Pretty much any person to write, talk, blog or Twitter about music streaming service Spotify has praised it to no end. In a world in which the term "iTunes killer" is tossed out without caution, Spotify is being hailed as a legitimate successor to Apple's market-dominating player/store. Capturing some of that market share would depend on two things: (a) a great product and (b) the ability to generate revenue and be an ongoing concern. The former is a lot easier than the latter.

Brand Republic continues the praise but gets to the heart of the matter: Can it make money? Can it integrate advertising and keep its non-paying customers?

Opinions vary, but some feel Spotify has as good a chance as any to successfully merge advertising and streaming music. The head of technology at an interactive agency calls Spotify "the start of the future of audio advertising" and ads it is more targeted that radio advertising and allows for direct response ads for brands. An ad-supported version of Spotify inserts a one-minute audio ad every 30 minutes. An ad-free version costs £9.99 per month. (U.S. users cannot yet use the service.)

Spotify CEO Daniel Ek talked with The Telegraph just last week about what it offers to advertisers:

We can facilitate a number of other things for brand advertisers such as mood targeting. We can also target demographics more clearly than offline media channels. In light of a financial crisis, the focus should be on providing the ad industry with a value that they don’t currently get. Those services that can provide that value will survive and those that can’t will have a hard time.

Posted by Glenn at 10:36 AM | Link
|Online Stores/Services|

You may get run over by Omnifone's runaway PR campaign sometime today or this week. The company has announced MusicStation Next Generation, a "revolutionary" music service that offers "unlimited access to the world's music" and ushers in a "new era" of entertainment. (read press release).

It's a familiar refrain. All that is known at this point is MusicStation will available to consumers through their ISPs and that the service will offer both streams and downloads. That's it.

Here's what we may or may not know: MusicStation is "expected" to be offered as both a monthly fee bundled with the consumer's ISP bill, and as a pay-as-you-go choice.

Here's what we don't know: what file format will be used, anything about the user interface, size of catalog, if there are compatible portable devices, pricing and what ISPs in what countries will offer the service.

At first blush, this feels like another case of bad engineering. Too many times, a music service is shaped far more by the terms of licensing agreements than by consumer preferences. A better approach is to create a service with consumers in mind and then find the market. Judging from the anti-piracy hosannas in the press release, the goal of MusicStation is to satisfy content owners and offer ISPs a way out of legislation and lawsuits. But what about the consumers?

Posted by Glenn at 8:38 AM | Link
|Online Stores/Services|

As VentureBeat pointed out yesterday, Pandora has added advertising to its popular iPhone application. VentureBeat called the ads "unobtrusive" and described them as "simple overlays that reside right above the main navigation." Best Buy and Beck's beer are on board, and Pandora founder Tim Westergren told VentureBeat due to the unexpected level of the application's popularity he expects all advertising inventory to be taken soon.

Pandora, which had publicly fretted about royalty rates, is probably breathing easier after today's announcement of an agreement on Internet royalties between all the major parties.

For more on Pandora, watch the interview with Westergren at this April 2007 post at iinnovate.

Posted by Glenn at 1:32 PM | Link
|Mobile Music||Online Stores/Services|

In this USA Today article about Rhapsody's new plan of attack for its subscription service, JupiterResearch's David Card predicts subscription revenue will grow 20% per year for the next five years, and Rhapsody will still be the #1 service. That would put consumer spending at $600 million in 2012.

In the same article, Inside Digital Media's Phil Leigh is less optimistic. "I think Rhapsody will wither away, and eventually reincarnate as an ad-supported business."

I'm neither as optimistic nor pessimistic as the two analysts, but I'm on the side of Leigh. Subscriptions, as they exist now, are going to have to survive with a cult following and can do so as long as the company isn't a pure play (a bad sign for Napster).

Analysts, I believe, are right in one aspect of their assessment: broad demand for subscriptions exists. But it's a latent demand, meaning current products will not satisfy the demand. If that 20% growth materializes it will likely come from a new generation of mobile subscriptions. If mobile subscriptions (think Nokia's Comes With Music) gain traction and even come close to expectations, growth will be more than 20% per year. If in the coming years the subscriptions category includes ISP-based services (fixed number of MP3 downloads for a monthly fee) then subscriptions definitely have growth potential exceeding 20% per year.

Neil Smith, VP of business management for Rhapsody America, said subscriber acquisitions were "doing much better than we had expected" but offered no details.

Analysts have been overly optimistic with their forecasts this entire decade (everybody but Leigh) and regularly tone down their forecasts. JupiterResearch has already lowered its January 2007 growth estimate from the 32% annual growth rate it predicted for 2007-2011. In November of 2005, Jupiter was saying subscriptions would come in at $250 million for the year. In 2002, Forrester forecasted 2007 subscription revenues at $313 million (to be fair, a forecast that far in advance is hard to get right). Right now, Forrester estimates 2008 subscription revenue will grow 15% to $287 million.

I'd be surprised if consumer spending in the U.S. reached $287 million, and I wonder about the estimates of market revenue. The RIAA put 2007 subscription trade revenue at only $103.3 million. That figure was $98.5 million in 2006. For the sake of argument, if we apply Napster's cost of revenue, most of which is royalties for subscription services, to the RIAA's 2007 trade revenue number, we get only $148 million in consumer spending. With RealNetwork's lower cost of revenue for music, we get consumer spending of $184 million. Even if you combine the music revenue from Napster and Rhapsody for their most recent fiscal years, you get only $276 million for all territories in the world -- and that includes revenue from a la carte downloads and advertising. (In 2007, RealNetworks got 63.5% of its revenue from the U.S.)

Verizon would have to do a great job selling Rhapsody to its mobile subscribers. It is, basically, the same product that consumers have greatly ignored for years. Verizon should gain some untapped demand just on the basis of its sales and marketing. Hopefully future SEC filings will shed some light on their progress.

Card sounded less optimistic in a recent Billboard article. "Rhapsody's a great product if you're a sophisticated music fan, but it has not proven to have mass-market appeal yet," he told Antony Bruno. "Putting it on a phone may not make that much difference."

Given Apple's domination and the iPod's entrenchment, the success of the iPhone and iPod Touch as music players, and the limited commercial appeal for binging on tethered downloads, I see little reason to believe subscriptions -- in their current incarnation -- have significant growth in them.

Posted by Glenn at 2:58 PM | Link
|Napster||Online Stores/Services||Rhapsody|

TechCrunch has a long post on TotalMusic, the major label-led digital music initiative that faded away after a DoJ antitrust investigation. Writer Erick Schonfeld received comments from several sources that point to a TotalMusic revival.

Multiple sources in the Web music industry (including two CEOs and another executive) have told us that the music labels are mulling over another attempt at creating their own digital distribution business, or at least one they can control. Details are sketchy, but the buzz is increasing around a project to create a free, advertising-supported streaming service that would be licensed or white-labeled to other Websites. Each stream would link directly to a paid digital download. Some believe that a revived TotalMusic and this project are one and the same.

Scholfeld found four people on LinkedIn who list TotalMusic as their employer. All four list Chicago as their home town. The EVP of Product Engineering, according to his LinkedIn profile, is Ted Ferguson, a former VP of Digital Product Strategy for Universal Music Group. And Scholfeld ran across a job posting for a software engineer. That job posting lists the company's headquarters as Herndon, Virginia.

One item not mentioned in the TechCrunch post is the connection to Ruckus. The website listed in the job posting: www.ruckusnetworks.com, the company provides a music and video service to university students. The contact given on the TotalMusic job posting is the Director of HR for Ruckus Network. And the Herndon address on the TotalMusic job posting is the same address given from Ruckus Network in the Ruckus end user license agreement.

The connections between the two companies is unknown, but it's clear the person in charge of HR for Ruckus is hiring for TotalMusic.

The job posting has this to say about TotalMusic:

TotalMusic, LLC is a new digital music platform offering the integration of music discovery, streaming and downloads into a wide variety of online and mobile environments. We have solid financial backing and a staff with decades of combined experience in online music.

While little is known about TotalMusic, more is known about Ruckus. The company, which counts Anschutz Investment Company as one of its backers, has a media industry-friendly business model that is packaged to help universities prevent digital piracy on their networks. It is a model not dissimilar to that of TotalMusic, which, from these few reports, appears to be an attempt to give consumers legal alternatives to the many unlicensed sites and services that exist.

Posted by Glenn at 11:14 AM | Link
|Online Stores/Services|

One specific thing made me wince when I read that Dell is working on a new MP3 player (a second stab at the market). I'm fine with a new Dell player. There is certainly room for more MP3 players, although I think the odds that Dell is going to either grow the market or capture all but a sliver of Apple's share are very slim.

No, the word that did it was subscription. From Justin Scheck's article in today's Wall Street Journal:

Software would connect the device to an online subscription service that Dell expects to launch later this year. Through licensing agreements with online music providers, Dell's new service will let consumers download songs and move them between devices like PCs and cellphones. While the device Dell is testing is focused on playing music, Dell's new service also would allow movies to be downloaded and displayed on PCs, for example.

I'm reminded of a line from Seinfeld in which George says like, "Thousands of years people have been trying to have their cake and eat it too. ... Where do you get the ego?." It's like Dell is saying subscriptions haven't taken off because nobody did them right, not because the subscription's entire value proposition fails with all but 0.5% of the U.S. population.

Dell's hardware will be based on software created by Zing, a company it purchased last year. Zing's technology thus far has been centered around subscriptions and allowing devices to connect to one another and to a network. Zing software is included on portable satellite radio players and the Sansa Connect player that works with Rhapsody.

There are no additional details, but the mention of a subscription is suprising. Just when it was become abundantly clear that subscriptions based on DRM have more downside than upside, companies are still giving it a go. DRM-free tracks could be put on a Dell device (or any of them) but it appears Dell wants to push the device's interaction with the subscription service as a key selling point. Since the service could be far different than what has been attempted to date -- it would have to be -- I'll reserve further judgment until more is known.

Commentary worth your time can be read at Gizmodo, Silicon Valley Insider and Crave.

Posted by Glenn at 11:53 AM | Link
|Online Stores/Services|

Subscription revenue was flat in 2007, according to RIAA figures (revenue dropped slightly and the number of subscribers rose very slightly). That's not a surprise. Music services have not offered a compelling value proposition to the typical consumer. I can count the number of music subscription enthusiasts I know (including myself) on one hand.

Maybe that will change. In an article titled "How Apple is Changing DRM," The Guardian approaches the idea that Apple will sooner than later get into the music subscription space.

(Bill) Rosenblatt (of GiantSteps Media Technology Strategies) thinks that subscriptions may turn out to be Apple's answer to the DRM-free competition - because it has already laid the groundwork with films which expire a certain length of time after being downloaded or watched. "You can now rent a movie on your iPod. The functionality on the iPod that enables that to happen is part of the functionality that you would need to support music subscription services," Rosenblatt says.

And later some opinion from Jupiter's Mark Mulligan.

"It's highly likely Apple will get into the next-generation service game. That could be Apple selling iPods preinstalled with unlimited access to music, or with a bundle to a subscription offering," he says. Mulligan sees the market evolving into multiple tiers. At the top end, a minority will be willing to pay a premium for the best quality, DRM-free downloads. The middle tier will be "subsidised offerings like Nokia's Comes With Music, where you buy a device and the cost of the music is included subsidised"; while at the bottom will be advertising-supported services such as Qtrax, SpiralFrog and We7, where free music is paid for by embedded advertising.

Steve Jobs has been cool on the idea of launching a subscription service. But, as the article points out, "DRM might not stop pirates, but it does rivals." DRM-free downloads just might be the impetus that gets Apple into subscriptions.

Posted by Glenn at 1:16 PM | Link
|Apple||Online Stores/Services|

BusinessWeek.com has an article on brick-and-mortar retail's adjustment to falling CD sales. New York City's Other Music is a centerpiece of the article.

Filter through the requisite industry statistics and analyst quotes and you get to a few interesting things. First, the article claims its download store now account for a quarter of all Other Music sales. Second, Other Music hopes to have sponsors underwrite the in-store performances it records and streams from its website.

On a side note, the article comes with a slideshow of Other Music strategies for merchandising and selling music. Slide #7 shows the store's handwritten reviews that line its shelves. This has to be the most underused, overlooked weapon in physical retail. I'm such a sucker for a handwritten review. It's the closest you can get to a recommendation from an employee.

Posted by Glenn at 6:45 PM | Link
|Marketing||Online Stores/Services|

last.fm issued a press release saying its "free music boosts CD and download sales"...which makes you wonder how bad CD sales would be without all those free streaming services.

Yes, free music looks to improve music purchases, but be careful how you word the claim. Just being free won't do it. It's the type of free service that matters. (You have to dig into the press release to see co-founder Martin Stiksel relate the type of service to the sales.)

last.fm claims its sales of CDs and downloads through Amazon.com have increased 119% since its free-on-demand service was launched in January.

The bottom line here is people like on-demand streaming services more than non-interactive streaming services. Why? Because people aren't nearly as adventurous as is usually thought. They like running across new artists from time to time, but they'll take a sure thing over online radio's crap shoot any day of the week. They like familiarity with the occasional out-of-left-field discovery. Those early-adopter types that lust for fresh songs represent just a small slice of the bell curve.

If the music is not on-demand, people are going to run across their favorite songs less frequently. What are people more likely to buy: An unknown song that was picked by an algorithm or a song the user already likes enough to select personally? It's got to be the latter. There's a good portion of the 119% increase.

Part of the increase comes from a rise in last.fm subscribers. The company says existing users purchased 66% more music after the on-demand service launched.

Posted by Glenn at 3:25 PM | Link
|Online Stores/Services|

A good post over at Alley Insider pointed me to a USA Today article about the battle for bragging rights as runner-up to iTunes in digital music sales. Amazon.com says it is number two. eMusic says it is number two. The USA Today reporter called up four majors -- who have no relationship with eMusic outside of equity ownership of some indies -- and they all said Amazon.com.

eMusic's David Pakman pointed out the number of tracks it sells every month -- about 70 million. But labels get less for each eMusic track than they do for each Amazon.com download. In terms of total billing Amazon.com could very well be ahead of eMusic. What matters most to record labels -- and pretty much every other company that I can think of -- is total billing, not number of units sold. eMusic's revenue sharing model typically pays out in the $0.25 to $0.30 per track range (some payout info at this post). Amazon.com is probably getting around $0.65 to $0.70 per track. If number of units were so important, I'd exchange paper bills for pennies and walk around feeling like a king.

And if Amazon.com's entry and ditching DRM hasn't caused a noticeable spike in download sales, so what? There wasn't going to be an immediate reaction. Trends in music are long term. Download trends aren't like the stock market, which jumps every time the Fed chairman blows his nose. Consumers take time to adjust their shopping habits. I fully believe that selling only unprotected files will help sales in the long run -- new ideas, new stores and services, more entrepreneurship -- but not so much in the short run.

Posted by Glenn at 9:04 PM | Link
|DRM||Online Stores/Services|

A reader asked for some suggestions on tools and practices "for someone steadfastly NOT going to do live gigs" who wants to ignore the typical advice to give away MP3s and play lots of gigs. The good thing is there is no shortage of online tools for the stay-at-home musician, and it's something I was planning on writing about.

There is no shortage of new companies that offer services to independent musicians. In fact, the number of options may surprise you. Musicians should keep in mind two things. First, some of these companies may not be around in a few years. Second, the stay-at-home musician will be responsible for the legwork. These sites offer only the tools for online sales and promotion. Artists will need to find listeners and build a following using their own websites and/or social networking pages (MySpace, Facebook). Each company has different payouts (they're pretty similar) and different fine print, so do your homework.

Here are a few of the many companies:

A few weeks ago I took a look at Speakerheart, a new company that is an offshoot of PassAlong Networks. Speakerheart combines digital distribution services with online sales tools and does it all with an elegant, easy-to-understand interface. The 'Shelves' tool is Speakerheart's widget/storefront that can be placed on websites, MySpace pages, etc.

Nimbit offers distribution to major download stores and a customizable widget for your website or social networking page. Indie911 offers the Hooka to artists. Their Hooka is a widget that enables sales as well as hooka-to-hooka online chat. The company also offers digital distribution.

Here are two that lack distribution. Musicane is another that allows users to create a sale page or embed a widget (the company calls it a "viral media store"). INDISTR allows artists to create a page and sell through its site.

For distribution, stay-at-home musicians have TuneCore as the best option get their music to the main online stores and services.

CD Baby brings together physical and digital. The site acts as an online consignment store. Artists send their CDs to CD Baby and a unique artist page is created and hosted by CD Baby. The company also acts as a digital distributor to all the main players (digital tracks are taken from the artist's CD, so this is an option only if an artist wants to get CDs made).

For promotion, Garagaband.com is an option. It is a community-based site for listeners who seek new music. People rate the music they hear and Garageband lists the top-rated songs and artists.
Radio stations and podcasters give top-rated artists a good deal of exposure...though not all genres are going to work here.

AmieStreet is open to independent musicians and differentiates itself by using demand-side dynamic pricing to sell its music. Keep an eye on this one. Some major indies have signed up, and the company counts Amazon.com as one of its investors.

Finally, Snocap is still an option for a sales widget but the company is in a state of flux. It was recently acquired by imeem.com.

