If ever there was a misleading and off-the-mark article, it is "iTunes Under Threat as Bands Take Their Business Elsewhere" at The Telegraph. The piece rehashes the same points made in a very similar Wall Street Journal article a few weeks ago (Kid Rock doesn't want to sell single tracks, Estelle's album was pulled from iTunes by her label, Katy Perry can sell singles but not many albums).

The article added a quote from Elbow's Guy Garvey. "iTunes is responsible for the death of the album," he said. Quite a sentiment from a guy that keeps on releasing albums and just won a Mercury Prize for his latest one, not for a single track or an EP or a ringtone or a ringle or a track/ringtone bundle. (I wonder if he would have won the Mercury Prize if the tracks were not available on iTunes?)

Now that AC/DC has chosen not to release its album at iTunes, The Telegraph acts like a mass movement is underway.

I'll save you from reading the article and break the news to you right now. iTunes is not under an imminent threat. There is no movement away from iTunes, only occasional decisions by bands with a back catalog of considerable renown and demand. That a handful of high-profile bands have chosen not to sell music at iTunes means little. iTunes is where most people shop for downloads. Artists will put their music where people will buy it. It's really pretty simple.

iTunes has managed to do brisk business without the mother of all catalogs, The Beatles. It can survive without a few more superstars. The strength of Apple and the iPod, not the actions of a few bands, will determine iTunes' position as the preeminent music store.

Posted by Glenn at 11:59 AM | Link
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The Wall Street Journal's Katherine Boehret compares two new music discovery tools, Zune's Mixview and Apple's Genius, in today's "The Mossberg Solution" column. Boehret found both positives and negatives with both tools and had better things to say about Mixview. Go ahead and check out the article, but here's the meat of the article:

After using the music-discovery software from Apple and Microsoft, I felt like Apple’s Genius tool still had a lot to learn, though the company says it will improve over time as more people start using it. Zune’s software had some similar issues, but it offered recommendations in a richer, more engaging manner, encouraging me to keep digging around and learn more about my music. Though I didn’t happen to have as much time to use Zune’s software as I did Apple’s Genius, I got more out of my Zune experience.

Both are neat ways to discovery and learn about music, but let's face it, discovery tools are in their infancy. People are attracted to certain musicians for all sorts of reasons that have not yet been incorporated into the best tools. Listeners are attracted to musicians for all sorts of reasons that go deeper than merely how the music sounds. Factors such as political leaning, diet, social causes, artists toured with and home city all say something about the person behind the music. Better tools to discovery local artists would especially help independent artists. People tend not to know what musicians are in their own backyard.

Posted by Glenn at 11:36 AM | Link
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As Silicon Alley Insider reports, Estelle's album Shine is back on iTunes. Warner Music Group had removed the album from iTunes in hopes of spurring album sales. iTunes, with few exceptions, does not grant the option to sell only entire albums. Fearful that demand for a hit single was harming album sales, the album was pulled.

Now the album is back (and if I wasn't having problems with iTunes 8 I could tell you more). The digital album is currently on sale for $6.99 at Amazon.com, is getting page placement and is ranked #15 in digital albums. The CD, priced at $8.99, is currently ranked #142.

Posted by Glenn at 12:13 PM | Link
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Plenty of news items from today's Apple media event. New iPods. Addition of HD TV show downloads available iTunes. A "Genius" function at iTunes to create custom playlists. No music subscription service was announced. Apple's share price is down 7.2% from its high yesterday and fell 3% during the presentation.

• Ars Technica on Apple's announcement of new iPods and iTunes 8. On the new version of iTunes, "Confirming "tons of new stuff" and features that were rumored over the weekend, Jobs announced a new Pandora-like 'Genius' feature that can generate playlists of songs 'that go great together.'"
• Hands on the new iPod touch 2G at Engadget. "Jury's still out on the new nano, but the second-gen touch is a marked improvement over the first gen model. The WiFi antenna looks much better integrated, the speaker doesn't sound like complete trash despite not even having any speaker holes, and the thing is crazy thin."
• Hands on the new iPod nano 4G at Engadget. "Yep, it's pretty much what you expected."
• Engadget liveblogging the event.
• The New York Times liveblogging the event. "So far Apple is keeping the $149 starting price for the Nano and $249 for the Classic, increasing the capacity of both. This is a vote of confidence in demand."

Posted by Glenn at 2:02 PM | Link
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Last week The Wall Street Journal ran an article on some artists' and labels' dissatisfaction with single track sales on iTunes hampering album sales. Kid Rock, for instance, doesn't offer most of his albums at digital stores. So what exactly happens when a track is removed from iTunes and consumers are given only the option of purchasing the album? It's hard to say, but now we have a sample of one instance that won't teach us much but shows how strategies for a singles-driven album make the results hard to control.

Reports (outside of the U.S., which is on holiday) today claim Estelle's album Shine took a dive when the album was removed from iTunes in order to increase CD sales. The BBC says Shine dropped to #159 on the U.S. album chart after peaking at #38. (Dropped from what? When did it peak? Unfortunately the BBC didn't bother mentioning the number of spots on the chart Shine lost after the single was pulled.) Estelle's hit single, "American Boy," dropped to #37 from #11, which wouldn't be a big deal if an increase in album sales made up for lost singles sales.

But I'm getting mixed signals. Maybe the album dropped at iTunes, but it's currently at #20 at Amazon.com. And Australian music news site Undercover claims sales of Shine increased 35% after the single was pulled at iTunes.

If there was a large drop in album sales, it probably was not caused by pulling the single from iTunes. I have a hard time believing CD sales could be so strongly influenced by what is going on at iTunes. There are all sorts of reasons the album could drop. Maybe the album was losing steam. Maybe there's not enough product in the market and iTunes had an unusually large share of sales. (Although one would assume WEA, WMG's distribution arm, would have sorted that out before the album was pulled from iTunes.) Maybe the people buying Estelle are more digital album buyers than CD buyers. That would explain why the CD is #360 at Amazon.com while the digital album is at #20.

