal||Sony BMG|

• Insiders say Wal-Mart will lower the square feet designated for CDs and replace them with iPod accessories. (Kings of A&R, via Idolator)

• Warner Music Group has settled its years-old claim against Bertelsmann over the latter company's relationship with Napster. The WMG press release is mum on an amount, but an 8-K filed with the SEC says WMG will receive $110 million from Bertlesmann, who admits no liability in the settlement. (Press release)

• Another day, another Amazon.com rumor: Insiders say Amazon.com's digital download store will be integrated into existing the Amazon.com storefront. "It’s going to look just like Amazon does today," said one source. (Digital Music News)

• Gracenote has launched its online lyrics service. Yahoo Music, through a revenue-sharing agreement with Gracenote, will offer the lyrics of hundreds of thousands of songs. More sites will soon offer lyrics through Gracenote as well. (Reuters)

• Indie911, an online social network with music overtones, has partnered with APM Music, a joint venture between EMI Music Publishing and BMG Music Publishing. Indie911 will provide indie and unsigned content to television, film and video game companies. (Billboard.biz)

• An analyst put iTunes' operating profit at as much as 15%. Because Apple has undertaken measures to minimize credit card transaction fees -- something many people mistakenly think eats up all iTunes profit -- each song clears ten cents. (AppleInsider)

• Check out ASCAP's blog for its "I Create Music" ASCAPExpo that ran April 19th to 21st. (EXPO's Vox)

Posted by Glenn at 11:31 AM | Link
|Brick-And-Mortor Retail||Publishing||Sony BMG||Warner Music Group||iTunes|

• Circuit City will use Napster's online service to create its own branded music service called Circuit City + Napster. The prices are standard -- $15 for the subscription, $0.99 per track for downloads. I don't understand Circuit City's thinking here. Wal-Mart's download store is nothing much, and Tower's foray into download stores was pitiful. Maybe there's a great opportunity to drive traffic through in-store sales of pre-paid download cards or MP3 players, but those synergies usually turn out to be more of a mirage. (Billboard.biz)

• SoundExchange has reached out to some webcasters -- and released a press release about it -- in the wake of the Copyright Royalty Board's hike of rates paid to labels and artists. "We recognize that there may be certain needs and expectations, as expressed by webcasters in recent days, that might possibly be addressed through direct discussions," said Executive Director John Simson. (Press release)

• The Miami Herald ponders the precipitous drop in Latin music shipments and the disparity between shipments and scans (which were up 5% last year). Latin's digital sales rose by 63% in 2006. (Miami Herald)

• Sony BMG is examining business opportunities in India. (Business of Cinema)

Posted by Glenn at 1:28 PM | Link
|Brick-And-Mortor Retail||Napster||Sony BMG|

• Conde Nast's recently launched Portfolio has an article on Larry Fink, CEO of BlackRock. The private equity firm is behind Octone Records, which will soon release Maroon 5's sophomore album. (Portfolio)

• Apple's April 12th newsletter confirmed that iTunes will begin to offer DRM-free, 256 Kbps files next month. (Apple eNews, via Digital Audio Insider)

• Artists signed to Atlantic Records UK will use ShoZu-enabled mobile phones to upload videos and photos to the Internet. The first act to use the service will be Funeral For A Friend, which will upload videos to its MySpace page. (Press release)

• The Caroline-to-Fontana migration continues as Eighteenth Street Lounge moves to Universal Music Group's indie distribution division. (Billboard.biz)

• A profile of CMT and its many digital initiatives: CMT.com, CMT Loaded (video on demand), content for mobile phones and a fan-compiled Wreckers video, among others. (The Tennessean)

• Hipsters were quick to digital music but still believe in the quality of vinyl. In Brooklyn, at least six vinyl shops have opened in the last few years. (New York Sun)

• How the "cumulative advantage" impacts the popularity of music. The phrase I tend to use is, "Popularity breeds popularity"...but I've never published research on the topic. (New York Times Magazine, via David Card)

Posted by Glenn at 9:45 AM | Link
|Brick-And-Mortor Retail||DRM||Distribution||Warner Music Group||iTunes|

• The Australian Recording Industry Association announced strong results for 2006. CD shipments increased 7.9%, though the value of the shipments dropped about 5%. Digital album sales increased 250%; digital now account for 5.5% of music industry sales (up from 1.5% in 2005). Australian repertoire accounted for a greater percentage of the singles and album chart. (Press release)

• Music retailer Trans World chose PassAlong Networks to power its f.y.e. online download service. PassAlong's StoreBlocks services engine will offer customers enhanced search, customer-build music showcases, an incentive program and legal music sharing through IM and email. (Press release)

• Trans World updated its fourth quarter results. Net income was up slightly due to a revision of an extraordinary gain related to the acquisition of Musicland. Also mentioned: Trans World is in the process of re-branding the majority of its stores (Coconuts, Wherehouse, et al) to f.y.e. (Press release)

• Primary Wave purchased a portion of Julian Lennon's interest in the Beatles songs co-written by his father, John Lennon. The deal covers such songs as "Help," "All You Need Is Love," "Hey Jude" and "Come Together." (Billboard.biz)

Posted by Glenn at 12:38 PM | Link
|Brick-And-Mortor Retail||Publishing|

• Most of the music-related news in the media this week centered around EMI's decision to offer downloads without DRM. Other labels not have some thinking to do, and some negotiating. Billboard reported that Apple ponied up a $5 million advance for the right to sell EMI's catalog in unprotected AAC. Since majors' contracts with iTunes come due later this month, there could be some similar deals soon. (Digital Music News)

• Does country music have a difficult road ahead? From CMT.com: "It's common knowledge on Music Row that Wal-Mart has come around recently to call on the major labels and to tell them that if Wal-Mart isn't going to receive a dependable supply of salable artists' CDs from the labels, well, Wal-Mart may drastically cut down on racking country CDs." Last year's country boom (Rascal Flatts, Carrie Underwood) could do more hard than good if mass merchants expect those numbers year in and year out. (CMT.com)

• Foo Fighters have re-signed with RCA. (Billboard.biz)

Posted by Glenn at 11:12 AM | Link
|Brick-And-Mortor Retail||DRM|

• Circuit City's record music sales continue to fall. This is from the company's earnings release that came out yesterday: "Comparable store sales of music software declined by double digits, and comparable store sales of video software declined by mid-single digits." (Press release)

• Best Buy released earnings for its fiscal fourth quarter. Declines in sales of CDs and DVDs partically offset double-digit gains in gaming hardware and video. (Press release)

• Sanctuary will drop new releases from its U.S. label but will continue to sell its catalog. (Billboard.biz)

• Sony BMG has a deal with Global Music International to distribute songs, ringtones and videos to mobile subscribers through China Unicom. (News.com)

• Zune's director of marketing said the company is looking at ways to push its subscription service. One possibility it has considered is a plan similar to those of mobile phones, where a person signs up for the subscription and gets the phone for free or at a discount. With a cheaper, flash-based model, that could be a good idea. (Computer World)

• I don't keep track of these things, but it's probably not every day that Amazon.com's top five CDs are by female artists. Last night the list was, from #1 to #5, Alison Krause, Amy Winehouse, Martina McBride, Lucinda Williams and Norah Jones. Joss Stone, at #9, was the sixth in the Top 10. The next female, Corrine Bailey Rae, was way down at #19.

Posted by Glenn at 9:15 AM | Link
|Brick-And-Mortor Retail||Indies||Sony BMG||Zune|

You might wonder why I'm posting about the earnings release of Hot Topic, a mall-based retailer that caters to trend-conscious teens. The chain does really big business in all things music, even recorded music. Shifts in music trends are affecting all sorts of retailers.

In its 10-Q filing (download PDF), Hot Topic explains how changes in music trends and listening habits have impacted its strategy.

"With the availability of music on the internet, we have seen a diversification of teen fashion preferences. We believe the iPod revolution has reduced the number of 'one genre' fans and, as such, requires a shift in our music strategy as well as our store design. In addition, as music is our primary driver of traffic, sales in our music-influenced apparel and accessories categories declined as well. The decline in sales resulted in inventory overages and increased markdowns primarily due to more frequent promotions and liquidation."

Interesting. So kids are listening to more genres of music -- which makes sense given their access via the Internet -- and Hot Topic has noticed a change in buying patterns. No indication was given what the new strategy will be. Less recorded music? Different genre mix? A music download store or in-store digital kiosk? Fewer metal accessories and more classic rock t-shirts?

Posted by Glenn at 1:23 PM | Link
|Brick-And-Mortor Retail|

• Muzak reported a 3.0% increase in fourth quarter revenue and a 0.7% increase in annual revenues. Net losses improved to $39.2 million from $48.6 million. CEO Stephen Villa called the turnaround a "dramatic improvement." (Press release)

• Pump Audio and Snocap have entered into a client-sharing agreement. (Digital Music News)

• The only places in Greenwich, CT where you can find a CD is the public library and Starbucks. (Greenwich Time)

• The lesson here is, Music fans shouldn't live in Greenwich. In Seattle, Silver Platters is showing the CD is still a viable format. The indie retailer recently added 42,000 square feet. (Seattle Times)

• San Francisco area indie retailers are surviving in their respective niches. Mod Lang moved to El Cerrito and has found it "liberating" to no longer cater to university students. Aquarius Records uses its exhaustive staff reviews to attract sales. Amoeba is Amoeba. (San Francisco Chronicle)

• In England, Rough Trade is expected to soon open Britain's biggest music-only store -- a 5,000 square foot store in London's East End that will "reflect the public appetite for exciting new music." (The Independent)

Posted by Glenn at 9:00 AM | Link
|Brick-And-Mortor Retail||Earnings Releases||Snocap|

Media giant Bertelsmann announced its 2006 earnings yesterday. BMG, half of the Sony BMG joint venture, was the only division that did not improve its position from last year. BMG posted revenues of € 2.0 billion (down 5.2% from € 2.1 billion in 2005) and operating earnings (before interest and taxes) of € 173 million (down 2.3% from € 177 million in 2005). The company said the music division's lower 2006 performance "is attributed solely to the recorded music business." But there was (slight) good news as BMG "was able to raise the revenue contribution from digital formats from seven to twelve percent."

Retailer Borders announced its annual earnings today and gave some indication as to its future plans. (Read 8-K report) Sales increased 0.8% but the company reported a net loss of $151.3 million versus a gain of $101.0 million last year. Operating income dropped 38.5% to $111.3 million. Borders said 2007 will be "a year of transforming and stabilizing—but not significantly improving—financial performance."

