CNET's Greg Sandoval has a nice look into Sony Music's sinking digital market share. But he left out one important thing: The company's total market share -- not just digital -- has taken a beating since the Sony and BMG merger.

As I have written many times, the company has given up market share since the merger, mostly to Universal Music Group and Warner Music Group. There are a number of reasons, mainly A&R and management (the rootkit problem had no detectable impact on U.S. album market share).

Here's what I wrote in October 2007:

The Sony BMG merger was completed on August 5, 2004. The week before the merger, Sony's market share was 13.76% and BMG's share was 16.02%. The pre-merger combined album market share was 29.78%.

Six months later in February 2005, before any of the control and operational benefits would normally have time to kick in, Sony BMG's market share had dropped to 26.45%. Remember that the combined company had some integration problems.

Six months after that, in August of 2005, Sony BMG's album market share had dropped to 25.66%. By Christmas 2006, its share has dropped to 25.32%. (Note that very slight drop between August 2005 and December 2006. If you believe the company's rootkit problem hurt its market share, think again. Sony BMG's rootkit fiasco hit in November 2005 and appears to have had a negligible impact on market position.)

Sony BMG's current album market share is 21.76%. Again, the pre-merger combined share was 29.78%, a full eight points higher than where it stands today. Indies have gone from 17.58% in August 2004 to 20.55% today.

Posted by Glenn at 10:14 AM | Link
|Sony BMG||Sony Music|

Sony Corp released its Q2 2008 earnings today. For the quarter ending September 30, 2008, company's revenues were down 0.5%, operating income dropped 90.1% and net income fell 71.8%.

Click here for the presentation slides and here for the 24-page PDF of the earnings release.

Sales at Sony BMG dropped 11% versus Q2 2007. Its loss for the quarter was $45 million, a deeper deficit than last year's $8 million loss. The ongoing, worldwide decline in recorded music sales were blamed for the weaker quarter, as were restructuring costs -- even though they amounted to only $4 million.

Sony's acquisition of BMG's half of the joint venture was not finalized until October 1, the first day of Q3. The impact of AC/DC's successful Black Ice will be seen in the next earnings release. The impact of Sony ownership of the former joint venture should help the company regain some of the market share it has lost over the last few years, and it should put Sony Music in a better position to incorporate music into Sony Corp's many properties.

Posted by Glenn at 10:50 AM | Link
|Sony||Sony BMG|

(From top to bottom: September 2008, first half of 2008 and first half of 2007)

Warner Music Group had a good September -- even though overall sales were atrocious compared to both September 2007 and the entirety of 2008. So good, actually, that WMG overtook Sony BMG for #2 in album market share. WMG shot up to 24.7% and Sony BMG dropped to 21.6%. Universal Music Group still dominates with 32.4%. EMI had 9.4% (the same share it had in the first half of 2008) and all others split up the 11.9% remainder.

September marked the latest phase in Sony BMG's fading market share. WMG had 20.8% in the first half of 2008 and 20% in the first half of 2007. Sony BMG had 24.8% of album sales in the first half of 2008 and 25.3% in the first half of 2007. (Ed Christman's July 2 article at Billboard.biz has the stats. Here's a link to a spreadsheet with the numbers.) At the time of the merger, Sony and BMG had a combined 29.78% album market share.

Of course the entire market is falling, but there's a big difference between losing sales and losing market share. The latter can be controlled by any one company -- they either take it or cede it to competitors. The former, a falling album market, is less influenced by any one company. In 2008, each percentage point of album market share lost is equal to about 3.8 million units. At an average wholesale cost of $9 per unit, that's about $34 million in revenue.

Posted by Glenn at 10:03 AM | Link
|Sony BMG||Warner Music Group|

Sony Corp announced today it has finalized the acquisition of BMG Music. The deal brings an end to the four-year Sony BMG joint venture. The new company will be called called Sony Music Entertainment Inc.

The $1.2 billion acquisition ($900 million net of cash received) was announced on August 5 and received approval from the European Union on September 15.

What impact will this have? The company should benefit from a single, more focused leadership. In the years after the two companies joined forces, cultural differences, constant reorganizations and power struggles hurt the company. Some believe Sony BMG has lagged behind some of its competitors in digital initiatives and progress. Less debatable is that a combination of factors has lead Sony BMG to loose recorded music market share in the last four years (from a 21.5% global share to 20.1% at the end of 2007). There is definitely room for improvement.

Posted by Glenn at 9:02 AM | Link
|Sony||Sony BMG|

Yesterday the European Union approved Sony Music's acquisition of Bertelsmann's half of its Sony BMG joint venture. (read the press release and Reuters article)

Last month Sony agreed to purchase BMG from Bertelsmann for around $900 million. The need for regulators' approval is a standard procedure and an especially potent topic in a recorded music market with such concentrated ownership. The EU approval effectively ends an appeal by indie trade group Impala that asked the EU to rescind its original approval of the merger. As I wrote last year, indie label sales in the US -- either because of or in spite of the merger -- fared well since the merger. From the time of the merger through October of 2007, a period of just over three years, Sony BMG's share of US album sales dropped to 21.76% from 29.78%. Indies rose to 20.55% from 17.58%.

Posted by Glenn at 1:25 AM | Link
|Sony BMG||Sony Music|

Over the last few days, much commentary has been offered on how Sony's acquisition of Bertelsmann's half of Sony BMG can be used as a measuring stick for other music companies. That's a low-tech way of saying people are comparing multiples and valuing companies.

From the Times Online:

The warring parties could not even agree on the valuation of Sony BMG, the world’s second-largest music company, with Sony indicating that the business was worth $1.8 billion (£920 million) and Bertelsmann preferring a figure of $2.4 billion.

The valuation implied in the deal is $1.8 billion, not $2.4 billion (which is twice the $1.2 billion paid by Sony), because Sony already had a right to half the joint venture's $600 million in cash.

Applying WMG's current price/sales ratio to Sony BMG, wrote Alley Insider's Peter Kafka, values Sony BMG at only $1.3 billion. That's a pessimistic, but not totally unreasonable, look at it. But since cash is king, let's look at earnings rather than sales. The Times Online's Dan Sabbagh wrote that Sony valued the company at 4.7 times underlying earnings. That doesn't look to be way off if you take WMG, with its music publishing, trades at 7 times EBITDA. The difference is that Sony BMG does not have music publishing, which commands a higher multiple that does recorded music. Both, by the way, are way, way lower than the 18.6 times earnings Terra Firma paid for EMI.

Sony's acquisition price "has negative implications for music industry valuations, specifically Warner Music," says Pali Research's Richard Greenfield (quoted in this Financial Times article).

This was even a conversation item during this mornings Warner Music Group conference call. WMG's Edgar Bronfman said that from WMG's knowledge of the transaction, the analysis done and the resulting multiples are "well below" the actual multiples paid and if they were correct they ague for an improved valuation of WMG. That's optimism for you.

A problem with all this is there was only one bidder for Bertelsmann's half of Sony BMG. That, and the lack of publishing, messes with any attempt to apply similar ratios to other music companies. What is clear is the market thinks far more of publishing than recorded music. Publishing has growth in it. Recorded music does not.

I'm sure Sony feels it can turn around its recorded music division and may have a better idea than the market as to how it is going to do that. Or it believes it can take better advantage of intra-company synergies...even though it had four years to capture synergies and watched its market share fall. Or, more likely, Sony has more patience than do investors. It's clear the market does not have a clear window into WMG's or Sony's vision for profit growth. There's just too little certainly if and when it will happen. Whatever is going to turn recorded music around -- if it happens -- is just barely on the horizon. But if there is growth ahead -- organization overhaul, revenue from performance royalties, successful new subscription models, the superior margins of digital, a combination of all of the above -- then maybe Sony got a good deal on Bertelsmann's half of Sony BMG. And there's nothing wrong with buying low.

Posted by Glenn at 2:28 PM | Link
|Sony BMG|

• S&P reaffirmed Warner Music Group's BB- debt rating and said it expects the company will be able to meet its financial covenants in the near term. There was actually a rare bit of optimism in the analysis. "Our continuing concerns about Warner Music's profitability as it transitions to a digital business model are somewhat tempered by the termination of its dividend and its focus on significantly reducing acquisitions," S&P said. (Thomson Financial)

• Universal Music Group will partner with Qualcomm to expand its direct-to-consumer mobile offerings. (Press release)

• Sony BMG's promotion department plays musical chairs and retains all staffers. (Music Row)

• An article on HMV's music strategy: fewer CDs, more vinyl and in-store downloads and the lure of free wifi. "Whether young people will choose to meet in an HMV store at the weekends has yet to be seen, but the retailer hopes it is a step in the right direction." (The Times)

• A profile on Sony's Iron Collectibles, a small company that was founded to sell art-quality reproductions of photos from Columbia Records' archives. “We’re looking to take advantage of all the assets of the company, not just the audio recordings,” said John Ingrassia, president of Sony BMG Music Entertainment’s commercial music group." An executive at Warner Music Group's Rhino Records said the label is looking at ways to turn Warner's archive into a business. Be sure to check out the article's slideshow. (New York Times)

• Music for airports: EMI has licensed its catalog for sale at MEDIAnywhere's download kiosks. (Music Week)

• Live Nation is (still) considering a Pittsburgh-area location for a 5,000-seat amphitheater. (Pittsburgh Tribune-Review)

• The IFPI's Recording Industry in Numbers 2008 is available for pre-order. (IFPI)

Posted by Glenn at 9:58 AM | Link
|Sony BMG||Warner Music Group|

Sony Corp released its earnings today. Sony BMG revenues dropped 4% while operating profit jumped 90%. (Info is on slide #4 and #18 of the earnings presentation .) No results with constant currency were given. The reason given for the drop in revenues was the standard one: declines in sales of physical products are not being offset by the growth in digital.

Music publishing is part of an "other" category that had a 7.6% increase in revenues. Sony/ATV's acquisition of Famous Music was a factor in that increase.

You can read a PDF of the consolidated financial results here.

Posted by Glenn at 4:42 PM | Link
|Earnings Releases||Sony BMG|

• Sony BMG has signed up for Nokia's Comes With Music service. (Reuters)

• Nokia was not specific, but it denied paying Universal Music Group $35 for every handset that is part of the Comes With Music service. "We are not paying that amount to any record label," said a spokesperson. (paidContent)

• The International Association of Jazz Education has canceled its 2009 conference and will file for bankruptcy. (All About Jazz)

• EMI's restructuring is reportedly facing contractual obstacles: "issues concerning 'key man' clauses in artists' contracts; clauses in executive contracts that allow top staffers to leave if their responsibilities change or the company comes under new ownership or management; and challenges meeting deadlines by certain sectors of the company." An EMI representative denied all three. (Billboard)

• Current American Idol contestant David Cook does not yet have a major label deal, yet his self-released 2006 album rose to the #1 spot on Amazon.com MP3 store's album chart. As of last night, 87 customers had reviewed the album and 82 had given it five stars. (USA Today)

• EMI Christian will release twenty titles that each contain two albums by the same artist. The CD packages will list for $13.99. (Press release)

• SpiralFrog appointed former Maverick Recordings exec Russ Reiger to the new position of VP of strategic initiatives. (Press release)

• Widget-based music service Sonific will close its doors on May 1. In a message on the company's site, co-founder Gerd Leonhard blamed an "unworkable music licensing situation and the resulting lack of solid revenue modeling" and called the music industry "certifiably dysfunctional." (Sonific, via Billboard.biz)

Posted by Glenn at 8:44 AM | Link
|Nokia||Sony BMG|

Let's have some fun with Excel. Here are some bar graphs with data from Bertelsmann's 2007 Annual Report. Yesterday I listed this stuff in a post about BMG's 2007 earnings.

The bottom graph uses revenue and number of employees for the entire Sony BMG joint venture. The belt tightening had kept revenues-per-employee in check until the big dip last year. The future holds continued revenue problems and, thus, much more attrition.

Posted by Glenn at 4:02 AM | Link
|Sony BMG|

Bertelsmann reported its 2007 earnings yesterday. For the year, BMG revenues declined by 27.8% to €1.5 billion and operating EBITA (basically operating profit) dropped 46% to €93 million. Physical revenues dropped 17% while digital increased 40%. Digital accounted for 17% of BMG's revenue (up from 12% in 2006). BMG's revenue from Germany dropped 19.2% to €130 million.

The earnings release and annual report emphasize the emergence of 360 deals (called "partnerships" and "partnerships" in the annual report) BMG signed during the year, as well as the company's expansion into artist management, concert promotion and merchandising. Those new facets certainly added some revenues during the year. The company lost a good deal of revenue in 2007 when it sold its publishing division to Universal Music Group.

