Music GroupsThe Wall Street Journal has an article on Amazon.com's scant digital sales thus far (estimated at $100 million) even though it has invested an estimated $300 million over three years.
That article, and a post at Silicon Alley Insider, got me thinking about Amazon.com's MP3 sales and how they compared to those of iTunes.
First, I'd like to point out that iTunes did not sell two billion tracks last year as Silicon Alley Insider wrote today. Not in the U.S. and not globally (don't forget that there are many iTunes stores around the world). The numbers I have seen in the media peg iTunes' global 2008 sales at 1.7 billion. (This Billboard.biz post by Ed Christman has that estimate.) And since many of those downloads were from albums, it certainly did not sell two billion or 1.7 billion tracks at $0.99 each. (Note also that iTunes charges different amounts in different countries.)
Different versions of the iTunes store have been in multiple countries since mid-2004. Amazon.com didn't even announce an international rollout of its MP3 store until late Jan 08. So, as best we can, we should compared iTunes' U.S. sales to Amazon.com's MP3 sales.
According to Soundscan (numbers found in this post at Listening Station), there were 844 million single track downloads in the U.S. in 2007. There were an additional 50 million album downloads. If you count an album as ten tracks, that comes out to 1.344 billion downloads in the U.S. in 2007.
If iTunes has 80% market share, that means iTunes sold 1.075 million tracks in 2007. It has been reported that all iTunes stores sold 1.7 billion tracks in 2007. That puts iTunes' U.S. share at 63% of global if you assume it has 80% of the U.S. market, or 55% of global if you assume it has 70% of the U.S. market. (Billboard.biz estimated a 70% share for the U.S. in 2007.)
The Amazon.com MP3 store launched in late September 2007. So Amazon.com has been in the game for less than seven months. It's not going to compare well to iTunes in such a short period of time (regardless of the current Pepsi promotion). It does compares well to iTunes' first seven months of operation, in which it had only U.S. sales. iTunes was launched in late April 2003 and sold 30 million tracks by the end of the year.
NPD said iTunes' U.S. sales were 10x Amazon.com's in Feb 08. I figure iTunes U.S. did at least 100 million in Feb 08 (given last year's total and a modest 30% increase). At that multiple, Amazon.com did 10 million. With a small amount of growth throughout the year, that could total 150 million in 2008. Still small versus iTunes' U.S., which should do 1.2 billion to 1.3 billion in 2008.
NPD data (as reported in this Ars Technica article) suggests Amazon.com's MP3 download store is expanding the digital music market.
From NPD:
The fact that Amazon’s early growth does not appear to be at the expense of Apple iTunes is a healthy indication that the digital music customer pool can expand into new consumer groups who have not yet joined the iTunes community. Based on US CD sales, Amazon is among the largest sellers of physical music and boasts a substantial and loyal buyer base—many of whom may not be in the iTunes market sweet spot.
NPD noted that iTunes and Amazon.com's demographics differ and only ten percent of Amazon.com users had previously bought music through iTunes. There are other demos that iTunes has not reached very much. Its percentage sales of country, R&B, hip hop and Latin are well behind its strengths in indie rock, soundtracks and classical. For competitors, the laggards represent opportunities.
Dropping DRM was the right thing to do, and this NPD report offers proof. Not because it was going to instantly save the record industry, but because it would allow the market to grow, encourage new stores and services and entice entrepreneurship that had previously cringed at the thought of protected Windows Media files.
I'll post a link to this today since tomorrow's posts are going to be dedicated to only physical formats. (So much talk about digital and mobile, yet CDs are still king and vinyl is making a sort of comeback. Yes, tomorrow will be Physical Friday.)
An NPD memo reportedly has iTunes overtaking Wal-Mart as the top music seller in the U.S. NPD has been tracking a "sharp increase" in downloads over the past several months. (Oh, you mean that "sharp" 28.7% year-over-year increase in single track sales, which pales compared to 51.9% at this point last year?)