But Kid Rock has had great success even though his album is not available at digital stores. Why the difference? Well, one is an established superstar with a current hit single. The other, Estelle, is an almost unknown British newcomer with a hit single. To buy a Kid Rock album is far less a risk than to buy an Estelle album. Like I said in my post about the WSJ article, pulling a single by a new artist can have artist development issues. A superstar can offer only albums and get away with it. A new artist has a long way to go before asking so much from the public. Estelle is known for only one song. If she wins the Mercury Prize the album will have stronger legs to stand on.

And pulling out of iTunes is different than never being available on iTunes. At least Kid Rock is consistent.

Posted by Glenn at 1:48 PM | Link
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I just ran across this news item while looking for local reaction to Team USA's drubbing of Australia's basketball team. From the Sydney Morning Herald comes a report that China has blocked some expats' access to iTunes because Olympics athletes were given free downloads to the recently released Songs for Tibet compilation.

The album, called Songs for Tibet, was produced by an a group called The Art of Peace Foundation, and features 20 tracks from well-known singers and songwriters including Sting, Moby, Suzanne Vega and Alanis Morissette.

It was released as a download on the iTunes Store on August 5 - three days before the start of the Olympics - with the physical CD launched on Tuesday this week.

The Foundation provided free downloads of the album to Olympic athletes, urging them to play the songs on their iPods during the Games as a show of support. ...

On Monday, expatriate iTunes users living in China began experiencing technical problems with their previously unfettered access. ...

Although some iTunes account-holders suggest that the problem is with Apple, according to several forum posters and bloggers working in China, the source of the technical hitch is being attributed to the Great Firewall of China - the umbrella term given to China's system of internet censorship.

Posted by Glenn at 11:14 AM | Link
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In the past, equities analysts and journalists have offered estimates of iTunes' contribution to Apple's bottom line. For whatever reason, however, most people have been content to stick to urban myth that says iTunes merely breaks even (even if that was the case, it helps drive the sales of very profitable hardware). That myth has many faults, the most egregious being an assumption that each track sold carries with it its own credit card processing fee (hardly the case) that eats up the $0.30 gross margin per $0.99 download.

In the New York Times' Bits blog, Saul Hansell makes a case that iTunes may be Apple's best business segment.

Here’s what the iTunes store has: margins that are better than the best e-commerce companies around; no marketing costs and a built in audience; Sales of nearly $3 billion a year in its existing business; and a new $1 billion business on the way.

The analysis:

Let me modestly suggest that far from being a break-even proposition to lure hardware customers, iTunes may be the best business that Apple has.

While the "no marketing costs" assertion is an exaggeration -- one should include the considerable expense of television ads that tag both iTunes and the iPod, for example -- it's probably not far from the truth. There may be no more cost-efficient way to sell music -- especially with the huge scale the store enjoys. Additional revenue from videos and apps will make it only more profitable.

Hansell's analysis was to compare iTunes to Amazon.com and eBay, and it did not offer an estimated operating margin or back-of-the-envelope income statements. But other have done this. Last year, PacificCrest analyst Andy Hargreaves estimated iTunes' operating margin to be 10% and possibly as high as 15% (it would be better today due to the increases in volume). Earlier this year, Billboard's Ed Christman estimated $161 million to $390 million of operating profit on revenue of $1.9 billion. That comes out to an operating margin of 8.5 to 20%.

Whatever the true operating margin, we can safely assume iTunes is making money hand over fist. Steve Jobs might downplay its success, but we shouldn't.

Posted by Glenn at 6:20 PM | Link
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The use of the word "still" in the title really isn't necessary. iTunes isn't going to lose enough market share in just a few months to Amazon.com to drop below Wal-Mart. From today's NPD press release:

1. iTunes
2. Wal-Mart (Walmart, Walmart.com, Walmart Music Downloads)
3. Best Buy (Best Buy, Bestbuy.com, Best Buy Digital Music Store)
4. Amazon (Amazon.com, AmazonMP3.com)
5. Target (Target and Target.com)

Amazon.com moved from up one spot to #4 for two reasons: Online CD sales are stronger than brick-and-mortar CD sales, and the performance of its MP3 store. NPD used only the words "successful introduction" to describe the performance of the MP3 store, which is the subject of frequent guessing games about its share of the download market.

NPD bases its rankings on unit sales, not dollar value (no doubt a far easier way to do it). Given the higher sales prices of physical product compared to digital downloads, ranking retailers by revenue could lead to a different outcome. In addition, NPD converts individual tracks to albums at the rate of 12 to 1. The average album may have 12 tracks, but ten tracks have the same wholesale and retail value as an album download. Using a conversion factor of 12 rather than ten results in lower numbers for download stores.

Posted by Glenn at 4:15 PM | Link
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When Napster launched its six-million-track-deep MP3 store earlier this week, I wrote that depth of catalog is important but only to a point. The marginal value of the million least-popular songs is far from the value of the second million or the third million. People rarely get that deep into the catalog. Even with my out-of-the-mainstream tastes, I probably have no interest in much of any store's tracks and rarely want an album that a store does not have.

Just how often would I delve further than five million tracks into a download store's catalog? To find out I selected 16 albums to compare at five stores: Amazon.com MP3, eMusic, iTunes, Napster and Wal-Mart. The albums were a mix of titles I recently purchased (both CD and digital), CDs randomly pulled from a rack next to my computer and a couple local artists from Nashville that have independently released EPs.

The results show there is some difference between the stores' selection but a considerable difference in prices. What eMusic lacks in catalog it makes up for in price. Napster and iTunes had the best selection (just barely) but also had higher prices than eMusic and Amazon.com.

iTunes had 15 of the 16 titles, the best ratio of the five stores, but only five of those are available in MP3. Napster had 14 out of 16 and Amazon.com had 13 out of 16, and all of them MP3s. eMusic had 12 of the 16 and the lowest price by far. For the four albums not found at eMusic, the lowest prices can be found at Amazon.com.

The titles I picked are not Top 200 stuff but aren't the slowest-moving tracks in the stores. Cinema Verite is ranked 20,475 at Amazon.com. Fresh Pair of Eyes is ranked 17,522. The Bruno Pronsato EP is not at Amazon.com, but his Silver Cities album is there and has a ranking 117,036.