No details were given on music sales but I can't imagine them being anything but disappointing. The announcement of "Digital Centers" (see below) looks, on the surface, like a bad development for the CD format and more trouble for overall album sales.

The most interesting parts of today's announcements came from a press release about Borders' long-term strategy to focus on core domestic superstore business. Among the planned initiatives:

• Modifications to its rewards program
• Work on a new concept store prototype that will include "destination businesses, technology and experiential elements that will dramatically enhance the shopping experience and set Borders apart from the competition"
• Reworking its merchandising system

Today's earnings press release mentions another new initiative, new "Digital Centers" that "will enable customers to learn about, interact with, and purchase new digital products -- such as audio books, e-books, MP3 players -- and services such as downloading and personal publishing that complement the Borders brand."

Posted by Glenn at 3:32 PM | Link
|Brick-And-Mortor Retail||Sony BMG|

• New Island Urban president Jermaine Dupri has signed Jagged Edge to his So So Def imprint. Island Urban itself signed California rapper Hot Dolla. (Billboard.biz)

• Sirius and XM executives were questioned by a Senate anti-trust panel yesterday. Questions about market competitiveness rest on whether or not satellite radio faces competition from local terrestrial radio stations, or if its a market unto itself. While no single terrestrial radio station is in direct competition with XM or Sirius, I think consumers view satellite and terrestrial as substitutes -- and anti-trust regulators should take the viewpoint of consumers when assessing the merger's impact. (Forbes.com)

• A court rules that TVT Records must pay Slip-N-Slide $9.1 million for blocking the release of an early Pitbull release. (Vibe.com)

• Borders may sublease four Chicago-area stores as part of a cost savings strategy. The company, which has an earnings announcement tomorrow, has issued a profit warning due in part to sales declines in the music category. (Chicago Tribune)

• Career announcements are a dime a dozen, but this one stands out for an obvious reason: Koch Records has named Scott Givens as its new VP of metal. That's gonna be one sweet business card. (Billboard.biz)

• Albums on flash drives may (or may not) shake up the pop charts. HMV stocked 7,000 flash drives for the new Fratellis album. Hey, if it works, the industry has a new format to milk for a few years, and they'd probably be more than happy to sell protected files in a physical format for a change. (BBC News, via The Velvet Rope)

• Oddity: At one point yesterday, Amy Winehouse's Back To Black was both the #1 and #10 album at iTunes. (iTunes carries both the explicit and clean versions, and both are currently priced at $7.99.) Another SXSW buzz band, The Fratellis, was also in the Top 10.

Posted by Glenn at 11:34 AM | Link
|A&R||Brick-And-Mortor Retail||Sirius||XM|

• Starbucks and Concord Music Group have formed a new record label, Hear Music, that will release titles for both internal and external distribution. Seems like odd timing given that company founder Howard Schultz has been worried about the chain's brand recently. (Billboard.biz)

• EMI has dismissed claims by UK download site Wippit that the Beatles catalog will soon be available online. (Irish Examiner)

• British retailer HMV issued a profit warning. The company plans to close unprofitable stores and refurbish others. Also in the mix is a social networking site, to be tied to its own website, for music and film fans. (BBC News)

• Sub Pop Records has founded a new label, Hardly Art. (Pitchfork)

• Warner Music Group looks to be hesitant to up its offer of 260p per share for EMI, an offer that is "subject to numerous assumptions and conditions." EMI doesn't want to give access to its books without a commitment of a higher offer. (Times Online)

• Primary Wave's first big Nirvana licensing deal after purchasing 50% of the catalog for $50 million? Inclusion on the Major League Baseball 2K7 video game for the track "Breed." (New York Post)

• Old news, but I'll mention it: Universal Music Group settled its lawsuit with online video site Bolt.com for a "multimillion payment for damages for past infringement." (Press release)

Posted by Glenn at 9:17 AM | Link
|Brick-And-Mortor Retail||EMI||Indies||Publishing||Starbucks|

• US buyout firm Fortress is taking a look at EMI, as are Apollo and private equity firm One Equity. (AFX)

• Los Angeles gets a country station today. (Radio Ink)

• Story of a YouTube "star" who doesn't want to sign with a record label. The move could end up saving labels from themselves. If OK Go gets only 200,000 album sales from a YouTube megahit, why look use YouTube popularity as an indicator of future music sales? Who's to say YouTube popularity will translate to success at radio, television or touring? Right now, all indicators point to YouTube popularity existing in a near vacuum. (Billboard)

• A profile on DC-area indie retail chain cd.gameexchange. (Washington Post)

• Broadcasters speak out for relaxed ownership rules at the FCC media ownership hearing in Harrisburg, PA. (AP)

• DRM lives on: BitTorrent to launch a movie download service today with files protected by Microsoft DRM. The press seems to be going a bit light on founder Bram Cohen even though media files will be wrapped in the same sort of DRM that gets online music retailers so much grief. (The News.com)

Posted by Glenn at 8:22 AM | Link
|Brick-And-Mortor Retail||DRM||EMI||YouTube|

• To cut is (probably not) to cure: EMI laid off an undisclosed number of employees in Canada. (Billboard.biz)

• The EU is looking at whether or not the Sony BMG merger has raised CD prices. A survey sent to record companies and trade group asks, "Have the majors shown a parallel behavior, in particular in terms of prices before the merger? Did the merger have an effect on such parallelism?" Honest answers please. (Bloomberg News)

• The newly-created House Antitrust Task Force will hold a public hearing next week on the proposed merger between Sirius and XM. (The Wall Street Journal)

• Internet radio listening jumped 26% in 2006. AOL's radio network, at 15.25 hours per week, is the most listened to online radio network. (Radio Ink)

• The UK government responded to a petition to ban DRM. In short, it is not jumping on Norway's bandwagon. Excerpt: "DRM does not only act as a policeman through technical protection measures, it also enables content companies to offer the consumer unprecedented choice in terms of how they consume content, and the corresponding price they wish to pay." (Number-10.gov, via Tech Digest)

• The state of music retail in Columbia, Ohio. (The Other Paper)

• The state of music retail in Belfast, Ireland. "The demise of the independent sector has been rapid, brutal and in inverse proportion to the rise of downloading and the digital revolution." Actually, I think the demise has been in direct proportion to the rise of downloading and the digital revolution, but I get what they're saying. (Belfast Telegraph)

Posted by Glenn at 7:17 AM | Link
|Brick-And-Mortor Retail||DRM||EMI||Satellite Radio||Sony BMG|

• EMI wrote Warner Music Group and highlighted its regulatory concerns over a possible acquisition. (Reuters)

• Andy Gershon lands at Epic Records -- as executive VP -- after departing V2. (Billboard.biz)

• Indie retail legend Reckless Records is expanding to a third Chicago location. (Chicago Reader, via Fifth Disc)

• Sirius CEO Mel Karmazin predicts a better than 50/50 chance of getting regulatory approval for a merger with XM. Analysts aren't so optimistic. I'm not either. (BusinessWeek.com)

• EMI is taking the entire 15th floor of a waterfront office building in Jersey City. (The Real Estate)

• Puretracks announced it is offering music in the MP3 format from labels such as Arts & Crafts and Beggars Banquet, which are already available DRM-free elsewhere. (CBC)

Posted by Glenn at 9:36 AM | Link
|Brick-And-Mortor Retail||EMI||Online Stores/Services||Satellite Radio||Sirius||Sony BMG||XM|

• EMI warns of lower profits for the fiscal year -- a whopping 15% decline year over year -- and points to weakening sales in North America. (Press release)

• David Goldberg, one of the leading critics of DRM, is one of two execs leaving Yahoo! Music for "personal reasons." He said he will return to his "entrepreneurial roots." (Billboard.biz, more at paidContent)

• At the 3GSM conference, music executives criticize mobile operators for poor user experiences. (New Media Age)

• Trans World announces Vcommerce Enterprise, consolidates the majority of its stores under the name f.y.e." (Press release)

• LiveNation has closed the Starwood Amphitheater in Nashville and canceled its 2007 season. (WKRN.com)

• Venture capital for musical acts. (Billboard.biz)

• Canada is making a second attempt to tax MP3 players. (VNUNet)

Posted by Glenn at 7:53 AM | Link
|Brick-And-Mortor Retail||EMI||Live Music||Mobile Music||Online Stores/Services|

The Eagles' Don Henley spoke to The Los Angeles Times' Geoff Boucher about many topics, one being its exclusive retail deal with Wal-Mart and the band's upcoming album.

""A lot of the people who have criticized us are obviously unaware of what Wal-Mart is doing in overhauling their operation," he said, rattling off the company's well-publicized initiatives to open eco-friendly "green stores," reduce packaging and use its market share to pressure vendors into pursuing environmentally conscious approaches.

And there's the fact that the Wal-Mart deal offered a promising escape route for Henley and his band mates; they have no traditional record label deal, and, after watching the file-sharing websites rise to power, they were open to any path to keep their connection with fans.

"This is the world we live in," Henley said. Then, with a chuckle, he added: 'In the big picture, they can't be any more evil than a major record label.' ...

Wal-Mart is happy with the deal, at least so far; David Porter, Wal-Mart's vice president of home entertainment, gushed back in October that the retailer was 'very pleased to be able to bring our customers an alliance with America's greatest rock icons.'

Still, in the bargain Wal-Mart gets a cranky star promising to keep an eye on the promises made ('I will be watchful.') and to make a stink if they don't come through ('You can always get a divorce.')

The album that Wal-Mart will be getting won't be the predictably neutral material it always got from its other corporate troubadour, Garth Brooks. Henley said the lyrics are laced with dark humor and war protest."

Posted by Glenn at 10:41 AM | Link
|Brick-And-Mortor Retail|

• Target to partner with upstart label 180 Music to release exclusive, adult-centric CDs with a $9.99 price tag. (Reuters)

• Primary Wave Music Publishing is expected to announce the acquisition of a "significant interest" in the catalog of Hall & Oates. (New York Post)

• KCRW to release "Sounds Electic: The Covers Project" exclusively in select Starbucks locations. (Billboard.com)

• Capitol Music Group promotes Lee Trink to president and Jeff Kempler to COO. (FMBQ)

• Live Nation concocts MySpace of concert websites. (Digital Music News)

• Bill Gates talks about micropayments; speculation that the Zune Marketplace, which uses Microsoft Points for purchases, will be part of a grander scheme to make another bid at online payments. (The Globe and Mail)

Posted by Glenn at 9:49 AM | Link
|Brick-And-Mortor Retail||EMI||Publishing||Zune|

The Times Online reported today that music retailer HMV has become "one of the most “shorted” UK stocks of all time. To short a stock means people borrow stock they do not own, sell them and buy them back at a lower price and return the shares to the original owner. The investors keeps the difference between the higher sale price and the lower purchase price. The fact that HMV is being shorted means investors have great faith that the stock will drop in the future.