Continue reading "Tools For The Stay-At-Home Musician" »

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

It's been a busy week for Yahoo. Layoffs. A Microsoft buyout offer. And now Yahoo has announced it will drop its music service and switch over to Rhapsody's subscription service. (This makes an acquisition by Microsoft all the more interesting since Rhapsody and the Zune Marketplace would become a sibling rivalry.)

This will be a good test for the subscription value proposition. Yahoo's huge user base creates an enormous potential market. How much of that potential can be tapped is still the big question. Digital music rental simply turns off consumers. If anything is going to work, I think Universal Music Group's Total Music stands the best chance.

Posted by Glenn at 1:50 AM | Link
|Online Stores/Services||Rhapsody|

The International Herald Tribune has a good look at how the record industry is trying to define, offer and monetize "free" music.

Qtrax, a free, ad-supported P2P service that will launch tomorrow (in the U.S., Canada and seven other countries) is a centerpiece of the article. Qtrax, which has signed up all four majors, claims its music will be portable for PC users by February 29 and for iPod users by April 15. PC users will get Qtrax tomorrow but Apple users will have to wait until March 19, according to Qtrax chief executive Allan Klepfisz. (Read more about Qtrax at this Silicon Alley Insider post.)

The most sensible quote from the article is from Jamendo CEO Laurent Krantz: "Free is complementary. Free is not the opposite of pay. We see there is no cannibalization with free."

Update: Universal Music Group and Warner Music Group both deny they have licensed their catalogs for use in Qtrax's service. "Over the weekend, QTrax officials were still trying to convince Warner and UMG to sign on. On Saturday Robin Kent, who handles marketing for the company, allowed that its paperwork with labels might not be up to date." (Silicon Alley Insider)

Posted by Glenn at 1:28 PM | Link
|Online Stores/Services||P2P|

• The Slacker music service has some news on the portable music player. Most interesting tidbit: music synced from the stations is stored in protected AAC format and is kept in "hidden" storage. (Engadget)

• China Telecom has announced a new digital music service that partners with eight music companies, including the four majors. IMUSIC will feature ringtones, online trial listening, downloads, news and membership services. (TMCNet)

• Professionals talked artist development at the Billboard Touring Conference & Awards. (Billboard.biz)

• Canadian country music manager/label owner Louis O'Reilly is moving to Nashville to start a new label. On Ramp Records has the backing of EMI Canada. (The Star Phoenix)

• Though you may have read about it by now, I have not mentioned EMI's lawsuit against MP3Tunes and Sideload, two services created by MP3.com founder Michael Robertson. While some RIAA victories have obviously shaped the course of digital music -- Grokster is a prime example of how entire business models were impacted -- services like Sideload haven't got enough judicial clarification to keep labels from suing upstarts. Wired has a good article on the subject with a lengthy email from Robertson himself. Definitely worth reading, if only to get a sense of what's driving the lawsuit. (Wired)

• Social.fm is the latest to offer a Facebook widget. (Press release)

• Houston's Cactus Records, closed for a year and a half, has reopened with a new owner and a new location. Like many successful small stores, Cactus puts an emphasis on local artists. (Houston Chronicle)

Posted by Glenn at 8:43 AM | Link
|Online Stores/Services|

Amazon.com's greatly anticipated music download store launched today. Here is a bullet list of things that first caught my eye:

• The title alone says it all: Amazon MP3. No association whatsoever with other, doomed file formats. Protected WMA would have been a huge non-starter for customers.

• There are so many titles listed and the catalog is so well presented, one may not notice the gaps represented by the missing Warner Music Group and Sony BMG titles. The relatively thin catalog is more evident if you notice there is only one new age album and just two opera albums listed in the "bestselling new and future releases" section.

• Who said variable pricing is a bad thing? On the left sidebar Amazon.com has put links to bargain albums: $4.99 and under, $5.00 to $5.99, $6.00 to $6.99, etc. Though I expected to find a lot of EPs mixed in with the albums, I was surprised to find legit catalog titles by Bon Jovi, John Coltrane and 50 Cent, as well as LCD Soundsystem's latest album (for a mere $5.99). Albums priced at $7.99 or less are showcased on the "New and Future Releases" page as well.

• Yes, they've got Radiohead...but full album downloads only (except for a couple of songs from compilations).

• Though prices for individual tracks vary, each of the Top 100 tracks has a price of $0.89. The first track priced at $0.99 is #149, Guns N' Roses' "Patience." Amazon's blog post claims one million of the site's two million downloads are priced at $0.89 and "most albums" are between $5.99 and $9.99.

• While prices are cheaper than iTunes, it can still pay to shop around. Two of the first albums I saw, Manu Chao's La Radiolina ($7.99) and Les Savy Fav's Let's Stay Friends ($8.99), are available at cheap-o subscription store eMusic for far lower prices and in the same MP3 format.

• How to push album sales: Let people know the difference between buying the album and buying each song individually. For example, the pitch at Devenda Banhart's Smokey Rolls Down Thunder Canyon page: "Album Savings: $6.85 compared to buying all songs." Well done.

• There are no customer reviews for the digital albums even though the album's CD page is filled with reviews.

• Lots of cross-selling. CD pages let the shopper know if the MP3 album is "Available To Download Now." For example, KT Tunstall's Drastic Fantastic costs $11.99 for the CD or $8.99 for the download. Download pages have links to the CD page.

• The site lists upcoming MP3 albums and singles but unlike iTunes does not appear to allow for pre-orders.

• I haven't seen an attempt to sell MP3 players at any of the download pages.

Posted by Glenn at 10:09 AM | Link
|Online Stores/Services|

• Just a week after her terrible performance at at the MTV Music Video Awards, Britney Spears has reportedly been dropped by her management company, The Firm. A statement by the company says "current circumstances" have prevented it from properly doing its job. (NBC4.com)

• Digital store 7digital has at least two things iTunes does not have: Radiohead albums and the ability to sell to consumers in any country. (Listening Post)

• Here's a really good, lengthy article on the changing live music industry and how it is robust in an era of label sluggishness. "An expanding audience has allowed promoters to push up ticket prices, tempting more artists out on tour, creating demand for ever more elaborate shows and attracting investment in a new generation of venues to cater to concert-goers." (The Financial Times)

• Citing differences over amounts paid to the label, Epitaph has left eMusic. (Digital Music News)

• Larry Jenkins has been named the EVP of CBS Records. Jenkins is a former SVP of marketing & media for Columbia Records. (Variety)

• MC Hammer is preparing the launch of his new venture, a web site called DanceJam. The site, which has well known investors, is a mix between YouTube and "American Idol." (Don Dodge, via Techmeme)

Posted by Glenn at 10:24 AM | Link
|Live Music||Online Stores/Services|

• The New York Post has reported that Steve Bartels, an operations executive at Island Def Jam Music Group and president of Island Records, will also be the president of the label group. (New York Post)

• Prince, just weeks ago a leading light for the future of the music industry, has entered the muddy, new media-vs-old media fight. The artist is threatening to sue YouTube, eBay and The Pirate bay for failing to filter pirated versions of his content. (Epicenter)

• Ad-supported music download site SpiralFrog has finally launched. I recently reviewed the beta version of the site. Read that post here. Even though my post came before deals to include the catalogs of IODA and INgroove, the site still looks like a Universal Music Group exposition. (UMG is the only major to have signed on.)

• UMG's Fontana Distribution will distribute Amoeba Records, the label founded by legendary retailer Amoeba Music. (Press release)

• CrunchGear has a positive yet thin review of new music service Grooveshark. I have registered witht the P2P service but have not yet given it a whirl. Expect some comments within a week or so. (CrunchGear)

• Sony BMG has joined with Starwood Hotels & Resorts Worldwide to offer customized programming for Starwood hotels. Starwood believes it will offer exposure to Sony BMG artists. Sony BMG is excited to give each different hotel brand a different sound and feel. Of course, other than promotion a goal is the upsell (always an iffy proposition if you ask me). Starwood will sell $20 CDs with Sony BMG artists. (Reuters)

• 20 great music applications for Facebook. (Mashable)

Posted by Glenn at 9:45 AM | Link
|Online Stores/Services||Sony BMG|

• As part of the 100-day plan of new Yahoo CEO Jerry Yang, Yahoo Music is expected to be trimmed and its subscription music service could be retooled or shut down completely. (Reuters)

• Antitrust lawyers insist the new line of iPods indicate Apple is as anticompetitive as ever. Coughlin Stoia Geller Rudman & Robbins and other lawyers have a class-action lawsuit against Apple over its "anticompetitive products." The issue is the iPod's inability to play protected formats other than its proprietary FairPlay protected AAC format. A court date has not yet been set. (Wired)

• The Times Online profiles Rough Trade Records and looks at what the influential indie has done since it teamed up with Beggars Banquet. "We’ve got the first solo album from (the former Cocteau Twins vocalist) Elizabeth Fraser, new work from the Strokes and Belle and Sebastian; Antony (and the Johnsons) is making a new album, Green (Gartside) is working hard on a new Scritti Politti record and Sufjan is making a new record. Which state? He hasn’t revealed that yet.” (Times Online)

• Following LiveNation's entry into the Facebook widget scene, TicketLeap.com now has a widget that will allow Facebook users the ability to sell up to 5,000 tickets to their own events. TicketLeap.com caps each ticket price at $200. (Ticket News)

• Vodafone U.K. has unveiled its new music service. MusicStation, a collaboration with Omnifone, will allow users to download an unlimited number of songs from a catalog that includes all four majors. The service costs ₤2 ($4) per week. That's more than an annual subscription to either Rhapsody, Napster or Zune. (MarketWatch)

• Indie label firm PIAS Group has acquired a 50% stake in mobile marketing and distribution company Indie Mobile. PIAS looks at the deal as a tool to better serve its roster of over 400 labels. Five-year-old Indie Mobile offers such services as mobile licensing, content creation, retailing and marketing. (Billboard.biz)

• Try as I might, I just don't have much of an opinion on the ringle format. Billboard's Ed Christman calls ringtones a "phenomenon." Christman knows his stuff, but aren't ringtones stagnant? If ringtones weren't a stagnant format, would labels be putting them on physical discs and selling them in national retail chains like Wal-Mart and Target? No. But hey, leave no stone unturned. P.S. Somebody start a ringle Wikipedia page. The only current ringle page is for Ringle, Wisconsin. (Billboard)

Posted by Glenn at 10:22 AM | Link
|Mobile Music||Online Stores/Services|

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

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

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

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

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

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

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

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

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

The SpiralFrog home page

The nice folks at SpiralFrog sent me an invitation to the beta, so for the last few days I have been playing around on the ad-supported music download site. SpiralFrog allows users to download protected WMA files at no cost. Since the files are WMA, SpiralFrog will not work with iTunes. Tracks may be transfered to compatible portable devices, but I have not yet dug up my old Sansa MP3 player so the files I download have not made it past my hard drive. Downloaded tracks go in a SpiralFrog folder (mine is in my standard "My Music" folder along with everything else) and can be played on any music player compatible with protected WMA (I used both WIndows Media Player and the Slacker player).

In a nutshell, I think SpiralFrog is an average product that misses its greater potential. With some tweaking I think it could carve out a nice little niche. SpiralFrog does nothing wrong per se -- it lives up to its goal of offering free music to users -- but it feels half-finished. While the site design is clean and simple, it is also bland. The site currently offers about 700,000 tracks, but SpiralFrog's shallow facade offers no hint of such depth. Navigation, layout and search functions are poor compared to those of other download sites. If price dictates user experience, then you definitely get what you pay for.

The music is not organized very well. Imagine walking into a store and seeing only a few items on display. There are more items, but they are in an adjacent warehouse, arranged alphabetically in immense stacks. That's what browsing around SpiralFrog felt like. The "artists" page reveals an alphabetized list of names with about 200 listings to a page. (I was annoyed with all the blank space on a typical page. Too much scrolling is required to browse around.) Users can jump to any letter in the alphabet -- good for a small, brick-and-mortar record store, bad for an online store with a huge catalog. The "new releases" page displays a similar lack of care.

The SpiralFrog artist page

Downloading songs, which requires the simple installation of a download manager, is an easy but time-consuming process. The download manager is so basic even a beginner will now how to use it. An album must be downloaded one song at a time, and download times are long. I timed a download of the 5:06-long "Rave Down" by Swervedriver at 88 seconds.

The SpiralFrog business model is built upon the assumption that users will view the site's ads. How much time will actually be spent on the site can vary dramatically. For example, a user does not have to view ads for every download. Songs are downloaded one at a time, but I did not spend time looking at the ads while downloading an album. After I clicked the "download next track" button, I toggled to another browser rather than spend 88 seconds (or whatever) looking at whatever ad was underneath the download manager. A few minutes later I would toggle back to SpiralFrog, select the next song on the album, and then toggle to another browser as the song downloaded. While downloading an entire album can take well over ten minutes, much of that time can be put to good use through multi-tasking.

Continue reading "Hands On With SpiralFrog" »

Posted by Glenn at 12:17 PM | Link
|Online Stores/Services|

• The New York Post's Brian Garrity reported today that Amazon.com's digital music store will launch in mid-September. " The service is expected to carry somewhere around 1 million tracks at launch, featuring music from Universal Music Group, EMI and a large number of independent labels. But it will be missing music from two notable sources, Sony BMG and Warner Music Group. ... Unlike Apple, which charges 99 cents for songs with DRM and $1.29 for unprotected tracks, Amazon is expected to have at least two prices for individual songs: 99 cents for new and popular MP3s, and 89 cents for music from emerging artists and back catalog tracks. Albums are expected to cost between $7.99 and $9.99." (New York Post)

• Bertelsmann AG has agreed to pay $130 million to publishers who are part of the lawsuit against the original Napster. (Billboard.biz)

• Country group Diamond Rio has signed with Warner Music Group's Word Records and will release a Christmas album on October 9. (Music Row)

• SpiralFrog, still chugging along to an eventual U.S. launch, inked a deal with Universal Music Canada and Universal Music Publishing. (Press release)

• The Australia Recording Industry Association is pushing for Australian ISPs to cut the service of repeat copyright infringers. (Ars Technica)

• Portland's Musicfest NW has added national acts (Cat Power, Clipse, Grizzly Bear), will be broadcast by KEXP, and will have one of the first showings of the Kurt Cobain biopic "About a Son." The festival runs September 9-12 and wristbands cost $40. (Oregon Live)

• September will be a big month for new albums: Kenny Chesney, Kanye West, 50 Cent, James Blunt, KT Tunstall, Babyface, Barry Manilow (more cover songs), Rascal Flatts, Foo Fighters, Melissa Etheridge, Iron & Wine and Steve Earle. (Variety)

• Darren Dean, an executive at record label Ruff Ryders, has been indicted on drug and weapons charges. (Newsday)

Posted by Glenn at 12:28 PM | Link
|A&R||Online Stores/Services|

You may have heard or read commentary about a favorite way to launch a Music 2.0 site: Start without the proper licensing deals, attract users, and then hope for the best. If all goes well, the company will either be acquired, receive a cash infusion or start generating enough revenue to punch it into second gear. It's pretty much assumed to be fact, though the executives of those companies tend not to actually admit it.

If YouTube did it, why can't others? That's the rationale behind Deezer.com, a French website that offers free music streams. The site has the desire to operate legally, says co-founder Jonathan Benassaya, "but it takes time to put all the agreements in place." Deezer.com is actually the follow-up to Blogmuzik.net, a first incarnation that shut down after pressure from the industry. Now Deezer.com has a deal with SACEM, a French collecting organization for authors and songwriters. Now Deezer.com is in talks with record labels. Why is the wagon still ahead of the horse?

"Asked if Deezer.com should have waited until the agreements were in place to launch the service, Benassaya countered that YouTube launched its service before it signed deals with content owners to distribute their video. He also said that Deezer.com has been operating since April and that only now has Universal raised its objection."

Deezer.com has signed up 300,000 registered users -- most of the in France -- in the last few months, according to the article.

Posted by Glenn at 12:17 PM | Link
|Online Stores/Services|

• The Rick Rubin era at Columbia Records is upon us. Kyambo Joshua, formerly the SVP of A&R at Warner Music Group, has been named president of the urban department. Joshua recruited Chicago producer Dion Wilson to head urban's A&R department. (Billboard.biz)

• "So far, the RIAA is batting 1.000 when it comes to the 'making available' argument." (Ars Technica)

• CD Baby is now selling MP3 album downloads at its website. Each album download is priced the same as the CD and comes in a zip file with album art and liner notes. (Digital Audio Insider, via Listening Post)

• Verizon Wireless customers will get the chance to buy exclusive Bob Marley ringtones. Twenty-eight ringtones, all from songs from the greatest hits album Legend, are available for on Get It Now-capable phones. (Press release)

• How good is Starbucks at selling music? Almost half of the 511,000 units sold of Paul McCartney's Memory Almost Full has come from Starbucks stores. The chain can also help develop new artists. The article offers Ceu as an example, and it's a good example. The Brazilian singer's Six Degrees album has scanned 77,000 units. Just over 64,000 of those are CDs (83%) and about 56,000 of those come from non-traditional retailers (which covers Startbucks as well as online retailers like Amazon.com). (Financial Times)

• The always interviewable David Pakman of eMusic talks with the Hollywood Reporter. "The number of people in our focus and demographic is at least 5-10 million right now. ... (But a current study of baby boomers who retailers don’t really cater to) shows that 33% of boomers spend $50 on music a year. That’s 25 million people, and they are becoming increasingly tech savvy. If you are focused on selling music to a teen audience, that market is shrinking. For 2007 so far, people 25 and younger represents only 27% of music sales. We’re focused on the other 73%." (Hollywood Reporter)

• Ecast has signed an agreement with The Orchard to offer the latter's catalog to Ecast's multitude of broadband-connected, touchscreen jukeboxes. (Press release)

• Groan. MTV will produce a series of hourlong shows called "Celebrity Rap Superstars" in which B-list celebrities will receive mentoring and tutoring in an eight-week series of rap showdowns. Isn't it enough seeing them play during the NBA All-Star weekend? (Variety)

Posted by Glenn at 8:47 AM | Link
|Digital Distribution||Online Stores/Services||RIAA||Ringtones||Sony BMG||Starbucks|

Ad-supported P2P online music service SpiralFrog filed an ammended Form 10 on Monday and included results for the quarter ended June 30, 2006. In the most recent quarter, SpiralFrog lost over $2.6 million on revenues of $3.1 million. In the previous quarter, SpiralFrog lost $1.48 million. Also in the quarter, the company borrowed $5 million and improved its weak cash position.