Napster deep catalog was missing one relatively popular album and one that is slower moving. It did not have Orbital's Live at Glastonbury, which is ranked 23,987 at Amazon.com. Nor did Napster have Justin Earle's The Good Life, which is ranked 657 at Amazon.com. To put those rankings in perspective, Amazon.com currently lists 445,176 albums and 5,230,187 songs.

A few notes about the titles. It's a small sample that represents only my own listening preferences. Somebody else would most certainly get different results based on their purchases and preferences. I lean toward music that is a bit out of the mainstream. Some of the titles have major music group distribution while some are distributed by companies such as IODA, Iris, Finetunes or CD Baby. I acquire a good deal of tracks at eMusic (65 per month) but included only a few albums in the survey that I acquired there.

And a couple of things about prices. I pay $15 a month for 65 tracks at eMusic. Because it's a subscription store, tracks and albums do not have assigned prices. For the sake of this exercise, I divided the $15 monthly fee by 60 (instead of 65 because I sometimes do not use all of my alloted downloads) to get an average track cost of $0.25. Album prices equal $0.25 times the number of tracks on the album. Lastly, Napster charges $9.95 for every album or EP regardless of the number of tracks. Rather than use $9.95 for every title Napster stocks, I calculated the cost of downloading each track individually at $0.99 apiece.

The above chart compares the prices of the albums that two stores have in common. For example, Napster and Amazon.com have 11 titles in common from this sample of 16 albums. For those 11 titles, Amazon.com's average price is $8.12 and Napster's average price is $8.67. eMusic's prices are by far the lowest. Of the stores that carry major labels, Amazon.com had the lowest prices, followed by Napster, iTunes and then Wal-Mart.

A combination of eMusic and Amazon.com nets 16 titles (100%) in stock. When thinking about getting an album, the best way to shop is to first visit eMusic and then go to Amazon.com. In only one case did Napster have a lower price than Amazon.com. That was Johann Johannsson's A User's Manual. Napster lets you download the tracks individually, Amazon.com does not. Since the album has only five tracks, Napster's price is far better (but far higher than the cost at eMusic, which also allows for individual track downloads).

Posted by Glenn at 3:39 PM | Link
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• Manager, Digital Revenue at Razor & Tie entertainment. New York, NY.
• Online Marketing Manager at Wiredset. New York, NY.
• More Jobs.

Posted by Glenn at 9:12 AM | Link
|iTunes|

The 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.

Posted by Glenn at 11:16 AM | Link
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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.

Posted by Glenn at 1:42 PM | Link
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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.

Posted by Glenn at 12:54 PM | Link
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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.

Posted by Glenn at 11:30 AM | Link
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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.

Posted by Glenn at 1:20 AM | Link
|iTunes|

• 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)

Posted by Glenn at 9:46 AM | Link
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• 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)

Posted by Glenn at 9:12 AM | Link
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• 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
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• 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)

Posted by Glenn at 7:30 AM | Link
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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%.

Posted by Glenn at 2:49 PM | Link
|iTunes|

• 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)

Posted by Glenn at 7:55 AM | Link
|Digital Distribution||Universal Music Group||iTunes|

• 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)

Posted by Glenn at 7:46 AM | Link
|Online Stores/Services||RIAA||iTunes|

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.

Posted by Glenn at 1:11 PM | Link
|iTunes|

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.

Posted by Glenn at 6:44 AM | Link
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• 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)

Posted by Glenn at 8:03 AM | Link
|Indies||Online Stores/Services||Sony BMG||iTunes|

• 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)

Posted by Glenn at 8:03 AM | Link
|Conferences||Digital Distribution||Online Stores/Services||iTunes|

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.

Posted by Glenn at 11:07 AM | Link
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• 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|

• 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)

Posted by Glenn at 9:16 AM | Link
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• 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)

Posted by Glenn at 11:41 AM | Link
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• 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)

Posted by Glenn at 2:12 PM | Link
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• 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)

Posted by Glenn at 8:11 AM | Link
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• 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|

• 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|

• 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)

Posted by Glenn at 8:14 AM | Link
|Universal Music Group||iTunes|

• 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)

Posted by Glenn at 8:34 AM | Link
|Digital Distribution||Legal||iTunes|

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.

Posted by Glenn at 9:11 AM | Link
|EMI||iTunes|

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."

Posted by Glenn at 3:35 PM | Link
|iTunes|

In his Bit Player blog at the LA Times, Jon Healey lays out EMI's strategy for pushing MP3s at online retail as told to him by "two sources in the online music biz." While the press oddly attributed news of EMI's recent push to MP3 to Steve Jobs' DRM-bashing open letter, Jobs looks to have been reacting to EMI's quiet MP3 strategy.

EMI, wrote Healey, was asking online retailers for cash advances in exchange for the right to sell its catalog in MP3 format. That strategy was a reaction to a proposal by RealNetworks for switching to MP3. Who did and who did not get EMI's proposal explains Jobs' recent push to get rid of DRM.

"The deal was apparently not offered to Apple, however; evidently, EMI wanted to build up momentum among the also-rans before making Jobs and offer he might otherwise refuse. Before EMI could sign on the dotted line with the likes of RealNetworks and Napster, however, Jobs dropped his DRM bombshell. Go straight to the head of the parade, Steve! Then the Wall Street Journal reported EMI's MP3 overtures, and suddenly the record company wasn't in such a hurry to announce its initiative."

Looks like a good theory on the sequence of events. EMI wants to sell MP3s but wants to start small and build up to iTunes. Apple doesn't want to miss the MP3 party and throws a wrench into EMI's plan to leave Apple out of its initial plans.

Posted by Glenn at 3:42 PM | Link
|DRM||EMI||iTunes|

Jupiter's David Card noticed a first at iTunes. In an iTunes Music Store New Music Tuesday e-mail newsletter, Apple included a recommendation for the artist Borne. Wrote Card at his blog:

"Wow. Apple actually does some music promotion. I can't say I've seen this kind of thing from them before. ... This is pure, editorial merchandising. That is, it isn't generated by any recommendation robots. At least I don't think so -- I don't like Coldplay or Snow Patrol and Apple has no reason to think I do."