What is wrong with HMV? Plenty. Before a disappointing Christmas season, the retailer had already lost lost £26.1 million ($50.7 million) at the midpoint of its financial year. It has faltered under heavy competition from Internet retailers and supermarket chains.

Adding to brick-and-mortar woes, Brit retailer Music Zone ceased trading last week. About 800 jobs were lost after the retailer could not find a buyer to keep it in business. A deal with one potential suitor fell through because no agreement could be reached with suppliers over £12 million claim over stock.

These failures come after British musicians posted their best year in almost a decade. BPI figures show that UK artists represented 61.9% of UK album sales. But it's not as if UK consumers have shifted away from the CD: Digital album sales accounted for only 1.4% of total UK album sales in the last three quarters of 2006. Total UK album sales were down only 2.5% in 2006. The shift to digital singles has been more dramatic, and that leaves brick-and-mortar retailers out of the equation. Total singles were up 39.7% and digital singles rose 98.9%.

Posted by Glenn at 12:17 PM | Link
|Brick-And-Mortor Retail|

There's a good but brief article at The Economist about Britain's music retail climate. Low-margin supermaket chains which account for ___% of sales, are bringing downward pressure on music-specialty stores.

"Supermarkets have been selling music aggressively in the past five years. TNS, a research firm, reckons they now account for more than a quarter of all sales. Most stock no more than the 100 bestsellers, but according to the British Phonographic Industry these titles make up about a third of the country's total album sales. By concentrating on the fastest-moving stock, supermarkets have been able to drive down prices, turning music retailing into a high-volume, low-margin business."

I think a big problem with the article is its argument that indie labels are at more risk than larger labels when major chains carry less stock. While shelf space is definitely shrinking, indies can flourish online. The smart ones can. Not all indies are that smart. The fittest will survive.

Posted by Glenn at 12:21 PM | Link
|Brick-And-Mortor Retail|

• Data from Telephia suggests growth of ringtone sales may be flattening -- at least temporarily. Third quarter ringtone sales ammounted to $198 million, only $5 million more than the second quarter. (Read post at Digital Music News)

• Jupiter Research's Mark Mulligan says HMV, which struggled in the fourth quarter, needs to be more a media retailer than a music retailer. The retailer has dedicated more shelf space to non-music items, launched its own digital download site and, it is rumored, will launch in-store download kiosks. (Read article at BusinessWeek.com)

• URGE makes a move to differentiate itself by signing exclusive deals with dance labels Ed Banger and Planet E. The MTV online music service will make available unreleased tracks by the label. In addition, URGE is sponsoring a DJ set by Planet E founder Carl Craig. (Read artcicle at Billboard.biz)

Posted by Glenn at 2:22 PM | Link
|Brick-And-Mortor Retail||Mobile Music||Online Stores/Services||URGE|

Circuit City announced record sales for December 2006 (read press release). Music sales, on the other hand, continued to lag.

"Comparable store sales of video software increased by low-single digits, and comparable store sales in music software declined by double digits."

Satellite radio products also experienced double-digit declines.

Circuit City's announcement is the latest in a series of announcements that paints a gloomy picture for CD sales at mass merchants and national chains. Best Buy also reported lower music sales in December. Last month, Borders announced its comparable store sales in the music category were down 17.8% for the 13 weeks ending October 28, 2006.

In 2006, mass merchant album sales dropped 4% while retail chain album sales dropped 12%.

Posted by Glenn at 9:54 AM | Link
|Brick-And-Mortor Retail|

Best Buy announced Friday its December 2006 sales were up 15% to $6.6 billion (read Bloomberg article). Music numbers were not given, but there was an indication that CD sales were down.

"The entertainment software product group posted a comparable store sales increase of 8.8 percent, as strong gains in video gaming more than offset continued softness in CDs and DVDs."

Even with soft CD sales, comparable entertainment software sales were up 8.8% in December 2006 after falling 3.6% in December 2005.

Best Buy's 10-Q, filed yesterday, gives results for the three months ending November 25, 2006. Again, CD sales were down but no number was given.

"Products having the largest effect on our fiscal third quarter comparable store gains included flat-panel televisions, notebook computers, video gaming and digital cameras. These strong-selling product categories more than offset comparable store sales declines in product categories such as tube and projection televisions, desktop computers and CDs."

In 2006, mass merchant CD sales were down 4%. CD sales from Best Buy's 940-plus stores are included in that figure.

Posted by Glenn at 8:09 AM | Link
|Brick-And-Mortor Retail|

Trans World Entertainment, which operates such music retailers as FYE, Wherehouse and Sam Goody, announced yesterday a comparable store sales decrease of 6% for the five-week period ending December 30, 2006 (read press release). For the nine-week period that ended the year, comparable store sales dropped 5%. Chairman and Chief Executive Officer, Robert J. Higgins, said sales were below expectations and the company will report lower than expected earnings.

In a conference call yesterday (read transcript at SEC.gov), president and COO Jim Litwak revealed comp sales were down 12% in music and only 2% in video. (Music improved a bit, though, as third quarter comparable sales were down 14%.) Growth came from electronics and accessories. Music represented 37% of Trans World's business during November and December. Future emphasis will be given to DVDs, portable media devices and accessories.

Answering an analyst's question on its digital music strategy, Litwak described Trans World's plans to roll out a limited in-store test later this month.

"We’re going to be testing -- we’re going to roll out in January to 25 stores our mix and burn strategy, which enables us to either burn CDs in stores, or to download to specific portable devices. So, you can do one or the other, depending upon what portable device you have. Or if you don’t have the one that works, you’ll be able to burn a CD, bring it home, and upload it and download it into another device. That’s going to go into 25 stores. ... Ultimately, the feeling is is that if this is successful, it’s something that we could migrate into the LVS system. In fact, we’ve got a few where we are testing it through the LVS system now. But ultimately that will be the play; that we could bring it all the way through into the LVS system."

LVS is the tag for Trans World's next-generation listening and viewing stations that allows customers to sample CDs and DVDs by swiping the product's barcode at the LVS. Asked what portable devices would work with the digital program, Litwak said,

"It could be a Coby player; it could be a Sandisk player; it could be an [iRipper] player. It is not an iPod player. But in fact, what you could do there is you just burn the CD, you bring it home, and then you could upload it to your iPod."

And there's the problem. Asking iPod owners to take an extra step is a poor way to serve your customers. Litwak pointed out that the stores will stock compatible MP3 players. "That's the beauty of it," he told an analyst, as if stores will cash in on demand for both hardware and software. But the cart is coming before the horse. In order to take part in Trans World's digital strategy, most of its customers will have to first purchase a new MP3 player. That's a big assumption.

Posted by Glenn at 2:14 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

• Mediabase announced the 2006 airplay leaders. The most played song of the year was Mary J. Blige's "Be Without You" (Geffen). Natasha Bedingfield's "Unwritten" was the most-played Top 40 song. With 901,206 spins, Kelly Clarkson was the most-played artist of the year. Nickelback was second and just 11,000 spins behind. Island Def Jam was the most-played record label of the year. Arista Nashville received the most country spins, and Interscope received the most alternative spins. (Read press release)

• FaithMP3, a digital music store featuring the Christian music of Integrity Music, launched a beta version yesterday. FaithMP3 is the first digital music store enabled by freedomMP3, the PassAlong Networks service that grants interoperability and respects the creator's rights. Songs from freedomMP3 can be transferred between computer and MP3 player (including the iPod) but cannot be uploaded to P2P services or mass copied. (Read press release)

• That Sony BMG rootkit settlement mentioned yesterday wasn't with just two states. In all, the company settled with 39 states for a total of $4.25 million. California and Texas received $1.5 million. New York received $315,000. Customers will be able to file claims for refunds up to $175 but there's a catch. To receive a refund, a consumer must give a description of how their computer was harmed and documentation of repairs incurred. That should present enough of a roadblock to deter a great many consumers from filing a claim. This all stems from Sony BMG's use of a rootkit in copy-protected CDs (read at Wikipedia). The invasive rootkit files leaves users' computers at risk due to security holes. (Read AP article)

• FYE has backed out of plans to move into two Tower Records stores in Sacramento. FYE had planned on opening stores at the Broadway and Watt Ave stores, but company CFO John Sullivan said the leases "weren't what they thought they were." Trans World, owner of the FYE chain, still has plans to take over Tower locations in Torrance, Philadelphia and Nashville. (Read article at Sacramento Bee)

• EMI chairman Eric Nicoli has been named to the board of directors for Vue Entertainment, a UK cinema chain. Nicoli will assist with growth of the company in the U.K. and Ireland. (Read article at Variety)

• A profile of XM Satellite Radio and walk around the company's Washington DC office. "The building itself is a century-old renovated printing press where National Geographic and Newsweek were once printed." (Read article at The Washington Post)

Posted by Glenn at 7:44 AM | Link
|Brick-And-Mortor Retail||Digital Distribution||Radio||Sony BMG||Tower|

Circuit City, one of the country's biggest sellers of recorded music, announced a loss of $16 million for the third quarter ending November 30, 2006. (Read press release.) That's in contrast to a gain of $10.1 million last year.

No specific number for recorded music sales was given, only a mention that "comparable store sales in music software declined by double digits." Video sales declined by "mid-single digits." Music-related hardware fared better. Sales of portable digital audio products were flat and accessories grew by "high-single digits."

The big decline at Circuit City echos recent results from Borders, where sales of recorded music were down 17.8% over the same period last year.