What a perfect storm: iTunes overtakes Wal-Mart, and Wal-Mart is pressing for improved wholesale prices. The transition to digital is natural, expected and inevitable, but labels need to protect their cash cows during the transition. My advice is to play ball with Wal-Mart. Any lost shelf space, any reduction in inventories, will take away potential sales to those tens of millions of Wal-Mart shoppers who still prefer to buy CDs.
Billboard's Ed Christman got out his calculator and tried to figure out just how much money Apple makes from iTunes. A 30% margin and music (a Billboard estimate) gives a gross margin of $570 million. For expenses, Christman used Amazon.com as a benchmark. This does not strike me as a good idea given the different operating structures of the companies (e.g., Amazon.com has warehouses, iTunes does not) and Apple's propensity to spend money on marketing, but it will work for a rough estimate. Christman's two best guesses ranged from $161 million to $390 million of operating profit. (Depreciation and amortization are not included in operating profit.)
Another estimate was made last year by PacificCrest analyst Andy Hargreaves. He estimated per-song revenue at $0.69, network fees at $0.05, operating expenses at $0.05 and credit card fees at $0.10. That comes out to a 10% operating margin. On music sales of $1.9 billion, that gives us an operating margin of $190 million.
Apple and two major music groups will begin their hearing today concerning a European Union claim that iTunes' pricing across different European territories hurts British consumers. iTunes, which insists it has no choice in the matter due to label and publishers' licensing demands, does not let Brits shop at the iTunes stores of other countries. Other consumers in the Eurozone pay €0.99 while Brits pay 79 pence (about $1.59). Consumers in Denmark pay the equivalent of €1.07 ($1.50) per track. Americans, as most of us know, pay $0.99 (€0.71, or 49 pence) per track.
Labels say they have no influence on how Apple sets pricing at iTunes. Lawyers for Sony BMG and Universal Music Group will be on hand. EMI, Warner Music Group and prominent indies will sit this one out.
The European Union began its probe into iTunes pricing in early 2005.
Article at Times Online.
• Album sales dropped 3% last week and were 14% lower than the same week last year. For the year, album sales are down 14%. Last week's #1 album was a debut, UGK's Underground Kingz (Jive). With sales of 160,000 units, it was the only album to break the 100,000 mark. Digital track sales were flat last week and were 45% higher than the same week last year. For the year, digital track sales are up 48%.
• Everyone is always looking for a sign that the Beatles' catalog will be released digitally, and we're getting warmer. John Lennon's solo catalog -- sixteen albums -- is now available at iTunes. (Sydney Morning Herald)
• A year-long EMI marketing project will be handled by Saatchi & Saatchi. Well, music is marketing. (AdWeek.com)
• Sirius Satellite Radio inked a deal with Sonos that will allow subscribers to stream Sirius at home through Sonos' home music systems. A 30-day trial will cost subscribers an additional $2.99. Only 80 Sirius channels are available, and the home streaming service will be available only to U.S. subscribers. (Hollywood Reporter)
• Here's an idea: An underage music festival held in the London. The Underage Festival was open for people aged 14 to 19 and hosted 37 bands on four stages. "Corporate sponsors have been quick to embrace the trend, and all the hard parts — staging, logistics, security — have been arranged and paid for by the likes of MySpace, Converse and BBC's Radio1. Seizing the moment, UK indie music company Mute Records has also launched a label, Irregulars, pitching new, young talent at a new, young market, with (event organizer Sam) Killcoyne on board as a talent-spotter." (Time)
• Hal Hassel is moving from CMT.com to VP, Consumer Marketing at echomusic. (Music Row)
• Music bloggers, here's a topic for conversation: Spoon's Ga Ga Ga (Merge) came out the same week as Interpol's Our Love To Admire (Capitol). Currently Spoon sits at #68 and has sales of 100,000 in five weeks. Interpol is at #85 -- and dropping -- and has sold 129,000. Spoon is on an indie, Interpol is on a major. If nothing else, this makes for a good addition to the "indie or major?" debate.