The quote Card pulled from the email starts with the line, "If you like Coldplay and Snow Patrol, we think you'll love Borne." It goes on to explain how iTunes Australia received a demo CD from Borne. They were so impressed by the music, and the free single of the week was so popular in Australia, that they decided to make the song iTunes' "first-ever worldwide free Single of the Week."

Not lost on me is the fact that iTunes is doing something worldwide. The organization of music distribution tends to lead to a fragmented global market where availability and prices follow political borders.

Posted by Glenn at 2:44 PM | Link
|iTunes|

• Capita>ol Music Group has started laying off workers says a Billboard report. I heard it had started last week, but no difference. Pink slips are pink slips. Seven promotions employees got the axe at Capita>ol. (Yes, I know I spell the label wrong on occasion. After writing about net working capital and capital structure all day, I guess it's a hard habit to break.) (Billboard.biz)

• Ticketmaster hooks up with iTunes to offer a free song with every ticket purchased at Ticketmaster.com. (Hollywood Reporter)

• Now this is PR: An entire article on EMI's scant MP3 experiments. Such experiments are unlikely to offer an indication of potential results on a broader scale, though EMI spokesperson Adam Grossberg called them "very positive" (without giving any numbers). (MarketWatch)

• Steve Machin has joined Ultrastar as Vice President of International Business Development. Machin was previously head of Ticketmaster's European strategy and business development. (Press release)

• A directory of RIAA lawsuits. (Recording Industry vs The People)

Posted by Glenn at 10:03 AM | Link
|EMI||RIAA||iTunes|

• Bertlesmann confirmed the sale of its BMG Music Publishing to Universal Music Group. The deal must be approved by European Union anti-trust regulators. From where I sit, the two parties seem confident regulators will approve the deal. (Read article at Hollywood Reporter)

• The Canadian Radio-television and Telecommunications Commission ruled to leave radio station's quota for Canadian content at 35%. Associations representing producers, composers and publishers were seeking a new quota of up to 55%. The CRTC also passed on imposing an incentive-based strategy to promote Canadian music. (Read article at Billboard.biz)

• Sony BMG's Zomba Records signed 19-year-old Carli Marino, a singer from New Jersey who won Gospel Dream on the Gospel Music Channel. (Read article at NorthJersey.com)

• Paul Resnikoff follows up on reaction to Forrester's iTunes analysis. The lesson of it all: If you want to comment on iTunes' sales, Soundscan data trumps credit card receipts and music sales' seasonality cannot be ignored. (Read post at Digital Music News)

• The long, long, long awaited Guns N' Roses album, Chinese Democracy, is tentatively set for a March 2007 release according to a post by Axl Rose at the official GNR website. He also had some comments about his former manager Merck Mercuriadis. Sounds like the most recent delay comes for poor planning at the very least. (Read article at Billboard.com)

Posted by Glenn at 7:25 AM | Link
|Digital Music||Publishing||Radio||Sony BMG||iTunes|

Forrester analyst Josh Bernoff, whose name has been all over the news because of a report on slow sales at iTunes, offered clarification on his report. At a follow-up post at his blog, Bernoff called it a "a case study in how information -- and misinformation -- spreads on the Net."

News or the report started with a "fairly balanced" article at The New York Times. Then The Register and Bloomberg, he wrote, "decided to dive in and highlight one finding of the report -- that iTunes sales had dropped in the first six months of this year." With that came sensational words like "collapsing" and "dropping." Newspapers around the world followed suit. Apple's stock dropped 3%. All from a report that indicated what everybody already knew -- iTunes' sales have been flattenning out.

Bernoff laid out his opinion in very clear terms (emphasis his):

"Now for the record, iTunes sales are not collapsing. Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it's simply not possible to draw this conclusion . . . as we pointed out in the report. But that point was just too subtle to get into these articles."

He added that Apple's refusal not to comment either or or off the record "fuels speculation, pro and con, from their supporters and detractors."

So there you go. The sky is not falling. iTunes sales, while not breathing new life into recorded music sales, are not 65% down since January. Even just a cursory glance at Soundscan figures indicate positive year-over-year growth and slower growth in 2006.

Posted by Glenn at 10:31 AM | Link
|Apple||Research||iTunes|

For the first time, Apple announced its best-selling singles and albums for a year (read article at Billboard.biz). The trends are easy to see (they're evident in any given week). Singles are half middle-of-the-road pop rock and beat-driven R&B or hip hop. Albums are mostly rock and not at all urban.

The album list in particular shows American's digital music divide. Some of the top-selling albums of 2006 -- Carrie Underwood's Some Hearts, Mary J Blige's Breakthrough, Rascal Flatt's Me & My Gang -- did not make iTunes' Top 10.

Top Albums
1. The Fray: "How To Save A Life"
2. John Mayer: "Continuum"
3. Jack Johnson & Friends: "Curious George"
4. James Blunt: "Back To Bedlam"
5. Justin Timberlake: "Futuresex/LoveSounds"
6. Red Hot Chili Peppers: "Stadium Arcadium"
7. Dixie Chicks: "Taking The Long Way"
8. High School Musical: "Soundtrack"
9. Panic! At the Disco: "Fever You Can't Sweat Out"
10. Gnarls Barkley: "St. Elsewhere"

Top Tracks
1. Daniel Powter: "Bad Day"
2. Nelly Furtado: "Promiscuous"
3. James Blunt: "You're Beautiful"
4. Gnarls Barkley: "Crazy"
5. Sean Paul: "Temperature"
6. Justin Timberlake: "Sexyback"
7. The Fray: "Over My Head (Cable Car)"
8. Shakira: "Hips Don't Lie"
9. Natasha Bedingfield: "Unwritten"
10. Chamillionaire: "Ridin'"

Posted by Glenn at 1:59 PM | Link
|iTunes|

Commentary on Forrester's report on iTunes sales is all over the Internet. A much-linked article at The Register is titled "iTunes Sales Collapsing" and says iTunes "has experienced a collapse in sales revenues this year." Compare that to the actual title of the report, "Few iPod Owners Are Big iTunes Buyers." Compare the report title to titles of other articles written about the report: "Sales of iTunes hit low note: study," "Sales Plunge at iTunes Store, Study Says," "Digital Music Sales 'Collapsing'?" Those articles are based on The Register's article, not on the actual findings of the Forrester report.