The annual report laid out BMG's revenue, operating EBIT and number of employees for the last five years. Revenues, from 2003 to 2007, were €2.712 billion, €2.547 billion, €2.128 billion, 2.017 billion and €1.456 billion. Operating EBIT for those years was €54 million, €162 million, €177 million, €173 million and €93 million. Number of Sony BMG employees (total for the joint venture) from 2003 through 2007 was 4880, 4259, 3597, 3009 and 2851.

Put another way, BMG's revenue has dropped 46.3% over the last five years and at a cumulative annual rate of 11.7%. The number of Sony BMG employees has dropped 41.6% over the last five years and at a cumulative annual rate of 10.2%.

And there is continued talk about Bertelsmann's possible sale of BMG. From the Times Online: "Thomas Rabe, chief financial officer, said: 'What we will do depends on price. Of course, the EMI price is a good price for a seller, but we would not be interested in selling if we were offered a figure based on the current valuation of Warner Music. The market is undervaluing music assets.'"

Since Bertelsmann has been looking for somebody to take its half of the joint venture, one would expect Rabe to insist the market has undervalued music assets.

Helpful links:

• 2007 Annual Report (8.1MB PDF)
• Investor Conference Call Presentation (PDF)

Posted by Glenn at 2:49 PM | Link
|Earnings Releases||Sony BMG|

• A few weeks ago news broke that Bertelsmann was looking into the sale of its stake in the Sony BMG joint venture. Today, as Bertelsmann reported its 2007 earnings, came news the company is considering the sale of its Direct Group book and record clubs. (AP)

• Vodafone will release seven songs from Madonna's upcoming album, each staggered by one day, to its UK customers. Her new album, Hard Candy, will be released in late April by Warner Music. (The Telegraph)

• P2P service Limewire has launched an eMusic-styled MP3 subscription service. (Listening Post)

• Carrie Underwood has been invited to join the Grand Ole Opry. (Music Row)

• Gorilla vs. Bear, one of the better and more popular music blogs out there, was asked by Sports Illustrated to be music curators for the site's 2008 NCAA basketball tournament blog. There's a free download every day. (The Tourney Blog)

Posted by Glenn at 8:32 AM | Link
|Sony BMG|

• A report says Bertelsmann AG's CFO met with two private equity firms and explored the possibility of selling some of its divisions, one being its 50% stake in Sony BMG. (Forbes.com)

• Warner Music International inked a licensing deal with MP3 download store 7digital for sale to customers in UK, Ireland, Spain, France and Germany. 7digital is the first European download store to offer Warner tracks in MP3 format. (Reuters)

• The Weinstein Co. has optioned rights to "No Woman No Cry: My Life With Bob Marley," written by Rita Marley, and plans to release a biopic on the reggae great. (Variety)

• Merge Records has launched a download stores that sells MP3s for individual tracks and complete albums and FLAC for complete albums only. I'll continue to get Merge music at eMusic, a much cheaper option. (Merge Records Store)

• "Guitar Hero" is available for AT&T mobile subscribers. (MocoNews)

• Qtrax's death watch status improves a few notches: EMI Music Publishing has renewed its deal with the ad-supported P2P service. I guess that clears the way for all those bluegrass and symphonic tributes to Ozzy Osbourne. In addition, Sony/ATV announced it has signed a licensing agreement with Qtrax. (EMI Press release, via Silicon Alley Insider and Sony/ATV Press release)

• A profile on Power Amp, a new investment fund that puts money into musicians. (BBC News)

• The William Morris Agency and AT&T are part of a venture capital fund with the goals of "discovering, funding and building small, high-impact companies focused on innovation in the consumer media technology arena." (Press release)

Posted by Glenn at 7:34 AM | Link
|Sony BMG|

The Guardian has a nice spotlight on Sony BMG UK chief Ged Doherty. The exec recounts the industry's mistakes, insists the power shift is good for majors (I agree...it'll spur innovation) and has a good deal of optimism. All in all, it's a realistic view of the next five or six years. Here's a sample:

"We're not an industry that has generally been run by forward-thinking people. The CD boom papered over lots of cracks. The current generation are paying the price for the mistakes of our forefathers," he argues. ...

But he is convinced that remodelled major labels, offering a balance of local expertise and global reach, have a future. He says relationships with artists in the digital age will rely on deals being "fair, open and transparent".

Fifty-five per cent of Sony's artists are now signed to "extended" deals that involve an element other than recorded music, he adds. "I've seen God knows how many mobile-phone companies, hamburger companies and drinks companies start labels. They've all folded because they don't know what they're doing."

Posted by Glenn at 1:09 PM | Link
|Sony BMG|

There aren't many details, but MusicRow.com tried out a few of Sony BMG's MusicPass MP3 cards and had this to say about the experience:

This writer tested several cards including Ultimate Santana, a collection of 18 tracks and three bonus music videos. MusicPass.com began to automatically download four songs at once, but due to the large number of tracks and high file size (the videos were around 80 megabytes each) I ran out of time before all the material had transferred. Upon logging in again later, the site remembered me (via the pin/serial numbers) and picked up where it had stopped. Before long I was sweating on a spin bike grooving to “Oye Como Va” on my iPhone iPod.

Other items of note (from the post and the MusicPass FAQ:

• Each card has a scratch-off PIN code and serial number combination that are entered at the MusicPass site.
• After the consumer has downloaded the album, there is an opportunity to purchase a complete catalog album from the same artist.
• Said Sony BMG Nashville's VP of Digital Business,"They have to be activated at the register just like any other gift card purchase."
• The cards have no expiration date.
• The files are watermarked with "a unique code indicating that they belong to Sony BMG" but no personal information.
• Users are not required to enter anything other than the PIN code and serial number. An email address is optional (to receive artist info).

To watch a video about the MusicPass cards, go to the website and click on the "What Is MusicPass?" link.

Posted by Glenn at 10:23 AM | Link
|Sony BMG|

Sony Corp released its Q3 earnings today (download PDF of full release here). Sony BMG's Q3 sales were flat at $1.47 billion and net income dropped 12% to $208 million from $236 million last year. That figure includes income from a legal settlement and $13 million of restructuring charges.

Posted by Glenn at 8:22 AM | Link
|Earnings Releases||Sony BMG|

For those of you wondering what will become of all-you-can-eat music services in the next few years, mosey on over to this post at paidContent that quotes Sony BMG's global digital music president Thomas Hesse.

This idea of bundling music or access ... enjoying music on a fairly large scale with either a device or with access, be it a cell phone contract or a cable contract ... to me, that’s the next frontier. We feel quite optimistic about it. ...

Access to music so that music becomes something you can access in a very free way with very little encumburences.

Last October, reports surfaced that Universal Music Group was working on an industry-owned music service called Total Music plan, an unlimited (but presumably tethered) music service whose fees would be embedded in the price of compatible hardware. In addition, UMG is working with Nokia on Comes With Music, a music service for Nokia handsets. The service's costs will be embedded in the device's price.

Coolfer is optimistic about this kind of embedded service. A great number of people don't put much value on digital music, and they care little about subscription services. The best way to frame the cost of such a service, in order to take it to the masses, is to render it as invisible as possible. Labels would receive income from the sale of every device, which is far better asking device purchasers to take a second step and opt in a music service. Maybe then would consumers embrace music services in light of their inability to work with Apple products, their DRM, their catalogs that don't dig as deep as the illegal options.

One thing is for sure: Either subscription services have done a horrible job marketing their products, or consumers just flat out don't want them.

Posted by Glenn at 11:49 PM | Link
|Comes With Music||Sony BMG||Total Music|

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

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

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

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

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

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

• According to BusinessWeek, Sony BMG is "finalizing plans to sell songs without the copyright protection" and "will make at least part of its collection available without so-called digital rights management, or DRM, software some time in the first quarter." (BusinessWeek.com)

• U.S. and Canadian concert revenues rose 8% to $3.9 billion in 2007. That figure shows considerable growth in smaller scale concerts: revenue from the top 20 concerts dropped about 15%. (Forbes.com)

• Just as Napster quietly increased its monthly price to $12.95, Bear Stearns declared that "the pure-play music business faces significant challenges." (paidContent)

• Sirius Satellite Radio ended the year up 38% in subscribers, to 8.3 million. (Radio Ink)

Posted by Glenn at 10:06 AM | Link
|DRM||Napster||Sirius||Sony BMG|

Silicon Alley Insider and Digital Music News have posted about rumored upcoming layoffs at Sony BMG and Island Def Jam. Sony BMG, according to Silicon Alley Insider, will shed "40 to 70 mid-level execs" before the end of the year. Digital Music News has picked up chatter that cuts are imminent at Columbia Music Group as well as Island Def Jam ("particularly within A&R").

Posted by Glenn at 12:21 PM | Link
|Sony BMG||Universal Music Group|

• Another entry into the alternative distribution model game: MySpace will allow users to download an upcoming album by punk group Pennywise by adding as a friend mobile music distributor Textango. Free music on the Internet...no, it's not that unique. What is unique about this is the level of the band involved, the involvement of MySpace and the fact that the album can be downloaded rather than streamed. The difference between streams, which MySpace has plenty of, and downloads is all the difference in the world. (AdWeek)

• Sony BMG finalized an on-demand video licensing deal with Yahoo. The deal includes the ability for users to put Sony BMG music in their user-generated audiovisual content. (Press release)

• Video game "Guitar Hero III," developed by MTV Networks-owned Harmonix Music Systems, had sales of 1.4 million in its first week of release. (Billboard.biz)

• Nokia has inked a deal with EMI U.K. to offer to its Nokia Music Store subscribers Kylie Minogue's new album five days before its general release. The album will cost £8 or 80 pence per track. (Mobile Today)

• Haier has launched the Ibiza Rhapsody, a Linux-based, WiFi-enabled portable music player that integrates the Rhapsody music service. The device costs $330 and has 30GB of storage space. (Engadget)

• JupiterResearch put the five-year outlook of the U.S. digital music market at $3.4 billion per year and says "on-demand subscription services will appeal primarily to niche audiences among music aficionados" for the foreseeable future. Not a big surprise there. The typical American just don't see much value in subscription services. (Digital Music News)

Posted by Glenn at 11:23 AM | Link
|MySpace||Sony BMG|

Bertelsmann, the parent company of one half half of the Sony BMG joint venture, reported its financial results for the first nine months of its fiscal year. Both revenues and profits were down. Revenue dropped 2% to €13.27 billion while profits dropped 65% to €132 billion. Profits sank so sharply because fiscal 2007 includes a large special expense related to the company's Napster settlement. (The company settled with Warner Music Group and EMI this year, and with Universal Music Group last year). Operating EBIT was actually up almost 5% to €1.03 billion. Bertelsmann sold its BMG music publishing division to Universal last year.

From Bertelsmann's 2006 earnings report: BMG posted revenues of € 2.0 billion (down 5.2% from € 2.1 billion in 2005) and operating earnings (before interest and taxes) of € 173 million (down 2.3% from € 177 million in 2005). The company said the music division's lower 2006 performance "is attributed solely to the recorded music business." But there was (slight) good news as BMG "was able to raise the revenue contribution from digital formats from seven to twelve percent."

Posted by Glenn at 2:30 PM | Link
|Earnings Releases||Sony BMG|

• Album sales increased 5% last week but were 17% lower than the same week last year. Carrie Underwood's Carnival Ride debuted at #1 with sales of 527,000 units (9% digital). For the year, album sales are down 14%. Sales of digital tracks dropped 2% last week and were 38% higher than the same week last year. Chris Brown's "Kiss Kiss" was the top digital track again last week, with sales of 187,000 units. For the year, digital tracks are up 46%.