• Jeff Leeds has an article on very overlooked marketing tools: Mobile phones and text messaging. It's not the sexiest medium in the world, but there's money to be made by artists, promoters and artists. (New York Times)
• Universal Music Group will buy V2 Records from Morgan Stanley for $14 million (though reported price tags vary). The V2 roster includes Brit legend Paul Weller, the Stereophonics, Elbow and Bloc Party. The deal does not include V2 North America, which was sold to Sheridan Square for $15 million last year. The label merged with Artemis and had been demoted to a catalog-only label. (Reuters)
• The New York Post has an article on the collaboration between Epic Records and Koch Records. "Lacking a dedicated staff to market the songs specifically to hip-hop/ R&B radio stations and music video outlets like BET, Epic hired New York-based Koch, home to rappers including Jim Jones, UNK and DJ Khaled, to do it for them." (New York Post)
• Sanctuary Group chairman Robert Ayling, as well as James Wallace, Tina Sharp and John Preston, are no longer on the company's board of directors. (Billboard.biz)
• EMI has a deal with Arvato Mobile that will allow Arvato-powered carriers (T-Mobile, Swisscom, Mobilkom) to offer EMI videos to mobile phones or PCs. Content such as videotones, wallpapers and full-track downloads are also part of the deal. (Mobile Entertainment)
• A profile of new industry site The Daily Swarm. "We all saw that there was a ton of music-business information scattered around the Web, but there wasn't really one place that was bringing it all together." Side note: Coolfer will turn four years old this month. Thanks for reading. (Chicago Sun-Times)
• According to the BPI, UK music sales in France and Germany hit a four-year high last year. UK artists represented 23 of the top 100 albums in Germany. (BBC News)
• An interview with Guy Fletcher, head of music publisher MCS. "The internet is fast becoming a major platform for delivery of music in many different contexts. However, the advent of internet social networks, peer-to-peer file sharing, free downloading, etc. have created communication systems whose operators are generally unwilling to enter into licensing agreements with collection societies making it difficult, if not impossible for them to keep track of the online use of our copyrights." (The Telegraph)
• EMI's Blue Note Records is going to change its website to incorporate social networking and direct-to-consumer downloads. (The Register)
• Apple now offers iTunes widgets. (My iTunes, via Digital Music News)
• 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)
• Terra Firm again extended its bid for EMI. It has just over a quarter of shareholders on board. (Wall Street Journal)
• The Recording Industry Association of Japan (RIAJ) released sales figures for the first half of 2007. CD sales were down 15% and the value of the sales were down only 7%. No data was released for digital download or mobile sales. (RIAJ, via Digital Music News)
• This week, Apple will start selling Spanish language iTunes gift cards. The prepaid download cards will first be sold in Best Buy and Target, then Wal-Mart and Safeway. (Brandweek)
• The U.K. Office of Fair Trading has cleared Universal Music Group's purchase of Sanctuary Group. (Billboard.biz)
• Jim DeRogatis on the demise of the print magazine Punk Planet. (Chicago Sun-Times)
• Newsweek interviewed Alexandra A. Seno, chairman of Decca Label Group, the classical division of Universal Music Group. The talk centered around how Decca has found success in the digital arena. Said Seno, "Universal Music’s classical labels have had a great deal of success using digital because it presents a new way for us to present classical music and the younger generation of artists." (Newsweek)
A friend tipped me off to Sara Bareilles, who recently got into iTunes' top ten titles with her debut, Little Voice. The Wall Street Journal's Jamin Brophy-Warren noticed Bareilles as well and uses her as a case study for the benefits of variable pricing.
Little Voice sold 14,000 units at iTunes in its first week of release. "Ms. Bareilles says the lower price was probably responsible for her strong digital showing," wrote Brophy-Warren, "which accounted for around 80% of her total sales." The album was part of iTunes "Next Big Thing" series of bargain-priced albums.