I noticed a few things in the filing that I didn't see in the amendment filed three months earlier (although they were there). Here's some info about the Canadian beta trial, and about the song renewal process.

"We currently have over 2,000 members taking part in these previews and have received very constructive feedback about the site’s viability. In the first month, the average member has downloaded 16 songs and viewed 15 pages per visit. In May 2007, we went 'live' on our website in Canada. ...

In order to be able to keep downloading songs and playing songs previously downloaded, users are required to renew their membership at least every 30 days. In order to renew, users must enter their user name, email address, randomly generated code and answer a few questions about the user and his or her habits. Once the membership is renewed, the digital rights management, or DRM, program updates the license. Any songs on the user’s computer will automatically be updated, and the user must sync their portable music devices to their computer to update their song licenses."

Note: Thanks to Brian from SpiralFrog for correcting my original entry. I had written that SpiralFrog is an ad-supported P2P service. He reminded me that SpiralFrog is a music service and not a P2P service as is Qtrax and Limewire.

Posted by Glenn at 11:07 AM | Link
|Online Stores/Services|

• Album sales were up 5% last week and were 12% lower than the same week last year. For the year, album sales are down 14%. Digital track sales were up 2% last week and were 45% higher than the same week last year For the year, digital tracks are up 48%. High School Musical (Disney) was the only album over 100,000 scans last week. It debuted big with sales of 615,000 (10% digital).

• French ISP Neuf Cegetel will introduce a music subscription service in a partnership with Universal Music Group. Subscribers will get unlimited access to UMG music of only one genre; eight additional genres will cost Euros 4.99. Tracks will contain DRM protection and expire when the consumer's subscription expires. (Mark Mulligan's blog)

• The Rolling Stones catalog will be released in MP3 format first at London-based 7digital. Twenty-four albums will be available at 320 kbps rate. For the first four weeks they will be specially priced at £5.49 ($11.00) each and then will rise to the normal £7.99 ($16.00) rate. (Billboard.biz)

• gBox, which is part of Universal Music Group's MP3 plans, has officially launched. The gBox Gifting Widget allows users to customize a wishlish within a widget that can be placed on blogs, social networks and personal websites. gBox also has a deal with digital distributor IODA. (Press release and a previous Coolfer post)

• Sony BMG chairman Andy Lack is on the board of directors of Building B, which just secured $17.5 million in funding. Building B offers a wireless set-top box and service that competes with Slingbox and Apple TV. (Red Herring)

• PassAlong Networks launched an upgrade to StoreBlocks, its digital music incentive platform. New features include a new marketing platform for incentive marketing firms. StoreBlocks now has 2.1 million songs in the MP3 format. (Press release)

• The worst take on Wal-Mart's MP3 downloads comes from The Motley Fool. "Watch out, Apple," wrote Rick Aristotle Munarriz. If Wal-Mart becomes anything remotely close to a digital force, it will be due to a leveraging of its brand and physical retail strength. Wal-Mart's download store offers such a tepid user experience that it would take free or near-free downloads to steal iTunes shoppers. Side note: Apple closed up 5.35% yesterday. (Motley Fool)

• Not that it will impact sales much, but Pitchfork gave This Is Next, ADA's mass merchant-aimed indie rock collection a 0.0 rating. Matt LeMay called it "predictably lazy and disjointed," "totally dispensible," "a silly and ill-advised compendium of material freely available to anyone with the initiative to seek it out." But the review was a not a critique on the music as much as it was a (weak and uninformed) critique on ADA's marketing strategy. (Pitchfork)

• Universal Music Group's "legal" mixtape, Lethal Squad Mixtapes: Dose #1, has flop written all over it. Take away the cred and you take away the sales -- even with a $5 sticker price. (SOHH)

Posted by Glenn at 7:01 AM | Link
|Digital Music||Online Stores/Services||Sony BMG|

• The New York Post's Brian Garrity has an article today on some staffing possibilities at EMI. The company, he reported, is considering a role for Terra Firma managing director Stephen Alexander, and looking for an executive to run day-to-day operations and may look outside of the music industry. (New York Post)

• Social video site Bolt.com has ceased operations. A goodbye letter is at the site. "Please be advised that the operations of Bolt, Inc. and Bolt.com have ceased. Net Revolution, Inc. and Bolt, Inc. have executed an Assignment for the Benefit of Creditors effective as of August 14, 2007." UMG sued Grouper in October 2006 and later settled for $10 million in March 2007. (Bolt.com)

• PassAlong Networks has spun off its Speakerheart platform. PassAlong co-founders Jozef Nuyens and Brad Edmonson will head the new company. Speakerheart allows indie musicians to publish, promote and sell their music online. (Press release)

• Classic. The migration from the majors to indie Koch continues. Foxy Brown has ended her relationship with Def Jam and will move to Koch. The deal includes her own imprint, Black Rose Entertainment. An argument could b made that Brown had worn out her welcome at Def Jam, but the writing is on the wall. If you're not selling many albums, and you're a rapper, why not shoot for a lower breakeven point? (Billboard.biz, which could not be a slower website.)

• A Russian court found the head of allofMP3.com not guilty of copyright infringement. Said the judge, "The prosecution did not succeed in presenting persuasive evidence of his involvement in infringing copyright law." In response to the defense's argument that allofMP3.com had paid part of its income to ROMS, a Russian collection organization, the judge said, "Everybody who uses soundtracks has to pay a certain amount of their income to the rights holders and this company has done that. MediaServices (the owner of allofMP3.com) has paid a certain amount of money to ROMS." (Reuters)

• The Guardian asks, "Can Universal turn the tide against Apple's iTunes?" I put in a "yes" vote, but UMG does not want to hurt iTunes as much as it wants to grow the overall pie. Everybody knows iTunes is going to be the dominant force in digital music retail for many years to come. (The Guardian)

• Clear Channel restated earnings for the period 2002 through 2006. Revenues dropped 9% for each of those years. The basis for the restatement was a reclassification of the company's television business and radio stations to discontinued operations. Clear Channel announced its plans to sell 448 radio stations in November 2006. By June 30, 2007, the company had sold 26 stations and had definitive agreements to sell 374 more stations. (AP and 8-K filing)

• How much would terrestrial radio stations owe to sound recording owners if they had to pay such royalties? MusicFIRST believes about 3% of revenues would be an "equitable" rate. To put some fear into people, the National Association of Broadcasters threw out a far scarier figure of 10-35% of revenues. (Listening Post)

• Here's an interview with Ministry of Sound head of digital sales, Jim Haysom. MOS has a number of ways to push its video content. Notably, it has achieved click-through rates from 5-9% from its pre-roll video ads and banners. The typical European banner ad gets a click-through rate of just 0.19%. (E-Consultancy)

Posted by Glenn at 10:19 AM | Link
|EMI||Online Stores/Services|

Here's the press release and a blurb that describes the P2P service's upcoming download store:

"Initially the store will be a stand-alone website, also accessible from links in the file-sharing software. Subsequent releases will enable users to browse and purchase music directly from within the LimeWire program.

The first partners in the new digital channel are IRIS Distribution and Nettwerk Productions. These companies have signed deals with Lime Wire to provide music from their extensive catalogs."

Last month, Slyck had an interview with LimeWire that discussed its plans for a DRM-free music store and its strategy of preserving its core user base so users to not scatter to other services.

"We're building an online store to sell authorized media downloads. It will beta this fall and open in time for the holiday season. The LimeWire Store will be available from within the LimeWire program and on the Web. Search and download for the store will be centralized, not peer-to-peer. There won't be any DRM. ...

Our plan with the LimeWire Store is to add to the LimeWire experience--we're not going to take anything away. We think purchase links should appear alongside Gnutella search results, similar to how Google keeps sponsored links separate. We believe a significant number of users will choose to purchase content if the presentation is convenient and unobtrusive, the price is right, and the product isn't hindered by DRM."

LimeWire was the target of an August 2006 lawsuit by the RIAA. The company countersued a month later and described the RIAA as "a much larger conspiracy to destroy all innovation that content owners cannot control and that disrupts their historical business models."

Posted by Glenn at 10:27 AM | Link
|Online Stores/Services|

A partner in a new Universal Music Group initiative is gBox, which you might not have heard of before last week. The AP has a profile of the Cupertino-based startup. gBox was mentioned in the UMG press release that announced its upcoming experiment of offering DRM-free downloads. The experiment will run from August 2007 to January 2008.

People who follow a Googe AdWord text link from the results of a search for a UMG artist will be taken to gBox. Once there, they'll have the option of a DRM'd or DRM-free download for $0.99. (No information is given on album prices.)

"Under the program, gBox will get referrals through ads that Universal will buy through search leader Google Inc., gBox Chief Executive Tammy Artim said Friday.

Google will get standard advertising fees rather than a cut of sales under the arrangement. The ads, which would appear when Google users search for specific terms such as the name of an artist, will direct users to gBox.

The arrangement with Universal and gBox is separate from Google's music search service, which directs users to online music stores when they search for specific albums or artists. The company says it does not get paid for such referrals, and it does not restrict links to a single retailer.

Google, which has said it has no plans to create a music store of its own, described the new arrangement as strictly an advertising relationship.

Songs at gBox cost 99 cents each. For the Universal songs that are part of the test, gBox will offer an MP3 version free of copy-protection technology known as digital-rights management. A DRM-enabled version will be available at the same price."

gBox is currently optimized only for Internet Explorer 6.0. If you're able to, go check out the site. There's not much there -- there are only two Coldplay songs, for example, and both are available in WMA format -- but it's worth it to browse around a bit. The available file formats was the first thing I looked into after I registered. Here's what that page says:

"iPod®/iTunes® gBox supports Apple’s AAC/Fairplay format for iPod/iTunes. Download music for your iPod in Apple’s AAC/FairPlay format and load it into your iTunes library like any other imported music file. Just synch with your iPod and you’re done. It’s that easy.

PlaysForSure Windows Media®
Download your music in the Windows Media WMA format for your MP3 player and other devices. WMA is compatible with any PlaysForSure device.

Computer Crashed?
Lost all your gBox music files with no backup? Don’t worry! Just redeliver a backup copy from your gBox account.

Multiple Downloads in Multiple Formats
Do you have multiple devices? Perhaps an iPod and a MP3 player?
gBox lets you download protected music in your choice of iPod/iTunes or WMA formats. It’s that simple. The total number of allowable downloads may vary based on record label restrictions for different songs."

Posted by Glenn at 10:47 AM | Link
|Online Stores/Services||Universal Music Group|

• 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|

• After a three-month delay, the European Union is going to restart its investigation into the Sony BMG merger. That will put date of decision at the second week in October. Regardless of the outcome, a thorough investigation is expected to offer signals that other companies will use for their mergers and acquisitions. (Times Online)

• The Harry Fox Agency and Ingrooves have inked a deal that will see HFA using INgrooves' proprietary software platform for licensing and payment processing. (Billboard.biz)

• BurnLounge has no plans to give refunds to its paid members but will waive all renewal and monthly fees for existing members through the end of 2007. (Hypebot)

• British website Slice the Pie is the latest to provide a fan-based financing tool for unsigned bands. Bands move through stages called The Scout Room, Showcase and Financing, the latter being the stage at which a band that has secured 1,000 £15 offers will release an album. (Get Reading)

• A former Columbia Nashville SVP of promotion has launched Nine North Records, a country label that aspires to break new artists through "innovative independent partnerships." We'll be aligned with several highly experienced professionals who can bring sales, marketing, public relations, digital and artist development skills to the mix on an a la carte basis. This business format will allow us to work with acts from the ground up and with less of a safety net." (MusicRow.com)

• Fortune's Dennis Hau on the economics behind Burgendy Records' contracts with older artists. "Burgundy usually limits itself to one-album contracts with its artists, sometimes with options to release more music. And because it has a full-time staff of only about two dozen employees, it expects to put out no more than two or three albums a year." It takes 24 people to sell about 150,000 units per year? Amazing. (Fortune)

• The Guardian has a very smart take on the move, by bands like Ash, toward releasing just singles instead of albums. "...the looming death of what is still known as the album should cause no little alarm. Doesn't the obligation to attempt a grand artistic statement serve as a reliable litmus test? ... Songs may powerfully denote passing moments, but you surely need more to truly soundtrack your time." (The Guardian)

• Groove Mobile wants to expands its direct-to-consumer trial to more labels and carriers, and has a deal with Vodaphone UK for lower data charges. "Services like this need to be cross-carrier - there's no point in promoting track downloads at a concert, for example, if only a quarter of the people there can take part." (Mobile Entertainment)

• While I try to appreciate both sides of every argument, I can't agree with Ann Power's take on the Clive Davis/Kelly Clarkson dust-up. What separates Powers' belief in artistic development and my belief in a balance between art and commerce is the fact that Clarkson won a singing contest, not a singing-and-songwriting contest. (Los Angeles Times)

• Jupiter Research's Joe Laszlo has a report on over-the-air music purchasing and says that there are obstacles in infrastructure, business models and carriers' ability to take advantage of impulse purchases (which goes for pretty much every digital music store or service). "Approximately 20 percent of online consumers are impulse music purchasers. This segment, already reasonably engaged in mobile music activities, represents the best target for becoming regular users of OTA music stores or services. Tying into key purchase motivators, such as radio play and friends' recommendations, can help drive OTA impulse music purchases more broadly." (David Card's Jupiter Blog)

• Universal Music Group's catalog division has a website, ilovethatsong.com, that currently has a Flash-based puzzle game in which you complete puzzles of UMG catalog titles. Each album's puzzle pages has a link to purchase at iTunes for $7.99 -- or less if you already own one of the album's songs. (Unscramble the Covers)

Posted by Glenn at 6:57 AM | Link
|Mobile Music||Online Stores/Services||Research||Sony BMG|

• 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|

• Sony's Connect music and video stores are shutting down and remaining employees will support Playstation, eBooks and Sony Reader. (paidContent)

• Univision Music has been targeted in a payola lawsuit. A former EVP at Univision subsidiary Fonovisa claims he was fired after refusing to take part in payola practices that had him paying more than 50 program directors. (Billboard.biz)

• Following up a post from a few days ago, the new NaxosDirect website will offer digital downloads in the near future -- "as early as July" wrote Mark Berry. When I wrote about the new site, I called it a "throwback" because it sells only CDs. Berry quickly did some checking and got the word out about the impending digital offering. (The Naxos Blog)

• Starbucks is going to sell a Sonic Youth cover song compilation with tracks by Jeff Tweedy, Beck, Marc Jacobs, Portia de Rossi and Michelle Williams, and a new song by Sonic Youth. (Pitchfork)

•

Posted by Glenn at 7:57 PM | Link
|Online Stores/Services||Payola|

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

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

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

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

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

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

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

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

• 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|

• Album sales were flat last week and were down 11% year-over-year. For the year, album sales are down 16%. Digital track sales dropped 2% last week and were 38% higher year-over-year. For the year, sales of digital tracks are up 50%.

• It's a momentous event of sorts, I suppose: The first artist signed to Justin Timberlake's Tennman Records is YouTube star Esmee Denters. Now comes the hard part: Getting people to pay for it. (Billboard.com)

• Microsoft's new Ignition marketing program is a good use of the company's division. The program's first band, Warp Records' Maximo Park, will get pushed across the Zune Marketplace, the Xbox Live marketplace and the MSN.com portal -- that's 30 million regular users. (Reuters)

• A music analyst for Gracenote has started a website called Music Appraisals that, yes, appraises music and music memorabilia. (East Bay Express)

• Mexican indie label Noiselab and music download site Beon.com have created an MP3 store. Look for the "Beon MP3" tab on the right side of the middle section of the home page. (Billboard.biz)

Posted by Glenn at 7:31 AM | Link
|A&R||Marketing||Online Stores/Services|

I got this email last night:

"Dear Tower.com Customer,

We are very pleased to report to you that the legacy of Tower Records will live on through Tower.com. We are currently in the final stages of the sale of Tower.com to Tower.com Inc., which is committed to upholding and maintaining the integrity of Tower Records, and positioning Tower.com as your preferred online shopping experience. ...

Thank you again for your business and your loyalty to Tower Records and Tower.com."

Well, let's see how this goes. George Scarlet and Kevin Hawkins, two former leaders of the Tower Records' purchasing department, left Tower.com and its new owner, Caiman Holdings, not long after they the jobs. "I didn't really jibe with the new ownership," Hawkins told the Sacramento Bee. This doesn't bode well for the future of the online store.