• Sony BMG UK is the last of the four majors to sign on with Cliq, a music purchase system that will allow -- on 85% of U.K. mobile phones -- users to buy music when they hear it streamed on their mobile phones. (Thomson Financial)

• Though the Sony BMG merger passed a second European Commission review, a member of the European Parliament has questioned the commission's reasoning. Said Guy Bono, member of the Committee on Culture and Education, "The European Parliament is exercising democratic control over European institutions by interrogating the Commission on the Sony BMG merge." He continued to say that "music suffers from chronic concentration" and that "cultural diversity" should be at the heart of EU policy. (Billboard.biz)

• The Forms gave away a copy of their new CD to each ticket buyer at last night's show at NYC's Cake Shop. And an open bar. Free music and free alcohol, a combination for an ailing industry. (The Forms, via Brooklyn Vegan)

• An interview with Trent Reznor, who is now free from his contract with Universal Music Group. "Radiohead is one of my favorite bands. When they announced they were releasing that album for free, I got dozens of text messages. It gave me goose bumps? It's such an exciting way to sell a record. ... I think there were some serious flaws with how they executed but it was a good idea." (News.com)

• A Maryland couple has ended its lawsuit against Wal-Mart stemming from obscene lyrics in an Evanescence purchased at a Wal-Mart store. The judge refused to classify the suit as class action. The couple settled with Sony BMG in 2005. A similar lawsuit is still alive in Illinois. (AP)

• It's hard to say much about a greater trend, so let's keep this as an isolated incident for now: a radio station in Hartford has gone back to alternative rock after switching to hip hop four years ago. Said the local operations manager for Clear Channel, "What we've been hearing since the [modern rock] format left the city, is ... that women and men between the ages of 25 and 34 in the Hartford area really don't have a radio station to listen to." (Hartford Courant)

Posted by Glenn at 8:32 AM | Link
|Mobile Music||Sony BMG|

• Sony BMG, fresh from an E.U. approval, revealed it is looking for a partnership between its parent companies that would allow it to expand into music publishing. Bertelsmann, BMG's parent company, sold off its music publishing unit last year to reduce debt. Rolf Schmidt-Holtz, Sony BMG chief executive, said the proposed deal structure would allow Sony BMG to pursue publishing for its own artists without competing against Sony's Sony ATV publishing division. (Financial Times)

• Rumors are surfacing about the music store Facebook is thought to be working on. "The platform will allows bands and labels to create artists pages, and allow various widgets to be embedded for music promotion, organizing events, etc. Among those widgets would be iLike, the most popular app inside Facebook, but will also include iTunes widgets for sampling (to being with), and eventually buying music through Apple." (paidContent)

• The New York Times profiles classical label Naxos. "Bucking conventional wisdom has made Naxos not only a successful classical record label, but also, within the last few years, a profitable one. This year, having become a force in the digital market as well, Naxos is celebrating its 20th anniversary." (New York Times)

• A profile of Scotti's Record Shops, the country's oldest independent record store chain. "Scotti grudgingly accepts that the public's music consumption habits aren't what they used to be. He's more furious with the big record companies. As far as Scotti is concerned, the major labels never bothered to package CDs in a way that would make them attractive to customers." (Fortune)

• Sony BMG artists will be used in online Honda ads. "The campaign marks the first time that Sony BMG has sold an ad package encompassing all of its new music video releases to a single sponsor via its year-old Web site, Sony BMG Music Box. Neither the client nor Sony would discuss pricing, but sources said Honda is paying between $500,000 and $1 million for the new-release sponsorship." (Ad Week)

• An article on independent retailer Looney Tunes, which was recently damaged by a fire (to the tune of $300,000). The store isn't just fixing up damages, it's setting its target high. The store's owner has taken out a $1 million loan to build "the biggest and best independent record store in the entire country." (Newsday)

• Interesting story on branding in the music world: Brian Leighton, leader of the Minneapolis band GB Leighton, has licensed his name for a new nightclub, GB Leighton’s Pickle Park. Leighton has set up two corporations: one for touring (he pays salaries for up to five musicians) and the other for albums and merchandise. Great entrepreneurship, especially since it's on a regional level. (Star Tribune)

Posted by Glenn at 1:03 AM | Link
|Sony BMG|

• Labels trotted out a lot of big names last week but sales were still down 9% versus last year -- though up 9% over the previous week. Rascal Flatts' Still Feels Good lead a large slate of debuts. The country stars' album sold an impressive 546,000 units (8% digital). (Their 78-week-old album Me and My Gang rose ten spots to #46 and has sold 4.6 million.) Sales of digital tracks were up 1% over the previous week and 49% over the same week last year. For the year, digital tracks are up 46%.

• Confirming a September 10 report, The European Union cleared the Sony BMG merger. Said the antitrust commissioner, "It clearly shows that the merger would not raise competition concerns in any of the affected markets." Imagine what that statement would have been if Radiohead had been signed to RCA rather than EMI. (AP)

• The National Association of Broadcasters has filed comments in the FCC's ownership review. The NAB expressed its general support for "market-based stimulants" that increase women and minority ownership and participation but emphasized its broadcasters need the freedom to stay competitive. "Initiatives to promote diversity in broadcasting would be moot in an environment where radio and television stations are held back from effectively competing in an ever-expanding digital media marketplace." (Radio Ink)

• Warner Music Group head honcho Edgar Bronfman, Jr. has agreed to settle a suit with Vivendi, at which he was executive vice chairman after it acquired Seagram, over pension payments. (Reuters)

• Billboard.biz compiles some of the blog buzz on Radiohead's pay-what-you-like digital album sales. (Billboard.biz)

• How about an economist's take on Radiohead's album sale? Harvard's Greg Mankiw explains that like most economists he doesn't understand tipping. "Normally, we assume that consumers pay as little as they have to when buying the products they want," he wrote. "Yet, when buying meals, haircuts, and taxi services, most consumers voluntarily pay more than they are legally required. Why does this happen? Why is it more true for some services than for others? Why do tipping customs vary from country to country? I have no idea." If the strategy works, Mankiw jokes, he'll "put a hat next to the lectern." Be sure to read the comments. Good stuff. (Greg Mankiw's Blog)

• Viacom CEO Philippe Dauman told the U.S. Chamber of Commerce companies should use more DRM, not less, and predicted that anti-piracy measures such as DRM and watermarking "will usher in an unprecedented period of creative output across the globe." (The Inquirer)

• Browsing around Amazon MP3, I see all sorts of bargains. Steve Earle's new album is $6.99. Ben Lee's new album is also $6.99. Josh Rouse's is $6.99. M.I.A.'s is $6.97.

Posted by Glenn at 11:21 AM | Link
|DRM||Sony BMG|

• 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|

The Financial Times reported tonight that Sony BMG is set to win "unconditional backing" from the European Union for its merger three years ago.

"The ruling, which could come as early as this month, would end more than a year of legal uncertainty following a controversial court ruling that annulled the European Commission's original 2004 decision to clear the deal. ... That outcome – if confirmed – would be a blow to the independent record labels, whose legal challenge against the original 2004 merger clearance triggered last year's court reversal. It could boost hopes of another merger in the sector, between Warner Music and EMI Music."

To recap, indie trade group Impala launched a legal challenge to the merger, and the E.U. ended up taking another look at the matter after a court threw out the original merger. In December 2003, Impala called the merger "a bold move to make it even more easy to control the marketplace by reducing competition, consumer value and choice."

Posted by Glenn at 12:03 AM | Link
|Sony BMG|

• Due in part to amounts paid related to Napster lawsuits, Bertelsmann reported a net loss of €50.9 million ($69 million) for the first half of 2007. Sales were 2% lower after the company sold its BMG Music Publishing division to rival Universal Music Group last year. Sony BMG, Bertlelsmann's music joint venture with Sony, posted an operating loss of €2 million ($2.7 million) compared to an operating gain of €3 million ($4.07 million) last year. (Bloomberg)

• BMI posted record revenue and royalty distributions for its 2006-2007 fiscal year. The performing rights society recorded revenues of over $839 million and will distribute over $732 million to its artists. (Press release)

• LiveNation has release Stuart Galbraith, its U.K. managing director, due to a "breach of contract." (Billboard.biz)

• Warner Music Group announces a quarterly cash dividend of $19.4 million, or $0.13 per share of common stock. (Press release)

• A good article on how Saddle Creek Records has helped transform downtown Omaha. The label owns an entire city block and recently opened a 470-capacity venue called Slowdown. A coffee shop and Urban Outfitters rent space on the block. (Beatrice Daily Sun)

Posted by Glenn at 8:40 AM | Link
|Earnings Releases||Sony BMG||Warner Music Group|

• Sony ATV Music Publishing has signed Jonathan Rotem, producer and co-writer of the Sean Kingston hit "Beautiful Girls" and Rihanna's "SOS." (Billboard.biz)

• Redeye Distribution inked deals with Daptone Records and the band Cake and its Upbeat Records imprint. (Billboard.biz)

• An interview with Rep. Howard Berman, chairman of the House Judiciary Subcommittee on Courts, the Internet and Intellectual Property. He said there will soon be legislation regarding terrestrial radio's exemption from paying sound recording royalties. "Anybody who is transmitting radio digitally has to pay but over-the-air terrestrial is the one platform that is exempt. They have what I think of as an unfair competitive advantage. ... It is going to cost them a few cents on the dollar. There will be some rate determination. They are selling commercial advertising and are drawing customers and are economically exploiting for their programming the work of someone else. That is what compensation is for." (San Fernando Valley Business Journal)

• The race for convergence has companies fighting for each other's market share. Consumers are left scratching their heads. Said one analyst, "I pity the poor consumer. From a consumer perspective, it's very confusing to figure out where to go." (Herald Tribune)

• Pictures (legit?) of the next generations of the Microsoft Zune, one being a flash drive version with 4 GB and 8 GB of memory, the other a standard-sized Zune with 80 GB of memory. The design has been updated a bit but looks roughly the same as the first generation. (Gizmodo)

• It's the end of the line for Sony Atrac format. Connect download store on its way out and the new video Walkmans that will not support the format. Atrac is a good case study on a proprietary format that started with good intentions -- it was developed for Sony's Minidisc -- but ultimately helped slow Sony's growth in digital music. (Digital Noise)

Posted by Glenn at 10:48 AM | Link
|Distribution||Publishing||Radio||Sony BMG||Zune|

The New York Times' Sunday Magazine has an article by Lynn Hirschberg about Rick Rubin, the new co-head of Columbia Records, and the forces and events that lead to his hiring. There's a lot of, "Can Rubin save the music industry?" stuff in the article, which overestimates the influence one person can have. His hiring is, however, symbolic of the recent open-mindedness of major labels. (OK, so they've been forced to become more open-minded out of sheer desperation, but there have been all sorts of leaps forward this year.) It's a long read but worth your time.

Among the interesting tidbits in the article: Rubin convinced Sony BMG to do away with plastic jewel cases for more eco-friendly packaging; Rubin thinks subscription models are the future of the music industry (Columbia co-head Steve Barnett is skeptical); Rubin won't say if he will push artists to sign 360-degree deals; he has never watched "American Idol;" and one of his first projects will be Paul Potts, an opera-singing participant on "Britain's Got Talent" (view a YouTube clip here).

A quote from David Geffen:

"The music business, as a whole, has lost its faith in content. Only 10 years ago, companies wanted to make records, presumably good records, and see if they sold. But panic has set in, and now it's no longer about making music, it's all about how to sell music. And there's no clear answer about how to fix that problem. But I still believe that the top priority at any record company has to be coming up with great music. And for that reason, Sony was very smart to hire Rick."

A football metaphor from Barnett:

"My sons would go to training camp, and when Marshall Faulk started playing for the team, they called me and said, 'Not only is this guy a great player, he makes everyone around him better.' Of course, the Rams went on to win the Super Bowl. I think Rick Rubin is our Marshall Faulk. I knew he would change the culture here.'

Posted by Glenn at 9:32 PM | Link
|Sony BMG|

By acquiring majority stakes in MTS, a management firm, and Bucardo, a booking agency, Sony BMG Germany has positioned itself for 360-degree contracts, broad artist deals that cover recorded music and services such as management and booking. The majors have traditionally been involved in recorded music and publishing. Broader contracts require additional services. Acquisitions are the best and fastest way for the majors to attain those services.

Universal Music Group has acquired Sanctuary Group, which has recorded music in addition to management, merchandise and publishing. Warner Music Group has a joint venture with artist management firm Violator. EMI has not moved toward similar 360 deals, though the company has does have a variation of a 360 deal. Its revenue sharing deals, with Korn and Robbie Williams, gives EMI a portion of revenues in exchange for an initial lump sum investment. The Korn deal gave the band $15 million up front in return for 25% of the band's publishing, merchandise and touring revenues, plus profits from the band's albums. EMI's model works better for superstar deals (due to lower risk) but Sony BMG, WMG and Universal are better positioned to offer broader deals to developing and middle-tier artists.

Additional reading:

• The Economist's July 2007 article on 360 deals. "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."
• Billboard's article that broke down the economics of Korn's revenue sharing deal with EMI. "If its next album repeats the sales of the last (2 million units worldwide), and the band posts numbers on the road similar to 2006 (50 dates grossing around $11 million), it should come close to break-even by the end of this new album cycle. That's before any additional nontouring/non-CD revenue is factored in."