What Brophy-Warren surprisingly failed to mention in the article is that Bareilles' track "Love Song" was the free iTunes "single of the week" at the end of June. It was no doubt the combination of the free single and the low album price that helped push Bareilles to the top of the iTunes chart. A low album price alone would not have done it.
A free single and a cheap album is a winning combination. Unfortunately for labels and artists, there is a finite number of songs that can be anointed free singles of the week at iTunes. The "Next Big Thing" campaign is having an impact on participating artists, though not enough to push the albums into the top ten. Digital sales of Great Northern's Trading Twilight For Daylight, for example, rose 631% last week, while Mozella's I Will jumped 419%.
• Album sales dropped 1% last week and were down 3% versus the same week last year. For the year, album sales are down 15%. Digital track sales were dropped 2% last week and were 47% higher than the same week in 2006. For the year, digital track sales are up 48%.
• The Orchard is planning a merger with Digital Music Group. Said The Orchard's Greg Scholl, who will continue to lead the company, "This company has been uniquely designed entirely around the exploitation of digital music rights. We’ll have more songs for sale so we’ll be a bigger partner for the retailers we supply and we’ll have more leverage in the market." (New York Times, via Digital Music News)
• Universal Music Latino has launched Rebel Music Group, a joint venture with Jack Gonzalez of rap group Psycho Realm. (Press release)
• The Los Angeles Times has a good recap of the copyright infringement lawsuit involving Avril Lavigne's song "Girlfriend." (Los Angeles Times)
• The Copyright Tribunal of Australia has issued an increase of music licensing fees for recorded music. The dance music community has taken notice. "...the fees paid by venues that play recorded music will rise from its former flat rate of seven cents per patron per song, to a rate that can go as high as $3.07 per person depending on the scale of the event. Breaking it down, clubs will now pay a licence fee of $1.05 a person based on the club’s capacity, which means that a club that holds 1000 people for instance will pay $1100, even if the venue is only half filled for the evening." (Same Same)
• iDupe is an application that finds duplicate and dead tracks in your iTunes library. (The Mac Observer)
• BusinessWeek.com's Olga Kharif has a good overview of the recorded music industry's attempt to get terrestrial radio to pay royalties. "Aside from the occasional royalty scuffle across those decades, the music industry has always been happy to let radio stations play songs for free, treating it as a necessary marketing expense for the songs and albums they wanted listeners to buy. ... But with more music lovers consuming their passion over the Internet and through satellite broadcasters XM Satellite Radio (XMSR) and Sirius Satellite Radio (SIRI), the free exposure offered by FM and AM radio is no longer quite so valuable." (BusinessWeek.com)
• iTunes is sale pricing albums at $5.99 to $6.99 under the "Next Big Thing" banner. (Digital Music News)
• The Economist has an article on the new approaches of old music companies. "Record labels have come up with a remedy: the '360° contract'. Instead of settling for a cut of CD sales, they increasingly offer artists broader contracts that encompass live music, merchandise and endorsement deals. Such deals, also known as multiple-rights or all-rights contracts, are particularly important in regions with rampant CD piracy, such as Africa, Asia and Latin America." (The Economist)
• U.K. marketing firm MAMA Group has put it a bid to acquire six London concert venues from Mean Fiddler. (Billboard.biz)
• AllofMP3.com and MP3Sparks.com are out of business, but now there's word that customers of those two download stores can purchased music at Alltunes.com. (Slashdot)
• Nashville might be looking at country's 29.6% slide in album sales at 2007's midpoint. That drop is certainly larger than the overall album drop of 15%, but it was bound to happen in a year that followed smashes by Rascal Flatts and Carrie Underwood. MusicRow.com has a graph that compares the big country debuts of 2007 with the first-week sales of those artists' previous releases. (Music Row)
• Lala.com's online streaming service, which debuted to much fanfare a few weeks ago, is down for the count. Said Lala's John Kuch, "Many of our unique, forward-looking features have generated significant consumer excitement but have also generated an overwhelming load on our systems. To avoid falling short of consumer expectations, we're holding off on upgrading and returning some aspects of our offering until we can provide a fuller catalog that meets the demand of consumers and includes music from a broader cross section of the industry." (Ars Technica)
• Any implications on selling music online? Jupiter Research says social networking sites have little impact on where people shop online. (Silicon.com)
• iLike.com has a fun "name that tune" game called Challenge. I played once, got 17 out of 20 and made the rank of Music Intern. My advice is not to rush the songs you're not sure about. (iLike Challenge)
Universal Music Group's decision not to sign a long-term contract with iTunes has been seen by some as an indication that UMG is seeking an upper hand in its goal for variable pricing at iTunes. Jupiter's David Card wrote at his blog that variable pricing will be good, but the time is not right.