Posted by Glenn at 11:10 PM | Link
|Online Stores/Services|

• More on the CISAC Copyright Summit in Brussels: British Telecom CEO Ben Verwaayen was brutally frank with the audience. "Your industry has not changed for 20 years, maybe 50 years," he said in his keynote address. "You have to rethink how you work in the digital age. Are you just a rights administrator that sends me a bill, or are you something more?" Sounds like the Lawrence Lessig panel was pretty lively, too. (Hollywood Reporter)

• Ethan Smith covers Lala.com's interoperable, free-of-charge subscription service that launched today. (Go here to download player application.) "It's like a subscription music service, but without the monthly subscription fee. Lala is betting that in return for getting all that free access to music at home, listeners will pay to buy the songs they want to take with them on iPods and other music players. The prices will range from $6.50 to $13.50 for an album." Lots of interesting details in the article. Big difference here is that the subscription service works with the iPod. Give it a read. (Wall Street Journal)

• Melodio plans a mobile service that allows users to stream songs from their iTunes library. (Reuters)

• eMusic will offer Paul McCartney's new Hear Music album, Memory Almost Full. This means two things: Fans can get the album in MP3 format without Apple-style information embedded in the file, and the low price should help pad McCartney's SoundScan numbers. (Bit Player)

• Universal Music Publishing acquired the catalog of songwriter Michael Masser, who wrote the Whitney Houston hits "Saving All My Love For You," "The Greatest Love of All" and "Didn't We Almost Have It All." (Press release)

• Miami's Jackie Gleason Theatre inked a ten-year deal with Live Nation and will bear the Fillmore Theater brand name. (Billboard.biz)

Posted by Glenn at 8:25 AM | Link
|Mobile Music||Online Stores/Services||Touring|

• A joint study by PricewaterhouseCoopers, the IFPI and Singapore-based Soundbuzz predicts the global music industry's physical product revenue will drop 61% by 2009. (BusinessWeek.com)

• Amp'd Mobile, a mobile carrier with a music and video slant, has filed for Chapter 11 bankruptcy. Universal Music Group is one of the companies that funded $360 million that started Amp'd. (Wall Street Journal)

• A few news items on online music service Slacker: The company released a desktop application that allows users to manage their entire music collections. (Update: OK, not so new. I thought there was a new update, but maybe not.) In addition, Slacker just got $40 million in second round funding.

• PIAS America has signed with Universal's Fontana Distribution after a short run with EMI's Caroline Distribution. (Billboard.biz)

• CMT.com's Chet Flippo bids country radio goodbye and welcomes custom country radio (he's a Sirius fan). "I'm sorry, my friends in country radio, but I have long since moved on. No more commercials, no more wacky stunts, no more same 20 songs." I mention this only because country is bound at the hip to terrestrial radio. When that goes, chaos will ensue. (CMT.com)

Posted by Glenn at 8:29 AM | Link
|Distribution||Indies||Online Stores/Services||Radio||Research|

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

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

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

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

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

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

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

• Private equity group Terra Firma has raised its bid for EMI to £3.7 billion from £2.4 billion.

• CBS will reportedly buy social music site Last.fm for $280 million. Said president and chief executive Leslie Moonves, "heir demographics play perfectly to CBS's goal to attract younger viewers and listeners across our businesses." (Reuters)

• CD swapping service Lala.com has launched a free streaming service. Word is that Lala.com will "probably" pay labels $0.01 per stream (looks unsubstantiated to me) and will break even if users buy one CD per month. (Listening Post Blog)

• Universal Music Group has promoted Rio Caraeff to EVP of eLabs and GM of Universal Music Mobile. Caraeff is responsible for the company's digital strategy and mobile operations. (Press release)

• Knitting Factory is offering a SMS text message ticketing system that will allow consumers to purchase tickets through their mobile phones. (Billboard.biz)

Posted by Glenn at 8:49 AM | Link
|Online Stores/Services||Universal Music Group|

• The New York Post reported former EMI exec Jim Fifield is still working on a deal to buy the company despite his backer, Corvus Capital, pulling out. Fifield, the article said, wants to run the recorded music division and sell the music publishing division to record exec Charles Koppelman and private equity firm GTCR Golder Rauner. (New York Post)

• IFPI scare tactics are working. Ars Technica finds that some sellers of allofmp3.com gift certificates are getting out of the business after one London-based seller was arrested. (Ars Technica, via Billboard.biz)

• Ad-supported online music service Ruckus, the most miserable music service I have ever seen, has landed $10 million in funding. Well...it obviously needs it. (Reuters)

• Downloads are hurting the venerable CD single in the UK. Supermarket chain ASDA, one of the top music sellers in Britain, is going to stop selling CD singles. (Related: Handleman UK and ASDA have terminated their music supply agreement.) At the same time, indie stores are seeing a resurgance in the 7" vinyl single. Said one indie retailer, "We find customers like to have a more aesthetically pleasing physical product as a collectable item, rather than a throw away mass-produced CD single." (Manchester Evening News)

Posted by Glenn at 12:33 PM | Link
|EMI||Online Stores/Services||Venture Capital||Warner Music Group|

• 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|

• EMI has opened a data room at an investment back and has asked bidders to submit offers by May 23rd. It is said that EMI chairman John Gildersleeve is running the process while Deutsche Bank and Citigroup are advising EMI Group head Eric Nicoli. (New York Post)

• All those efforst to prop of the value of music and now this: Coke joins with iTunes to give away two billion songs in Europe. (Billboard.biz)

• Hypebot claims to have information on Amazon.com's digital track pricing structure: Full albums for $4.99 to $8.99 and tracks from $0.89 to $0.99. iTunes has sub-$9.99 albums but they're hard to find. It would be nice if Amazon.com breaks out digital albums by price as it does with bargain CDs. Even better would be sale pricing, something iTunes does not have. (Hypebot)

• The National Post has perhaps the worst take on Canda's 35% drop in CD sales: "The recording industry itself is to blame for this trend, because it imposes harsh copy protection rules on the sale of digital music." Yeah, that and about 106 other reasons, most of which relate to changing ways of listening to music. Journalists often miss the point, but usually not that badly. (The National Post)

Posted by Glenn at 2:05 PM | Link
|EMI||Online Stores/Services|

Forbe's Louis Hau has a good, comprehensive article titled "Why Online Music Will Stay Locked Up" on the majors' stances on DRM and the desires of the leading music download stores. It can be used as a DRM scorecard to keep track of who wants what.

Major Music Groups

• Warner Music Group: For. "No intellectual property business is going to cross the digital divide without figuring out how to protect its content and to ensure that transactions are associated with the acquisition of content. The music industry simply has to solve the content security problem or risk the obsolescence of its business model." -- Michael Nash, senior vice president of digital strategy and business development, speaking at NARM.
• Sony BMG: For. "We don’t want the whole world to be a college dorm. Because that’s what a no-DRM world looks like--it’s a world in which all product can just be cloned without limitation." -- Thomas Hesse, Sony BMG president of global digital business and U.S. sales, speaking at NARM.
• Universal Music Group: Undecided. Hau wrote that UMG is thinking about dropping restrictions. "...if further tests prove that this provides us with a net positive sales result, by which I mean sales increase more than piracy, then we will try to work out a reasonable solution." -- Amanda Marks, UMG executive vice president and general manager of digital distribution.
• EMI: Has already decided to drop DRM, though it will sell DRM tracks at the (lower) original price.

Stores and Services

• Napster: All or nothing. Napster wants to sell DRM-free downloads, but only if it can sell all music without DRM. "We don’t want to confuse customers,’’ said Napster's Chris Gorog. “It’s all or nothing. We’re not going to do it incrementally."
• Rhapsody: Wants to minimize confusion. Kevin Nakao, RealNetworks’ vice president of music and mobile services: "Can you create the consumer experience and merchandising experience that’s not confusing or does more harm than good? We think we can do that because we think the best way to sell music is in the context that they’re listening to it."
• Yahoo! Music: Reduce clutter. Rather than sell both DRM and DRM-free tracks as iTunes plans to do, Yahoo! may stop selling a restricted version of a track as soon as it can sell the DRM-free version.

Posted by Glenn at 3:18 PM | Link
|DRM||Online Stores/Services|

• Hip hop magazine The Source has filed for Chapter 11 bankruptcy. (SOHH)

• The NARM website has a link to NPD Group's PowerPoint presentation at the NARM conference a few days ago. "Digital has created new opportunities for discovery and commerce but it may have a dark side," says slide 30 of the presentation. One result is said to be "over stimulated consumers with less need to buy, or delayed buying." (Consumers and Music Discovery)

• Musician Peter Gabriel is one of the financial backers of ad-supported, DRM-free music service We7. Ads will be put right into the music files. The one song I downloaded had only a brief We7 ad at the beginning. (Digital Media Wire)

• "We are essentially a technophobic business," said Atlantic Records Group's Andy Karp at the Musexpo in Hollywood. Jokester Jason Flom of Capital Music Group put free in perspective. "The whole competing with free thing is tricky, it works well in the water business but it's hard everywhere else." (Digital Music News)

• There have been positive reviews, but when the newspaper with the nation's second-highest circulation talks about the Sansa Connect music player, it's worth taking note. Wrote Katherine Boehret for The Mossberg Solution column, "It forced me to look at my portable player as an evolving, untethered device that introduced me to lots of songs. When it wasn't connected to Wi-Fi, I was disappointed to not be downloading new songs. My iPod suddenly seemed old-fashioned." (Wall Street Journal)

• Sirius Satellite Radio cut its Q1 loss to $144 million from $458 million last year. Revenue grew 61% on revenue of $204 million. (Press release)

• An industry blog to add to your blogroll: TALENTfilter, one of those rare music-related blogs actually written by someone closely involved with the music industry.

Posted by Glenn at 10:16 AM | Link
|Legal||Online Stores/Services||Portable Music Players||Weblogs|

• Apple sent out a notice to its partners to let them know how they can offer DRM-free downloads. (MacRumors.com)

• The British Phonographic Industry is pleased that local acts are finally selling well in the States. According to its press release, the UK now accounts for one in 12 albums sold in the U.S. Hmm...it it a coincidence that this comes as urban sales are slumping? Or is the partially due to UK government assistance and more touring? Gone are the days Brit stars go for a radio hit and a six-city U.S. tour. They're putting in a lot of effort over here. (Press release)

• Caiman Inc, owner of the Tower Records logo and the Tower Records domain (www.tower.com) is going to relaunch the website and open stores in New York, Los Angeles and San Francisco. (Hollywood Reporter)

• Indie label Touch & Go will launch a music download store sometime in June. Downloads will be in the MP3 format and will have standard pricing ($0.99 per track, $9.99 per album). For consumers, this might be big news if much of Touch & Go's catalog -- less Steve Albini bands -- was not already available at eMusic at far better prices. (Billboard.biz)

• The RIAA really took to the report released by U.S. Trade Representative Susan Schwab that highlights piracy hot spots around the world (Russian, China, Brazil, Thailand, Czech Republic and Canada). (RIAA press release)

• BurnLounge is moving to the MP3 format. (Press release)

• Del McCoury's McCoury Music has signed with RED Distribution to handle all of McCoury's future projects. (CMJ.com)

Posted by Glenn at 9:27 AM | Link
|Apple||Online Stores/Services||Tower|

• 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
|DRM||Music 2.0||Online Stores/Services||Research||iTunes|

• Though it was just down the road from Vanderbilt, I was unable to attend the Leadership Music Digital Summit 2007 yesterday in Nashville. Paul Resnikoff from Digital Music News was there and has posts on the familiar themes that emerged and the conversation about lack of scarcity in the digital world.

• MusicRow.com covered Terry McBride's speech at the conference. "We must move to monetize the behavior of the consumer, not try to change it," he said in a common refrain. I'd love to hear his thoughts on Qtrax, which attempts to monetize a behavior by trying to change that behavior so it is in line with the only type of licensing agreements that will allow for such attempts to monetize a behavior... (MusicRow.com)

• A Chinese court has ordered Yahoo China to delete links to free web sites that offer music downloads. Beijing's No. 2 Intermediate Court ruled Yahoo should bear some -- but not all -- of the responsibility for the copyright infringement. Warner Music Group, through the IFPI, sued Yahoo China for copyright infringement in January of this year. (Reuters)

• The IFPI's statement on the Yahoo China ruling said "the ruling promises to improve the whole environment in which the local and international music industry does business in China." (IFPI)

• The iinovate blog has a podcast and video interview with Pandora founder and Chief Strategy Officer Tim Westergren. (iinovate)

• A Bank of America analyst said of XM and Sirius "stand-alone values and merger synergy values likely are lower than previously estimated." Based on market valuations, he believes regulatory approval of a merger is 35-40%, but " FCC contacts believe that the percentage is trending lower." (RadioInk)

• Other Music, perhaps the ultimate tastemaker New York music store, has launched its digital download store. Downloads are 320kbps non-variable rate MP3 files. Said the introduction page, "It is very important to us that in this new era, real record stores run by real music fans can still survive and thrive."

Posted by Glenn at 10:02 AM | Link
|Conferences||Online Stores/Services||Satellite Radio||Sirius||XM|

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

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

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

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

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

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

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

• In 30 days, PassAlong Networks will start offering its entire catalog in MP3 format. The company will use its FreedomMP3, which allows the use of MP3 format with "a reasonable amount of rights management" that works on PCs with Windows 2000 or higher. (Press release)

• CMC Management Group is try to launch the Country Music Cafe in Nashville, the first in what it hopes will be a nationwide expansion. On the CMC team is music industry vet Tim Wipperman. (Nashville Scene)

• Louis Hau on music's digital holdouts. It's not just The Beatles, but AC/DC, Paul McCartney and, I've often noticed, Husker Du. Radiohead and others do not permit a la carte downloads, instead requiring purchase of entire albums. (Forbes.com)

• EMI woes seen unlikely to shift merger block. (Reuters)

• EMI in desperate need of venture capital rehab. "The difficulty for Eric Nicoli, who has been chairman or chief executive since 1999, is that he is not a Michael Grade who can provide creative leadership; nor is it clear that he will spend much time in the US. Instead, much responsibility is invested in Jason Flom’s running of the merged Capitol and Virgin labels." (Times Online)

• An article on Daytrotter.com, which records indie bands -- Cold War Kids, Bonnie Price Billy, Elf Power, for example -- in its studio and gives away the MP3s for free. Bands do not collect a fee, and the site sells advertising and a few T-shirts. (Chicago Reader)

Posted by Glenn at 2:42 PM | Link
|EMI||Online Stores/Services|

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

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

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

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

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

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

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

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

• Video site Bolt.com is nearing a settlement with Universal Music Group for "several million dollars." Additionally, Bolt.com will agree to pay UMG royalties in the future. The company is working on similar royalty agreements with other majors. (New York Times)

• SpiralFrog inked licensing deals with Click Record Productions and distributor Kudos Records Ltd. (International Business Times)

• More reaction to Jobs' open letter: SanDisk CEO Eli Harari calls for an end to proprietary formats. (Digital Music News)

• An article on some f.y.e. stores that have replaced former Tower locations. Different product mix, digital kiosk test and a partnership with Great American Country. (The Tennessean)

• How do you merge two companies and prevent a culture war? Capitol Music Group's sales staff will be comprised of the former Virgin Records staff. Capitol Records' sales staff was let go. (Billboard.biz)

• Plug Award winners include Band of Horses, Neko Case, Sufjan Stevens, J Dilla and Brooklyn Vegan. (Plug Awards)

Posted by Glenn at 7:58 AM | Link
|DRM||Legal||Online Stores/Services||Universal Music Group|

Billboard has an article on online subscription services. (Read article at Reuters) While Jupiter predicts good growth in the coming years, companies are finding the model difficult to reach profitability. Writer Antony Bruno thinks the business should be left to the best-known brands, which would mean there's more consolidation to come.

Said one former music subscription service executive, "There's no industry desire to see subscription services succeed. (Labels) love the idea of reoccurring revenue but they know it's replacement revenue. They recognize that unlimited access to content wherever you are whenever you want equals no CD sales."

Subscription models offer the promise of a celestial jukebox, but most consumers don't yet see the value in renting music. The iPod is not compatible with any subscription services -- and portable players are what drives digital consumption. Where the market will be in two or three years is anybody's guess. Consumers, it turns out, are as unpredictable as ever, and changes in hardware and software aren't easy to forecast.

Less than three years ago, Jupiter was so bullish on subscription models it thought that over time "revenues for digital subscription services will outpace those of digital download." The tune had changed earlier this month when Juptier issued its U.S. Digital Music Forecast. Downloads outpaced subscription services $800 million to $185 million. Subscriptions, they said, were still a niche. "For the next several years, on-demand subscription services will appeal primarily to niche audiences among music aficionados."

AOL dropped its subscription service -- while selling its subscribers to Napster -- and is going to concentrate on its advertising model. Rhapsody and Napster are in front of the competition for a couple of reasons. First, they had a first-mover advantage. Second, they have the best services. Third, they've both made partnerships (Rhapsody has partnered with Sonos and Sandisk, for example) and marketed themselves better than their competitors. While Napster and Rhapsody present music in different ways, I think they're the best. Microsoft's Zune Marketplace offers a similarly-priced subscription services. While it syncs nicely with the Zune device, the store itself lags behind Napster and Rhapsody.