Posted by Glenn at 2:36 PM | Link
|Sony BMG|

• 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|

• 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|

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

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

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

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

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

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

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

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

• The European Commission cleared Terra Firma's takeover bid of EMI. Today is the last day of Terra Firma's extended bid period. (Dow Jones)

• The rootkit is back in the news. Sony BMG has sued The Amergence Group (formerly SunnComm), the maker of the anti-piracy technology included in Sony BMG CDs that resulted in public outcry, lawsuits and government investigations. (AP)

• Senator Russ Feingold is checking in with the radio industry to make sure they're complying with the FCC's directive to enforce the ban on payola practices. He sent a letter to executives at Clear Channel, CBS Radio, Citadel and Entercom that asked for information on access the companies have given to artists and labels. "Have you taken any efforts to increase the amount of access provided and to facilitate submissions?" he asked. (Billboard.biz)

• The Wall Street Journal's Sarah McBride has an article on radio stations' analysis of P2P traffic to help create playlists. Clear Channel's Premiere Radio Networks has a venture with BigChampagne that offers traffic data to radio stations. She tells the story of Shop Boyz' "Party Like A Rockstar," which was big with file sharers but wasn't getting requests. Eventually, the requests started to roll in -- especially in text messages from mobile phones -- and track downloads increased as well. (Wall Street Journal)

• Fox and the production company behind "Laguna Beach" and "The Hills" are planning a reality TV series called "Nashville" that will follow musicians trying to make it in Music City. The show will feature Sony BMG artists Chuck Wicks, Matt Jenkins and Mika Combs. (Music Row)

• Just as Kelly Clarkson's My December album dropped 60% in its second week, rumor is that RCA pulled Clarkson's summer TV and print campaigns and are focusing on the upcoming Carrie Underwood album. (Kings of A&R)

• Swiss consumers will have to pay a tax on digital music players and some types of A/V recorders. (SwissInfo)

• Napster unlimited over-the-air download service launched with NTT DoCoMo in Japan. The service is integrated with the PC-based Napster To Go service. Here's a new twist for Napster: Customers have the option of paying for Napster through their DoCoMo bill. Whether or not mobile subscription services will take off is still up in the air, but these are positive steps. I like the billing option a lot. (No link to press release yet.)

• EMI and management company Union Entertainment Group have formed a joint venture record label called Audionest. The label will be distributed by Caroline. UEG manages rock bands Nickelback, Default and Candlebox. (Billboard.biz)

Posted by Glenn at 8:09 AM | Link
|EMI||Napster||P2P||Payola||Sony BMG|

• Only 3.6% of EMI investors accepted Terra Firma's $4.8 billion bid, which led Terra Firm to extend the offer to July 12. (Bloomberg)

• Overall sales were down 1% last week and were 8% below the same week last year. For the year album sales are down 15%. Sales of digital tracks were also down 1% last week, and were 40% ahead of the same week last year. Year to date, sales of digital tracks are up 49%.

• Clive's fears came true: Hannah Montana topped Kelly Clarkson last week. Montana debuted with 326,000 while Clarkson's My December debuted with 291,000.

• A Belgian court has ruled that Internet Service Providers must use the technical means available to stop illegal file-sharing on their networks. The IFPI is, of course, thrilled. (Press release)

• Sony BMG is trying to renegotiate the terms of its music publishing joint venture with Michael Jackson that will allow it to sign songwriters. The current terms of Sony/ATV does not allow Sony to sign competing songwriters. Talks are reportedly at an early stage. (Times Online)

• David Cameron, leader of the Conservative Party, has a deal for the British music industry: Stop with the misogyny, guns and materialism and he will support an extension of copyright to 70 years from 50 years. (Times Online)

• Edna Gundersen writes about Live Earth and "benefit fatigue" that could limit its effectiveness. My fear is that people move on," said Grammy producer Ken Ehrlich. The Pet Shop Boys' Neil Tennant worried about "the idea of rock stars lecturing people as if they know something the rest of us don't." (USA Today)

Posted by Glenn at 7:49 AM | Link
|EMI||P2P||Publishing||Sony BMG|

• 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|

• Universal Music Group's $87 million bid for Sanctuary Group was approved by the Sanctuary board of directors. (Reuters)

• musicFIRST, a coaltion of labels, industry groups and recording artists, has been formed to lobby for terrestrial broadcasters to pay performance royalties. Currently, only songwriters are paid when a song is broadcast on terrestrial radio. (AP)

• Sony BMG and Nickelodeon have a four-year agreement to produce and finance music-themed television shows. (Variety)

• Billboard's Brian Garrity has an article on labels' push for more environmentally friendly products. Some are being helped by the Natural Resources Defense Council. (Billboard.biz)

• Labor intensive cease-and-desist letters have moved music blog Idolator to cease posting leaded MP3s unless they come with the label's blessing. (Idolator)

• Navarre filed its annual report yesterday. Good reading if you have a ton of free time. In fiscal 2006, Best Buy and Wal-Mart/Sam's Club accounted for 23% and 11% of Navarre's billing, respectively.

• Seems like everybody is moving to Nashville these days. USA Today looks at Bon Jovi's rock-to-country transformation as well as the many other older rock artists who are growing roots in Music Row. Two things I didn't know until today: Darius Rucker (Hootie and the Blowfish) signed to Capital Nashville, and Jewel has been shopping an album produced by Big & Rich's John Rich. (USA Today)

Posted by Glenn at 7:58 AM | Link
|Earnings Releases||Sony BMG||Weblogs|

• 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|

• According to Digital Music News, Universal Music Group is "actively discussing" DRM-free downloads with Apple. (Digital Music News)

• Music, book and video distributor Baker & Taylor has signed a long-term lease for a 500,000-foot warehouse in Indianapolis. (Inside Indiana Business)

• Sony BMG Nashville has sent a cease-and-desist letter to radio stations demanding that they stop playing the album cut of Tracy Lawrence's "Find Out Who Your Friends Are." The album version features vocals by BNA (and Sony BMG) artist Kenny Chesney and Tim McGraw while the single version has only Lawrence. Sony BMG's SVP of legal and business affairs claims the company did not grant singles rights to Lawrence's label. In response, one program director said, "I'm not a legal expert, but I don't think anybody can tell us what album cut we can or cannot play. It's available out there for public consumption, and if I choose to play cut nine off an album that I think is going to work for our radio station, I'm going to play it." (Billboard.biz)

• Some feel stripping DRM and improving audio quality is going to create a classic download boom. For as long as recorded sound has been in existence," said Mark Forlow, the vice president of EMI Classics US, "the people who buy classical music like to have the best sound." (Christian Science Monitor)

• A recap of a hearing before the House Committee on Science and Technology. University officials are divided on how to combat campus piracy -- social versus technological means -- while the committee's chairman believes technology "will be the first line of defense." Read the hearing's charter here. Click here for the webcast. (Ars Technica)

Posted by Glenn at 7:55 AM | Link
|Legal||Sony BMG|

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

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

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

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

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

• Justin Timberlake and Interscope Records announced a joint venture record label called Tennman Records. The label will be distributed by Interscope Geffen A&M. Ken Komisar, SVP of A&D at Sony BMG, will serve as president. (All Hip Hop)

• CD Wow has been ordered to pay £41 million ($81 million) over three years to the U.K. recording industry for selling parallel imports from Asia. (Billboard.biz)

• Digital distributor IODA announced a partnership with IMagine that will allow the company access to China, Hong Kong and other markets in the region.

• A profile of ArkivMusic.com, which offers many out-of-print classical albums on CD. The company is not worried about piracy. "You can't buy 100 discs on somebody else's credit card and then get rid of them on the street. It's a profitable niche to be in. It's a highly attractive demographic." (Philadelphia Inquirer)

• Dave Navarro's Panic Channel will self-release its next album to break free of record company "slavery" and a "failing corporate industry that is on its last legs and gasping for air." That sound about right for a band that failed at mainstream success the first time around. (andPop)

• As majors sign fewer artists in Canada, indie distributors are stepping up with more labels and more releases. Examples are Koch Records and Labwork Music, a joint venture between Sonic Distribution and EMI Canada. Collectively, Canadian indies account for 19.1% of sales, above all majors expect Universal Music Group. (Reuters)

• Once renegade music tab site MXTabs.com has announced some licensing deals with BMG Music Publishing, Peermusic, Famous Music, and Bug Music. The licenses cover both guitar and drum tabs. (Press release , via Digital Music News)

• This is not related to music or media, but Andrew Martin's great article on Coca-Cola's struggle to change reminded me of the recorded music industry. Coke is like a CD. Non-carbonated drinks are like digital downloads. The latter could hardly make up for drops in the former, but investment in the latter is crucial for the future. (New York Times)

Posted by Glenn at 9:08 AM | Link
|Digital Distribution||Distribution||Indies||Publishing||Sony BMG|

• Vivendi, parent company of Universal Music Group, will reportedly launch a paid content portal to sell music, videos and mobile content. Given labels' past history with these sorts of endeavors, I don't think this will be successful. Entertainment groups fare better when they let others sell to consumers. I can see bands carving out some space for themselves with direct-to-consumer relationships, and niche-fulfilling indie labels can pull it off on a small scale, but not this. (Reuters)

• A Greenfield Online Fact of the Week survey showed that 64% of online respondents still get their music by purchasing CDs. (mi2n)

• Contrary to its initiatives elsewhere, EMI is reportedly selling protected MP3 files in Russia through Soundkey.ru. (WebPlanet)

• PayPlay.fm will start selling its 1.3 million-deep catalog in unprotected MP3 format by the end of this month. MP3 files will cost $0.88 while WMA files cost $0.77. You won't find many popular acts there, but a few searches revealed some local (to Nashville) names such as Justin Earle. (Listening Post)

• Muzak and DMX, a design firm, want to merge and then be acquired by a third company. The Department of Justice has a few questions about the transaction's effect on competition. (Bizjournals)

• Music-heavy social media site Buzznet laned $6 million in funding. (paidContent)

• A report says some (Don) "Ienner loyalists" have left Sony BMG recently, including SVP of marketing, Barbara Jones. (Digital Music News)

• The IFPI has pointed to research by Italy's Luigi Einaudi Foundation that shows how file-sharing reduces consumers' physical music purchases. While 30% of file sharers surveyed say they purchase fewer CDs, 6% say they purchase more. The press release does not mention any increase in digital purchases, which makes it look pretty one sided. If you can read Italian, view the report here (file is about 9MB). (Press release)

Posted by Glenn at 12:16 PM | Link
|DRM||EMI||Sony BMG||Universal Music Group|

"Bertelsmann Remains On Track In First Quarter" says the headline to the company's earnings release (read PDF). Just below that, bullet points tout a 1.7% organic growth rate and an adjusted operating result that was "slightly above previous year's record value."

But there is no way around it: Bertelsmann reported a net loss of €70 million in the first quarter, and legal fees related to its music division was the reason. The company incurred a charge of €114 million for out-of-court settlements with EMI and Warner Music Group related to Napster, as well as provisions made for possible settlements in the future. (Oddly, the settlement with WMG was announced over three weeks after the end of the first fiscal quarter, yet the related expense hit Bertelsmann's books in the first quarter.)

Income from operations is a good measure of financial performance, and Bertelsmann adjusted for the absence of BMG Music Publishing, earnings before interest and taxes (and special items) fell to €194 million from €215 million last year.

Posted by Glenn at 11:03 AM | Link
|Sony BMG|

• After months (or was it weeks?) if speculation and rumors, Rick Rubin has officially joined Columbia Records as an (as-yet-unnamed) executive. Rubin takes with him his American Recordings label (previously with Warner Music Group). This marks the most exciting development at Sony BMG in a while, though there are no details yet on the "new model for the music business of the future" that will come with Rubin's arrival. (Billboard.biz)

• According to Berg Insight, digital sales will overtake physical sales in Western Europe in 2011 and the European music market will revert back to growth in 2008. The key to the 6.5% compounded annual growth rate will be mobile handsets. "We expect that the handset is going to become the primary portable listening device. Once consumers are provided with unhindered mobile Internet access, these devices will increasingly be utilised for accessing online music content." I don't doubt the mobile device could become the primary listening device, but I'm skeptical that as a purchase driver it will do better than MP3 players have done when tethered to personal computers. Mobile stores and services must improve greatly. (Press release)

• An article on the publishing assets just purchased from Dimensional Associates by Colonial First State. Said the CFS head of strategy and development, "It will be a high-yield fund that will appeal to investors with their eye on longer-term, low-volatility assets, that offer growth on the upside." (Herald Sun)

• Mike Oldfield is criticizing EMI for "devaluing" his classic album Tubular Bells by using at part of a newspaper giveaway. (Contact Music)

• MTV Networks will license a social networking media player that was created by Georgia Tech students for MTV's Digital Incubator program. (Press release, via paidContent)

Posted by Glenn at 9:04 AM | Link
|EMI||Research||Sony BMG|

• According to The Telegraph, two American hedge funds, Fortress and Cerberus, are planning to jointly bid on EMI at a price below the $4.1 million Warner Music Group bid earlier this year. They hope EMI will accept a sub-WMG bid because of the lower level of regulatory scrutiny they expect to come with their bids. The report says One Equity is still looking at EMI but will not join the bid with Fortress and Ceberus. Permira is unlikely to join in the bidding. (The Telegraph)

• Sony BMG, which recently rid itself of its BMG music publishing arm, plans to get back into the music publishing game. Said chief executive Rolf Schmidt-Holtz, "We will do everything to re-enter the market for music publishing. ... Our shareholders see that a music company that has a music publishing business is more attractive" And why not? The revenue is far more less volatile and risky than that in the recorded music world. (Financial Times)

• The price for a non-DRM track at the New Zealand iTunes store will carry a 39% premium. A DRM track costs NZ$1.79 and a non-DRM track will carry a NZ$2.49 price tag. The U.S. iTunes store will charge only a 30% premium for the non-DRM version. (PC World NZ)

• The New York Post has a decent article on how labels are looking to ad-supported business models. Nothing new there, but at least some execs went on the record with their thoughts. (New York Post)

• Warner Music Group has signed a worldwide publishing deal with Destiny's Child member LeToya that covers her 2006 self-titled album and future compositions. (Press release)

• Vickie Winans' Destiny Joy Records has signed a distribution deal with Central South Distribution. (BreatheCast)

Posted by Glenn at 9:16 AM | Link
|DRM||EMI||Publishing||Sony BMG||iTunes|

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Today Bloomberg reported that Universal Music Group is "close to winning" the approval of the European Union in its purchase of BMG Music Publishing. The EU's decision will be made in the next few weeks.