One potentially troubling aspect of the report is data that shows since January the monthly revenue has fallen by 65 per cent. I have not read the report and am quoting The Register. What's the problem? Music sales are seasonal. Digital track sales peaked sharply in the last week of 2005, dropped over the next two weeks and then leveled off. It makes sense that January sales are not representative of a typical month's sales. Because of these predictable fluctuations, only year-over-year comparisons should be made. Comparing October to January ignores music's seasonality and gives a distorted view of sales trends.

Have digital sales collapsed? Hardly -- though the days of irrational exuberance are long gone. Week in and week out, between roughly 16 million and 20 million digital tracks are sold. A rate of 18 million per week results in 936 million per year. Sales were flat to down in the second and third quarters (compared with the first quarter) but track sales are trending upward over the last seven weeks. One has to assume that Apple, the dominant player in digital music, goes as the market goes.

Posted by Glenn at 2:06 PM | Link
|Digital Music||Online Stores/Services||iTunes|

• The Financial Times reports EMI has hired a third investment bank to advise on a potential deal with Permira. It is a sign a deal could be finalized soon, maybe this week. (Read Reuters article)

• Forrester takes the iPod down a notch. Analyst Josh Bernoff: "The iPod is not necessarily a machine for generating revenue for the music industry." He has found that iTunes' rapid expansion has slowed (as has digital sales in general), which echoes worries by music executives around the world. (Read article at Globe and Mail)

• The holiday layoffs continue. House of Blues layed off 79 people post-acquisition by Live Nation. (Read article at Billboard.biz)

• Hits reports on more structural changes at Sony: Columbia Records' promotions staff is now organized by "national specialist cells by format." (Read post at Hits Rumor Mill)

• An IDC report on mobile music services are not connecting with consumers. One of the main reason is prices, which are seen as too high. While SMS (short message service) is popular, only about 20% of respondents have purchased a ringtone and only 10% have purchased either a graphic, wallpaper or game. (Read post at Playlist)

• J. Valentine, known for a sound described as "R&Bay" (rhythm and bay) has signed with J Records. His album will be out in early 2007. Production was handled by Scott Storch, Cool & Dre, The Underdogs, Dre & Vidal, Polow Da Don, Needles and The CityBoyZ. Among the guest artists are E-40, Keak da Sneak,Bailey and Keri Lynn. (Read press release,, via Kings of A&R)

• Sony Music Studios unveiled Sony Music Studio Internet Mastering, an Internet-based mastering service that will professionally master four songs per project at a cost that starts at $99 per track. (Read article at Mixonline.com)

• A few bits from yesterday's FCC media ownership hearing in Nashville. The Hollywood Reporter has a good overview. Radio Ink has excerpts from introductory remarks from Chairman Kevin Martin and Commissioners Michael Copps and Jonathan Adelstein. The FCC website has the full texts of their remarks (read PDFs of Martin, Copps and Adelstein).

Posted by Glenn at 7:16 AM | Link
|Apple||EMI||Live Music||Mobile Music||Sony BMG||iTunes|

Fortune writer Tim Arango got everybody's attention earlier today when his article "Beatles: only on iPod?" claimed Apple is "close to a deal to bring the Beatles catalog online." There's a great subtext here: Apple Corp, owner of the Beatles' catalog, has been a legal thorn in the side of Apple Computer for many years.

EMI's David Munns recently said the Beatles would be online "soon." Presumably he was not referring to Love, a George Martin-produced Beatles mashup that was released last week (and is not yet online).

Is there any other way to debut online than with the help of Steve Jobs? Apple Corp would be crazy to give an exclusive to any other download store. "It's not a surprise the Apple Corporation, which owns the rights to the Fab Four's songs, would ink a deal with Apple Computer, owner of the hottest music player in the world," said Forrester's Ted Schadler.

And it would be best to go online with a splash so everybody knows about it. Not everybody knows the Beatles aren't currently on iTunes. Wrote Melly Alazraki at Blogging Stocks: "Until I read this article, I had no idea one couldn't download Beatles songs from iTunes."

Sales at iTunes are slowing and could use a shot in the arm right before prepaid gift card season. The Beatles' arrival at iTunes would be more than a big media event. It would be an important, symbolic event that shows a handshake between technology and music industries. They have often acted like cold war foes. The Beatles at iTunes would be glasnost all over again.

Posted by Glenn at 5:37 PM | Link
|Digital Music||EMI||iTunes|

The Consumer Electronics Association will announce its holiday survey tomorrow, reports a article at the Sydney Morning Herald. The survey predicts a 27% increase in holiday electronic device spending. Digital cameras and DVD devices will be the most in-demand products, followed by mobile phones and portable media devices.

In early October the CEA released the findings of a survey on tech enthusiasts, those early adopters who account for 50% more spending on portable entertainment devices than later adopters. What do early adopters care about? Battery life is the most important aspect. "Like most consumers," said the press release, "they'd also like to see lower prices for digital media files in the future."

Interoperability is another key feature mentioned -- not that all CEA members are listening. I'd expect lower prices for digital media before any signs of greater interoperability. CEA member Apple has succeeded with a close iTunes/iPod system. Microsoft and RealNetworks, also CEA members, are working on their own media/player systems. Microsoft will launch the closed Zune in mid-November. RealNetworks has its branded Sansa line of players that will play most, but not all, popular audio formats and is built to work best with its Rhapsody music service.

More reaction to closed systems is found in today's USA Today article, "Closed Systems Leave Buyers Out In The Cold." Said former EMI exec Ted Cohen of Microsoft's closed Zune system, "This goes against the grain of everything Microsoft has been telling consumers for two years. I'm stunned." But Microsoft has noticed that for most consumers ease of use trumps DRM.