Posted by Glenn at 11:47 AM | Link
|Online Stores/Services|

SpiralFrog chairman and founder Joe Mohen said the free, ad-based music service will indeed launch in early 2007 (read Reuters article). Mohen hinted that former SpiralFrog CEO Robin Kent, who was ousted last month, didn't have the experience and/or mindset for the company. Our business is evolving more like a television station than a Web site," Mohen told Reuters. "So we need to have executive and board talent that understands how to run a medium both from the programming side and from the advertising sales side."

And with that, a former television executive was named to the SpiralFrog board of directors (read press release). The addition of Jordan Levin, former CEO of the WB network, was announced yesterday. It's a logical move. SpiralFrog is not necessarily in the music business. It's in the advertising business, and it plans to use music to acquire customers.

I've been surprised by the amount of media coverage on SpiralFrog's internal problems. Anything related to digital music tends to get a good amount of attention, but in this case I feel people want to see SpiralFrog launch so they can then watch and revel in its demise. Few think the business model will work, and some think SpiralFrog's failed experiment will push labels to embrace less restrictive models.

Posted by Glenn at 11:30 AM | Link
|Online Stores/Services|

• Today The New York Post reported that Jermaine Dupri, recently ousted as the head of Virgin Records' urban unit, "is in negotiations with Universal Music Group about joining its Island Def Jam label." Talks are focused on his role at the label but details have not yet been determined. (Read article at New York Post)

• Napster Mobile has launched on au/KDDI, Japan's second-largest mobile network with over 20 million subscribers. The service is already on Japan's i-Mode platform. Napster Mobile requires a $3-per-month access fee, and users buy credits that are redeemed for over-the-air song downloads and ringtones. (Read press release)

• Digital distributor IRIS Distribution has inked deals with dance/electronic labels Neurodisc, Scion and Subliminal Records. Artists added to the IRIS catalog include Erick Morillo, Bob Sinclair, Harry "Choo Choo" Romero and Spank Rock. (Read press release)

• Digital Music Group Inc. signed a three-year deal with Apple to sell its video content at iTunes. Two weeks ago, the company announced a distribution deal for nearly 200 hours of video content for content such as ""Hopalong Cassidy" and "My Favorite Martian." DMGI's shares rose more than 30% on the announcement. (Read article at Sacramento Business Journal)

• Apple's FairPlay DRM is illegal in Norway ruled the Consumer Ombudsman in Norway. (Read article at The Register)

Posted by Glenn at 8:45 AM | Link
|Digital Distribution||Napster||Online Stores/Services||Universal Music Group|

The wait for Spiral Frog's major label-sanctioned, ad-supported P2P service could drag on a bit longer. On Saturday I linked to a report that said CEO Robert Kent was fired. Yesterday the story hit the Internet, with more information. Reports say six members of the company's executive team and three directors have left.

The Times reported that Spiral Frog's main backers, London-based VC firms, drafted a resolution calling for Kent to be reinstated.

Yesterday, a major label exec told Digital Music News, "SpiralFrog looks dead." Another pointed to "specific model flaws."

SpiralFrog originally intended to launch in December 2006 and had reportedly hoped to have launched by the end of this month. Other than the occasional press release, not as much as a whiff of marketing has been seen from the New York-based company since its licensing deal with Universal Music Group was announced in August 2006..

Even though I applaud companies that try new business models -- and manage to secure the proper licensing deals -- and even though I'm eager to take Spiral Frong for a test drive, the recent boardroom chaos isn't as threatening to the company as the public's lack of interest in its entire product category.

The new generation of music sites -- which also involves Qtrax and Mashboxx -- is very disappointing at this stage. We're six months past MGM Studios, Inc. v. Grokster and no closer to a compelling quasi-P2P service. At least Qtrax has on its side Ted Cohen, the former EMI exec who is lobbying the majors to test a DRM-free trial period at the P2P service.

Posted by Glenn at 6:53 AM | Link
|Online Stores/Services|

• Sony BMG and Warner Music Group announced an investment in ACCESS China Media Solutions, a mobile music provider. The two companies are attracted to the security offered by purchasing via mobile phone, as opposed to physical product. (Read press release)

• Ruckus, which targets the college market for its legal P2P service, now offers a free, ad-based version of its music download service. Files are protected by Windows Media DRM. The free service is available to anybody with an .edu email address. I have an .edu email so I signed up...and was terribly disappointed by the pedestrian quality of the entire service. I'll gladly pay for a better subscription service. (Read article at Red Herring)

• Even though one online store's digital shelf space is just as abundant as another's, look for niche download stores to flourish this year. Indie retail store Other Music (which has very few square feet) will launch a digital download store in late February 2007. Wired's Eliot Van Buskirk interviewed co-owner Josh Madell about the new site. "The thing about iTunes, which is by far the most successful digital store so far, is that despite the cool factor they have been able to hold onto, they are really closer to Best Buy than Other Music in terms of the shopping experience." (Read article at Wired News)

• The Orchard just signed two deals. One is with Ericsson and will distribute The Orchard's catalog to Ericsson in all major non-U.S. territories. In the other, The Orchard and Muzak announced a licensing and marketing agreement that will expose Muzak's 100 million daily listeners to The Orchard's deep catalog. The Orchard will provide turnkey music licensing, publishing administration, song research, and programming solution to Muzak. (Read Ericsson article and Muzak press release)

• Gracenote is expanding its presence in Europe through its Content Partner Program. (Read press release)

• Digital distributor IODA is launching a European divison. IODA UK comes after the company finalized the acquisition of London-based digital music distributor Uploader. (Read press release)

Posted by Glenn at 8:26 AM | Link
|Digital Distribution||Online Stores/Services||Sony BMG||Warner Music Group|

Online music site Lala.com is building quite a presence and going well beyond its technolgy roots. Founder Bill Nguyen was featured in a Wall Street Journal article today (reprinted here at the Pittsburgh Post-Gazette). "Tech Start-Ups Have Money To Burn, But Choose Thrift" talked about the way Lala Media Inc. is part of a new way of thinking among start-ups. "When you got venture-capital money previously, many people thought you immediately needed to spend it by hiring 40 or 50 people," said Nguyen. "Now we view the money as just as asset and not an immediate license to spend."

Lala.com has hired 20 employees -- mostly engineers -- and burns about $200,000 a month. If you've tried the service or passed by the website, you have probably seen an attractive, user-friendly website that is a cross between entertainment, social networking, music discovery and good ol' fashioned commerce. The site has forums, radio stations and sells new CDs.

Tonight, Lala is webcasting Groove Is In The Heart, a benefit concert in San Francisco. The rotating lineup of guests includes Bob Weir, Norton Buffalo (Steve Miller Band, Bonnie Raitt), Narada Michael Walden (Sting, Jeff Beck), Ozzie Ahlers (Van Morrison, Jerry Garcia Band) and Dewayne Pate (Robben Ford Band). The show starts at 8pm Pacific.

You may have also heard that Lala purchased/saved Internet radio station WOXY after it was closed down.

Posted by Glenn at 6:03 PM | Link
|Online Stores/Services|

AOL has dropped its Music Now music service and is migrating its 350,000 customers to Napster (read press release). It's a great -- although expensive -- windfall for Napster, which raises its subscriber base to 916,000 from its year-end estimate of 566,000. (Napster will release financial results on February 8, 2007.)

Today Napster filed an 8-K with the SEC (read PDF) that has some dollar amounts and specifics. Napster will pay AOL $15.6 million for its 350,000 subscribers (along with "certain related assets and liabilities"), or $445.71 per subscriber.

As a part of the deal, Napster will get exclusive advertising rights throughout AOL Music Channel for one year. The agreement will be subject to renewal if certain, unnamed milestones are hit.

Napster's losses from operations are falling but are still losses, and there are worries about the company's liquidity. Even so, the acquisition of AOL's subscribers was pricey but the correct move. The bottom line is the company needs far more subscribers in order to reach profitability. Between April 1 and September 30, 2006, Napster spent $19 million on advertising and marketing and lost 60,000 subscribers (excluding college subscriptions, which are seasonal), part of the reason for the drop was the introduction of the free Napster Light streaming service. In comparison, paying $15.6 million to acquire 350,000 subscribers -- which increases its subscriber base by 38% -- was a bargain.

Posted by Glenn at 2:16 PM | Link
|Napster||Online Stores/Services|

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

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

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

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

Indie label Minty Fresh recently launched its own MP3 store at www.mintyfresh.com. The label joins a growing list of indie labels that sell their own tracks in the MP3 format at their own websites: Thrill Jockey, Arts & Crafts, Def Jux and Warp to name a few. Songs will sell for the now-standard rates of $9.99 for albums and $0.99 per individual track.

I asked Al Verik, the digital content manager, and Jim Powers, the label's president, about the label's motivation for selling MP3s at its own site. The scalability and ability to better serve its customers were what made a digital store attractive.

"Our feeling is the wider we can make our music available, the better; and we view our Minty Fresh digital store as simply another spoke in the distribution wheel. The digital store also creates limitless shelf space for additional items. Minty Fresh titles are already available online through iTunes, eMusic, Rhapsody, Zune and many others. We also maintain a strong brick-and-mortar presence through ADA. We want music fans visiting the Minty Fresh site to be able to obtain our music by a click of a button as directly and simply as possible. With our new digital store, now we can offer that."

If you take away anything, it should be the prhase Another spoke in the distribution wheel. One spoke (digital) isn't going to replace another (physical). Some spokes are gaining strength. All spokes are important. Some are vital.

Posted by Glenn at 11:20 AM | Link
|Online Stores/Services|

• Hits reported that the parent company of Koch Entertainment could be acquired outright by a minority owner. The company, shipping company Clarke, has spent more than $2 million on due diligence. An acquisition would likely lead to cost cutting, which means fewer employees and less manpower to work releases. (Read post at Hits Rumor Mill)

• Much like when a politician you've never heard of announces he's bowing out of a presidential run, Virgin Digital U.S. announced it is shutting down operations. What few customers it had are being referred to Napster. This is a very good sign for the digital space. Competitive forces have begun to weed out all but the most innovative, well-funded and aggressive mainstream digital retailers. At the same time, boutique digital stores are popping up everywhere. Consumers will be better served. (Read article at Billboard.biz)

• The New York Post's Cindy Adams reported Jive Records is less than thrilled about five new songs Britney Spears recorded in New York recently. Wrote Adams, " Talk inside the company is that either it's redone, or they need to drop it - and her." (Read article at New York Post)

• BusinessWeek.com covers the fight against DRM. There's lawsuit against Apple, and a lawsuit against the four major music groups. "We are focused on interoperability," said RIAA President Cary Sherman, even though Apple and Microsoft are not. Nothing new there, but the article is decent for its thoroughness. (Read article at BusinessWeek.com)

Posted by Glenn at 10:08 AM | Link
|DRM||Indies||Online Stores/Services||Sony BMG|

• Nielsen Soundscan announced a slew of top tens lists for 2006 (through December 10). The top album of 2006 was the High School Musical soundtrack with 3,480,000 units sold, followed by Rascal Flatts' Me and My Gang (3,060,000) and Carrie Underwood's Some Hearts (2,460,000). The top digital download of the year is Daniel Powter's "Bad Day," which sold 1,880,000 units. Gnarls Barkley's "Crazy" was second with 1,525,000 and Sean Paul's "Temperature" was third with 1,460,000. (Read press release)

• French musician Johnny Hallyday lost his final legal battle against Universal Music Group over control of his catalog. France's highest court denied Hallyday ownership of his master tapes recorded between 1961 and 2004. The music industry looked to the case as possibly setting a precedent that would allow artists more rights. (Read article at Reuters)

• A group of record labels have filed suit in New York against Russian music download site AllOfMP3.com. The move comes after Mastercard and Visa have refused to accept transactions from the controversial site. Earlier this year, the IFPI filed suit against AllOfMP3.com in Britain. Among the labels filing suit are Arista Records, Capitol Records and UMG Recordings. (Read AP article)

• The Dutch government will exclude digital music players from copyright levys. Such levys are imposed to compensate artists and labels for personal copying of music. Electronics manufacturers oppose such levys, saying consumers who buy music should not have to pay again to transfer it to a device. Music industry executives tend to challenge the idea that all consumers have actually paid the first levy -- by purchasing the music -- in the first place. (Read AP article)

Posted by Glenn at 8:26 AM | Link
|Legal||Online Stores/Services||Universal Music Group|

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

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

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

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

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

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|

There's a good article at Stereophile on ArchivMusic, a classical music company, that's definitely worth a read. (The NY Times had an article on the company on November 25, though I missed it.)

ArchivMusic has licensed classical recordings and makes them available for online ordering. But it doesn't sell downloads. ArchivMusic burns the song to CD -- bit-for-bit copies -- and lets the customer select the file format when ripping the CD. A current featured box set, for example, are the 155-CD Bach Edition - Complete Works of Bach for $139.98.

The company has licensed some music from Sony BMG and because of Tower's closing finds itself in a good position. Labels that lost Tower's billing are looking to ArchivMusic to pick up the slack. The company added 200 title just last week and has a treasure trove of out-of-print music. (If more companies like ArchivMusic sprout up, out of print will be a thing of the past.)

I seem to recall an indie store owner (Don Van Cleave of CIMS?) saying years ago that he had tried to get major labels to license their music to him so he could burn copies to sell at his store. Needless to say the idea was rejected, but the point is there's a market for cheap, no-frills CDs and a need to experiment with lower prices.

Posted by Glenn at 5:06 PM | Link
|Online Stores/Services|

• Universal Music Group took the lead in cutting CD wholesale prices, and it's doing the same (in Europe) with digital albums. Catalog titles, though, not new releases. The initial group will consist of 1,500 titles by such artists as Bob Marley, R.E.M. and Stevie Wonder. Prices are dropping to £6.99 from £9.99. Some UMG catalog titles are already sub-$9.99 at U.S. iTunes, though they are not part of an organized program as in this case. (Read article at Reuters)

• EMI Music Publishing is really getting into joint ventures. (See link yesterday about joint ventures on Broadway musicals.) Billboard reported EMI Group has offered a joint venture to Marty Bandier, who resigned as chairman of EMI Music Publishing yesterday. "Bandier said he would have an equity stake, according to the source. The venture would be under the EMI Group umbrella, but separate from EMI Music Publishing." If a joint venture beats a licensing fee, it can certainly beat a salary. (Read article at Billboard.biz)

• Found in an article about record label Thrill Jockey and its almost reluctant forays into digital music: Thrill Jockey is about to launch a new download store that will also host tracks by Rune Grammofon, Touch, Smalltown Supersound, Mosz, and Morr Music. The site will sell albums only, for $10 each. Read the article for a look at the other side of the industry, those labels that would prefer to stick to physical product but are being forced into digital sales. (Note: A late-night blogging session produced a fantastic typo. The original post referenced Touch & Go. The article is about Thrill Jockey. Thanks for reader Sam for pointing out the error.) (Read article at Chicago Reader)

• They may not have a ton of street cred, but the big portals can sure help make a career. Yahoo! Music will produce a music program that will be sponsored by Nissan. The show, titled "Nissan Live Sets on Yahoo! Music," will be broadcast on both the Internet and a high definition TV channel to be named later. Christina Aguilera and Incubus will be the first guests. (Read bits and pieces of an article at press release)

• Sonific announced a widget for Typepad that will allow users to post free music players on their blogs. Sonific pulls from a catalog of over independent 50,000 songs. Unlike Snocap's Linx widget, which can be placed on blogs and MySpace pages, the Sonific widget does not allow for purchases. (Read press release)

• MySpace has licensed technology from Gracenote to block unauthorized uploads of copyrighted music. Wrote Louis Hau at Forbes.com: "Perhaps the most curious aspect of the MySpace-Gracenote pact is that it took so long for the News Corp. unit to put a serious filtering system in place. ... Frustration over MySpace's failure to implement a satisfactory filtering system prompted Universal Music Chairman Doug Morris to lash out at the site during an investor conference in September." (Read article at Forbes.com or press release)

• Not mentioned yesterday: Garth Brooks' five-CD, Wal-Mart exclusive CD set is out this week. Given that fact, the retail giant certainly had good timing when it declared Brooks has sold 20 million CDs in the first year of his exclusive arrangement with Wal-Mart. Oh please, Wal-Mart, become a Soundscan reporter. (Read post at Hits Rumor Mill)

Posted by Glenn at 8:26 AM | Link
|EMI||Indies||MySpace||Online Stores/Services||Publishing||Universal Music Group||Wal Mart|

• Even Steven: Los Angeles lost a country radio station, now it's getting a country station. Mount Wilson Broadcasting is moving to country from standards after KZLA-FM ditched country for urban. (Read article at Radio Ink)

• Brit rock band Keane is releasing a single, "Nothing In My Way," in the memory stick format. Right, a memory stick. Said one analyst, "I can't see this being something that's commonplace, but it's a good idea for people who haven't completely moved to downloads and breaking them in gently." No matter. Sales should be pretty light. (Read article at The Guardian)

• The AllofMP3.com story is getting weird. The IFPI has been giving the "legal" Russian download site a pretty hard time. Now Visa and Mastercard have stopped taking credit card transactions from the site. AllofMP3's response? A DRM-wrapped free service. The anti-RIAA crowd, which was firmly in AllofMP3's corner, must really be between a rock and a hard place. (Read AP article at BusinessWeekOnline)

• Ben Goldman was named Senior VP of A&R at Columbia Records. (Read article at Billboard.biz)