In addition to all the usual cost-savings and synergistic talk that goes along with this kind of acquisition, I imagine much of this news' impact is on the signal it sends to acquisition-minded Warner Music Group, which has been lovesick over EMI for some time.

Posted by Glenn at 4:45 PM | Link
|Publishing||Sony BMG||Universal Music Group|

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

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

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

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

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

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

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

• Bob Morelli has been promoted to president of RED Distribution, Sony BMG's indie distribution arm. He was previous EVP and GM. (Variety)

• The European Commission has brought charges against Apple and record labels, alleging the companies are restricting sales of music in Europe. Different countries have different iTunes stores, which can lead to difference pricing. Apple says it wants a pan-European store but is limited by record labels' requirements. An EMI spokesperson said, "We do not believe we have breached European competition law, and we will be making that case strongly." I can't believe France would really want to share its iTunes with other, non-Johnny Hallyday-loving countries. (Billboard.biz)

• RealNetworks is raising the price for the streaming version of its Rhapsody subscription service, to $12.99 from $9.99. The company rationalized the price increase by pointing out the value-added enhancements it has added, and the constant price of Rhapsody since the service was unveiled. (Digital Music News)

• In a move to facilitate licensing, Sony BMG will partner with a leading online music database to make available its music catalog for advertisers. (The Guardian)

• The Electronic Frontier Foundation found something to complain about in yesterday's move by EMI to drop DRM on its digital downloads: "Unfortunately, the industry is still giving consumers a raw deal. EMI will be charging fans a 30% premium to avoid DRM ($1.29 instead of 99 cents per track, or 30 cents to upgrade an old download) -- effectively a surcharge to buy back your rights." It followed that with its usual proposal of a voluntary collective license for file sharers...pretty much a pipe dream at this point. One thing at a time, and I'd bet labels would first want to promote download store growth before sending a signal that they are supporting P2P. (EFF Deep Links)

Posted by Glenn at 8:59 AM | Link
|Indies||Rhapsody||Sony BMG|

• Positive comments by analyst Richard Greenfield at Pali Research coincided with Warner Music Group's stock increase of almost 3%. This quote, though very non-committal, is about as positive as it gets for a music company right now. "The key question becomes whether or not the weakness experienced in [the first quarter] will persist throughout the year, and if the industry improves, how much, relative to [the first quarter]," he wrote in a research report." What Mr. Greenfield is getting at is WMG's release schedule, which is all but certain to improve in the second quarter. Frankly, it would be sad if a stock moved because an analyst pointed out the natural ebbs and flows of a music company's release schedule. That should already be priced into the market cap. (New York Business)

• A report says Bertelsmann paid EMI up to $100 million to settle the Napster lawsuit. I'm not playing Mr. Righteous, here, but guess how much EMI artists will get? (Times Online)

• Rap duo Youngbloodz has sued Sony BMG for $50 million. If you guessed royalties, you guessed wisely. (Billboard.biz)

• Jake Paine of AllHipHop.com bemoans the end of underground (backpacker) hip hop...and just as Aesop Rock releases an exclusive track for Nike. (AllHipHop.com)

• Ben Fritz of Variety on the continued campaign -- Pakman and von Lohman are, quite naturally, quoted in the article -- to rid DRM from music. There are always a lot of articles on the subject, but this one has a good variety of viewpoints. That variety is the reason the debate continues and change is rare. eMusic's Pakman has a good proposal: Try ditching DRM on small scale and then measure the results. It's the "Give It A Shot and See If You Like It" pitch. "Our position has always been that they should give us some stuff from the back catalog that isn't selling on iTunes and see if we can create some upside," he said. "We're not asking for Jay-Z, but it doesn't seem that the Clash's second album needs DRM anymore." (Variety)

• The National Association of Broadcasters, writes the WaPost's Sam Diaz, is playing both sides on the XM-Sirius merger debate. On one hand, it says Clear Channel's collection of local radio stations is not in competition with satellite radio. On the other hand, it is trying to convince the FCC that competition with satellite radio should allow radio companies to own more local stations. (Washington Post)

Posted by Glenn at 5:31 PM | Link
|Satellite Radio||Sony BMG||Warner Music Group|

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

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

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

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

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

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

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

• To help win European Union approval for its purchase of BMG Music Publishing, Universal Music has offered to sell of the Zomba Music Group catalog, home of hits by Backstreet Boys and Britney Spears. (Reuters)

• Snocap inked a deal to sell Sub Pop, Dangerbird and New Line labels through Snocap MyStores. The deal will allow artists on those labels to offer downloads directly through their MySpace pages and other websites. Sub Pop is home to current Top 40 artist The Shins as well as The Postal Service. (Press release)

• Indie execs speak on SXSW's first day. Said New West founder Cameron Strang: "The digital thing hurts our business. It doesn't hurt the music business, but it hurts the record business." Matador's Gerard Cosloy said he's trying to find ways to offer more value with each CD purchase. (Billboard.biz)

•Digital distributor IODA has launched Promonet Pro, a suite of digital marketing tools. (Press release)

Posted by Glenn at 8:25 AM | Link
|Snocap||Sony BMG|

There's a Reuters report today that Sony BMG's Sony Wonder, a kid's label, will be shuttered so the parent company can focus on its core business. That's biz speak for, "We're not doing the kid's game as well as our competitors, so it's time to get out." Razor & Tie has its Kidz Bop franchise, and Disney has been incredibly strong lately. But some Sony Wonder partners have recently left the label, and Shout Factory! is reportedly taking its DVD business to Vivendi Visual Entertainment.

"Sesame Workshop left Sony Wonder in February, cutting a long-term deal with Genius Products that gives Genius the North American DVD rights to its 100-plus titles, many of them consisting of 'Sesame Street' episodes. Sony Wonder had distributed Sesame Workshop titles for more than a decade.

Classic Media exited the month before, bringing to Genius such high-profile titles as "Rudolph the Red-Nosed Reindeer," "Frosty the Snowman" and the animated VeggieTales franchise."

Posted by Glenn at 8:55 PM | Link
|Sony BMG|

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• XM and Sirius agree to merge. A "$13 Billion Merger of Equals" they say. (Press release)

• Tower Records founder Russ Solomon has signed a lease at the old Tower Records building on Broadway in Sacramento, CA, and will open a record store in April. (Sacramento Bee)

• Enders Analysis points to a major problem for CD sales that goes beyond consumer sentiment. "The total retailing space that will be lost in 2006 and 2007 is something of the order of 20%." (Times Online)

• Billboard's MarketWatch weekly sales report, which visually compares current sales to the previous two years. (MarketWatch PDF)

• With the DualDisc all but forgotten -- nice idea, bad execution -- let's start talking about Blu-ray. On March 20, Sony BMG will release "Destiny's Child: Live in Atlanta" on Blu-ray for a reasonable $19.95. (High-Def Digest)

• Jon Healey on the music industry, softening sales, the emergence of PlayLouder and the gradual acceptance of the blanket license. (Los Angeles Times)

• It's open letter season. Here's one from Macrovision's president and CEO. ""The solution is to accelerate the deployment of convenient DRM-protected distribution channels -- not to abandon them." (Top Tech News)

Posted by Glenn at 7:00 AM | Link
|Satellite Radio||Sirius||Sony BMG||XM|

Video Business has an article on the consent decree and order that Sony BMG agreed to last week. (Read FTC press release, download PDF of agreement containing consent order.) The settlement lays out requirements for labeling of copy protection on CDs, and to what lengths Sony BMG must go to disclose what the protection software will do. From the press release:

" The settlement requires clear and prominent disclosure on the packaging of Sony BMG’s future CDs of any limits on copying or restrictions on the use of playback devices. It bars the company from installing content protection software without obtaining consumers’ authorization, and, if Sony BMG conditions consumers’ use of its CDs on installation of the content protection software, it must disclose that requirement on the product packaging.

In addition, the settlement bars Sony BMG from using the information on consumers’ listening preferences that it has already gathered through the monitoring technology it installed and bars them from using the information to deliver ads to those consumers. For future CDs containing such technology, the agreement requires that, before transmitting information about consumers, their computers or their use of the CD, Sony BMG must clearly disclose on consumers’ computer screens what the technology will do, and obtain consumers’ consent. If it conditions consumers’ use of its CDs on their agreement to have information collected, Sony BMG must disclose that condition clearly on the CDs’ packaging."

When the settlement hit the newswires last week, as in this article at Variety, the dollar impact was the point of interest. I think the labeling requirements have a greater, more far-reaching impact. The matters at hand are what copy protection schemes -- if any -- will be used, how disclosures will look plastered across a CD jewel case and how consumers, well aware of Sony BMG's rootkit circus, will react to such labeling.

Posted by Glenn at 10:25 AM | Link
|Sony BMG|

• Record exec and producer Rick Rubin is in talks to become co-chairman of Columbia Records. His label American has three years left on its deal with Warner Music Group. (Variety.com)

• Patents filed by Apple appear to be an attempt to strengthen its FairPlay DRM and the iPod and iPhone ecoystems. (ITNews)

• Billboard.biz talks to Roger Faxon and Clark Miller of EMI Music Publishing. "The reality of the online world is that it has no borders, and, therefore, the license needs to recognize the expanse of the use territorially." (Billboard.biz)

• VH1 gets into the user-generated content business with its recently launched Talentload.tv. (paidContent)

• Yesterday CBS Radio's WARW-FM/Washington switched to 94.7 The Globe, adding alternative hits to its classic rock format and adding a pro-environment message. (Radio Ink)

• Music promoter Billy Kelly, who was behind Glasgow's Big Big World and Big Big Country, died at the age of 58. (The Herald)

Posted by Glenn at 7:45 AM | Link
|Apple||DRM||EMI||Publishing||Sony BMG|

• 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|

• EMI named to new top executives yesterday. JF Cecillon will become chairman and chief executive of the newly established EMI Music International unit, which will oversee Asia, Latin America and Australia and New Zealand. Ian Hanson was promoted to to the global role of chief operating officer of EMI Music. Both will report directly to Eric Nicoli, the executive chairman of EMI Group was named CEO of EMI Music. Nicoli seems to want to be very hands on with the underporming U.S. units; North America business will report directly to Nicolo. (Read article at Billboard.biz)

• While we wait for legit P2P service Qtrax to arrive, parent compay Brilliant Technologies has named Andrew Nibley to a newly formed advisory board. Nibley is currently Chairman and CEO of Marsteller and formerly was the head of GetMusic, the online music service founded by BMG and Universal Music Group in 1999. More advisory board members will be announced shortly. (Read press release)

• Hartmut Ostrowski was named CEO of Bertelsmann, parent of BMG Music. Ostrowski follows Thomas Middelhoff. (Read article at BusinessWeek.com)

Posted by Glenn at 10:10 AM | Link
|EMI||P2P||Sony BMG|

• The Times Online offers a guestimate of EMI's upcoming restructuring. "About 900 of the group’s 6,600 staff are expected to lose their jobs as EMI seeks to save £110m in overheads." (Read article at Times Online)

• EMI's Eric Nicoli calls "a million miles away from the mark" a report of a planned management buyout of EMI's publishing division. (Read article at Forbes.com)

• Digital Music Group, Inc. has acquired the rights to distribute about 200 hours of video content. The company does not expect "meaningful" revenue from the videos, which include episodes of "Hoppalong Cassidy," the "Master of Poker" series and "The Mr. Bill Show." (Read press release)

• Sugar Hill Records is leaving Durham, North Carolina and will relocate to Nashville, where it will operate with another Welk Music Group-owned label, Vanguard. As a result of the cost-cutting move, most of the label's nine employees will be laid off. (Read article at The News & Observer)

• Koch signed deals to distribute Bodog Music, Syntax Records, Indianola Records and upstart Latchkey Records. (Read article at Billboard.biz)

• Robert Hillburn interviews Clive Davis for the Los Angeles Times. "The mistake people make about 'American Idol' is that they think the show itself is enough to make anyone a bestseller, so there is no creativity involved. But the show's exposure is only worth about 350,000 to 500,000 record sales for an artist. To go beyond that, you have to have hit songs to get on the radio." (Read article at Los Angeles Times)

Posted by Glenn at 7:30 AM | Link
|Digital Distribution||EMI||Sony BMG|

• Touchstone TV has formed a music department to handle music management for the studio's television shows, which include "Grey's Anatomy" and "Lost." Dawn Soler, music supervisior and former head of music at PolyGram Pictures, will run the new operation. The move is another indication of music's integration with television series. CBS Records was recently re-launched as a digital label that will integrate its music into CBS's television shows. (Read article at Hollywood Reporter)

• Producer J.R. Rotem gave some details to Billboard about his joint-venture with Sony BMG. "t's a multimillion-dollar, joint-venture label deal with Sony/Epic. Beluga Heights is the name of my label. It's the parent company, including the label, publishing company, clothing line and a bunch of other things. A lot of labels were interested, but we went with [Epic president] Charlie Walk because he was so excited about the music." (Read article at Billboard.biz)

• Influential and entrepreneurial MP3 blog Music For Robots released its second compilation CD yesterday. Music For Robots Vol. 2 has new tracks from Simian Mobile Disco, The Long Winters, Pela, Lo-Fi-Fink, These United States and others.