Posted by Glenn at 7:54 PM | Link
|DRM||Portable Music Players||Zune||iTunes|

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|

• UK ring tone sales are down for the first time in six years. Said the director of Universal Music UK's new media division: "You can put it down to price, piracy and the Crazy Frog effect." The latter refers to how sick and tired people became from hearing "Crazy Frog" so much last year. (Read article at The Guardian)

• Two icons of the new music era have teamed up: Starbucks and iTunes. The music-selling coffee chain will get a branded section in the iTunes music store, and iTunes gets "significant signage" inside Starbucks locations. Looks like a win-win for these two superbly branded companies. (Read article at Billboard.biz)

• Digital gearheads all over the www. are talking Sony BMG's claim that 20% of its revenues come from digital. Could this have been a misstatement or a misquote? Last I heard, the company was sitting at closer to 10%. Sony BMG has 22% of the digital album market, but that doesn't mean digital equates to 22% of the company's share. Given the fact that Warner Music Group's last 10Q reported its digital revenues account for 11% of its total revenues, 20% for Sony BMG seems high. If you know the answer and have any insight, send me an email. (Read post at Wired's Listening Post blog)

• Downloadpunk.com launched a new feature called UploadPunk that allows bands, labels and aggregators to upload content and track sales. (Read article at Punknews.org)

• People are always shocked that vinyl still sells. Here's the 1,034th article this year that reacts in amazement to vinyl's continued strong sales. (Read article at The Telegraph)

• Well, how nice to see common sense in an article about digital music. The Chicago Tribune asks "Who needs record labels?" as long as bands can sell music at MySpace. The answers are given by indie bands and David Kusek, the vice president at Berklee College of Music. MySpace, they acknowledge, will help increase exposure of previously unknown bands, but signing with a label -- along with a good publicist and manager -- is still the best way for a band to succeed. (Read article at The Chicago Tribune)

Posted by Glenn at 8:14 AM | Link
|Ringtones||Sony BMG||Starbucks||iTunes|

Early adopter-oriented outlets give every new iPod/iTunes wrinkle maximum coverage. When the Wall Street Journal's Walt Mossberg highlights new technology, he speaks to a more mainstream audience. His influence is why I take note of his articles.

Today, Mossberg and Katherine Boehret wrote about the new iPod and iTunes and the increased competition from Microsoft's Zune and Rhapsody's branded SanDisk player. Their verdict?

"The new iPods are more versatile and less costly than ever, but the new iTunes software is an even bigger improvement, although it has one big downside -- its coolest feature is so graphically demanding that it doesn't work right on some older consumers."

The big winner was the new iTunes feature called Cover Flow, which they called "just a parlor trick" but they "love it" because it reminded them of "flipping through a box of old vinyl albums or watching an old jukebox in a diner." The article is not aimed at Generation Y, obviously.

Posted by Glenn at 7:46 PM | Link
|Apple||iTunes|

• After news got out that Warner Music Group's Edgar Bronfman has been targeting EMI investors, shares of EMI rose 7%. At the same time, Bloomberg data indicates the perceived risk of holding EMI's bonds rose 3%, which shows an decrease in perception of credit quality. (Read article at Bloomberg)

• Network Live is gone and has parted with AOL, but its production team is going to start a new live music distribution deal with MSN called Control Room. (Read the details at paidContent)

• The RIAA's Cary Sherman testified to Congress that universities "resist taking action, or do as little as possible in order to brush off further responsibility" when it comes to P2P on their networks. (Read post at Digital Music News)

• A truce was called without as much as a press conference: Victory Records titles finally make an appearance at the iTunes Music Store. (Read post and comments at Punknews, via Idolator)

• Def Jam attempts to squash rumors that the label dropped rapper Method Man due to less-than-stellar sales. "Method Man is still part of the Def Jam family and he is currently on tour promoting his new CD," said a spokesperson in a statement. (Read article at SOHH)

• Rapper Beanie Sigel, on the other hand, says he is no longer signed to Def Jam or Roc-A-Fella Records. (Read article at SOHH)

• Study: HD radio still confusing listeners. (Read article at Radio and Records)

Posted by Glenn at 8:56 AM | Link
|EMI||EMI WMG Merger Talk||RIAA||Radio||Research||iTunes|

Promotions aren't just for the young. Bob Dylan is involved in a few specials that tend to be offered for young artists. iTunes and Bob Dylan are modifying the strategy of selling albums used by Prince during his tour two years ago. The music legend has teamed up with iTunes to offer the opportunity of a pre-sale to those who pre-purchase his new album, Modern Times.

He's also giving an exclusive to XM Satellite Radio. Modern Times will be previewed on three XM channels on Monday, September 28th. A pre-order of that album from Dylan's Columbia Records website will get the consumer a CD titled Theme Time Radio Hour With Bob Dylan, Baseball Sampler, a recording of a performance on XM, plus a 10% discount on additional Dylan purchases. Some physical retailers will also give away copies of the CDs with purchase of Modern Times.

Posted by Glenn at 1:32 PM | Link
|Apple||Touring||iTunes|

• Chris Morris of The Hollywood Reporter on Tower Records' deep financial problems and its impact on music retail and the experience of its customers. This jumped out: "One confidential source familiar with Tower's balance sheet put the company's debt to Warner Music Group's distributor WEA Corp. at $20 million. The same source said that one sizable independent distributor was owed $2 million." (The Hollywood Reporter)

• CD Baby has ended its business relationship with the Tower Records. (Digital Audio Insider)

• First day sales: Hits predicts Port of Miami by Rick Ross will debut at #1 with sales upward of 200,000. (Hits Rumor Mill)

• This may not amount to a whole lot: EMI Music Publishing has struck a deal with Qtrax that licenses its music catalog for an ad-supported P2P service. (Press Release)

• Top digital album last week? None other than Five for Fighting's Two Lights (Columbia), which sold 15% of its overall total in the digital format. The album debuted at #8 on the album chart. G. Love's Lemonade (Universal) is #39 on the album chart but #3 on the digital album chart.

• A current iTunes promotion, found via Billboard.biz (which requires registation, so no hyperlink will be given) is giving away select digital singles with the purchase of a video. For example, Anti-Flag's "The Press Corpse" single can be purchased for $0.99, or the video for "The Kill (Bury Me)" and the single can be purchased for $1.99. No indication is given as to how long the promotion will last or if more such promotions can be expected.

• Congrats, Kemado Records: Diamond Nights' "The Girl's Attractive" will be used in a worldwide Jaguar advertising campaign. (View the commercial here.) Also, "Destination Diamonds" will be the theme song for the upcoming MTV program "Little Talent Show." The songs are on the album Popsicle.