"There are at least two sides to this story. My Jupiter colleague Mark Mulligan is more excited by variable pricing than I am, but it is inevitable, and will eventually be a good thing for the market(place) -- digital distribution allows the fluidity to match supply with demand better than physical distribution. But Apple has a point, too -- it's still relatively early in digital music, and simplicity is an easier selling point. That, and the ability to even buy singles, which, though scary to artists and labels raised on album-oriented rock, is probably the natural order of pop music. And our surveys still suggest 99 cents is a still a sweet spot."
Without market research to back up my belief, I'm of the opinion that consumers are ready for variable pricing. If they can navigate the iTunes installation process, consumers are ready for a world in which not all songs have the same price. (It some research I've seen, consumers say price takes a back seat to convenience when buying digital music. If the purchase process is convenient, I think variable pricing will be good for digital music. Besides, sales are slowing and could use a kick in the pants.) Labels' attachment to the album format may even wane if prices for single tracks increase in singles-dominated genres like hip hop and pop.
Last night the Wall Street Journal posted an article that said Universal Music Group will not renew its contract with iTunes. Instead of a long-term deal, UMG will have an "at will" agreement with iTunes, kind of like a month-to-month lease. The expectation is that UMG will work on a short-term contract with iTunes and will not pull its catalog. The WSJ's Ethan Smith and Nick Wingfield theorized that UMG could give UMG "more flexibility in its dealings with competitors to iTunes."
The New York Times' Jeff Leeds has an article similar take on the hold out. "By refusing to enter a long-term deal, Universal may continue to press for more favorable terms from Apple," and added the theory that UMG could "explore deals to sell its catalog exclusively through other channels." Another impetus for hard-line tactics is Unless UMG is going to drop DRM and sell its catalog through Amazon.com's upcoming download store or eMusic, any deal with an iTunes competitor would lock out the most prized group of digital consumers in the country: iPod owners.
Labels would like Apple to license its FairPlay technology so other download stores will be iPod-compatible. But we've seen Apple's opinion on how labels and competitors can become compatible with the iPod. Steve Jobs' solution would be for UMG to drop DRM, a strategy I doubt UMG will adopt in the near term.
• iTunes is now the third largest music retailer in the U.S. With 9.8% of the market, the leading music download store passed Amazon.com and ranked behind Wal-Mart (15.8%) and Best Buy (13.8%). Showing that not even market research experts have moved beyond the album format, NPD counted units sold, not total value of sales. To account for iTunes' single sales, NPD counts every 12 tracks as one album on CD. (AP)
• In order to reduce its exposure to the declining recorded music business, the German division of Sony BMG has created a joint venture with Microsoft, called Comedy.de, and has a long-term, exclusive contract with a television product to sell its comedy series on DVD. (Thomson Financial)
• BurnLounge, under fire from the FTC for its business model, announced it will simplify its business model and eliminate the network marketing element -- called a pyramid scheme by some critics -- and will provide greater benefits for its users. (Press release)
• Some orchestras are using younger, hipper musicians like Ben Folds and The Decemberists to lower the average age of their audience members. (New York Times)
• Rock band The Donnas have formed their own label and have a joint venture with Sony BMG's Redeye Distribution. (Update: I corrected myself after I saw that I typed RED Distribution. After I replaced it with Redeye, the correct distributor, I accidentally left in Sony BMG. My apologies.) In what looks like a fairly weak deal for a band with its own label, The Donnas' label will get a 50/50 split and co-ownership of the masters. A deal that gives Redeye that much of the revenue and some ownership of the recordings indicates the band is not assuming a great deal of the financial risk. Still, it's as artist-friendly as deals get these days and may be a model for others. (Billboard.biz)
• Album sales were up 5% last week but were 8% lower than the same week last year. For the year, album sales are down about 16%. Digital track sales were up 2% and were up 40% year over year. For the year, track sales are up 49%.