• An interview with David Eun, Google's vice president of content partnerships. "If content owners have concerns about what happens to their business or their content, they're also really impressed and attracted to the distribution and promotion YouTube can offer. We know for a fact that there were some companies that were very vocal about the legal concerns, whose own marketing departments were uploading content to YouTube. It's a complicated thing." (Read article at LA Times)

• RIP Pete Kleinow, original member of the Flying Burrito Brothers. (Read AP article)

Posted by Glenn at 9:22 AM | Link
|Sony BMG||YouTube|

• Vivendi's chief executive, Jean-Bernard Lévy, underscored his company's focus on media over telecom. "In telecoms, the opportunities are rare, and there are no real cross-border advantages." He said the company will seek future growth from Universal Music Group, Vivendi games (online gaming), and programming created by Canal Plus. (Read article at International Herald Tribune)

• The Equal Employment Opportunity Commission has found that Sony BMG discriminated against black employees when it "overwhelmingly" targeted black employees in a series of 2004, post-merger layoffs at a Manhattan office. Later this week, a lawyer for one of the former employees will file a suit against Sony BMG. (Read article at New York Post)

• The Los Angeles Times' Randy Lewis combined concert grosses an album sales to arrive at the Ultimate Top Ten. They are, in order, The Rolling Stones, Tim McGraw & Faith Hill, Rascal Flatts, Kenny Chesney, Madonna, Barbra Streisand, Celine Dionne, Red Hot Chili Peppers, Bon Jovi, Nickelback (Read article at Los Angeles Times)

• Toshiba has partnered with MTV's URGE digital music service. Nothing of substance is mentioned in the press release, though. No details of the partnership. No info on collaborative branding efforts. Nothing. (Read press release)

• Shane Allen, formerly a national director of promotion at Universal South, has been hired as VP of radio strategies and field marketing at Capitol Nashville. (Read article at Billboard.biz)

Posted by Glenn at 7:30 AM | Link
|Legal||Sony BMG||Touring||Universal Music Group|

• 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|

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

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

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

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

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

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

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

• Sony BMG settled its rootkit lawsuits brought by attorneys general in California and Texas. The company will pay $1.5 million in penalties, which really is a light slap on the wrist compared to expenses related to the various class action lawsuits around the country. (Read article at PC World)

• Changes at Blue Note Records, and oddly enough for this time of year there are no layoffs. Meg Harkins was named VP of Marketing at Blue Note. Josh Zieman is in as VP of Marketing for the Manhattan group of labels (Manhattan, Back Porch, Higher Octave and Real World). Two received internal promotions. Saul Shapiro was upped to SVP of Sales at the Blue Note Label Group, and J.R. Rich was upped to senior VP of publicity for Blue Note. (Read article at Variety)

• The RIAA has dropped its case against Patricia Santangelo and will instead focus on her children. (Read post at Fox News)

• A federal court in Australia upheld a ruling that the operator of www.mp3s4free.net and the ISP hosting the site are guilty of authorizing copyright infringement because the site provided links to other sites at which people could illegally download music. (Read article at Smarthouse)

• EMI is consolidating its operations in Los Angeles. The company signed a ten-year lease for 1800 Highland. The 50,000 square foot office space will house staffs from EMI Music Marketing, EMI Televisa, Caroline Distribution and the west coast office of Virgin Records. (Read press release)

• The Associated Press profiles Koch Records and the financial benefits it offers rappers with an established audience. A good quote came from Miss Info of New York radio station Hot 97. On the financial aspects of signing with Koch she said, "It's like, do I want to look like I have money or do I actually want to have money? (Koch) is not like a graveyard, but more like a retirement pension." Layzie Bone of Bone Thugs-N-Harmony has a good strategy: Sign with Interscope for the group albums, which will lead to better sales for his more profitable solo albums on Koch. Last year, Koch Records's rap revenue was $40 million. Rap accounts for 80% of the label's revenues. (Read AP article)

• Music recommendation is fast becoming a hot investment. Ticketmaster bought music discovery site iLike.com for $13.3 million and will introduce it to its millions of customers. iLike.com, which was formerly Garageband.com, helps users organize, share and discover music. (Read article at Red Herring)

Posted by Glenn at 11:44 AM | Link
|EMI||Indies||RIAA||Sony BMG|

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

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

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

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

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

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

• EMI will buy out shares of Toshiba-EMI, a Japanese joint venture EMI has with Toshiba Corp. The company was created as Toshiba Music Industries Co. in 1960 and changed its name to Toshiba-EMI Ltd. in 1973. (Read article at Reuters UK)

• As mentioned yesterday, Verve Music Group downsized. It was be under the Universal Music Enterprises umbrella. Variety's Phil Gallo reported that Verve GM Nate Herr will be in charge of day-to-day chores. Staffs at Verve's sub-labels, such as Verve Forecast, will not get pink slips, he wrote. What really stood out in the article is the section of Forbes.com in which is was placed: Tech. The URL places it in the digital entertainment section of the website. Verve, tech? CDs must not be newsworthy. (Read article at Forbes.com)

• Changes at Warner/Chappel: CEO Richard Blackstone will become an advisor to Warner Music Group chief Edgar Bronfman, Jr. and assist with the company's global expansion strategy. David Johnson, EVP and general counsel at WMG, will replace Blackstone. (Read article at Reuters)

• The Rolling Stones' "A Bigger Bang" tour, with $437 million in gross receipts, was the top tour of 2006. Madonna's Confessions tour was second at $197 million. (Read article at Billboard.biz)

• Devine Entertainment Corporation signed a deal Sony BMG to distribute its "Marsalis on Music" DVD series. (Read press release)

• The Who's Pete Townshend will give the keynote address at the 2007 SXSW conference in Austin, Texas. SXSW will run from March 9-18. Music runs from March 14-18. Townshend's speech is set for March 14 at 6:30pm. (Read article at Retuers,
SXSW blog post)

• An article on brick-and-mortar music retail in the Twin Cities. Independent retailers say CD sales are down about 10% this year. (Read article at StarTribune.com)

• Seen yesterday on the History Channel: during a show, an announcement in the bottom right corner that read, "Now available at iTunes." Now that's good advertising.

Posted by Glenn at 7:50 AM | Link
|EMI||Sony BMG||Universal Music Group|

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

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

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

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

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

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

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

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

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

• Sony Urban will be folded in Columbia, and Lisa Ellis was named Executive Vice President, Sony Music Label Group. Hits has the full text of an email accouncement from Howard Stringer. (Read article at Hits or this one at Billboard.biz)

• Phil Quartararo, EVP of EMI Music North America, is leaving to start his own strategic marketing company. (Read article at Variety)

• Sevendust and its label, 7Bros, have partnered with Warner Music Group's Asylum Records. Alpha is slotted for a March 6, 2007 release date. Asylum, along with Cordless and East West, is part of WMG's Independent Label Group. Much ado has been made about WMG's digital gains, but one of the real successes has been Atlantic's deals with a few indies. Downtown and Eleven Seven each had a big year, thanks to Gnarls Barkley and Buckcherry, respectively. And Cordless looks to be establishing its identity. (Read article at IGN.com)

• Snocap hired two execs, Bruce Taylor and Karin Visnick. Taylor will be the VP of marketing while Visnick will be VP of Product Management. (Read press release)

• A bold prediction: XM Satellite Radio Chairman Gary Parsons said regulations would have no reason to think a merger with Sirius would harm compeition. "We are operating in a much larger marketplace than satellite radio ... The competition is predominantly terrestrial radio," he said. (Read article at MarketWatch)

• It's that time of the year: The Hollywood Reporter laid off eight employees, including music editor Chris Morris. The publication is owned by VNU. (Read post at Variety)

• Want to hear "Thinking About You," the Norah Jones track that Yahoo! Music will sell in MP3 format? Click for your choice of WM, RA or Quicktime and prepare to get mellow.

• American Scientist has a review of Chris Anderson's "The Long Tail." Classic first line: "If a book about the demise of the best seller becomes a best seller, does that undermine the book's credibility?" After reviewer Brian Hayes ran through some of Anderson's examples, he came in with some feedback. "Unfortunately, quantitative evidence supporting this proposition is hard to come by," he wrote. In the end, Hayes was disappointed by the lack of "forensic economics" but thinks "Anderson may well be right about the waning influence of the hit parade and the greater scope for ideas without mass-market appeal." (Read article at American Scientist)

Posted by Glenn at 7:56 AM | Link
|EMI||Satellite Radio||Snocap||Sony BMG||Warner Music Group||XM|

• Soundscan unveils its mastertone sales data this week. Edna Gunderson has an article on a global market that is projected by one firm to gross $6.8 billion by 2010; U.S. sales are projected to be over $600 million in 2006. How are sales right now? Recently, an average of 4.6 million ringtones have been sold per week at an average cost of $2.40. (Read article at USA Today)

• Columbia Records has named Michael Caplan as its new Senior VP of A&R. Previously he held the same title for the Sony Music Label Group. (Read article at Hits)

• Here comes the video revenue streams (one day): Warner Music International has launched a new video content division called Warner Music Entertainment (Read article at Variety)

• House of Blues is considering building a 7,000-seat music venue at the Great America theme park in Santa Clara, CA. The site is adjacent to the site the San Francisco 49ers are considering for a new stadium. (Read article at Inside Bay Area)

• Not that it matters much to Americans, but Charlotte Church has parted ways with Sony BMG to concentrate on her TV talk show. Check out her theme song and her infamous cover of "Beat It" with an incapacitated Amy Winehouse. (Read article at Metro)

• A report of healthy HD radio sales. (Read article at Radio Ink)

Posted by Glenn at 7:58 AM | Link
|A&R||Live Music||Radio||Ringtones||Sony BMG||Warner Music Group|

According to a November 22 report by the New York Post, Sony BMG will dissolve its Sony Music Urban division.

"According to several sources both inside and outside the company, the dissolution of Sony Urban, which was created under the former regime of Don Ienner and Michelle Anthony, is imminent, with an official announcement coming by Dec. 1, and possibly as early as today."

Sony Urban holds 13.4% share of the R&B market and a paltry 3% of the rap market. The article claims one reason the division is being folded is because it "had the unintended consequence of isolating artists, rather than freeing them up." There's a lesson in organizational behavior for you.

This move comes after Sony BMG downsized its classical music division.