Posted by Glenn at 1:14 PM | Link
|Brick-And-Mortor Retail||Earnings Releases|

• There's a report that Amazon.com has begun the paperwork for a music download store. The store, said to be slated for an early 2007 launch, will reported offer (1) only MP3s and (2) variable pricing. This would be another -- and strictly indie -- download store to offer MP3s. Yahoo! Music has convinced a few majors to make small MP3 experiments, but currently MP3s are the domain of indie-leaning sites and thus are kept at arm's length from mainstream consumers. (Read post at Hypebot)

• Several rock legends -- Grateful Dead Producgtions, Carlos Santana, members of Led Zeppelin and The Doors -- have sued online music memoribilia retailer Wolfgang's Vault. Wolfgang's Vault operator William Sagan purchased an archive of live recordings from the late Bill Graham. The plaintiffs allege the site streams live performances to generate sales of other items. Said Bob Weird in a statement, "We have never given permission for our images and material to be used in this way. What Sagan is doing is stealing. He is stealing what is most important to us -- our work, our images and our music -- and is profiting from the good will of our fans." Recently, Norton LLC, the owner of Wolfgang's Vault, obtained the Tower.com domain as well as the retailer's 33rd Street Records and Pulse magazine. (Read article at Billboard.biz, Hollywood Reporter and Variety)

• Los Angeles mourns the news that Go Boy Records in Redondo Beach will close its doors the day after Christmas. "Six months ago it seemed that everyone at once decided to stop buying CDs," said owner Scott Dallavo. "It's almost like someone flipped a switch." (Read article at The Daily Breeze)

• Billboard magazine's Brian Garrity has a top ten list...the top ten music industry stories of 2006. Topping the list are Universal Music Group's buck-a-Zune royalty, the hardline positions of UMG's Doug Morris and Tower Records' fall. Garrity didn't mention the year's biggest non-story: The inability of EMI and Warner Music Group to figure out how to merge or acquire the other. (Read article at Billboard.biz)

Posted by Glenn at 7:40 AM | Link
|Brick-And-Mortor Retail||Legal||Online Stores/Services|

• Austin City Limits Studio Theater will be a $15 million, 2,000-seat venue that will be part of a larger, $225 million project in Austin, Texas. Forty nights a year it will be a soundstage for tapings of "Austin City Limits." Willie Nelson and his nephew Freddy Fletcher are co-partners with Stratus Properties Inc. (Read AP article)

• Fontana Distribution beefed up its roster by signing an exclusive distribution deal with Six Degrees Records, which celebrates its tenth anniversary in 2007. Next year the label plans to release albums by Bebel Gilberto, Ojos de Brujo, Spanish Harlem Orchestra and CéU. Six Degrees also announced a new digital only series of albums that will aim to break new artists. The series' first release will be the five-track Emerging Artists Sampler Vol. 1. It has songs by Rara Avis, DO (featuring Omar Sosa & Greg Landau), ZAMAN 8 and Hafez Modir, MNO, and Jef Stott.

• Sirius reports holiday sales are slower than expected and now expects 5.9 million to 6.1 million subscribers by the end of 2006, which would equal 2.6 million to 2.8 million new subscribers for the year. (Read article at MarketWatch)

• BusinessWeek's Olga Kharif on the new generation of software meant to help sites like YouTube identify prohibited content. MySpace is testing an automated take-down tool, and Google is expected to have a similar technology installed in YouTube by the end of the year. (Read article at BusinessWeek.com)

• Pontiac has a partnership with Virgin Megastore. The auto manufacturer is sponsoring Virgin Recommends at ten Megastores. In return, Virgin will act as musical expert to Pontiac. (Read article at Billboard.biz)

• EMI became the first major label to sign up with eListeningPost, a new viral marketing service that allows bands to send out secure versions of songs or videos to distribution lists. After a one-time set up fee, the service costs $9 per month. (Read press release)

• Reminder: The FCC will hold a public hearing on media ownership in Nashville, Tennessee on Monday, December 11 at 1pm. The event will be held at Belmont University's Massey Performing Arts Center.

• RIP Logan Whitehurst, drummer for The Velvet Teen, and Ronnie Lipin, famed music publicist and manager.

Posted by Glenn at 9:49 AM | Link
|Brick-And-Mortor Retail||Distribution||Satellite Radio||YouTube|

• Borders filed its 10Q report yesterday. Bad news for record labels. Comparable stores sales in the music category were down 17.8% for the 13 weeks ending October 28, 2006. Total sales were up 1.8% over the same period last year. Net loss improved to $39.1 million over $14.1 million last year. (Go to Borders SEC filings page)

• This is a week old but I just saw it: Iceland cut its Value Added Tax on recorded music to 7% from 24.5%. Who's next? (Read IFPI press release)

• A patent application is the smoking gun for speculation that Apple is moving to launch a mobile phone. (Read Financial Times article)

• There's some music- and entertainment-related issues in this debate between Dave Winer and Robert Scroble over whether Microsoft is an innovator or is playing catch-up. (Read article at Wall Street Journal)

• A Disney executive said YouTube needs a more efficient procedure for taking down infringing content. (Read Reuters article)

• Universal Music Group's Doug Morris was such a fountain of information and opinion at the Reuters Media Summit. Here's another UMG tidbit: Mariah Carey is slated to release two albums in 2007. (Read post at SOHH)

• Musicnotes sold its 2,000,000th sheet music download. It hit the 1,000,000 mark 15 months ago and sold its first in 1999. (Read press release)

Posted by Glenn at 10:43 AM | Link
|Apple||Brick-And-Mortor Retail||Universal Music Group||YouTube||Zune|

• Another note from the Trans World conference call, which I had not heard or read yet: Tower will close its stores around December 15th but may leave a few open past that date.

• Kevin Lyman, co-founder of the Vans Warped Tour is one of the co-founders of Chaos Mobile, an online portal aimed at the Warped market. ChaosMobile will have both exclusive and non-exclusive content on an a la carte and subscription basis. Currently the site offers music trutunes, voice trutones and wallpapers. (Read article at Texas Gigs)

• Southern California radio stations KKGO and XSURF will begin simulcasting country music on December 1st. Some of the on-air personalities will come from KZLA, which stopped playing country last month. (Read article at Los Angeles Times)

Posted by Glenn at 8:10 PM | Link
|Brick-And-Mortor Retail||Mobile Music||Radio|

One item in Trans World's 8K report that really stood out was its digital strategy. Brick-and-mortar retailers have long struggled to properly mix its physical presence with a digital/online presence. n March of this year, Trans World acquired a controlling interest in Mix & Burn, which provides digital solutions to retailers. Consumers can create custom CDs or download digital content to portable media players or mobile phones.

Said Chairman and CEO Bob Higgins in a conference call:

"Our acquisition of Mix & Burn has accelerated our timetable for in-store downloading. In fact, we began testing digital download in a few stores in the third quarter."

When asked by an analyst how those tests were going, Higgins was short on details.

"We're seeing some stores that are doing well from a physical perspective. The digital piece of it is just brand new. So in January, we're going to expand to 25 stores. We're going to take on a region or two in regards to putting both a Burn and a Digital Solution in those stores."

Higgins added that it would cost "a couple hundred thousand dollars" to expand to 25 stores.

Posted by Glenn at 1:17 PM | Link
|Brick-And-Mortor Retail|

• Entertainment retailer Trans World lost $11.4 million in the third quarter of 2006. Sales increased by 23% due to the company's acquisition of Musicland. Comparable store sales decreased 5%. Accessories sales were up 40% and electronics sales rose 41%. Trans World expects music and DVD sales to account for 40% of fourth quarter sales. (Read article at Albany Business Journal, download PDF of 8K filing)

• Mercora signed deals that will put its mobile service into over 350 sites and storefronts (ranging from CBS to Verizone). (Read post at Digital Music News)

• A story of Branson B., "hip hop's version of the Dalai Lama," and hip hop's abandonment of Cristal champagne. "A self-taught oenophile, Branson has spent years developing his own high-quality champagne and has just begun rolling it out in select venues nationwide." And he's trying to build the brand with the help of his hip hop friends. Mentioned in the article: Foxy Brown will launch a brand of sparkling wine, and Ja Rule and DJ Clue will have branded beverages as well. (Read article at Fast Company)

• An interview with EMI's CEO, David Munns. "The power lies with the consumer, and they're going to either accept some of these (business models) or not. And we don't know what they are, so I want to be in all of them." It's about time an executive reached out to the technologists. Interesting that Munns' example of the long tail in action is the fact that Pink Floyd's Dark Side of the Moon, an old album not exactly struggling for attention, is in iTunes' Top 30. Some think the long tail is all about unknown artists, but I'd but Munns' long tail is filled with EMI back catalog. (Read article at News.com)

• Bad Boy Entertainment and Block Enterprises have renewed their joint venture, which is responsible for Yung Joc, Boyz N Da Hood and an upcoming album by Boyz member Big Gee. (Read press release)

Posted by Glenn at 12:14 PM | Link
|Brick-And-Mortor Retail||EMI||Mobile Music|

• Here's a fun thread: "Do labels ever sign an artist just to shelve them?" Much of the thread is about whether or not Geffen screwed over Rock City Angels to protect Guns N' Roses. (Fun fact: Johnny Depp was in the band briefly.) On one hand you had a scruffy, bluesy rock band that arrived during the Guns N' Roses era. On the other hand you had a band not good enough to threaten Guns N' Roses -- and that's not just hindsight talking. (Read thread at The Velvet Rope)

• Veteran music critic Robert Christgau is doing just fine post-Village Voice. He was named contributing editor at Rolling Stone and as already mentioned is now a music critic for NPR's All Things Considered. His "Consumer Guide" archives will become editorial content at the Rhapsody online music store. (Via Idolator)

• Another day, another article about superstar artists going the independent route, another day of Terry McBride saying it's "the future" without explaining how artists because superstars without major labels. Nice creativity: Hall & Oates tackled their marketing budget problem by getting an exclusive deal with Trans World. (Read article at the Daily News. Thanks Frank.)

Posted by Glenn at 4:37 PM | Link
|Brick-And-Mortor Retail||Marketing||Music Criticism/Writing|

This follow up is a bit late (school is killing me lately) but worth noting. A few days after r I posted on Wal-Mart's threats to movie studios against licensing content to iTunes, Variety reported the two companies are negotiating. While any threat from Wal-Mart is a credible threat, I thought it was more a scheme to get concessions that something that would lead to an outright ban.

Turns out Wal-Mart may get concessions. One possible result: iTunes gives Wal-Mart a cut of its sales. In exchange, Wal-Mart sells digital download coupons for iTunes. One good thing that could come out of that, other than more movies at iTunes, is that iTunes downloads may less the effects of seasonality in digital downloads; gift cards increase sales in the fourth and first quarters (mainly the first) and then sales drop and level off.