• iTunes' entry into the (possibly free) live music business will allow it to sell downloads of the performing acts at iTunes. (Hollywood Reporter)
• U.K. download service 7digital has beefed up its service: DRM-free MP3s fro EMI, video downloads and online music lockers. (The Guardian)
• PassAlong Networks is getting EMI's DRM-free MP3s for stores (such as Trans World's download store) powered by its StoreBlocks technology. (Press release)
• At the Digital Hollywood conference, a panel discussed the "impossibility of the packaged product" and changing priorities in young consumers' budgets. (Digital Music News)
• The private equity train keeps on rolling. British company Chrysalis is reportedly in talks with a private equity group over the possibly sale of its radio division, Heart 106.2. (Reuters)
iTunes US started offering unprotected AAC files today for EMI artist downloads. iTunes Plus offers what EMI calls premium downloads. Engadget runs us through the new store and gives a step-by-step of the simple process of upgrading your EMI purchases.
• 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)
• According to The Telegraph, two American hedge funds, Fortress and Cerberus, are planning to jointly bid on EMI at a price below the $4.1 million Warner Music Group bid earlier this year. They hope EMI will accept a sub-WMG bid because of the lower level of regulatory scrutiny they expect to come with their bids. The report says One Equity is still looking at EMI but will not join the bid with Fortress and Ceberus. Permira is unlikely to join in the bidding. (The Telegraph)
• Sony BMG, which recently rid itself of its BMG music publishing arm, plans to get back into the music publishing game. Said chief executive Rolf Schmidt-Holtz, "We will do everything to re-enter the market for music publishing. ... Our shareholders see that a music company that has a music publishing business is more attractive" And why not? The revenue is far more less volatile and risky than that in the recorded music world. (Financial Times)
• The price for a non-DRM track at the New Zealand iTunes store will carry a 39% premium. A DRM track costs NZ$1.79 and a non-DRM track will carry a NZ$2.49 price tag. The U.S. iTunes store will charge only a 30% premium for the non-DRM version. (PC World NZ)
• The New York Post has a decent article on how labels are looking to ad-supported business models. Nothing new there, but at least some execs went on the record with their thoughts. (New York Post)
• Warner Music Group has signed a worldwide publishing deal with Destiny's Child member LeToya that covers her 2006 self-titled album and future compositions. (Press release)
• Vickie Winans' Destiny Joy Records has signed a distribution deal with Central South Distribution. (BreatheCast)
• Digital Music News reported the names of some Warner Music execs who have or will leave their posts: Nikke Slight, Atlantic SVP of New Media, and Robin Bechtel, head of new media at Warner Bros. Records. Those departures have led to the entry of Jack Isquith, formerly with AOL Music. Isquith will report directly to Warner Bros. chief executive Tom Whalley. (Digital Music News)
• PassAlong Networks announced version 2.0 of freedomMP3. The new version adds track-based rules that allow rightsholders to predetermine how many times the song can be moved off a PC. (Press release)
• EMI Music UK announced a strategic partnership with TLC Marketing to launch a download royalty card that will be used in third-party promotions. TLC has brand partnerships with Samsung, First Direct and British Gas. The promotion will allow consumers to download songs from an EMI owned and branded website. (Creative Match)
• With every concert ticket purchased online, Ticketmaster is giving away a free, ten-song digital sampler. Between Memorial Day and Labor Day, each ticket purchased will get one free download at iTunes. (Press release)
• A report by eMarketer finds that the music industry as a whole is "healthy" and "growth in many other areas will more than make up for the shortfall" in falling CD sales. Growth in music publishing and live music will help the industry grow at an average annual rate of 2.8% through 2011. (Press release)