Posted by Glenn at 2:25 PM | Link
|Sony BMG|

• Sony BMG fired the president of its classical music division, Gilbert Hetherwick, and six other staffers at Sony BMG Masterworks. The Masterworks label is being folded into Sony BMG Music Entertainment Commercial Music Group to make it (quoting from a statement) "eaner, more responsive and more effective in adapting to the new realities of reaching the classical music consumer." (Read article at Playbill)

• Rhino Records, the venerable catalog label owned by Warner Music Group, has a deal with Verizon Wireless that will allow V CAST customers to purchase ring tones and ringback tones of classic songs from the Rhino Catalog. The songs will be released in a series called "Songs You Know." Each volume is a bundle of tones and songs (that will be downloaded to the PC) and have a price tag of $9.99. Artists on the first volume include Otis Redding, Mr. Big, Devo and Skid Row. Volume Two includes songs by Dio, Brandy, The Ramones and En Vogue. I can't speak for all consumers, but I think these are pretty terrible mixes of artists and genres. This would be fine unbundled, but bundling Dio and Brandy doesn't make sense. (Read press release)

• Warner Music International has partnered with social network elHood.com. The deal will put WMI content in the music-focused, Latin-targeted social networking site. (Read article at elHood.com)

• A country Coachella? Goldenvoice, who puts on the popular Coachella Valley and Arts Festival, is putting together a country version to take place May 5th and 6th, 2007. Artists on the bill so far are Willie Nelson, Lucinda Williams, Kenny Chesney, George Strait, Emmylou Harris, Earl Scruggs and Nickel Creek. (Read article at Pollstar)

• Brooklyn band Mgmt has signed with Columbia. (Read article at Hits)

Posted by Glenn at 12:30 PM | Link
|Live Music||Mobile Music||Sony BMG||Warner Music Group|

• Sony BMG got some press for using Second Life to promote its acts. Now EMI is getting into the game. Its Innocent label will use Habbo Hotel, a cartoonish social networking site, to promote boy band 365. They're certainly leaving no stone unturned. (Read article at NMA)

• Apparently there's some chatter than Microsoft is considering a purchase of EMI, though one analyst calls such a deal "odd and unlikely." Agreed. (Read article at newrating.com)

• Neil Gillis, formerly of Concord Music Group, has been named President/COO of Dimensional Music Publishing. (Read post at Hits Rumor Mill)

• Bloomberg has hopped on the indie label bandwagon...although their market share doesn't show a huge gain in strength. "The independents have come from almost obscurity to having an immense effect on the music landscape," said a fund manager. He was referring to how Impala may have sank the Sony BMG merger. Have indies come from "almost obscurity"? I recall the same thing being said when Epitaph broke The Offspring and Rancid in the mid-'90s. Bottom line: More than market share, their strength has come from better organization toward common goals. (Read article at Bloomberg)

• Digital Music Group increased its loss in the third quarter of 2006. On revenues of $1.2 million, the company lost $848,000. (Read press release)

• Sony will launch a Connect download store in Canada next week. That's the last you'll hear of Sony Connect for quite some time. (Read article at Canada.com)

• VNU will restructure the company into "market-focused" groups. Among the company's music-related publications are Billboard and Radio & Records, which will fall under the "music" umbrella along with Bookseller, Kirkus Reviews and The Book Standard. (Read article at Foliomag, via paidContent)

Posted by Glenn at 7:55 AM | Link
|Publishing||Sony BMG|

• It's CMA time, and with it comes a really good article on the life and times of Cliff Cody and other songwriters trying to earn a living in Nashville. (Read article at The Columbus Dispatch)

• Keven Federline's show at NYC's Webster Hall (capacity 1,600) pulled in an estimated 100 paying customers. At least there were no lines at the bars. (Read post and view pictures at Stereogum)

• The trend at this year's CMJ? Newsday says it was "a continuing drift toward dance music, or anything even vaguely danceable." (Read article at Newsday)

• Sony BMG's Legacy Recordings will have the soundtrack to the upcoming, seven-part Ken Burns documentary, "The War." (Read press release)

• An interview with Ian MacKaye (Fugazi, The Evens). (Read post at Gothamist)

Posted by Glenn at 4:13 PM | Link
|New York City||Sony BMG|

Sony Corp. announced its financial results for the second quarter ending September 30, 2006. Sony BMG increased its revenue by 1% over the same period last year. Its loss of $39 million (on sales of $948 million) was less than the loss of $60 million last year. That loss included a $39 million restructuring charge.

Read the PDF of the consolidated financial results. Sony BMG results are on page 7.

Last quarter, Sony BMG lost $81 million on sales of $872 million.

It's clear that post-merger Sony BMG is having difficulties. A handful of hits -- Justin Timberlake, Christina Aquilera -- are tempered by underperformers, notably Dixie Chicks and OutKast. Clay Aiken's new album is falling steadily after five weeks of release. Beyonce is pushing the 1,000,000 mark, though, and Carrie Underwood continues to sell 30,000-plus a week after almost a year of release.

Posted by Glenn at 12:16 PM | Link
|Sony BMG|

• "The CD is dead," said EMI chairmand and CEO Alain Levy to an audience at the London Business School. What he meant is the plain CD is no longer viable. "By the beginning of next year, none of our content will come without any additional material." Here's a good question: What makes CDs more attractive, a lower price or more content? Hard to say, honestly. If EMI is going to jazz up CD content, it's going to need more than a few videos and a screensaver. (Read article at Marketwatch)

• Just when Andy Slater's A&R efforts come into doubt, Capitol Records goes and signs Roxette for the U.S. Kings of A&R posted this, then I found an article with more details. A new album will be released on December 26th....gift certificate season.

• There's been talk on The Velvet Rope about layoffs at Sony BMG. Tower's demise means fewer employees on the payroll. Best of luck, Eddie. (Read thread at The Velvet Rope)

• Chalk up another advertising revenue-sharing agreement: Warner Music Group signed a deal with Internet TV provider Brightcove that will provide video content through ad-supported video players. The Brightcove video player requires no download. Fans will be able to put the player on websites and blogs and, I assume, MySpace pages. (Read press release)

• Music blogs are business: Word is out about Stereogum's investment deal with the Pilot Group. Financial terms are not out, but it's said that blog founder Scott Lapatine will retain creative control. Naturally. (Read post at paidContent.org)

• Through September, 2006 touring dollars are up 10.5% over last year. Attendance figures were down 1.2%. (Read article at Billboard.biz)

• For you Long Tail fans: Harvard's Working Knowledge on video sales: "Consumers can find videos online that they can't find anywhere else. And yes, there is a shift in sales to the tail—but there is also an increasing number of titles that do not sell at all." (Read post at Working Knowledge, via Digital Audio Insider)

• An interview with Steve Kaneko, Design Director, Entertainment and Devices Division for Microsoft's Zune. (Read post at Zune Insider)

Posted by Glenn at 8:53 AM | Link
|A&R||EMI||Sony BMG||Touring||Warner Music Group|

• 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|

• Universal Music Group and Sony BMG signed ad revenue-sharing deals with YouTube. (CBS Corp inked a deal as well.) The article mentions the "new YouTube technology" that will allow companies to find restricted content and remove it, or leave the ad and share ad revenue generated from views of that video. Sony BMG said it will allow users to include some of the music group's catalog songs in their videos...which implies new releases will be forbidden. (Read article at MSN Money)

• More video deals: Sony BMG and Warner Music Group inked an ad revenue-sharing deal with Google. In the near future, the companies' audio-video content will be accessed through Google's Ad-Sense network. (Read article at Forbes.com)

• Brit music magazine NME is working on a greater presence in the U.S. through a US-oriented website (it figures it would be too expensive to launch a print magazine), an American news service and club nights to really hammer the point home (one done in LA, one coming up in NYC). (Read post at paidContent)

• It's not music, but it'll sell: EMI is going to release a limited editiion DVD of Steve (The Crocodile Hunter) Irwin's memorial tribute service. (Read press release)

• A Piper Jaffray survey reveals 79% of U.S. teens own an iPod, up two points in six months. Interest in music-playing mobile phones increased to 74% from 70%. (Read post at Digital Music News)

Posted by Glenn at 9:43 AM | Link
|Research||Sony BMG||Universal Music Group||Warner Music Group||YouTube|

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

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

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

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

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

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

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

• 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|

A report yesterday in the New York Post told of pending cuts at Sony BMG. Rob Stringer "officially took the helm" a few weeks ago and is prepping the duty roster for layoffs.

"Stringer, who had headed the company's U.K. division, is said to be scrupulously going over the company's personnel rolls looking for cuts.

Despite nearly 2,000 layoffs worldwide following the 2004 merger between Sony Music and Bertelsmann's BMG, 'The cost structure is still bloated,' said one source.

Stringer, incidentally, is the younger brother of Sir Howard Stringer, the chief executive officer of Sony. But Rob Stringer joined Sony years before his brother did. Another source said Stringer's tinkering is about 'undoing Don nie's legacy and the structure he put in place.'

One area that is sure to be altered is Sony's urban music division, which right now sits outside the division's two main labels - Epic Records and Columbia Records - and which boasts such hit artists as Beyonce, Shakira, AC/DC and Jessica Simpson.

Sources say the likely cuts won't be anywhere near the magnitude of the original post-merger downsizing, and could amount to no more than 100 employees."

Posted by Glenn at 9:40 AM | Link
|Sony BMG|

• Sony BMG settled with Canadian music fans over its infamous root kit. Hundreds of thousands of consumers will get $8.40, a replacement CD and free downloads. Information on the settlement and how to fle a claim can be found here. (Read article at Vancouver Sun)

• The Zune makes an appearance on "The Ellen Degeneres Show." Degeneres gets the facts a bit mixed up; users cannot take songs from other Zunes, they can only take what is sent to them. (Watch clip on YouTube, via Medialoper)

• Rags Gupta thinks about Napster's possible suitors: wireless carriers, handset makers, cable/DSL providers and XM. For wireless and cable/DSL, Gupta floats the idea that using Napster as a customer-retention strategy could possibly make it a good investment. (Read post at Digital Music News)

• The Motley Fool's Rick Aristotle Munarriz thinks Google is the best fit for Napster. His best argument fits Napster's free, ad-based platform to Google's talent for selling ads. I dunno. Google, currently sitting on cash piles that inch toward the moon, could surely build something far better. (Read article at The Motley Fool)

• An interview with RealNeworks CEO Rob Glaser that hits on the company's parnerships with Sonos and SanDisk. "If you're on the right side of history, there's nothing wrong with starting out with a product at the high end and then riding that into the mainstream. That is the path we're on with Sonos." (TechNewsWorld)

• Delphi has introduced a new XM receiver, the SkyFi3. (Read review at CNET)

Posted by Glenn at 9:45 AM | Link
|Napster||RealNetworks||Sony BMG||XM||Zune|

• On a panel at the NAB Radio show, Clear Channel CEO Mark Mays predicts a "great renaissance in American radio" and calls for increased consolidation over the next ten years. "We need to be taking content, repurposing it, and giving it to people in a format that they want." (Read article at Radio Ink)

• XM Satellite Radio is in talks with labels over new fees related to downloads and licensing. (Read article at Bloomberg)

• Country star Tim McGraw and producer Byron Gallimore are starting a new label, StyleSonic Records, and will release the soundtrack to McGraw's upcoming movie, Flicka. (Country Weekly)

• Sony BMG expects its European sales to be down 5% for the year; the company's first-half sales were down only 3%. (Read Reuters article)

• IODA has signed up for more labels for digital distribution: Big Daddy Music Distribution Inc, Cargo Records UK, Challenge Records International BV, Select-O-Hits, and Stomp Entertainment. (Read article at Press Release)

• Listen to a webcast of a presentation by Warner Music Group's Edgar Bronfman at Goldman Sachs Communacopia XV Conference. (Hear webcast at WMG Investor Relations)

Posted by Glenn at 7:56 AM | Link
|Radio||Sony BMG||Warner Music Group||XM|

• Hits predicts Justin Timberlake's album should have done about 700,000 in its first week of release. John Mayer, who is getting some unexpected blog love, is looking at 240,000. Bob Segar should come in under 100,000. (Hits Rumor Mill)

• Qtrax continues to get more press than it is likely to get customers: The yet-to-be-released, ad-supported P2P service has inked a licensing deal with Warner Music Group. EMI and TVT are already on board. The iPod and the Zune, however, will not be on board. (Digital Music News)

• Maybe this is old news, but it's the first I saw it: Epic Records has dropped INXS in the U.S. (The Daily Telegraph)

• The biggest part of the news about the Rhapsody/Sandisk partnership that will create a portable music player that will be integrated with the online music service? Rhapsody is ditching Microsoft's PlaysForSure DRM for its own technology. And why not? PlaysForSure doesn't work with the iPod, and it won't work with the Zune. (Press Release)

• Jupiter Research finds that 83% of all iPod owners do not buy digital music at least once a month, and only 5% of the music on the typical iPod came from an online music store. (BBC News)

• Entertainment Weekly lists 25 albums it can't wait to hear. Topping the list is Jay-Z's Kingdom Come. (Entertainment Weekly)

Posted by Glenn at 9:13 AM | Link
|Portable Music Players||Rhapsody||Sony BMG||Warner Music Group|

• Three 6 Mafia and the group's Hypnotize Minds Productions has inked a deal with Warner Bros. Records, which will market and distribute the label's releases. Three 6 Mafia are to produce current Warner Bros artists like Lil' Scrappy and Mike Jones. (Rap News Network)

• EMI Christian Music Group has extended its relationship with Inpop Records. By the end of the year the label will release new albums by newsboys and Jimmy Needham (CMSpin)

• A few months after the NY Times' Sunday Magazine's surprising profile of doom metal band SunnO))), the AP says "metal gets a makeover" and finds -- somewhat belatedly -- that many metal bands are pushing social causes and making intelligent music. (AP)