Posted by Glenn at 9:37 AM | Link
|EMI||Indies||Tower||iTunes|

News.com's John Borland wrote an article called "Apple's music: Evolution, not revolution" about the unveiling of iTunes in April of 2003, calling it "a solid, but hardly revolutionary, addition to the market." At the time its main competitors were Listen.com's Rhapsody, Pressplay (a joint venture between Universal Music Group and Sony Music that become the foundation for Napster) and MusicNet (a joint venture between EMI, AOL/Time Warner and BMG).

What Apple stressed at the time was the simplicity and the a la carte downloading, the two aspects that have made Apple the digital music leader.

"Label executives privately say the Apple service is an experiment, which could be expanded if it proves successful. Apple's small market share means that the stakes are relatively low... Apple essentially used two features to persuade the labels to give the company the benefit of the doubt. The ease of purchasing music was a draw. So was the light, almost invisible layer of digital rights management software that Apple built in-house and applied to the songs."

This didn't come to pass, did it?

"Rivals weren't convinced Apple's pay-per-song model marked any improvements in music distribution. Some noted that a mix of services would likely be more successful and that Apple might ultimately be overshadowed by other companies with more music retail experience.

'A lot of people are going to fight not only to keep up with Apple, but to surpass them,' said Zack Zalon, general manager of Radio Free Virgin, the online radio service of music retailer Virgin Entertainment. 'They're an excellent software company, not a music retailer.'"

Posted by Glenn at 5:50 PM | Link
|Apple||Digital Music||Online Stores/Services||iTunes|

paidContent has some notes on the recent Music Alley gathering in London that had a few panels that talked about digital media and music.

eMusic's David Pakman compared iTunes and eMusic. Apple gets very few downloads from each iPod owner (1 billion songs divided by 50 million iPods over three years). eMusic, he said, pays out an average of $5.62 per subscriber per month, or "2,858% more than Apple" according to his math.

It was Ted Cohen, though, and not Pakman who predicted a great rise for subscription services. Cohen thinks it will dominate the market while Pakman thinks subscriptions will be a niche player.

There was some talk of MySpace, of course. MySpace VP for European marketing and content Jamie Kantrowitz played down the controversies surrounding the site's use of music and the fact that it doesn't compensate labels or artists for audio streams. MySpace hasn't run into serious trouble, he says, because artists choose to upload their music (Beggars Group's Martin Mills agreed) and said, "MySpace is only 2.5 years old and down the line there may be other revenue models."

Posted by Glenn at 1:14 PM | Link
|Digital Music||MySpace||eMusic||iTunes|

Average price of yesterday's Top 40 albums: $10.97

Highest: Red Hot Chili Peppers' Stadium Arcadium at $19.90. This is a double-album with 29 tracks, and includes a digital booklet. (Amazon.com sells this double-CD for $11.99.)

For the highest single album there's a tie: Yung Joc's New Joc City at $13.99 for 16 tracks (three of which are interludes) and Dane Cook's Retaliation at $13.99 (for 29 tracks, some of which are not even one minute in length). Amazon.com sells New Joc City for $9.98 and Retaliation for $12.98.

Lowest: KT Tunstall's Eye to the Telescope at $8.91. (Amazon.com's price is currently $7.98.)

Coolfer wonders when competition will heat up to the point where digital stores will do what many physical and online retailers regularly do: price the music at or below cost. There's no sign of major labels' interest in dropping wholesale prices on the most popular songs and albums, and at this point Apple has no incentive to compete on price. We're still in the infancy of digital music, and early adopters always pay more because they have the means and the willingness.

Posted by Glenn at 1:28 PM | Link
|Apple||iTunes|

Coolfer reader You Can Take The Boy Outta Brooklyn noticed this site's comments about upward iTunes price creep (which weren't specified as being upward, really, but that was the intent). It mentions the downward creep as well and lists some albums that have iTunes prices well below the $9.99 standard.

• PJ Harvey: Stories from the City - Stories from The Sea, $7.99
• Tricky: Maxinquaye, $5.99
• Tom Waits: Bone Machine, $5.99
• Tom Waits: Rain Dogs, $6.99
• U2: Pop, $6.99

The point of all these Coolfer posts about different prices at iTunes is to show variable pricing -- a big issue between Apple and major labels -- already exists. The single download price is stuck at $0.99 per track, but album prices fluctuate wildly.

The ability to search by price would be a nice addition to iTunes. Otherwise, finding a bargain takes digging or luck.

Posted by Glenn at 1:04 PM | Link
|iTunes|

Digital music shoppers need to be aware of different prices for the same titles. Just compare the price of Miles Davis Quintet's Fantasy titles at iTunes and eMusic. Cookin' With the Miles Davis Quintet was just added to iTunes with a price tag of $9.99. A 40-song subscription to eMusic is $10 per month, which means a person could buy the four-song album ten times at eMusic for the same price of of one purchase at iTunes. (Relaxin' With the Miles Davis Quintet is $5.99 and Workin' With the Miles Davis Quintet is $7.99.)

A further benefit: eMusic's downloads are DRM-free MP3 files. Though iTunes seems DRM-free to a lot of people because they aren't going outside of the iTunes-iPod walled garden, iTunes does indeed limit the use of its AAC files with DRM.

iTunes offers majors and indies eMusic offers only indie labels. Mainstream shoppers might feel lost looking at eMusic's highlighted titles, and they might be cowed by the idea of an ongoing subscription. But for a person who frequently buys music and is able to look beyond iTunes for digital downloads, eMusic's subscription service will reward them with big savings. Yes, variable pricing already exists...for those who are willing to shop around.

Posted by Glenn at 4:14 PM | Link
|Digital Music||Online Stores/Services||eMusic||iTunes|

More new releases at iTunes go over the standard $9.99 price point.