Posted by Glenn at 2:17 PM | Link
|Brick-And-Mortor Retail||iTunes|

• Trans World had bid on troubled retailer Tower Records. Other bidders include Great American Group and real estate development firms. A court-supervised auction will be held this Thursday. (Read article at The Business Review)

• Tower Records founder Russ Solomon did not make a bid on the company before the deadline. (Read article at Los Angeles Business)

• As mentioned here yesterday, a report says Warner Music Group is going back to the DVD album format it attemped with a release by The Sun. The article claims WMG will release multiple DVD albums in 2007. (Read article at Video Business News)

• Jeff Leeds on Clear Channel's Mediabase airplay monitoring service, its chart-oriented advertisements in USA Today and criticism that the ads appear to imply an endorsement by the newspaper. (Read article at NY Times)

• The University of Washington has switched to Cdigix from Napster. Cdigix says it now supplies its online music service to 60 universities, is on pace to have 100 universities by the end of the year, and currently has 100 employees. Chairman and Chief Executive Larry Jacobson says the company plans to compete with MySpace and Facebook. (Read article at Seattle Post-Intelligencer)

• Music retailer Plan 9 plans to open a store in Roanoke. Earlier this year the company purchased five Record Exhange stores. (Read article at Roanoke Times)

• Ministry of Sound, which operates dance clubs in the UK as well as a dance music label, will sell 60,000 DRM-free tracks at its download store. It will not carry major label downloads unless they are sold without restrictions. (Read article at The Times Online)

Posted by Glenn at 7:55 AM | Link
|Brick-And-Mortor Retail||Digital Music||Online Stores/Services||Tower||Warner Music Group|

Over the weekend the New York Times reported that Wal-Mart executives had threatened movie studios not to follow Disney's footsteps by selling movies through iTunes.

Sound familiar? It should. In October of 2004, Rolling Stone reported on Wal-Mart's efforts to strong-arm record labels into dropping their wholesale prices to a level that would enable a $10 retail price. All the majors "agreed to supply some popular albums to Wal-Mart's $9.72 program," according to the article. Not all, but some.

Since then, Universal Music Group announced its plan to offer CDs in a three-tier system. The cheapest of the three would be a no-frills CD in a sleeve (though according to the report this would be only for catalog titles). The plan was for the U.S. to see how it goes in Europe and Asia before adoping the new system.

Is Wal-Mart posturing? Probably. Going through on its promise of "serious ramificaitons" would mean it wouldn't stock popular titles that its customers expect the chain to carry. Committing to a full boycott would hurt customer experience. A harsh tone and a few threats may get Wal-Mart something: maybe price concessions, maybe exclusives, maybe higher wholesale prices at iTunes.

Bottom line: This is the kind of roadblock digital companies will run across from time to time. Physical retailers aren't going to quietly concede their market shares. Analysts and experts tend to forget about these things when forecasting the transition to digital from physical entertainment. They think studios and labels will be the only impediment.

Posted by Glenn at 1:25 PM | Link
|Brick-And-Mortor Retail|

Retailers sure know how to hold a grudge. A post at The Velvet Rope offers details on something Coolfer caught wind of a few days ago. Because of comments by Scissor Sisters about FYE pricing during a speech at this year's NARM convention, Trans World is refusing to carry the band's new album, Ta Dah! (out September 26th).

From an email by Newbury Comics' Mike Dreese:

"Hey everyone! The Scissor Sisters hit #1 in the U.K. singles charts a week or two ago. They apparently pissed off transworld with an accurate comment about FYE pricing on the stage at NARM. So it seems transworld/strawberries/fye/sam goody is boycotting their new release....

This reminds me of when Strawberries pulled Husker Du for a YEAR for doing a Newbury in-store 20 years ago."

Dreese went on to encourage his stores to give the album in-store play and give the album an extra push to take advantage of Trans World's void. Trans World operates over 800 stores in the FYE, Coconuts, Wherehouse, Strawberries, Spec's and Planet Music chains.

Posted by Glenn at 11:51 AM | Link
|Brick-And-Mortor Retail|

• The American Music Awards were announced yesterday. (Commence yawning.) Four acts -- Nickelback, Black Eyed Peas, The Red Hot Chili Peppers and Mariah Carey -- received three nominations apiece. Long tail enthusiasts, take note: Because the minimum sales threshold was not met by at least five candidates, no award will be given out for Favorite Female Rap/Hip-Hop Artist. (Article at liveDaily)

• At the Goldman Sachs Communacopia Conference, Warner Music Group chairman and CEO Edgar Bronfman, Jr. said his company's digital growth had exceeded expectations. "Physical has been a little bit weaker than expected, but digital has grown faster," he said. (Editor: WMG's digital growth was flat last quarter.) As for WGM's recent revenue-sharing deal with YouTube, he said he expects it to grow into "big business" over time. (Article at Hollywood Reporter)

• Digital distributor IODA announced this morning that it intends to acquire European digital distributor Uploader. (Read the Press Release)

• Koch Records has joined two majors -- Universal Music Group and EMI -- in licensing its catalog to SpiralFrog, a free, ad-supported P2P network. (Read the Press Release)

• After the death of D12 member Proof, Eminem planned to put out unreleased D12 tracks on a mixtape. Now that mixtape has turned into an official Shady Records compliation titled Eminem Presents: The Re-Up that will be released December 5th. Artists on the comp are 50 Cent, Lloyd Banks, D12, Obie Trice and Akon. (Article at SOHH)

• A profile on Long Island music retailer Looney Tunes. How has the indie store survived when so many others have gone out of business? This will blow your mind: "We have changed with the times," said owner Karl Groeger, Jr. There you have it. Businesses can change. (Article at Newsday)

Posted by Glenn at 8:19 AM | Link
|Brick-And-Mortor Retail||Digital Distribution||Warner Music Group|

World music blog DubMC queried some world music labels to get their thoughts on the Tower Records situation -- some are owed big money by the struggling retailer -- and got some thoughts on greater shifts in brick-and-mortar retail as well. Their comments show optimism for digital, acknowledgement of the CD's staying power and regret that retailers are cutting back on stock of niches like world music.

A few key comments:

Patrick Moxey, President of Escondida Music:

"Tower is still ordering and racking world music product, but they are not particularly world music friendly. The biggest loss is, as you mention, Virgin which was extremely proactive in world music. The CD is not dead yet, but as downloading increases, the return rates are going up, makings CDs a tougher business."

Ian Ashbridge of Wrasse Records:

"There is a real issue developing in that CD sales are decreasing and the legal download market is not covering the shortfall, primarily due to illegal copying and downloading. This leaves retail exposed as their stock-to-sales ratio increases. As a result, they will cut their inventory. They will not cut chart or rock music at this point, and as a result that is why they cut niche sections first."

Jacob Edgar, CEO of Cumbancha and A&R consultant to Putumayo.

"Stores aren't selling as much as they used to, there are fewer hits and as a consequence they are becoming more conservative, taking fewer risks to expose new artists. I don't blame it all on downloads, though. The fact is, there is too much substandard stuff being released and consumers can't keep up. Hell, I can't even keep up, and part of my job is listening to music! Since world music is a niche genre it is definitely being impacted by the current situation. Stores are buying less, reducing their world music sections and sticking to the tried and true."

Posted by Glenn at 2:51 PM | Link
|Brick-And-Mortor Retail||Tower|

• Universal Music Group and MTV are expected to announce today an agreement that will give MTV a blanket license to use UMG songs and videos in mobile programming. A digital executive at UMG points to exclusive, mobile-only content that he hopes will build awareness for the medium. (LA Times)

• Warner Music Group's Asylum Records signed a marketing and distribution deal with Atlanta-based hip hop label Aphilliates Music Group. Asylum acts as an incubator for WMG and has a good track record with albums by Mike Jones, Bun B, D4L and Cam'Ron. (NewYorkBusiness.com)

• Retailers, find a pen and some paper and start that letter to your Congressman: Transworld stores will be the exclusive retailer of Daryl Hall & John Oates’ Home for Christmas, out October 3rd. (Hits Rumor Mill)

• eMusic, the independent-minded music download service, has officially launched its European service to all 25 member countries of the European Union. (Reuters)

Posted by Glenn at 7:14 AM | Link
|Brick-And-Mortor Retail||Mobile Music||Universal Music Group||Warner Music Group||eMusic|

• After Universal Music Group and Fuse failed to reach an agreement on compensation, UMG sent the cable music network a directive to remove all its videos from programming until the two reach common ground. (Hits Rumor Mill)

• A profile on the legendary London record shop Rough Trade, which turns 30 this year. (The Independent)

• Beggars drone rockers Serena-Maneesh will have its music pre-loaded on Microsoft's Zune media player (Zune Insider)

• It didn't score BMG Music Publishing, but EMI Music Publishing did sign a deal with Beyonce. She was previously with Windswept Publishing. (Billboard.biz)

• Clear Channel's board of directors approved the repurchase of $1 billion in company stock. (Radio Ink)

Posted by Glenn at 8:18 AM | Link
|Brick-And-Mortor Retail||EMI||Universal Music Group|

• We all forgot about this, didn't we? Bertelsmann settled the lawsuit brought by Vivendi, parent company of Universal Music Group, over P2P service Napster. UMG gets $60 million and Bertelsmann admits no liability. (Reuters)

• EMI Music Publishing has inked a deal to license its music to Spiral Frog, the free, ad-supported music service that made waves last week when it signed a similar deal with Universal Music Group. (The Guardian)

• A very interesting article on former Capitol country artist Tim Murphy, California lottery winner Dennis Sanfilippo, Sanfilippo's Big 7 Recods and a belated chance at the country singles chart. (San Jose Mercury News)

• Here's a clever promotion: ATO Records is giving college students DropCards with purchases at college bookstores that can be used to download ATO artists. (Press Release)

• The Wall Street Journal covered the new program from Naxos and eMusic at Borders stores. CD-sized boxes are purchased at Borders. Inside is not a CD but an access code to download the album at eMusic. And here I though digital music would bring an end to returns and breakage. (Digital Audio Insider)

• Today's digital distribution signing: Nareos has signed an agreement with The Orchard to sell the distributor's catalog on Nareos' online store, MyPeerBox. (Press Release)

• An interview with Magnatune founder John Buckman. Magnatune is an e-label with a unique business model (with, among other features, a 50/50 split with its artists and a very liberal attitude about seeding the market with free MP3s). (OS News)

Posted by Glenn at 8:26 AM | Link
|Brick-And-Mortor Retail||Digital Distribution||EMI||Marketing||Universal Music Group|

• According to the NY Times, the final three bidders for BMG Music Publishing are Warner Music Group, Viacom and Univesal Music Group. The bids are said to be in the $1.8 billion oto $2.1 billion range. Sony Music and EMI (teamed with a private equity firm) did not submit bids. (NY Times)

• It's really obvious but it merits an article: Television exposure sells music. There you have it. "American Idol" can really move the units. (Billboard. Also, see Coolfer's post from January about the impact TV and big screen have on Amazon.com's top sellers list.)