• William Patry's copyright blog has a post on the recent Copyright Office decision on ringtones. Wrote Patry of the decision that ringtones are subject to a compulsory license: "This is an epoch-making decision that bears repeated readings." (Read post at The Patry Copyright Blog)

• The Harry Fox Agency and the National Music Publishers Association avow they will not recognize the ringtone compulsory license. "This decision has no effect on HFA's existing policy that digital phonorecord delivery licenses issued by HFA on behalf of publishers are limited to the making and distribution of full downloads comprising full-length musical works and do not cover the additional configurations of ringtones or mastertones," the firm said in a statement. (Read post at Digital Music News)

• A group of music companies is teaming up for the Music Nation talent search. The contest will take video entries from bands around the world and grant three of them recording contracts with Epic Records. Local radio will help drive partcipation (Clear Channel is involved) and host performances. I dunno...sounds like Flickerstick all over again. (Read press release)

Posted by Glenn at 9:12 AM | Link
|Online Stores/Services||Radio||Ringtones||Sony BMG|

• First the revenue warnings, now the spin. EMI is downplaying its expected drop in revenue by saying digital revenues are growing at a healthy clip. Forbes.com thinks EMI is sending "mixed messages." Indeed. Digital growth -- a song here, a song there -- comes at the expense of CD sales -- ten or 12 songs at a time. The rates are going in opposite directions. If EMI's revenues will be down 4%, it seems the company may not have the right strategy to make up for the loss of CD sales. The bottom line could be fine, though. Revenue growth -- or at least stability -- would certainly please investors, but a stable net income would practically be cause for celebration given the tough environments the majors are in these days. (Read article at Forbes.com)

• Big ringtone news: The US Copyright Office says compositions for ringtones may be subject to a compulsory license. (Read article at Billboard.biz)

• Diddy will team up with the new Best Buy Digital Music Store to promote Play, which goes on sale today. To purchasers of an album download, Best Buy will offer the exclusive Diddy track "Come To Me" (Remix) featuring rapper T.I. CD buyers get free shipping and the exclusive track "Get Off." What are the odds that every Best Buy store in the country is going to be packed to the gills with Play? Pretty good, I'd say. (Read press release)

• More Diddy news: EMI Publishing was resigned the entrepreneur to a longterm publishing deal. (Read post at Hits Rumor Mill)

• The Boston Herald asks people, "Will shoppers care when the last record store goes out of business?" A few "it's sad" comments, and one that oddly places music in the luxury category. (Read article at Boston Herald)

• Nokia finalized its $60 million acquisition of digital music distributor Loudeye. Nokia intends to use Loudeye to broaden its mobile music offerings. The press release puts forth the company's goal: "Our vision is to enable people to access all the music they want, anywhere, anytime and at a reasonable cost." Coolfer looks forward to finding out what that "reasonable cost" will be. (Read press release)

• There's plenty of talk at The Velvet Rope about Jumaine Dupri's dissatisfaction with sales of Janet Jackson's new album 20 Y.O. One of the longest one-day threads in recent memory. There are two sides: Jermaine Dupri screwed up and should be ousted as head of Virgin's Urban department. Or, the buck stops with boss Jason Flom. Both sides seem to agree the album is weak. Post-EMI Mariah gets referenced a few times, naturally. (Read thread at The Velvet Rope)

Posted by Glenn at 8:43 AM | Link
|EMI||Mobile Music||Online Stores/Services||Ringtones|

• Sony and Bertelsmann have appealed the annulment of their 2004 merger. (Read article at Reuters)

• Thomas Hesse of Sony BMG's global digital business operating group, predicts the company's digital revenues will be up as much as 70% in 2006. Speaking at the Digital Music Forum West, Hesse said Sony BMG wants to "do business with everyone" and will be "very agressive" in the digital space. Also, he predicted major growth in mobile music revenue in 2007. (Read article at Digital Media Wire)

• Canadian music television channel MuchMusic launched a music download store that uses the Puretracks infrastructure...which means it has the same look and feel (and icons) as Puretracks and Tower Records' digital store, which is also powered by Puretracks. (Read article at Mediacaster)

• At the Digital Music Forum West conference, executives from Napster, eMusic and Universal Music Group criticized the growth in closed digital music systems and the lack of interoperability between the systems. (Read post at Digital Music News)

• Yesterday's buttons and posters are today's digital accessories. EMI's Parlophone offers an MSN Themepack for the new Lily Allen album as a part of her overall digital marketing campaign. The Themepack includes custom Lily Allen emoticons, backgrounds, display pictures and winks. (Read article at E-Consultancy)

Posted by Glenn at 8:20 AM | Link
|DRM||EMI||Online Stores/Services||Sony BMG|

• The anti-DRM train keeps on rollin': PayPlay will offer its catalog of 600,000 tracks as unprotected, 192kpbs MP3 files for $0.88 apiece. Now if they get music people want, they'll really be in business. The company does, though, offer a widget (a la Snocap) that allows users to sell music through the MySpace page, website or bog. (Read press release)

• Sony BMG to license its catalog of music to Russian download sites. Tracks will be available at around $0.60, over a third lower than at the U.S. iTunes. (Read article at MarketWatch)

• The European Union deems labels' commitments on rebates on music royalty payments are legally binding. (Read press release)

• Dates for the 2007 Winter Music Conference were announced. The annual dance music event will be held in Miami from March 20th to 25th. (Read article at ResidentAdvisor.net)

Posted by Glenn at 9:08 AM | Link
|Conferences||Online Stores/Services||Sony BMG|

• Citigroup is optimistic for the second half of 2006, upgrades EMI to "buy" from "hold." (Read article at NewRatings.com)

• Newsweek's Brad Stones asks of YouTube: "Is it worth a billion dollars, or is it just another company in need of a business model?" He covers the usual Warner Music Group v. Universal Music Group angle, then digs into what one analyst called YouTube's "winner's curse." (Read article at Newsweek)

• Here's a mobile music news bit that I actually find interesting: Motorola iRadio will preview J Records/Arista Records albums. The first offering is Monica's latest single, "Everytime Tha Beat Drop," and other songs from her album The Makings of Me. (Read Press Release)

• Bridge Ratings reports "sluggish" satellite radio sales, especially to the youth market. The research company has lowered its third quarter estimates for new subscriber acquisitions. (Read article at Radio & Records)

• Napster and Tower Records Japan introduced the first subscription-based service for the Japan market. NTT DoCoMo will offer the service to mobile subscribers. The service offers over 1.5 million songs. (Read press release)

• The tail just gets longer and longer: Shout! Factory will release two catalogs, Biograph (early jazz and blues) and Black Top (blues), comprising 10,000 tracks through digital distributor Digital Music Group.

Posted by Glenn at 8:18 AM | Link
|Digital Distribution||EMI||Mobile Music||Online Stores/Services||Radio||YouTube|

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

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

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

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

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

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

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

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

• UK record labels are asked their government for tax breaks to encourage investment in new artists. Seventeen percent of annual revenues are spent on "R&D," claims the BPI, more than the aerospace, defense and automotive industries. (Read article at The Independent)

• Last week, K-Tel Entertainment, Inc. reported an ammended 10-Q report to the SEC. The notes explained that the former CFO of its UK subsidiary was discovered to have missappropriated $924,000 from the subsidiary and another $344,000 from a customer. Almost $1.5 million was been recovered from the "former employee." The results of the misappropriations were overstated product and SG&A costs in 2003 and 2004. (View ammended 10K at SEC.gov)

• Rap legend Kurtis Blow is teaming up with Holy Hip-Hop and EMI Gospel to launch a Christian hip hop label, Music Ministry Recordings. (Read article at UPI)

• Black Eyed Peas' will.i.am has joined Musicane as the digital services company's head of marketing. (Read post at Digital Music News)

• A profile on Louisville-based Resonant Vibes, a digital download store that specializes in electronic and dance music. (Read article at The Courier-Journal)

• RIP Raymond Burrell, former bass player for Bad Company. (Read press release)

Posted by Glenn at 7:59 AM | Link
|Digital Distribution||Digital Music||Indies||Online Stores/Services|

There's nothing terribly wrong with an artist's refusal to sell a la carte downloads at online stores like iTunes. An artist really should be able to dictate how his/her music is sold. If songs were recorded as an album some artists feel they should be heard as an album, in their entirity, from start to finish. If that's an ideal that an artist wants, then the artist should live with that. Heck, an artist has the right to only commercially release an album on a four-part, multi-color vinyl set. It may be commercial suicide, but that's the artist's problem.

But should a holdout be based upon a hope that the album format will return to glory? In an AP article about digital holdouts, Ed "Punch" Andrews, the manager of Bob Seger and Kid Rock, said he and his artists are waiting for just that. "We've always thought certain artists put out albums that aren't meant to be compilations with 50 other artists," he said. "We're hoping at some point albums become important again like they were in the past 30 years."

Seger is considering re-releasing his 1976 classis Night Moves but wants it to be available only in album forat at online stores. "We're hoping albums work there," he said.

You know what would help digital sales of older albums? A lower price point. (Steve Jobs, though, doesn't want to stray from $9.99 for old or new titles.) Rather than being shackled with a $9.99 price, an older album should be closer to $6.99 -- maybe higher if it was just remastered and/or expanded.

Then again, with digital royalties not providing what some artists want (see Cheap Trick vs. Sony BMG) there may not be enough incentive to lower prices.

One thing is almost certain: The album format is not due for a renaissance. The younger generation has spoken. It wants single tracks, playlist and NOW compilations. The album, while still formidable, will continue to decline.

Posted by Glenn at 4:13 PM | Link
|Digital Music||Online Stores/Services|

Excerpts from an article at The Economist about Amazon.com that mention music:

"(Piper Jaffray analyst Safa) Rashtchy thinks Amazon may have missed the boat with digital music, but could still have a chance to become a big online destination for digital video."

"Amazon does provide some digital downloads of music and video, although it is mainly promotional material. At heart the company remains primarily a purveyor of old-world media: some two-thirds of its sales are from books, CDs and DVDs. Whatever share of media ends up being downloaded, Amazon will miss out unless it introduces its own service."

The emergence of Microsoft's Zune will change the digital music landscape and should give pause to companies like Amazon.com that have lagged in taking a shot at iTunes' market share.

Posted by Glenn at 12:31 PM | Link
|Online Stores/Services|

• Artist development is not dead...at least in the UK. New British acts like Corrine Bailey Rae, Arctic Monkeys, Dirty Pretty Things and Sandi Thom have accounted for 17.2% of UK music sales this year. The British Phonographic Industry credits an increase "in the quality in new acts and the creative impetus of digital media." (The Hollywood Reporter)

• Start up eMinor (a seriously Google-screwed company at this point) landed $2 million in funding. The company will launch ReverbNation.com this fall. The site will be, according to the CEO, "empower musicians and independent bands so they can more closely interact with their fans and, as a result, be in better control of their financial destiny." No word yet if the service includes a manager, a booking agent, a publicist, an accountant, a lawyer and a group of fans who actually leave the house at night. (Digital Music News)

• Russian cheapo download site AllofMP3.com is down. Why is this suspicous? Richard Menta explains that in two weeks there will be an ammendment to the Russian copyright law, which will require AllofMP3.com "to come to some direct agreement with the worldwide record industry." (MP3newswire.net)

• Los Angeles loses a country station as its switches to "the mix that makes you move." (Radio Ink)

• iLounge has details on the Microsoft Zune's body, interface and capabilities. It's made entirely of plastic, has a Wi-Fi capability that allows users to loan songs to other Zune users, displays album art and has an integrated FM radio. (iLounge, via Engadget)

• A Paris Hilton autograph signing at a Manhattan FYE (which "caused a veritable riot") marks the beginning of the elaphantine marketing push for her upcoming album, Paris (out this coming Tuesday on Warner Bros). Next up: a tour with dancers choreographed by Pussycat Doll member Robin Anton, and voice lessons before a tour. No kidding. (Rock & Roll Daily)

Posted by Glenn at 11:32 AM | Link
|Music 2.0||Online Stores/Services||Radio||Zune|

• Warner Music Group's Independent Label Group has acquired a stake in Ferret Music, a growing metal label that now has on its roster In Flames, Every Time I Die and Boys Night Out. This is a solid investment for WMG that should help Ferret realize the growth and stability in heavy metal. (Press Release)

• Sony BMG's Burgendy Records has signed Donna Summer. (Other Burgendy artists: Aaron Neville, America, Chaka Khan.) The plan is for her to enter the studio this fall. (Press Release)

• Nokia will buy Loudeye for $60 million in an effort to increase its share of the mobile music market. (Press Release)

• Let's see if this works: Yahoo! Music and MasterCard have teamed jump in a buy-one-year-get-one-year-free promotion for Yahoo!'s music subscription service. (Clickz via paidContent)

• Atlantic has named Kevin Weaver its new senior vice president. (Press Release)

• Two news items on online multimedia service Ruckus: Former Napster COO Michael Bebel is now the Ruckus COO (Press Release) and Ruckus landed $137 million in investment capital (paidContent).

• Ghostface, Rhymefest, David Banner, Daz Dillinger and Xzibit will contribute exclusive tracks to an Xbox game from the makers of "Grand Theft Auto." (Baller Status)

Posted by Glenn at 8:42 AM | Link
|Digital Distribution||Finance||Online Stores/Services||Warner Music Group|

• Rock radio continues its slide, but country gains one: WKOE, a modern rock station in Monmouth-Ocean, New Jersey is switching to WKMK as a country station. (Billboard Radio Monitor)

• Kemado Records' Keith Abrahamsson will launch Anthology Records, a label and online store that will release obscure and experimental albums starting with China Shops, Suicide Commandos, Sciensts and Parson Sound. Abrahamsson has secured digital rights for three years and has recruited TuneCore to distribute to other online stores. (Yahoo! News)

• Razor & Tie named Beka Calloway the new Senior Director, A&R. At least one band, Sam Champion, is no longer with the label. (Hits Rumor Mill) Matt Shay has been named the VP of A&R/Marketing for the RCA Music Group. (Billboard.biz)

• XM has signed a five-year licensing agreement with ASCAP. (RWOnline) Analysts at Morgan Joseph expect XM's earnings per share to drop as revenues increase. (newratings.com)

• iTunes has grabbed an exclusive on the Beach Boys' Pet Sounds - 40th Anniversary collector's edition. It will be available August 28th; the CD will be in stores four weeks later. (Macworld)

• Country music network CMT has launched CMT Loaded, a new website with a free, ad-based model with videos, live performances, interviews, news, movie trailers and more. (Online Media Daily)

Posted by Glenn at 1:10 PM | Link
|A&R||Online Stores/Services||Radio||XM|

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|

Will variable pricing ever see the light of day? It just might if ta post today at Digital Music News is accurate. It claims sources "pointed to a variable pricing approach on an upcoming Microsoft digital music store."

Many have long been in favor of variable pricing. Warner Music Group's Edgar Bronfman is for it. EMI's Alain Levy stated publicly that he wanted it. Univeral Music Group's Doug Morris wants to have the option but as of October of 2005 was content with the status quo.

Though some music executives predicted iTunes would adopt variable pricing, Apple's negotiations with labels earlier this year did not produce a change in price points. And, of course, let's keep in mind that Microsoft's music store starts with the built-in handicap of facing iTunes as a competitor. If variable pricing is to be of benefit to labels, there will need to be some sales behind it.

Continue reading "Signs of Life for Variable Pricing" »

Posted by Glenn at 2:30 PM | Link
|Online Stores/Services|

National Geographic has added itself to the short list of niche-oriented music download stores by launching a world music section at the National Geographic website. It is a collaboration with world music download site Calabash Music, Link TV, Afropop Worldwide and Global Rhythm magazine.

At 99 cents a track, National Geographic has adopted the standard price point for a la carte downloads. There is no price point for an album, however, so consumers lose out on the savings that can be found in the standard $9.99 album price point. Like Calabash, the files are available in MP3 format.

Content is organized by artist, region and genre, and guest DJs (such as Chris Blackwell) offer recommendations. There are video clips and a news page with, sadly, infrequent news links. In all, the browsing experience is adequate. It is highly focused on just a few artists per page, so the act of discovery isn't as rich as it is at a site like Calabash.

The site has much of the same content as eMusic, which also offers MP3 files and a good (and always improving) selection of world music. In a random sample of 20 albums, Coolfer found that 12 out of 20 were also available at eMusic (with more overlap in African music than Asian titles). For frequent downloaders, eMusic's subscription model offers a far better deal. For infrequent downloaders -- say five to ten tracks a month -- National Geographic is a good source for music.

Posted by Glenn at 1:44 PM | Link
|Digital Music||Online Stores/Services|

Digital Music News has four posts (read one, two, three and four) that take from talks with inside sources and present a rather comprehensive picture on Microsoft's plans to battle Apple for market share in the hardware and music download markets.

What really stands out is Microsoft's alleged format, which calls for a closed system, a la iTunes/iPod, that will not be compatible with Microsoft's PlaysForSure DRM system. Also, the company plans on a multi-faceted pricing structure that will have "bundling, variable pricing, and subscription," though the subscription aspect will take a backseat to paid downloads.