• Guitar Center announced its Q1 2007 results. Net sales increased 13.5% to $534.5 million and earnings rose to $17.2 million. The company opened 12 new stores during the quarter, one being the result of an acquisition of the former Victor's House of Music in Paramus, New Jersey. (Press release)
• Country label 903 Music has "ran out of money" and shut its doors. (MusicRow.com)
• The Arctic Monkey's UK chart domination looks like it could have been made possible by an error by iTunes. The store accidentally put up for sale the individual tracks for the band's new album, Favourite Worst Nightmare, before the album itself was available. Fans acquired the album by simply downloading each track. The result was 17 tracks in the UK Top 200 singles chart. (NME.com)
• Flat-fee digital distributor TuneCore announced a strategic partnership with music retailer Guitar Center -- which is a TuneCore investor -- that will promote TuneCore to Guitar Center customers. (Press release)
• Keith Wozencroft, currently president of Capitol Music and Virgin Records UK, has entered into a partnership with EMI that will see him launch a joint-venture label with EMI UK and Ireland. (Billboard.biz)
• The NARM website has a PowerPoint presentation from Nielsen SoundScan that was given at the recent 2007 NARM conference. The slide show has a good amount of information on album and digital track sales for both 2006 and year-to-date 2007. Slide 17 had a statistic I had not seen: In 2006, there were 75,774 new albums released, up from 60,313 the year before. Another good tidbit: In 2006, there were 50% more digital-only albums released than the year prior -- but 95% of those digital albums sold fewer than 100 units each. Slide 47 has some info on ringtone sales, which Nielsen began tracking in September 2006.
• There's a rumor that Atlantic will split with Vice Records and decide which artists it wants to keep. (Hits)
• Will Apple offers a music subscription service? No, not if Steve Jobs' comments to Reuters in any indication. Said Jobs, "Never say never, but customers don't seem to be interested in it. The subscription model has failed so far. ... People want to own their music." (Reuters)
• Even a person with no legal knowledge could see this coming: In saying digital downloads do not count as public performances, a court denies ASCAP from double-dipping. (Hollywood Reporter)
• Research from Strategy Analytics Digital Media Strategies puts this year's global online music growth rate at 62%. By 2011, the value of the online market will grow to $6.6 billion from $2.7 billion in 2007. It predicts a "temperate increase in single track download revenues" due to EMI's decision to offer DRM-free, premium tracks. Their optimism is striking: "This year will likely be the turning point for the music industry, and a return to overall revenue growth." I doubt it, but it's possible if you include publishing revenue. (Strategy Analytics)
• The Guardian has a routine article on download stores and DRM -- it's the hot topic of the quarter -- but there's one part that may cause your eyes to open wide. Scott Cohen, founder of The Orchard, explains that dropping DRM is not technically complicated but the finer stuff can get a bit complicated. Details vary from store to store (things like bit rates and metadata identifiers). "There are 63 variants for mobile devices alone, and overall there are hundreds. Cohen notes, though, that the really hard work is marketing the music." (The Guardian)
• An interview with Last.fm co-founder Martin Stiksel. "We released our software in ten different languages before Christmas, and because of our unique 'scrobbling' within two weeks we had millions of tracks of Brazilian music and Spanish music and Russian music added to our catalogue." (Exclaim.ca)
• 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)
• 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)
• Island Def Jam is going to bring back the Mercury imprint. Veteran exec David Massey will be the division's president. No word yet on any artists migrating to Mercury from Island or Def Jam. (Billboard.biz)
• Apple rumor of the week: the CEO of digital distributor INTENT MediaWorks said he has had meetings with Apple and believes the company will announce a music subscription service within six months. If that's the case, the subscription model would receive the one thing that would get it over the hump: Steve Jobs' blessing. (MacDailyNews)