• BMI, in conjunction with Volunteer Music for the Arts, presents The Legal Series every Wednesday in September in New York City. The free events, to be held from 6:30pm to 8:30pm at Pianos, will offer "a behind the scenes look at the legal side of music" by some of New York's leading music attorneys. (Press Release)

• Denver retailer Twist & Shout will close two of its locations and move everything into a new location in "the new cultural retail complex at the former Lowenstein Theatre." (Denver Post)

Posted by Glenn at 8:16 AM | Link
|Brick-And-Mortor Retail||Legal||Publishing||Television|

• Newsweek's Joshua Alston writes about a wave of R&B musicians who "who have grown tired of the creative restriction and unpredictable politics at major labels and made the jump to smaller labels" like Stones Throw, Astralwerks and Anti. Nice article, but there's a problem: Most of the artists mentioned -- Dudley Perkins, Georgia Ann Muldrew, Aloe Blacc, Jamie Lidell -- have never been on a major. The thrust of the article rings loud and clear, though. Majors, he argues, can't nuture these creative "indie soul" artists. Nor should they. Leave the niches to the indies. They'll do more with them. (Newsweek)

• A profile of legendary music man Jac Holzman, who heads up Warner Music Group's e-label, Cordless Recordings. (International Herald Tribune)

• John Connolly, president of the American Federal of Television and Radio Artists, spoke against media consolidation at a FCC Town Hall Meeting late last week. (Bilboard.biz)

• More than a quarter of all UK music sales come from supermarkets, up from 15% just fiive years ago. With this trend comes the usual warnings on behalf of independent retail and small labels. (This Is Money)

Posted by Glenn at 9:30 AM | Link
|Brick-And-Mortor Retail||Indies||Radio||Warner Music Group|

• Charles Duhigg has an interview with Lyor Cohen of Warner Music Group in today's LA Times. In terms of market share, the company has done well in the last year. Can it be called a turnaround? Let's wait until net income looks a bit rosier. Quote of the article: "Our industry wastes money on hundreds of acts because executives are afraid to cut an artist who might be successful somewhere else." (LA Times)

• Then there's his personal life: Cohen sold over $17 million of company stock to "address financial needs arising from the anticipated divorce settlement" with his current wife of 14 years. (Fox News)

• Clear Channel Radio is cutting some layers of management.

• A profile of indie retailer Boogie Woogie in Hollywood, Florida. Here's something I found surprising: "(The owner) adds that people are becoming more ethical about illegal downloading, and clerks at the store discourage customers from the practice." (Herald Tribune)

• Two Silicon Valley IP lawyers outline pitfalls of and give recommendations about DRM to music companies. (Law.com)

• Ara Guzelimian will be the next dean of the Julliard School next year. (Playbill)

Posted by Glenn at 10:05 AM | Link
|Brick-And-Mortor Retail||DRM||Radio||Warner Music Group|

Ever since Tower was put on credit hold by suppliers, the main question about the company's future was which chapter of the bankruptcy code it would file under? Would it be a Chapter 7, which woud mean the store would close its doors for good and liquidate its assets to pay creditors, or a Chapter 11, which would allow it to restructure its debts?

Last night a press release was released that answered the question: Tower plans to seek a buyer under a special section (Section 365) of Chapter 11 of the bankruptcy code. Given a judges approval, the Section 365 procedure will mean Tower will be purchased within 60 days of the filing.

In the Bankruptcy Court petition (read PDF) filed for MTS Incorporated, Tower's parent company, both estimated assets and estimated debts are listed as "to more than $100 million." (Update: As pointed out at The Velvet Rope, I did not have a link to the other documents. To read all six court petitions, go to the Tower Records (2006) page at the Omni Management website and click on the "court docket" link on the left.)

Starting at page 10, the 40 largest claims against the company are listed. (No major music groups are listed here.) The top ten are:

1. Six Degrees Records, $1,898,563
2. International Periodical, $1,282,247
3. Super D/Phantom, $846,822
4. Harmonia Mundi, $791,218
5. Ingram Entertainment, $758,583
6. Entertainment UK Ltd, $758,583
7. Image Entertainment, $750,592
8. City Hall Records, $595,441
9. Allegro Corp, $548,457
10. Select-O-Hits, $524,513

Posted by Glenn at 11:06 AM | Link
|Brick-And-Mortor Retail||Tower|

Nothing like an earnings release to try to put a positive spin on a grim situation. Entertainment retail chain Transworld emphasized what it could in its press release, mentioning its 18% increase in revenue in the second quarter. The problem is that the increase came entirely from Transworld's acquisition of Musicland stores. Adjust out sales from Musicland stores and you've got what's important: a "comparable store sales decrease of 7%."

Bottom line: Transworld had a net loss of $7 million on revenues of $298.3 million.

Another telling figure: Same store music sales (which means music sales at all locations other than the newly acquired Musicland stores) dropped 16% and accounted for 48% of total revenues. In the second quarter of last year music revenues represented 58% of Transworld's revenues.

Revenues from other products rose in the second quarter. Same store DVD revenues were up 6%, same store game revenues were up 10% and same store revenues for the remaining categories (electronics, accessories, etc) were up 10%.

President and COO Jim Litwak expects stronger music sales in the second half of the year to be fueled by releases from Janet Jackson, OutKast, Diddy, Beyonce, Justin Timberlake, Ludacris and Jay-Z. During the earnings call he told an analyst that the company is "we're being very, very aggressive in terms of promoting the rest of the music category for the fourth quarter" and that labels are being aggressive with Transworld in their fourth quarter promotional push. He later told another analyst that he thinks a $9.99 is the key new release price point for at least the first few days of release.

Posted by Glenn at 11:30 AM | Link
|Brick-And-Mortor Retail||Earnings Releases|

An article at Video Business News reminds us that Tower has a lot of video debt as well as its mountain of debt to music companies. The article confirms what Coolfer has heard from multiple sources about its arrangement with labels: Vendors are shipping product to Tower on a pre-paid basis.

"It appears that most suppliers, including Image Entertainment, have agreed to work with Tower on a cash on delivery basis. However, Tower has not taken in new product from at least one of its music suppliers and one of its DVD suppliers for several weeks, indicating that its cash flow situation is dire."

One distributor is pleased that Tower is working hard to get through this, which is in contrast to the way Musicland's financial problems were handled. "With Musicland, there was no communication. But [Tower] has been forthright with information. They are very communicative with suppliers, but they aren’t optimistic."

Posted by Glenn at 10:26 AM | Link
|Brick-And-Mortor Retail||Tower|

• Charles Duhigg profiles Geffen chairman Ron Fair and looks into the age-old question: Is a suit or a musician the better executive? (LA Times)

• This marks the dawn of a new era: The music of Andrew Lloyd Webber will be sold as ringtones thanks to a deal between Universal Music and Lloyd Webber's Really Useful Group. (Times Online)

• Lousiana four-piece Mute Math has ended its lawsuit against its label, Warner Bros. The band's own label, Teleprompt, signed a "new and improved" deal with Warner Bros. The group's next album will be out September 26th. (SoulShine)

• Album sales are down 5% through July. If digital tracks are taken into account (total downloads divided by ten equals an album sale) then album sales are down only 0.9%. Of course, that means nothing to companies like Tower, but it helps some people sleep at night.

• A profile on Summit, NJ-based music chain Scotti's. Its secret to competing with the mass merchants? Lots of vinyl. (NewJersey.com)

• The 21st century jukebox: Rowe's digital NiteStar jukebox with capacity for 300 albums and artwork. (Pollstar)

Posted by Glenn at 9:17 AM | Link
|Brick-And-Mortor Retail||Ringtones||Universal Music Group||Warner Music Group|

The San Diego Union-Tribune's Frank Green has an article on Tower that looks at the overall decline of those large music stores that specialize in, well, music. One striking element of the article was a graphic that shows how music retailing has changed in the last 17 years. In 1989, 71.7% of music sales were from record stores (a.k.a. retailers that specialize in selling music). Last year, only 39.4% of music sales came from music specialists.

Two quotes stood out. One was from Inside Digital Media analyst Phil Leigh. "This was inevitable," he said. "Physical record stores like Tower will soon be obsolete."

Leigh didn't say all music retailers will soon by obsolete. He said retailers like Tower are in trouble. Broad music specialists are dying, and in their wake smaller, more niche-focused music retailers are surviving and occasionally succeeding.

Eric Howarth of popular San Diego two-store music chain M-Theory says his stores succeed because they have a narrow focus. "Tower tried to be something for everybody,” Howarth said. “Our customers are people who purchase niche, independent music by independent artists on independent labels."

Do consumers need broad music specialists? I mean really need? The music fan in me says yes, but the truth is that consumers are far better educated than they used to be, mainly because of the Internet. Consumers can buy what they want at iTunes, or at the supermarket or at a mass merchant. Another impediment for broad music specialists: They can't match the prices of the mass merchants.

Today's smaller stores cater to niches and don't try to be everything to all people, and they're often more about lifestyle than the product they carry. Indie stores represent how consumers want to feel about themselves, and there will always be a need for this kind of small, anti-coporate retailer. Some people could shop at Best Buy (Thom Yorke's album can be found there) but they choose not to.

People are exposed to so much more music today than they were in 1989, an era far before file-sharing, music blogs and AllMusic.com. Finding information on a band took time and effort. Staying clued into music meant being a part of your local scene, talking to people at record stores and reading a lot of magazines. (If this sounds like some kind of "When I was your age I walked through five miles of snow to go to school" speech it's because having a music habit 15 years ago was a lot more work than it is today.)

For the mainstream, 1989 was all about radio and MTV. In 2006, people are content to walk into a Best Buy or log into iTunes. As long as it's in stock, today's consumer doesn't need human contact to find what they need. It may be a cold, impersonal way to buy music, but that's how it is.

Posted by Glenn at 4:55 PM | Link
|Brick-And-Mortor Retail||Tower|

DRM is taking hits left and right. Days before the annual meeting of the National Association of Recording Merchandisers (NARM), which runs through tomorrow in Orlando, retailers emphasized to labels and hardware makers the need for download standards. The NARM retailers issued a statement that urges "the adoption of compatible DRM systems and standards to administer intellectual property rights, combat piracy and ensure interoperability." DRM systems, it says, "erode the very consumer confidence that is essential to achieving the full potential of digital delivery."