Posted by Glenn at 6:32 AM | Link
|Digital Music||Online Stores/Services|

• EMI will not pay as high as $5.6 billion for Warner Music Group, a source tells Reuters, saying EMI "clearly believes $38 is a completely unrealistic valuation for a company that was trading at $21 in March." (Reuters)

• Next week a Euroean court will decide on a challenge by Impala, an association of independent record companies, against the Sony BMG merger. Impala challenged the merger in November of 2004, saying it created a "market imbalance." (Reuters)

• Troubled music group Sanctuary sold MW Entertainment, an artist management company, back to its founder, Mathew Knowles for $5 million. (The Guardian)

• Free isn't a good enough carrot for college students when it comes to online music services such as Napster and Ruckus. Adoption rates have been low, but the RIAA's Cary Sherman is on the record as being happy with the results so far. (Wall Street Journal)

• Parlophone, an EMI label, is setting up a multi-pronged digital campaign for the release of Lily Allen's debut album. (Brand Republic)

Posted by Glenn at 11:36 AM | Link
|EMI WMG Merger Talk||Indies||Online Stores/Services|

Tower Records officialy launched a digital download store today. Coolfer spent a while browsing around. What impression did Tower's digital store make?

First off, there's a branding issue. The store doesn't even have a name. Its URL is www.tower.com/digital. The obvious need to use the Tower name conflicts with a need to make this digital store stand on its own. Calling it something obvious like Tower Digital would be better than not calling it anything at all. Even Engadget harped on the lack of a name. (It appears that the site is officially called Tower Records Digital, although the top of the page says only Tower Records.)

Next, the front page isn't impressive. There's not much above the fold, so seeing the highlighted albums requires scrolling. Just above the fold are links to genre pages. Since Tower is a record buyer's record store, the genre pages should reflect the company's incredible knowledge of music...but they don't. They look thin, and once again most of the important content is below the fold. Browsing titles in each genre and subgenre is an absolute disaster and is the complete opposite experience of browsing the bins in a Tower brick-and-mortar store. Tower's existing online store offers a much better browing experience than its new digital store.

Continue reading "Notes On Tower's Digital Store" »

Posted by Glenn at 11:23 AM | Link
|Online Stores/Services|

• Based on first-day sales, Hits predicts Nelly Furtado's Loose could go upwards of 200,000 in its first week. Underoath (on Tooth & Nail) could break 100,000. Keane may get to 75,000. (Hits)

• TLC member Chili has signed a deal with Konvict Records, the imprint owned by rapper Akon. Her first release is expeted this summer. (SOHH)

• The closely watched interoperability legislation in France is getting watered down. Additional language will allow for a loophole where labels could keep DRM measures if the get permission from artists. This news is being reported as if most artists will opt for DRM -- but will that really happen? Out come the fear-mongers. A consumer group claims artist will lose their deals with Apple if they opt out of the FairPlay protection on iTunes downloads. The Business Software Alliance warns that giving more leverage to record labels will result in the higher prices that some majors want to install on some songs. "It would definitely harm consumers," said its policy director. (AP)

• French music download store Starzik opened for business yesterday, selling DRM-free downloads as the country and continent seriously ponders interoperability issues. Digital distributor The Orchard has signed a deal wtih Starzik to supply more than 400,000 tracks. In all, most of Starzik's more than 600,000 tracks will be available in open format (MP3, Ogg Vorbis, FLAC, AAC, and WMA).

Posted by Glenn at 8:24 AM | Link
|A&R||DRM||Digital Music||Online Stores/Services|

As if the no-longer-free Stax music sampler at eMusic wasn't enough, the online music store is offering to subscribers a free, 24-track sampler of bands that will perform at the Pitchfork Music Festival later this month. The track listing reads like a who's who of indie faves: Art Brut, The National, Spoon, Mission of Burma, The Futureheads, Jens Lekman, Aesop Rock, Mr Lif, Tapes 'N Tapes, Destroyer and others.

Among the 24 tracks are two songs tagged as "eMusic only." One is Yo La Tengo's "Beanbag Chair," which is currently available for free at the Matador website (download MP3 here). The other is The Mountain Goats' "Woke Up New" from their album Get Lonely, out August 22nd on 4AD.

eMusic currently offers other free or mostly-free samplers from Mirsa Records, Surfdog Records and Upper Class Recordings.

Posted by Glenn at 11:45 AM | Link
|Digital Music||Online Stores/Services||Pitchfork||eMusic|

The chatter on a possible Google music store is getting louder. CNET's Declan McCullagh pieced together a good deal of circumstantial evidence to show Google's clandestine efforts to build an online music store.

"f course, if and when any "Gtunes" store launches, one big question will be whether it will use some kind of digital rights management or not. A DRM-embracing Google stands a good chance of alienating the free-software crowd -- and anyone who wants to use Gtunes-purchased music on their iPod. (The only DRM variant compatible with the iPod is Apple's FairPlay embedded in iTunes.) But if Google follows emusic's model and does not wrap songs in DRM, major record labels may balk."

May balk? That's an understatement.

ZDNet has unconfirmed information on Google Music: Google Music will not be the final name and Google Desktop will have an interface with search and media player build in.

A Google music store would arrive as the online music retail space is becoming increasingly crowded. Throwing Google into the picture accellerates the rate at which the less strong are weeded out. How long could Yahoo continue its music store against Google, which wouldn't have to unleash a whole lot to exceed Yahoo's market share.

Posted by Glenn at 3:19 PM | Link
|Online Stores/Services|

Russian online music store AllOfMP3.com, which takes advantage of loose copyright law to sell MP3s at bargain prices, was recently down for three days. (See cached page here.) It turned out to be down for only a brief time. Slyck reported that it was told by an IFPI spokesperson that the site was "genuinely down for repair." (The IFPI filed a complain against the online store in February of 2005, but Russian prosecutors found it to be legal)

Some found a coincidence between the outage and Russian president Vladimir Putin's comments about intentions to beef up copyright protections. Putin is under pressure to protect intellectual property and is seeking to join the World Trade Organization, and so there were theories that the Kremlin shut down the site to appease is detractors.

What's the controversy over AllOfMP3.com? It sells music according to bandwidth -- for about one dollar per album -- and since Russian law doesn't require it to do so, the company does not pay rights holders or songwriters. The site is not nearly as user friendly as most online music stores, but the files can be purchased in varying bitrates and in various DRM-free formats. Its page at Wikipedia explains how it works (payment, downloading, etc) and the site's legality.

Other Russian digital music stores: MP3Search.ru and MP3stor.com.

Posted by Glenn at 2:03 PM | Link
|Online Stores/Services|

Microsoft unveiled its new Windows Media Player 11 today, a revamped media player that incorporates MTV's anticipated URGE music service. (Though I currently don't see it on Microsoft's Windows media download page, it installed along with URGE.)

In the few minutes Coolfer spent with URGE this morning -- after a buggy installation of WMP 11 -- the service looked like a honest to goodness revolution. Particularly striking were the incorporation and visual presentation of blogs and playlists. One quesiton though: Where's the "back" button?

CNET's editor ratings for both WMP 11 beta and URGE were a favorable 8.0 rating.

paidContent was nice enough to gather numerous reviews and comments on URGE, which by the way is sometimes spelled in all caps and sometimes not.

Michael Gartenberg of Jupiter says URGE "shines" while PC Mag wrote that URGE "could end up being the subscription service to beat once they work out some of the bugs."

Posted by Glenn at 11:15 AM | Link
|Digital Music||Online Stores/Services|

• MTV will launch its URGE music service on Wednesday. All of it -- the playlists, the artist pages, the exclusive content -- sounds like a can't-miss situation...except the site will use protected WMA files, which will not work with iPods. (Digital Music News)

• paidContent has some thoughts on URGE and some screenshots on its Flickr page.

• Some country fans and radio stations might not be on board with the new Dixie Chicks album, but the controversial trio is aiming for a crossover to the pop and rock world. Last night's feature on "60 Minutes" should help with that transition. Their next album, Taking The Long Way, will be released next week.

• Charles Duhigg on online used CD trading site Lala.com, and a curious quote by EMI's Ted Cohen about the legality of the site. (LA Times)

• OutKast's oft-delayed film, "Idlewild," and corresponding soundtrack will be out in late August. (Billboard.com)

Posted by Glenn at 8:36 AM | Link
|Online Stores/Services|

Def Jux announced its intentions a while back, but it wasn't until Billboard.com ran an article about the hip hop label's new online store that Coolfer remembered about it.

The store is built into the existing -- and well designed -- Def Jux site. All label releases look to be on sale, including singles. Tracks from singles can be purchased individually or the entire single -- no matter if it has four songs or seven songs -- costs $3.98. Albums cost $9.98. Videos cost $1.98. All audio comes in MP3 format (though that information came from the Billboard.com article...I couldn't find specs on the actual website).

One complaint: Unlike Warp's store, Bleep.com, the Def Jux store doesn't have its own domain. Go to www.definitivejux.net and currently you're met with an intro screen for Mr. Lif's upcoming album. It took two clicks to get to the digital store. That's two too many.

Posted by Glenn at 1:43 PM | Link
|Digital Music||Online Stores/Services|

• Details have emerged about Amazon.com's upcoming music service. It will have Microsoft's Janus DRM for its subscription service downloads, will sell a la carte downloads, will sell MP3 players pre-loaded with content, and will offer subscribers 20% off on CDs. (Gizmodo, via Hypebot)

• NPR will offer an online guide to classical music with over 500 audio streams from classical label Naxos. (Digital Music News)

• The Virgin Megastore in Dallas will close its doors. The 25,000 square foot retail space will soon get a West Elm home furnishings store. (Dallas Morning News, via Kings of A&R)

• St. Louis retail legend Vintage Vinyl celebrated its 25th birthday over the weekend (with performances by such bands as The Bronxx. Margot & The Nuclear So & Sos, Shawn Mullins and Mason Jennings.) (St. Louis Post-Dispatch)

• Singer-songwriter Sonya Kitchell's Words Came Back To Me is the second in Starbucks' Hear Music Debut series. It was released on Kitchell's Velour Music Group. For a lucky album that is deemed to have the "Starbucks sound" the program can be a windfall. (Seattle Times)

Posted by Glenn at 9:11 AM | Link
|Online Stores/Services|

Ever since Napster unveiled its new free music site -- songs can be played for free up to five times before a subscription or purchase is required -- the comments and coverage have been intense. Some don't think much of the poor sound quality. Others consider the ad-based royalties a breakthrough and an important first step in exploring alternative business models.

Coolfer's first few attempts to check out the new features were thwarted by a slow site -- traffic was obviously high. When I finally got an acceptable speed the free listening was a smooth experience. Regisration is required to stream tracks but no money changes hand unless the user wants to buy the track or sign up for a subscription to the music service (streams and tethered downloads).

High marks are given for the easy search process and the worry-free media player, which requires no software or installation. From a blogger's point of view, the best thing about the new Napster is that every song has a unique URL that can be emailed or embedded in a blog post. Other services don't have this, and it's a fantastic way to share music with others. (Coolfer will regularly include Napster links from now on.)

(To underscore the depth of the music catalog and what a far-reaching collection of music is now at people's fingertips, the media player pictured above shows that Napster has an album by French artist Benjamin Biolay -- two, actually -- that were never released domestically.)

On the downside, the audio quality is in the AM radio range, which means songs can be heard and previewed but not totally enjoyed. To hear the subtleties and richness in songs, a subscription is needed or the track would have to be purchased outright.

Select media commentary on the new Napster:

• The LA Times' David Colker lists his pros (search function) and cons (limited to five songs per play, can't build playlists.
• BusinessWeek.com gets experts' opinions on likelihood of success (not all are sold on it) and estimates of ad revenues.
• The Register shows its stripes in this biting criticism of Napster's portrayal of "its service as an open paradise."

Posted by Glenn at 3:20 PM | Link
|Napster||Online Stores/Services|

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|

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|

Via VentureBlog, Coolfer found a list of Web 2.0 companies that has a section of Audio 2.0. (and 36 companies under the Bookmarking 2.0 heading!) Though Coolfer woudln't agree that they're all competitors (except for venture capital) the list shows just how many Internet companies are attempting to remake and control. the digital music experience.

A little lost on what defines a Web 2.0 company? So is everybody else. Wikipedia has a good, general definition at its entry for Web 2.0: "Web 2.0 generally refers to a second generation of services available on the World Wide Web that let people collaborate, and share information online." To translate for the Audio 2.0 startups, they're trying to figure out a good way to organize and to allow people to share what is becoming a mess of information on the Internet. (It's also a way to distance a company/idea from the first round of websites that went belly up, which were most often online stores that sold consumer goods.)

The full list after the jump.

Continue reading "The Crowded Audio 2.0 Market" »

Posted by Glenn at 2:50 PM | Link
|Digital Music||Online Stores/Services|

In a lawsuit over Bertelsmann's investment and involvement in Napster, two rulings may give the Justice Department a better case in its investigation into digital music pricing. The LA Times' Joseph Menn detailed the judge's findings in an article today. One ruling had to do with which documents would be turned over by two majors music groups:

"But the Justice Department's decision was influenced by two detailed 'white papers' — one submitted by EMI Group and MusicNet, the other by Universal Music Group and Pressplay. In a ruling made public Friday, U.S. District Judge Marilyn Hall Patel found that those papers were 'deliberately misleading.'"

The other dealt with Bertelsmann's $50 million loan to Napster and the revealing of an "unwritten deal allowing $10 million to be used for the legal defense of the old system." Bertelsmann did not disclose to the court that $10 million legal fund.

The Wall Street Journal quotes Bertelsmann's lawyer, Ken Steinthal, as saying, "There's no impact on the merit of the claims."

Posted by Glenn at 6:25 PM | Link
|EMI||Legal||Music Industry||Online Stores/Services||Universal Music Group|

• Anaylists react to EMI's positive earnings announcement yesterday. Citigroup lifted its target price today. (newratings.com) The stock rose 8% yesterday. (The Independent)

• There is one growth market other than digital music, and that's Latin music. The RIAA announced yesterday the majors' shipments of Latin music CDs rose 13% last year. Almost half of those shipments were of regional Mexican and Tejano music. (AP)

• David Lee Roth's radio show will be put out of its misery in the next few weeks. (Billboard.com)

• Spitzer did the dirty work and created the public uproar, now the FCC comes in to the sound of trumpets and tubas. FCC Commissioner Jonathan Adelstein officially announced the formal phase of a payola investigation. Letters of inquiry were sent to Clear Channel, Entercom Communications and Citadel Broadcasting. (Washington Times)

• FreshTracksMusic.com is a new online music store that offers all-you-can-eat downloading for the bargain price of $4.95. Digital Music News gave it a little review. What it didn't mention is that the artists available on the site are as close to unknown as you're going to get. I browsed around the site for a few minutes and didn't recognize a single artist's name. Not one. (Digital Music News)

Posted by Glenn at 8:55 AM | Link
|EMI||Online Stores/Services||Radio|

• News on MTV's Urge music service: It's in "alpha-edge beta testing right now" says MTV Networks chief digital officer Jason Hirschhorn, and "MTV Networks very much influenced" the creation and design of Microsoft's upcoming Windows 11 media player. Urge will have an early second half release. (paidContent)

• Harriet Brand, former MTV Networks SVP for music, has joined Universal Music Group International as SVP in business development. (Telegraph)

• Universal Music Group's Doug Morris made $17.8 million in 2005...five times more than the head of UMG's parent company, Vivendi Universal. (FT.com)

• Buried at the bottom of this Kings article in the Sacramento Bee is this little gem about the mysterious record label formed by the Maloofs, the owners of the Sacramento Kings. At a benefit concert to honor slain Arco Arena cameraman John Johnson, "the concert will feature Maloof/Interscope Records' new artist, Narwhal." The Maloofs and Interscope have a band named after a whale that looks like a unicorn? They sure do. Here's the band's MySpace page. (Sac Bee)

Posted by Glenn at 8:58 AM | Link
|Online Stores/Services||Universal Music Group|

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|

• Suge Knight is looking to declare bankruptcy in order to prevent his label, Death Row, from going into receivership. (Forbes.com)

• Clear Channel has offered to pay a $1 million fine to the FCC to settle its payola investigation. The company cut ties with indepedent promoters two years ago, and it has completed its own internal investigation. At least one FCC commissioner isn't keen on settling, claims the article. (San Antonio Express-News)

• The Village Voice profiles New York-based online music stores: digital stores Tight Tunes and Dancetracks Digital, and CD-selling Insound. (Village Voice)

• Today Rhapsody will offer an exclusive on 33 live Barenaked Ladies concerts, with 27 more to follow later in the month. Each of the concerts, from the group's Play Everywhere for Everyone tour, can be purchased for $9.99 apiece.

• Mobile music execs talk about whether or not consumers should be charged more than once for the same content. (Digital Music News)

• The Vortex Jazz Club is at the forefront of London's jazz renaissance. "The renaissance involves a new generation, including the talented pianists Zoe Rahman and Andrew McCormack, the bassist Orlando le Fleming and the drummers Chris Higginbottom and Gene Calderazzo. There are also some well- honed bands with names like Acoustic Ladyland, Polar Bear, Partisans, Squash Recipe and Orchestra Mahatma that sound as though they mean business." (Bloomburg News)

Posted by Glenn at 8:59 AM | Link
|Music Industry||Online Stores/Services|

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|

TowerRecords.com was down earlier today. It's up now, but Coolfer grabbed a screen shot to share with you. Enter this coupon code on an order of $20 or more and get 10% off and free standard shipping service.

You don't have long. Enjoy.