• Jewel: $13.99, includes a video and an interactive booklet. (Purchased individually, the 13 audio tracks would cost only $12.88.)
• Springsteen: $10.99, includes digital booklet
• Goo Goo Dolls, $11.99, video for "Better Days"
• Mercy Me, $10.99, includes digital booklet and an exclusive track
• The Streets, $11.99, includes two bonus tracks and digital booklet

Items that would normally be used as no-cost, value-added items to entice consumers aren't being used that way at all. They're being used as extra content to help rationalize a higher price. It's similar to the strategy used for selling CDs. Some labels, such as Sony BMG, haven't wanted to drop prices so they've added content or released titles in the DualDisc format.

On the other hand, Godsmack's IV is $9.99 and includes an exclusive live version of "I Stand Alone."

Posted by Glenn at 2:10 PM | Link
|Digital Daily||Online Stores/Services||iTunes|

Apple renewed contracts with the four major music groups and will sell its songs for $0.99 apiece, effectively winning the most recent Cold War between the technology company and the disgruntled major labels.

Two majors, Warner Music Group and EMI, publically called for variable pricing. Execs at Universal Music Group and Sony BMG were less vocal about the matter -- especially at UMG. Some execs agreed with Apple's Steve Jobs and felt changing the price would harm sales by making the process of buying downloads more difficult.

Of course, variable pricing on albums already exists -- to a small degree -- at iTunes. Songs, though, will stay at $0.99. Could album prices begin to rise even more now that single downloads are fixed through the life of these contracts?

Previously at Coolfer: A Vote For Variable Pricing

Posted by Glenn at 10:16 AM | Link
|Apple||Digital Music||iTunes|

Not sure if Coolfer had ever wondered this in a blog post, but in conversation Coolfer had often asked when iTunes was going to start accepting marketiing dollars. At some point, I figured, Apple would start looking at its razor-thin margins differently. Either it would view iTunes as an inseparable partner to the profitable iPod, or it would look at iTunes as a standalone operation...and want to improve profitability.

Sunday Ad Age reported that iTunes would soon have advertising. They won't be ads for albums sold at the store, though. Initially advertising will be limited to ads in the lower left of the screen when users listen to podcasts on the iTunes music player. This is the business equivalent to putting a small speck of stain cleaner on the inside of a shirt. If the shirt's color is ruined, at least no real damage was done.

The big question is: When will iTunes accept advertising from labels, and how would thoes be incoporated as to not seem overbearing or obvious?

(Link via Hypebot)

Posted by Glenn at 11:34 AM | Link
|Apple||Online Stores/Services||iTunes|

Tony Brummel has offered a good deal of entertainment and raised important points this year. A thread at The Velvet Rope has an exchange between Brummel, the owner of Victory Records, and Apple's Steve Jobs.

Brummel, who has been vocal about his refusal to sell his label's music at iTunes, reached out to Jobs in an effort to see the two companies "working together in a proactive and revolutionary way" and expressed disappointment at the ways iTunes' people responded with a "pompous, uneducated and condescending demeanor."

Jobs asked what Brummel wants, Brummel responded with a loose plan for a mutually exclusive, anti-corporate relationship that would be a "great headline/story" and a "great PR campaign." Jobs was succinct in shooting down Brummel's ideas.

And that's when Brummel let fly.

The entire email exchange after the jump...

Continue reading "The Brummel-Jobs Email Exchange" »

Posted by Glenn at 12:45 PM | Link
|Apple||Indies||iTunes|

Forget the upcoming battle between Apple and the major labels over variable pricing. Prices already vary. The current average cost of an album of iTunes' current Top 40: $10.50.

Not $9.99? No, and here's why: Five of the Top 40 albums cost $9.90. Eight of them cost $11.99 or more. Two cost $12.99. Two cost $13.99.

The two most expensive albums are T.I.'s King -- which has 17 tracks and is sold as a single CD -- and Dane Cook's Retaliation, which has 29 tracks and is sold as a double-CD.

One of the $11.99 albums is Bob Marley's Legend, which is a perennail top selling catalog album. Amazon.com sells the CD for $11.96.

Only two of the more expensive albums are what could be considered as proper double-albums -- Ben Harper's Both Sides of the Gun and Cook's Retaliation. The Flaming Lips' At War With the Mystics is long, and it has bonus content, but it's not a double-album. (Update: I didn't see the normal version, and according to a post at Digital Audio Insider a lot of other people aren't seeing it either.)

And what does one get for paying $11.99 for James Blunt's Back to Bedlam? A digital booklet and a video for his hit single "You're So Beautiful."

One of the titles in the Top 40 is a video collection. Queen's Greatest Video Clips 1 costs $11.99 for seven videos.

The cheapest album of the group? KT Tunstall's Eye to the Telescope. Virgin is trying to break KT here in the States, which would most likely explain the lower price. If she suddenly blows up, expect the price to blow up as well.

Posted by Glenn at 12:15 PM | Link
|Digital Music||Online Stores/Services||iTunes|

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|

• Analysts point to France's bid for digital interoperability as a possible gateway to further growth. This factoid sticks out: A European study found that consumers are prepared to pay twice as much for a song that can be moved freely between devices. (News.com)

• Sticking with the same topic, the NY Times quotes a London-based analyst as saying Apple could pull out of France altogether if the country passes legislation requiring the iPod to play music from competing services. "My gut feeling is that Apple will simply pull out of France if these amendments get through. Weighed against breaking their business model for all markets, it doesn't make sense for Apple to continue operating with the iPod and iTunes in France." (NY Times)

• The latest on Microsoft's iPod killer: it will combine video games, music and video, and it may not be out until 2007. (A&R Interactive)

• Hypebot lists a group of Web 2.0 companies that are putting together music software/applications, such as Bebop Mercora and Odeo. (Hypebot)

• ECast, a digital jukebox company, raised $5.2 million in funding. (paidContent

• Groove Mobile, a mobile music technology provider that powers Spring's over-the-air download service, ha raised $8.5 million in a second round of financing. (Digital Music News)

• Lifehacker readers suggest where to find new music online. eMusic was mentioned most often. (Lifehacker)

• Archos unveiled a new 4 B 104. It has a $149 price tag, works with Microsoft's battery-draining PlaysForSure and is a bit thicker than an iPod Nano. (Engadget)

Posted by Glenn at 1:28 PM | Link
|Digital Music||Online Stores/Services||Portable Music Players||Venture Capital||iTunes|