Additional reading:

• The Hollywood Reporter on nervous retailers and their uncertain future.
• Read Jim Donio's Address To NARM Attendees During Opening Session.

Posted by Glenn at 10:41 AM | Link
|Brick-And-Mortor Retail||Digital Distribution||Digital Music|

• Painful: Tower has been put on credit hold by all its major distributors. (Hits Rumor Mill)

• Barney Wragg, formerly SVP at Universal Music Group's eLabs, has been appointed EMI's worldwide head of digital. (Macworld UK)

• The RIAA decided to drop a lawsuit against a file trader (here called a "massive setback") because the defendent's unprotected WiFi network may have been used to download the files in question. (Bit-Tech.net)

• Surprisingly, I didn't read about this at Stereogum: Lindsday Lohan was dropped by her UK label, Island Records. Said an insider to The Sun, "A single was a huge flop over here because Lindsay couldn’t be bothered to get off her bum and promote it." (The Bosh)

• Universal Music Enterprises acquired 11 early Elvis Costello albums and plans to reissue them through box sets, reissues, deluxe editions and the usual ways labels milk their investments. The albums were previously reissued and expanded by Rykodisc, so UME says its reissues will be "definitive reissues." (Billboard.com)

• Here are two albums that have been in dire need of digital remastering: Rhino will reissue the first two Pretenders albums on October 3rd. Finally! (Billboard.com)

• Apple's European iTunes music stores have sold 200 million tracks since launching two years ago. (Playlist)

Posted by Glenn at 1:11 PM | Link
|Brick-And-Mortor Retail||EMI||RIAA||Universal Music Group|

• After attacking the Sony BMG merger, indie coalition Impala turns its sights on Bertelsmann's planned sale of its BMG Music Publishing. A trade sale of any major publisher to another would strengthen existing collective dominance in publishing and the functioning of the collective societies, online licensing and synchronisation markets," it protests. (Reuters)

• Universal Music Group's bid for BMG Music Publishing: reportedly close to $2 billion. (Reuters)

• Collector's Choice will release a second series of 15 "Elektra Rarities" CDs on August 29th. (Press Release)

• Tower Records named Joe D'Amico its new CEO. (Billboard.biz)

• EMI and Kohlberg Kravis Roberts are teaming up in an attempt to acquire BMG Music Publishing. EMI is said to provide the management and KKR will provide most of the capital. (The Times Online)

• Think people are tired of DRM? Sony BMG's sale of a Jessica Simpson single in the MP3 format is a popular news item. It's all over the place. Even the USA Today picked up the story, noting the company behind the rootkit mess just put out its first DRM-free digital single. That -- and not mullets and mustaches -- is ironic. (USA Today)

• A profile on Cleveland record store Music Saves. (The Plain Dealer)

Posted by Glenn at 11:51 AM | Link
|Brick-And-Mortor Retail||EMI||Publishing||Sony BMG|

Newspapers are still writing articles about the decline of independent record stores. Most articles are by local newspapers that cover local business. Even the ones by powerhouse newspapers tend to stick to local stores. (The LA Times has covered Aron's closing and Amoeba's rise.)

Today the NY Times has an article called "The Graying of the Record Store" that looks at some NYC record stores and finds that the kids aren't shopping at their stores any more. Unforunately Alex Williams didn't mention the stores that still get youth dollars -- national chain stores, mainly -- and barely mentioned that some indie stores are successfully finding ways to cater to younger shoppers.

The Hook, a Charlottesville, VA weekly, wonders, "Can Indie Stores Survive?" and shows how area stores like Plan 9 have done their best to adapt to the download era. (Thanks to Dominic for the link.)

Posted by Glenn at 4:16 PM | Link
|Brick-And-Mortor Retail|

• Universal Music Group is interested in two music publishers. Sources told The FInancial Times the company has had talks with EMI about buying Warner Music's music publishing in the event the former buys the latter. UMG is also prepared to bid for BMG Music Publishing, for which Bertelsmann is currently seeking a buyer. (Financial Times)

• A Bridge Ratings surveys shows how MP3s, podcasts, Internet radio and satellite radio have lessened time spent listening to terrestrial radio. (Bridge Ratings, via Digital Music News)

• An Ipsos Insight report says one in five Americans over the age of 12 owns a portable music player. One in 20 owns more than one. (Ipsos Insight)

• The Record Exchange will close its five remaining stores in North Carolina and Virginia. (The Charlotte Observer)

• RIP Johnny Jenkins, guitarist who played with Otis Reading. (Hollywood Reporter)

Posted by Glenn at 8:39 AM | Link
|Brick-And-Mortor Retail||Research||Universal Music Group|

Normally an article about an independent bookstore in Berkeley, CA would catch Coolfer's attention, but it was an article about the legendary Cody's, and it does show how retail has evolved in recent years. Yesterday's NY Times article "In Berkeley, a Store's End Clouds a Street's Future" is noteable for two reasons.

First, the decline of independent bookstores is a trend that is also seen in the music business. There are roughly half as many indie record stores as there were at the end of the '90s. On Berkeley's Telegraph Avenue, a store that symbolized the city's anti-corporate climate finds itself struggling as the communty's demographics change.

But the main reason the article caught my attention is because Telegraph Ave is home to two legendary record retailers, Amoeba and Rasputin. Amoeba co-owner Marc Weinstein, who told the Times the store has lost about a third of its business in recent years (which almost exactly mirrors the skid in the sale of recorded music, by the way), said of the area, "I mean, you can't buy a house for less than $1 million near the university. And if you're rich, you don't want to be on Telegraph."

Posted by Glenn at 5:30 PM | Link
|Brick-And-Mortor Retail|

Best Buy, one of the country's largest music retailers, announced its earnings for the first quarter of fiscal 2007. Revenues were up 14% to $7.0 billion.

Most relevant to the music industry is this sentence, on page 11 of the company's 8K filing:

"A low -- single -- digit gain in comparable store sales of gaming hardware and software was more than offset by expected declines from CDs and DVDs."

The broad category of "Entertainment Software" accounted for 18% of revenue, down from 20% last year. Fewer CDs are being sold -- even though advertisements tout below-cost prices -- but there was double-digit growth in the sale of MP3 products (including players and accessories).

Posted by Glenn at 11:41 AM | Link
|Brick-And-Mortor Retail|

Yes, the industry needs to embrace new forms of digital distribution and work around piracy and find ways to grow revenue, but what about a scenario in which the country's biggest music retailer expands its product offering? It could be a goldmine for some labels.

Billboard's Todd Martens and Ed Christman wrote an article about a possibility that must have some labels tingling with excitement: Wal-Mart may look to end its band on stocking explicit albums. Sources told Billboard the retail giant has shown signs of loosening its policy that does not allow its stores to stock titles that carry a parental advisory sticker. It is bringing in urban lines in other product categories, and there are new executives that may initiate the changes.

"We've certainly heard that Wal-Mart has looked into including stickered product in their assortment," one label source told Billboard. A distribution exec, though, said, "There is no truth to it."

Spin.com covered the story as well and got a VP of TVT to comment. "Their entry into uncensored product will mean an increase in sales for titles that were previously only available in their stores in an edited form," said Paul Burgess.

Wal-Mart requires labels to voluntarily sticker albums that have explicit content, and it does not carry stickered albums. It requires an edited version to be produced in order to stock the album.

Previously on Coolfer:

• Evanescence slips a dirty word into Wal-Mart.
• Wal-Mart goes gold with Garth Brooks' box set.
• Wal-Mart's policy on carrying explicit content.

Posted by Glenn at 11:03 AM | Link
|Brick-And-Mortor Retail|

Slate's Tyler Cowin has an article titled "What Are Independent Bookstores Really Good For?" that works almost equally as well for a discussion of indie retail. Cowin actually throws in a comparison to music in the article, which takes on the premises in Laura J. Miller's recent Reluctant Capitalists: Bookselling and the Culture of Consumption, which argues against "excess commercialization and the proliferation of chains."

"Our attachment to independent bookshops is, in part, affectatio -- a self-conscious desire to belong a particular community (or to seem to). Patronizing indies helps us think we are more literary or more offbeat than is often the case. There are similar phenomena in the world of indie music fans ("Top 40 has to be bad") and indie cinema, which rebels against stars and big-budget special effects. In each case the indie label is a deliberate marketing ploy to segregate, often artificially, one part of the market from the rest. But when it comes to providing simple access to the products you want, the superstores often do a better job of it than the small stores do."

Cowen argues the the real change in the book market isn't big vs. small or indie vs. corporate, but a change in consumer behavior that the music business can appreciate: "the reader's greater impatience, a symptom of our amazing literary (and televisual) plenitude." The album format is to music as the long, serious novel is to books: Less popular.

Posted by Glenn at 5:03 PM | Link
|Brick-And-Mortor Retail|

Mixtapes a popular topic with the New York press this week. The Village Voice's Robert Chrisgau has an ode to the mixtapes he's been listening to lately. "Explorations in Mixtape Nation" is about the "illegal" mixtape, "an unofficial recording you can buy for seven bucks both online and in clandestine geographical locations." He later adds, "Need I add that the RIAA has no idea what to make of them?"

What Christgau's article misses in policy analysis, it makes up for in enthusiasm for the format. To get an idea as to what the RIAA makes of mixtapes, read this op-ed by record store owner Alan Berry in today's NY Times (seen here at the International Herlarld Tribune, which may go live at the Times' website later today): "Meanwhile: The Tale of the Tapes," which tells of Berry's arrest for selling mixtapes at his Indianapolis store. He asks some very good questions about mixtapes, the position of the RIAA and how law enforcement can penalize the sellers of items that are obviously important to and endorsed – though not explicitly -- by virtually all hip hop labels.

"But under the current system, the only people who risk punishment are the retailers. I know about this firsthand. In August 2003, police raided my Indianapolis record stores and seized thousands of dollars worth of mixtapes. I was charged with 13 felonies, spent a night in jail and ultimately lost my business. Ten months later, I pleaded guilty to one misdemeanor charge: selling CD's that did not conspicuously display the address of the manufacturer. If the industry truly wanted to stop mixtapes, record companies should simply stop providing tracks to DJ's. The industry knows, of course, exactly who's making these tapes; the industry needs these tapes to be made. Why, then, are tax dollars being spent on arresting people who, by distributing mixes, are doing nothing but promoting upcoming hip-hop releases?"

Great question.

Posted by Glenn at 4:08 PM | Link
|Brick-And-Mortor Retail||Music Criticism/Writing|

Warner Music Group's Edgar Bronfman is often heralded as a digital music maverick. Yesteday's announcement will create more attention and adulation for him and his music company.