Posted by Glenn at 8:42 PM | Link
|Online Stores/Services|

The oppostion to DRM continues to grow in membership. Timothy B. Lee, who has written a policy analysis for the Cato Institute titled "Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act," has an op-ed in yesterday's Salt Lake Tribune that's basically a teaser version of the 28-page analysis. Here's a taste:

"The DMCA was billed as an anti-piracy measure. It prohibits anyone from 'circumventing' a copy protection scheme such as that used to scramble songs from the iTunes store, or from creating software to do so. ... But that's not how things have worked out in the real world. After nearly a decade on the books, it's hard to find any evidence that the DMCA has reduced piracy.

Congress may have intended to target copyright infringers, but in practice the DMCA mostly harms paying customers by preventing them from playing legally acquired content on the device of their choice. The Constitution says that the purpose of intellectual property is to 'promote the progress of science and the useful arts.' When a copyright law begins to interfere with peoples' freedom to enjoy the content they have legally purchased, Congress needs to give it another look."

Posted by Glenn at 2:47 PM | Link
|Digital Music||Music Industry||Online Stores/Services||P2P|

The limitless shelf space of the digital world is encouraging a new era of music titles. RCA Dance Vault is a new undertaking that repackages dance tracks for digital stores. It has a dedicated page set up at iTunes that touts its "unreleased and out-of-print" versions. Some, like Kelly Clarkson's Because of You and Heather Headley's In My Mind, have the cost and length of a normal album. Most are bite-sized offerings of just a few tracks, like the trio of remixes of Icicle Works' "Whisper to a Scream" and the two versions of G.Q.'s "Disco Nights."

What RCA has done is move its catalog online, a storefront that encourages slower moving titles to remain in print. In the physical world some music wouldn't sell enough to keep from being pulled from circulation. Since labels are wise to maximize the value of their catalogs, finding new ways to sell old music will be paramount. We've already seen this from Rhino, which sells Hi-Five EPs, brief five-song artist introductions the label makes available at digital stores.

Posted by Glenn at 2:32 PM | Link
|Digital Music||Online Stores/Services||Sony BMG|

• 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|

Time Europe has a piece called "Sing When You're Winning: How EMI and the music industry learned to stop worrying and love the digital download." Great title.

It's a story about EMI's Eric Nicoli, who after losing his job when Seagram bought Polygram in 1998 went to EMI in 2001with the goal of finding a way to make money from digital music. Early hire John Rose was given the task of making it work. And it is working. Digital sales are up to 5% of total revenues, EMI's market share has increased in the last year and some analysts are impressed by EMI's innovative approach to digital music.

And let's not forget the ringtone, the newest revenue stream that is sometimes forgotten because it lives in a world separate from music downloads:

"The unexpected cash cow of the digital era is the ringtone, and its wireless cousins: ringtunes, ringbacks and wallpaper. Last year mobile music sales were more than $400 million globally. EMI's publishing arm — with a catalogue of more than a million songs — is the world's largest, with a market share analysts estimate at around 20%. ... And consumers — especially teens — are embracing the new technology with fervor."

The article also hits on wireless sales, which has everybody hopeful due to the high penetration rate of mobile phones. One thing that's missing from the article, though, is Ted Cohen, the respected head of digital development and distribution. This Newsweek article from September of 2005, which calls Cohen "one of Levy's secret weapons," explains how valuable he is to the company's digital future.

Posted by Glenn at 11:45 AM | Link
|Digital Music||EMI||Music Industry||Online Stores/Services|

There's an update to the Google-Napster-Amazon recap from the other day: Thursday the Wall Street Journal reported that Amazon.com is in "advanced talks" with the four major music groups about a "digital music service" with a range of features. One facet is an Amazon.com-braded MP3 player (seems like a weak idea) and a "subscription subscription service that would deeply discount and preload those devices with songs" (which seems like a great idea). Word is that the service could be launched this summer.

MacNewsWorld sees Amazon.com has a formidable opponet for iTunes. "Amazon has a better chance than some of its predecessors to break into the digital music space, thanks to its huge brand name recognition, extremely high volume of traffic and the many related products it also sells on its Web site," wrote Erike Morphy. "The cross sell and upsell marketing opportunities alone may put Amazon within striking distance of iTunes."

Scott Devitt, senior analyst for Stifel, Nicolaus & Co., told the Seattle P-I that Amazon.com needed to compete in this sphere. "They are uniquely positioned to benefit because of their delivery of physical media" such as CDs."

Amazon.com has had plenty of time to check the competition, see what they've done well and what they've done wrong, and put together something other than the half-hearted music stores/services that have hit the market lately. At a minimum, Amazon.com's entry would help raise the bar for all stores and services. Competition -- serious competition -- would help push all services to innovate and differentiate.

Posted by Glenn at 1:05 PM | Link
|Online Stores/Services|

• From a business point of view this is great, but it's even better from a fan's point of view: The Orchard has announced it will launch a program to provide record labels a way to digitize rare and unreleased vinyl. What a blow to eBay and other markets for expensive collector's pieces, but what a bounty for music lovers. Here's how it will work:

A modified Simon Yorke S7 turntable fitted with a Kondo IO-j cartridge feeds the esoteric, rare, expensive and exquisite Kondo M1000 preamplifier, via a Kondo KSL SFz step-up transformer. This signal is in turn converted via an audiophile A-D 2 channel converter, and archived in DSL. All wiring is Kondo age-annealed 99.9999% pure silver wire, and all components are isolated by Vibraplane active isolation platforms."

The resulting high resolution digital archive can be re-encoded in the future as better digital formats become available. The first group of labels taking part in the program include SST, Delicious Vinyl, Lookout! Records, In the Red, Amphetamine Reptile, and Bizarre/Straight, and the songs will be available next month under the banner "When It Was Wax" at online stores such as eMusic, iTunes, Napster, Rhapsody and all the usual players. (Press release)

• Interesting quote from a Motorola exec: "Our relationship with Microsoft is about making the mobile world seamless with the desktop world and allowing consumers to experience music wherever and whenever they want." What is Richard Chin talking about? Motorola is adding Microsoft's DRM into its mobile phones, and they're pretty happy about it. (ZDNet)

• Koch Entertainment Distribution has inked a deal with digital distributor IODA and RoyaltyShare, a provider of royalty accoutning services and sale data consolidation. Over 40 labels and over 32,000 songs are part of the deal, which will help work the songs to many smaller retails while the Koch staff concentrates its efforts on the larger online retailers. (Market Wire)

• Indie rapper Murs will have a new album out on March 21st on the Record Collection label, which recently hired him as an A&R consultant. Murray's Revenge was produced by 9th Wonder. The label is known more for its rock releases by bands like The Walkmen, Ash, John Frusciante and Kate Earl. Look for more labels to rebuild in an effort to reach both rap and rock fans, which are increasingly the same group of people.

Posted by Glenn at 9:02 AM | Link
|Digital Music||Music Industry||Online Stores/Services|

There's been a lot of scattered talk lately about current and possible online music stores: Napster's financial health, the possiblity of a Google music store, rumors of a Google acquisition of the dollar-short Napster, and Amazon.com's foray into digital music. Here's a recap.

To start, a Bear Stearns analyst Robert Peck got people talking when he forecasted an imminent Google music store.

There was a report from Digital Music News that Napster going to layoff some people. Napster denied those rumors but did announce it would cut ten middle manager positions.

And there has been some professional chatter about the possibility that Google will acquire Napster as a means to enter digital music sales. Citing anonymous sources, the NY Post reported (as reported here by News.com) Google was in talks with Napster over an "extended alliance" and a possible "outright acquisition." Forbes reports Napster's takeover value at $3 to $5.

As is often the case in Silicon Valley, Google denied rumors that it was looking to acquire Napster. "No, we have no plans at this time to develop a music store, or to compete with existing online and offline music retailers," said a spokesperson.

Last week Napster released its "sorry results" for last quarter. Napster wouldn't say what it had up its sleeve, but in a conference call with analysts CEO Chris Gorog said the company was optimistic about an upcoming initiative.

On Saturday The Independent ran an article about the music ambitions of Amazon.com and Google and how music executives are eager to work with the two companies in hopes they will loosen Apple's strangehold on digital music. One executive claimed "active communications in the last 60 days" with the two companies, and put Amazon.com ahead of Google in preparedness to launch a store.

Posted by Glenn at 10:56 PM | Link
|Music Industry||Napster||Online Stores/Services|

It's the battle of the companies at the beginning of the phone book (the oldest tactic in the world). In "Can Amazon Catch Apple?" Newsweek's Brad Stone writes about Amazon.com's pending entry into digital music sales and wonders if the online retail behemoth has what it takes to take on Apple.

It's a fine -- though brief -- article that's built around Amazon.com's hesitance in being a first mover in digital music. "I'm comfortable there will be a second, third and fourth generation of digital media services," Amazon.com's Jeff Bezos told Newsweek in 2004. Now that we're in or approaching that second generation, what has Amazon.com got up its sleeve? Coolfer finds this excerpt to be absolutely titilating (bold is mine):

"Customers who buy a CD will receive a digital copy of the album or song, which they can transfer to a portable digital music player. 'It's the most well-thought-out, consumer-conscious strategy I've seen yet for digital music,' says the insider. ... 'They realize that a very significant percentage of their sales are in physical media products that will almost certainly migrate to digital,' says Citigroup analyst Mark Mahaney. 'The writing has been on the wall for a long time, and Amazon knows that.'"

It's not like ripping a CD takes a lot of effort, but offering digital tracks to CD buyers could lead to an exciting new strategy. What kind of purely digital plan, if any, will Amazon.com unveil? Coolfer can't wait to see it. Online music is finally getting the kind of competition and innovation that benefits both consumers and labels. The next year or two should be filled with ideas and ventures that will breath life into music.

Posted by Glenn at 2:36 PM | Link
|Apple||Music Industry||Online Stores/Services|

• Rhapsody subscribers, here's a playlist with 36 tracks from 18 of last Tuesday's new releases (including His Name is Alive, Il Divo, UB40, Tha Alkaholics, Audio Bullys, Cat Power, Fivespeed, Saint Etienne, Rosanne Cash, P.O.D., Yellowcard, Film School and Robert Pollard).

• The Rambler Blog has a long (long, long) list of music-related deaths in 2005. Well known names are on the list (Lou Rawls, Link Wray, Robert Moog) but more relatively known ones such composer Robert Wright, Chet Helms (Janis Joplin' promoter), and Afgani pop star Nasrat Parsa.

• The NY Times' Deborah Sontag writes about Korean pop star Rain, who has two upcoming shows at Madison Square Garden. Rain says he would like to see an Asian pop star make it in America, so he's practicing his English, studying the culture and preparing an English-language album.

• MP3.com has an interview with David Pakman, CEO of online music store eMusic. It's a good, revealing discussion of eMusic's place in the online market. Pakman is very optimistic on the company's future. "We want to be at millions of subscribers and we want to sell more independent music in the world than anyone else," he said. "And I think we're very close to that." Later, he commented on eMusic's lack of DRM. "We'll continue to be no-DRM, not for philosophical reasons but only for practical, compatibility reasons. And if that whole practical, compatibility thing got sorted out, if you could sell DRM-protected music that was interoperable everywhere and that wasn't sort of penalizing customers for buying music digitally, we would do that."

Posted by Glenn at 3:03 PM | Link
|Music||Online Stores/Services|

• Grandaddy to retire after the release of next album. (Pitchfork)

• Merge Records' offer of free MP3 to buyers of its vinyl is part of this article on how vinyl records are still thriving in the iPod era. (The Emory Wheel)

• The deal between Jay-Z and Nas, and the agreement between Sony Music and Def Jam that made is possible, is "brilliant from a business perspective," but the lawyers and their "hefty billable hours" were winners as well. (LawBlawg)

• Napster has cut 10 management jobs but dismissed Digital Music News' claim that a bigger round of layoffs is pending. (MP3.com)

• A Bears Sterns analyst reads blogs and so thinks Google is working on a music store? Looks to be true. (WebProNews)

• Video games help music sales? That's the argument made by AP business writer Lawrence Frost. One example given is Fall Out Boy, who sold 70,000 albums in one week because, insists video game music scout Tim Riley, of the band's inclusion in Tony Hawk's American Wasteland. Given the meager sales of many game-related soundtracks, Coolfer is skeptical. (Ars Technica)

Posted by Glenn at 8:33 AM | Link
|Music Industry||Online Stores/Services|

Napster is nearing "a substantial round of layoffs," reports Digital Music News. A source also said Napster executives are considering various exit options, "including a fire sale or liquidation." A Napster representative denied those claims. One has to wonder how long the company can unsuccessfully grasp for traction in an increasingly competitive environment. The company will announce its third quarter results after the close of market on February 8th.

paidContent claims the industry grapevine has some Napster chatter. "Someone told me RealNetworks might be interested in the company...someone else told me it could be Microsoft/MSN," wrote Rafat Ali. The Register reports of similar chatter, "in particular that the company is making job cuts here in the UK."

Posted by Glenn at 8:40 AM | Link
|Online Stores/Services|

Today's Wall Street Journel has an article (sorry, no link, going off a piece of newsprint) on New York State Attorney General Elliot Spitzer's latest investigation into the music industry. This one is looking for price collusion in pricing. Ethan Smith's article isn't about the typical suspect -- wholesale prices -- but rather prices in subscription services.

"The concern is that, when selling their music to subscription services, music labels engage in what may amount to a passive form of collusion, resulting from their use of 'most favored nation status' clauses, as they are known in the trade. Unlike downloading services -- in which labels sell songs to retailers for a set wholesale price -- the prices charged to subscription services are derived from complex licensing agreements. The most-favored-nation clauses, or MFNs, seek to ensure that if a rival label negotiates better deal terms, the label with most-favored-nation status gets the same terms. Critics say that, because all of the major labels have sought or secured such clauses from subscription-music services, the result is anticompetitive."

Not surprisingly, there's no one point of view on the MFNs. A Universal Music Group spokesperson put it this way: "Universal is committed to providing our artists with the best possible service and this includes protecting them as their music is used and exploited in new and different ways." Then president of the American Antitrust Institute said, "Antitrust enforcers seem to recognize most-favored nation as a red flag." And said Jonathan Potter, executive director of the Digital Media Association, "The MFNs of a few years ago were not as aggressive."

The Los Angeles Times ran a similar article today but didn't concentrate on the contracts for subscription services. It does have, though, the same difference of opinions. Potter told the Times that labels were insistant upon MFNs and in a roundabout way called the practice collusion. Anonymous music executives said the MFNs were needed to facilitate a growing market. "The music industry wanted to establish the online marketplace as quickly as possible, but we didn't want to get bogged down in debates over prices," said the executive.

Wrote technology lawyer Rob Hyndeman at his blog, "I thought an associate in a NY law firm was a tool for delivering offerings quickly."

Posted by Glenn at 10:16 PM | Link
|Music Industry||Online Stores/Services|

iTunes added the "digital version" of the Talking Heads' classic Remain in Light. Added to the remastered album are four unfinished outtakes: "Fela's Riff," "Unison," "Double Groove" and "Right Start."

William Orbit's new single, "Spiral," is at iTunes. It features UK chart-toppers Sugababes on vocals.

It's a big week for new jazz titles at iTunes as a slew of Verve titles made an appearance. Among the additions are Gerry Mulligan's Presenting the Gerry Mulligan Sextet, Max Roach's The Many Sides of Max and Quincy Jones' Newport '61.

DownloadPunk has added Kansas City-based Anodyne Records to its catalog. Its roster includes Dirt Nap, Shiner, The Hearers and Pornhuskers.

Rhapsody has an exclusive Rolling Stone Original EP with Spoon's Britt Daniel. It has three songs: "The Way We Get By," "Lines in the Suit" and "Advance Cassette."

eMusic is now the exclusive distributor of the catalog of indie legend SST. In two weeks everybody else will get SST -- the label had a deal with digital distribution The Orchard. Just a few titles are live so far: fIREHOSE's Ragin', Full-On, Descendents' I Don't Want To Grow Up, and Black Flag's Six Pack.

eMusic has its usual logjam of good, interesting and rare titles. Among them is Silva Screen Records' Music of John Williams: 40 Years of Film Music. At 45 songs, the entire collection will put a dent in your monthly allotment. 40 Years has music from all the classics: Star Wars, Jaws, Indian Jones and the Temple of Doom and Schindler's List. Plus there's music from some not-so-classics like Amistad, The River and Family Plot.

The Pixies eMusic exclusive, Hey - Live Pixies, has fewer songs but just as many classics: "Debaser" recorded in Norfolk, VA in December of 2004, "Monkey Gone To Heaven" taken from a June, 2005 show in Denver and "Planet of Sound" from a August, 2005 performance in Manchester, England. In all the 28 tracks covers all the bases.

Bleep.com has a few good albums for electronic fans. B.Fleischman's new the humbucking coil is available (well before it's in stores). Also new is A Guy Called Gerald's 1995 album Black Street Technology, for those of you who want to start a jungle revival.

Posted by Glenn at 8:48 AM | Link
|Online Stores/Services|

Ever since word got out that Elliot Spitzer was investigating the major labels' pricing at online music store, there's been speculation -- though not any good theories actually printed -- over the focus of the investigation.

Digital Music News reports that the Spitzer's office is looking at "clever contracts" crafted using most-favored nation clauses and, here's the really interesting part, "the right to audit competing agreements on an annual basis."

The roles of Apple and other online sellers are also part of the investigation. "Everybody expects to be contacted, and some already have been," said Jonathan Potter of the Digital Media Association last week, adding that he thinks the investigation has the potential to be "full-blown."