• Not only does the Canadian government dish out grant money to musicians, it has just given Nettwerk Music Group CAN $650,000 "to continue working with Canadian artists to enrich Canada's musical experience." (Press release, via Digital Music News)
• I've laid off talking about the new Sansa Connect music player -- which connects to subscription services via WiFi -- but I'll point out this Computerworld review that showers praise all over the new product. "...the Sansa Connect dramatically increases what you can do with your media player and, for the first time, highlights the potential of subscription music services." (Playlist)
• An Amazon.com acquisition of eMusic is not going to happen, sources told Digital Music News. Said one source on Amazon.com's digital strategy, "They are unsure of their plans, and very confused." (Digital Music News)
• The U.S. government will filed two complaints against China at the World Trade Organization that aim to stop piracy of copyrighted movies, music, games and books. The RIAA's Mitch Bainwol was quick with the quote: "This failure to abide by international standards and obligations is in no one's interest -- least of all China's, whose cultural and economic opportunities are completely stifled by the quagmire of piracy." (Billboard.biz)
• Now that EMI has pushed interoperability closer to a reality, it's time to think about digital kiosks. Some feel the segment's time already came and went. Some, like Mix & Burn (which has partnered with Trans World), are optimistic. The price of kiosks probably needs to come down, and interaction with portable devices is going to be more important than the ability to burn to CD. (Self Service)
• Cracker Barrel Old Country Store has formed a partnership with country musician Josh Turner. The chain will sponsor Turner's summer tour and will get an exclusive live CD that will be recorded on April 19th at the Ryman in Nashville. (Press release)
• It's that time of the year...time for Circuit City's "Best of Class" awards that honor vendors "who put customers first while demonstrating 'best in class' performance." Universal Music Group was one of the winners in the Merchandising Vendor category and was the only music company to take home an award. (Press release)
• A pricing expert talks about iTunes' pricing system. (Blogging Stocks)
EMI held a press conference today to announce it will sell its entire catalog in DRM-free, high quality downloads. (Read press release.) iTunes will be the first online retailer to offer the tracks. Each track will cost $1.29, or $0.30 higher than lower quality tracks with DRM. Complete albums will automatically be sold with the higher sound quality and without DRM -- but at the same price (now iTunes' second incentive to purchase an entire album over individual tracks).
Said EMI's Eric Nicoli, "ur goal is to give consumers the best possible digital music experience. By providing DRM-free downloads, we aim to address the lack of interoperability which is frustrating for many music fans. We believe that offering consumers the opportunity to buy higher quality tracks and listen to them on the device or platform of their choice will boost sales of digital music."
Engadget live-blogged the event and its Q&A session. Click here to listen to the webcast of the press conference.
On a side note, I have to wonder if today's announcement would have been held if Levy and Munns were still running EMI. Many seemed to feel that EMI's previous leadership was too "old guard" and that the company was not properly transforming itself for the digital era. Nicoli did not waste much time in ridding EMI of at least one old convention.
This email from iTunes just popped into my inbox:
"Did you know that if you've purchased one or more songs from an eligible album, you may now be able to buy the rest of the album at a reduced price? You have up to six months after first downloading a song from an eligible album to purchase the remainder of the album."
This was hinted about just the other day in a New York Times article.
Update: Here's a BusinessWeek.com article on iTunes new "Complete My Album" feature. "It now gives a full credit of 99 cents for every track the user previously purchased and applies it toward the purchase of the complete album. For instance, most albums on iTunes cost $9.99 so a customer who already bought three tracks can download the rest of the album for $7.02."