WMG announced that it is working with digital company B3 to provide indie music retailers a way to get online and sell digital downloads. The retailers are members of three indie music retail coalitions: Coalition of Independent Music Stores (CIMS), Association of Independent Media Stores (AIMS) and the Music Monitor Network. WMG will supply the content and licensing. B3 will provide the infrastructure.

The plan is to offer digital bundles (not bundles as in an e-label bundle, rather albums with added value), downloads of in-store performances, downloads from local artists and coupon-based promotions.

Indie retailers have wanted a level playing field, says AIMS' Eric Levin. "What we wanted was an opportunity to sell the same items as our online competition in the same time frame. At best, we'd hoped for a slow-down in the preferential treatment that other major online music stores have received from the music industry; we did not expect the gift of a digital delivery solution for all of our stores."

Continue reading "Digital Downloads Meet Indie Retail" »

Posted by Glenn at 9:44 PM | Link
|Brick-And-Mortor Retail||Digital Music||Warner Music Group|

• Muze has purchased the U.S. operations of digital media company Loudeye for $11 million. (Reuters)

• Another week, another rumor about EMI and Warner Music Group. This article says EMI is likely to make a takeover bid for WMG "within weeks." (Sharecast)

• Napster has launched a new, web-based and mostly free version of its music service. Each song can be streamed up to five times. Good news for bloggers: "It seems pretty easy to paste Napster Links to any personal page, a wiki, or an email." (Jupiter Research, via paidContent)

• The Stinkweeds store in East Valley, Arizona, will close its doors in about a month. The Phoenix location will remain open. Stinkweeds is a member of the Alliance of Independent Music Stores (AIMS). (Arizona Republic)

Posted by Glenn at 9:11 AM | Link
|Brick-And-Mortor Retail||Digital Music||Napster|

• Toucan Cove Entertainment has signed a worldwide distribution deal with Universal Republic. The label's next album is by The Muckrakers. T(PR.com)

• eMusic anc Circuit City have teamed up to offer a download starter kit that will be sold in Circuit City stores. The kit has the physical aspect of a gift card but comes packaged in a CD jewel case and includes a "how to" download guide, collector's cards of independent artists and information on eMusic's features. For $14.99 the kit offers 65 downloads per month (which goes for $15 per month) and 25 free downloads for signing up.

• Skype, the web-based phone service, has a deal from Warner Music Group to sell music on Skype's music store. Which music store? This one. (Forbes.com) If you're like me and wondering how this would work, ZDNet has a blog post that explains some scenarios. (ZDNet)

• Warner/Chappel names Bob Bortnick Senior Vice President, A&R. (Press release)

• Phil Walden, an industry veteran and head of Capricorn Records, died on Sunday. (Tennessean.com)

Posted by Glenn at 8:40 AM | Link
|Brick-And-Mortor Retail||Music Industry||Universal Music Group||Warner Music Group||eMusic|

Ghostface Killah's new album Fishscale is two dollars higher than the normal $9.99 album price at iTunes. Still, $11.99 isn't bad given the album has 25 tracks -- though six of them are skits (and one of those lasts only six seconds).

But...The CD is currently $6.96 at Amazon.com, $6.99 at Best Buy and $7.99 at Circuit City. TowerRecords.com is way up at $9.99.

That digital revolution might come a bit later than originally thought.

Posted by Glenn at 1:47 PM | Link
|Brick-And-Mortor Retail||Online Stores/Services||iTunes|

Lynell George, senior writer at the LA TImes' West magazine, writes of her years spent in record stores in an op-ed titled "What I Learned at the Record Shop." Yet another record store eulogy at the LA Times, which has given a lot of ink to the passing of an era; LA has recently lost Rhino and Aron's, and the city's music afficianados are in a deep state of mourning.

"I invested in these places — not just money, but time. And then, like the changer arm lifting and the stereo switching off, my habits changed. I somehow slipped out of my routine. I eased up on my record store fetish; I invested elsewhere.

And maybe that's why I didn't shed a tear or show up to mourn when Rhino Records and now Aron's (both long relocated from former addresses) began shutting their doors for good in the last few months. I'd already said my goodbyes — to old locations, to overpowering memories, to bins that had long since been picked over. I'd seen the shift coming, the back-stock thinning, all manner of new media — DVDs and DATs — taking up shelf space. I couldn't stomach the emptying bins, the death of an era.

It wasn't me that changed, it was the business model: a general slump in record sales (down 7% last year, according to SoundScan), a great big uptick in digital downloading, a rush to shop online. Statistics underscore what our eyes already tell us: The Amoebas stay in business, but there are only about half as many independent record stores as there were 10 years ago countrywide."

Previous Coolfer posts on LA record stores:

• Amoeba Expands While Aron's Closes
• The Further Decline of the Record Store

Posted by Glenn at 12:32 PM | Link
|Brick-And-Mortor Retail||Music Industry|

• Most everybody knows that Pearl Jam has a new album coming out May 2nd on J Records. Many have surely heard the new song, "World Wide Suicide." Opinions vary on the urgent, no-frills lead-off single. Here are a few links so you can hear and judge for yourself. Here is the e-card. Here's the band's MySpace page. Get all your Pearl Jam news at the Pearl Jam Rumor Pit. If you pre-order the self-titled album you'll get a bonus disc of a 1992 New Year's Eve show at the Academy in NYC as well as a free download of the album "one minute after it becomes available in the U.S." (so says the site).

P.S. Check out the guy who got the www.myspace.com/pearljam domain. The band's page is at www.myspace.com/tenclub, named after its fan club.

• Today's new release day, and AOL Music's Full CD Listening Party has a slew of albums available for streaming: Dave Chappelle's Block Party, Willie Nelson's You Don't Know Me, Hard-Fi's Stars of CCTV, SheDaisy's Fortuneteller's Melody and a Back to Mine mix by The Prodigy's Liam Howlett. Check out Goldfrapp's Supernature, the duo's third album that is finally available after the usual early UK release and dollar-weakened imports.

Posted by Glenn at 7:22 PM | Link
|Brick-And-Mortor Retail|

Sacramento Bee business writer David Barton gives us a reason to read the Bee other than Kings coverage: a frontpage article on Tower Records founder Russ Solomon. It's more a profile on the man than his company, since Solomon wouldn't comment on the current state of Tower Records (recent bankruptcy filing, current search for buyer). Barton captures an optimist who sees today's changes in the music business as part of an ongoing evolution of formats, music styles and retail landscape.

Jim Urie, president of Universal Music and Video Distributing, had many compliments for Solomon and Tower Records.

"'Tower Records is the best brand that has ever been or probably ever will be established in music retailing. And I think that there is no Web site with the clout or reach or credibility that Tower has. They were the first, and they're still the best. Specialty retail is going to continue to decline. But where Tower is better off than the recently departed Sam Goody chain is that they have this huge breadth of catalog, and what the consumer is saying is, they want the depth of catalog.'"

And Solomon is adamant about the future of physical product.

"'People who want full albums are not in the world of digital downloading. It gives them pleasure to own the album, the same way people get pleasure out of keeping a book after they've read it. It feels good to have it on the shelf at home. ... There will be a future to the packaged part of the business'."

But he did have harsher words for labels: "The business is in the hands of the record companies. But they won't do anything. They refuse to take any substantial chances."

Posted by Glenn at 11:33 AM | Link
|Brick-And-Mortor Retail||Music Industry|

As iTunes hits the one billion song mark and music retail's future is celebrated comes news of Tower Records' move to find a buyer. Ed Christman's article at Billboard.biz reveals that the chain -- a rare powerhouse national retailer that specializes in selling music -- has hired an investment banking firm to find a suitor for the 90-unit chain of stores.

"Houlihan Lokey, based in Los Angeles, has been working for the chain in an advisory role since at least last fall. Initially, its task was to work with Tower senior management on a value-creation enterprise, aimed at boosting the chain’s worth. But some time in the last two months, Tower’s directors approved the hiring of an investment bank to shop the company, and Houlihan Lokey won that assignment."

Christman compares Tower's peak years with its current sales. Before it filed bankruptcy, the chain's annaul sales were nearly $1 billion. Now sales are around $450 million to $500 million.

In May of 2002, Tower sold its Japenese operations -- 51 stores -- for $122 million.

Posted by Glenn at 7:52 AM | Link
|Brick-And-Mortor Retail||Music Industry|

The changing retail climate was altered again as Musicland Holding Corp. filed for Chapter 11 bankruptcy yesterday. The company has over 800 stores -- physical and online -- under the names Sam Goody, Suncoast Motion Picture Company and MediaPlay.com. The company announced last month its plans to close the Media Play chain.

Musicland last made a profit in 2001, claims this AP article. Sales have fallen to an estimated $1.1 billion in 2005 from $1.89 billion in 1999.

Sam Goody is the ninth largest music retailer in the country, right behind Tower Records and ahead of Borders.

Posted by Glenn at 8:39 AM | Link
|Brick-And-Mortor Retail||Music Industry|

More sign of the times: Los Angeles is losing another legendary record store. A few months ago Aron's announced it was closing its doors. Now Rhino Westwood, the precursor to the Rhino label, is closing on Thursday. The store's lease expired, explained LA Times writer Geoff Boucher, and founder Mark Foos decided to close the doors.

What caused Rhino and Aron's to fail? The reasons are many.

"The causes of death for Rhino and Aron's are numerous and unsurprising. Album sales are in decline, music consumers continue to migrate to music downloading and CD-burning. The loss-leader approach to CD sales at giant chains such as Wal-Mart and Best Buy have smothered mom-and-pop outfits. And when prerecorded CDs are sold, more and more often it's through new-approach merchants that are as varied as Amazon.com and Starbucks. Closer to home and to the heart, a new competitor arose from within the indie ranks with the 2001 arrival in Hollywood of Amoeba Records, the Bay Area brand-name that opened a colossal indie store on Sunset Boulevard that siphons offbusiness from stores far and wide."

Bucher hit the nail on the head. Rather than tick off the main culprits given by the RIAA in every press release and interview soundbite, he shows the many facets of the music retail market. Piracy is a problem for all retailers, and so is the adoption of digital music. More than anything, indie retailers in particular have been hurt by the predatory pricing of mass merchants. For Los Angeles retailers specifically, the arrival of Amoeba has posed a problem some obviously couldn't overcome.

Posted by Glenn at 7:49 AM | Link
|Brick-And-Mortor Retail||Music Industry|