• eMusic subscriptions in Europe rise as the company launches a European service. "It appears that current customers will get to keep their old subscription rates, though they'll get socked with the Value Added Tax now that eMusic has an official European presence." (Digital Audio Insider)

• Bryan Leach, who was previously the VP of A&R at super indie TVT, was hired as the Senior VP of Urban at the RCA Music Group in a deal that brings his own Polo Grounds Music to the label. (Billboard Radio Monitor)

Posted by Glenn at 8:22 AM | Link
|A&R||EMI||Sony BMG||Warner Music Group||eMusic|

• Bertelsmann closes in on a buyer for BMG Music Publishing. It should have a short list of potential buyers by the end of August. (Billboard Radio Monitor)

• France president Jacques Chirac signed an interoperability law that aims to force Apple to make its iTunes/iPod duo compitable with competitors' hardware and online music stores. Next, let's see if other countries follow France's lead, and let's see if other companies can use interoperability to make inroads into the dominance of the Apple brand. (MacNewsWorld)

• Forty-eight symphonies and their managers have signed an agreement that covers the recordings of live performances. The deal replaces up-front fees to musicians with a revenue-sharing system. Orchestras also retain ownership of the live recordings, which will be licensed out to labels. (NY Times)

• News about Fontana Distribution: Ken Gullic has been upped to SVP of Sales and Marketing, and the distributor has landed Ipecac Recordings, which decided to leave Caroline Distribution. (Hits Rumor Mill)

• P2P start up Skyrider landed $2 million in funding. One of the three projects planned by the company is a keyword search technology that allows advertisers to capitalize on the millions of daily P2P keyword searches. (Press release, via Digital Music News)

• Musicane has introduced Musicane Groups "to enable effective administration of online sales by record labels and video distributors." The first label to take advantage of Content Manager is Koch Records. (Press Release)

• RIP Elisabeth Schwarzkopf, the legendary soprano. (Playbill)

Posted by Glenn at 10:07 AM | Link
|Apple||P2P||Sony BMG||Universal Music Group|

Sony Corp announced its the results for the first quarter ending June 30th, 2006 (download PDF. Sony BMG's results are on page six.) For the first quarter of 2006, Sony BMG had equity in net loss of $40 million on revenues of $872 million. Its revenues were $147 million lower than the same period last year.

The company blamed its poor performance on "a year-to-year decrease in unit sales primarily due to the change in timing of several key releases into the second half of the calendar year, and the continued decline in the overall market." One of those bumped releases is OutKast's Idlewild, which will join a very strong release schedule in the second half of 2006. Coming are albums by Christina Aguilera, DMX, Beyonce, Justin Timberlake, Rod Stewart, Maroon 5, John Mayer, Taylor Hicks, Clay Aiken, Il Divo, Kenny Chesney, Monica, Jessica Simpson and Audioslave.

Posted by Glenn at 1:36 PM | Link
|Sony BMG|

• More optimism: Sony BMG Chief Executive Officer Rolf Schmidt-Holtz to Der Spiegel magazine: "I am confident that the approval will stand even after a new examination." (Reuters)

• Hits predicts NOW 22 will remain atop the album chart next week after selling around 225,000, which isn't all that bad of a second-week fade. Two will debut in the Top 10, although with modest sales in the 50,000 to 60,000 range: Rodney Atkins and Los Lonely Boys. Dixie Chicks, Gnarls Barkley and Nelly Furtado are holding strong. (Hits Rumor Mill)

• Eliot Spitzer returned a few campaign contributions related to companies his office has dealth with. One was from CBS Corp, which is currently under investigation for payola practices. Another contribution was from the wife of an EMI board member and chief executive of EMI Music Publishing. (Wall Street Journal)

• Robert Hillburn recounts meeting some of music's biggest names over his decades as a music writer. (LA TImes)

Posted by Glenn at 4:02 PM | Link
|Sony BMG|

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

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

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

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

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

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

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

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

The LA Times printed an op-ed yesterday that made a case in favor of a combined Sony BMG, saying the company has a stronger case now that it does two years ago. "Europeans' Same Old Tune on Mergers" comes as European regulators are giving the 2004 merger of Sony and BMG a second look.

The Times gets a bit carried away when it proclaims "the barriers to entering the music business and building an audience have all but evaporated" and has a stronger case when arguing that digital distribution "doesn't favor bureaucratic conglomerates." And the facts don't lie: Sony BMG's market share has dropped in the last two years.

Posted by Glenn at 9:12 AM | Link
|Sony BMG|

The NY Post's Tim Arango today called an EMI/Warner Music Group deal "on ice" a week after a European court overturned an EU decision to approve the 2004 merger of Sony and BMG.

Although EMI chairman Eric Nicoli said last week the Sony BMG decision had no bearing on its efforts to acquire WMG, Arango was told by sources that "Nicoli and those close to him have realized that a deal anytime soon is farfetched" and that talks will not resume until the Sony BMG issue is resolved by the EU.

Yesterday a Hits piece on the merger matter and outlined the time table for a resolution. The review process would not begin until September and would take at least four months, meaning that Sony BMG would not get regulatory approval or denial until early 2007. That means EMI and WMG would postpone talks in earnest until that time.

Today Bertelsmann said it does not expect the sale of its BMG Music Publishing to be affected by by the decision against Sony BMG. Some have been worried that the court's decision was a harbinger of greater scrutiny to come, and that attempts by WMG, Universal Music Group and EMI to increase their publishing businesses would be hampered.

Posted by Glenn at 4:16 PM | Link
|EMI||EMI WMG Merger Talk||Sony BMG||Warner Music Group|

What will be the impact of yesterday's court decision that said Sony BMG's merger should not have been given regulatory approval? Depends on who you ask. Read the papers today and you'll get all kinds of opinions.

Quoted by Bloomberg News, an analyst at SG securities said, "It appears to pour a bucket of ice water over the hopes of an EMI-Warner merger, and that's what's been supporting the shares." The Times Online presented a dour outlook for both Sony BMG and a proposed merger of EMI and Warner Music Group, writing that "Investors concluded that a Warner-EMI deal would be harder." A Times Online commentary by Robert Cole said it doesn't necessarily spell doom for either Sony BMG or EMI/WMG, but it "will inevitably lead to hesitation."

Investors obviously feel the doubt. Stocks for EMI and Warner Music Group plunged yesterday.

But not everybody is down -- at least publicly. EMI is staying positive. EMI chairman Eric Nicoli said EMI wouldn't be going after WMG if it didn't think it would get regulatory approval. Sony BMG officials don't think they will lose regulatory approval after the case is revisited by the EU. "Today's judgment does not affect the validity of the Sony BMG joint venture, which has been up and running since August 2004," said the company.

A NY Times article quotes a competition lawyer in Brussels as saying this whole thing "is probably just an inconvenience for the companies" and the merger is not likely to be blocked.

Posted by Glenn at 2:04 PM | Link
|Sony BMG|

• This just in: A European Union Court has annulled the European Commission's decision that allowed for the merger of Sony and BMG. The Commission will re-examine the case. From the court's decision: "The Commission did not demonstrate to the requisite legal standard either the non-existence of a collective dominant position before the concentration or the absence of a risk that such a position would be created as a result of the concentration." (Billboard.biz)

• The commission's decision burst a bubble for investors: EMI's share fell more than 8% after the court's decision due to worries that it could prevent a merger of EMI and Warner Music Group. (Irish Examiner)

• WMG shares fell more than 12% in early trading. (Reuters)

• The prognosticators at Hits are saying Now 22 could do 400,000 in its first week. That will be miles ahead of Pimp C and Thom Yorke, who are looking at the 100,000 range. (Hits Rumor Mill)

• Bad news for Digital Music Group: co-founder Peter Koulouris resigned to "pursue new opportunities." (Sacramento Business Journal)

• The payola settlements from Eilot Spitzer's investigations are making their way out of New York state's music funds. Almost 100 New York City programs have received millions of dollars. Two, Brooklyn Academy of Music and Carnegie Hall, received $750,000 each. (NewYorkBusiness.com)

• A profile on new Kansas City indie labels Wheatfield Group, Drama Club Records, Minnow Records, Curb Appeal Records, OxBlood Records and Range Life Records. Wheatfield is distributed in the U.S. by Fontana. (Kansas City Star)

Posted by Glenn at 10:20 AM | Link
|EMI||Indies||Payola||Sony BMG||Warner Music Group|

• Clive Davis signed fourth-place "American Idol" finisher Chris Doughtry. His album, which is in the writing process ("with A-list collaborators") is due out before the end of the year. (CourtTV.com)

• Rapper Nas has signed with Creative Artists Agency. (Billboard.biz)

• Endemol, the Dutch television production company behind hits like "Big Brother" and "Fear Factor," has signed a deal with BMG Music Publishing to represent the music catalog of its programs. (Reuters)

• Universal Music Publishing has signed Dashboard Confessional frontman Chris Carrabba to an exclusive, worldwide co-publishing deal. The band's latest album, Dusk and Summer, debuted at #2 on the album chart. (Top40-Charts.com)

• Engadget posted a picture of Microsoft's heavily rumored answer to the iPod, code name Project Argo. Gizmodo says the final name of the product will be Zune. Digital Music News reports that some music execs who have seen it aren't all that impressed.

• An EMI spokesperson on Adam Klein: "Adam has done a great job in helping shape the global digital strategy. But given the development of the digital music market, EMI has adjusted its internal structure and approach both centrally and at a national and regional level." (The Telegraph)

• The Telegraph calculates offer prices of 370 pence per share for EMI and $33.50 per share for Warner Music Group. (The Telegraph)

Posted by Glenn at 10:25 AM | Link
|EMI||Portable Music Players||Publishing||Sony BMG|

• Capitol Records has entered a partnership with apparel company Sub-Urban Brands to help promote its urban artists. (Rap News Network)

• Lil' Flip is putting on a public relations campaign to say how angry he is that his album was leaked by Sony (he alleges) after his label let him go...unless the timing of this press release and this article in the Daily News is just a coincidence. For a few weeks the word has been that Lil' Flip has hooked up with Warner Music Group, though nothing has been confirmed yet.

• EMI and Snoop Dogg have both filed lawsuits over Snoop's claim that he could exit a contract with the music group. (SOHH)

• Perfect for a global industry: A new system called Voxonic, can replicate a voice in any language. Voxonic has a partner in Andre Harrel, founder of Uptown Records. An unnamed major label, says Harrel, is going to use the technology for ringtones sold in other countries. (Bloomberg.com)

• RIP Syd Barret. (Scotsman.com)

• RIP Milan Williams of the Commodores. (Billboard.com)

Posted by Glenn at 10:30 AM | Link
|EMI||Sony BMG||Warner Music Group|

• Sony BMG has created a new unit, called the Commercial Music Group, to find new opportunities for its catalog and classic recordings. (Hollywood Reporter)

• HIts has additional info: The group will be headed be veteran John Ingrassia, formerly an executive vice president at Columbia Records Group. CMG will include Legacy Recordings; the Strategic Marketing Group; the Custom Marketing Group, Television; and Sony BMG Masterworks. (HIts)

• Vivendi, the parent company of Universal Music Group, is selling its stake in a utlity company. It's believed the move, which will result in about $1.91 billion, will give it more resources in its pursuit of the music publishing assets of BMG and Warner Music. (Financial Times)

• Castle Harlan, Inc. has completed its acquisition of Baker & Taylor, a leading wholesale distributor of books, videos and games. (Charlotte Business Journal)

• Related: Rumors that Baker & Taylor laid off some members of its sales staff yesterday. (The Velvet Rope)

• Physical album sales for the year are down 4.2% while digital album sales are up 126%. Digital tracks are up 77%. Taking all three into account, sales of recorded music are up 0.1% through the first half of 2006. (Hollywood Reporter)

Posted by Glenn at 11:01 AM | Link
|Distribution||Sony BMG||Universal Music Group|

• Live Nation, which owns, operates and/or has booking rights to 153 venues (Google FInance link), will buy House of Blues for $350 million before the end of 2006. House of Blues is a privately-owned company that owns, operates of exclusively books venues in 19 venues across the country. (AP)

• Bertelsmann completed the purchase of its 25.1% stake previously owned by Groupe Bruxelles Lambert. The company will pay for the acquisition in part by the pending sale of BMG Music Publishing. (Billboard.biz)

• A profile of Milwaukee's new Bulleseye Records, which will focus on used CDs and vinyl. Bullseye is owned by Luke Lavin, who closed down his Farewell Records in March. (OnMilwaukee.com)

• Free download site Epitonic is back with new downloads and a new design. (Via Tuning Fork)

Posted by Glenn at 12:06 PM | Link
|Live Music||Publishing||Sony BMG|

The scales at Sony BMG may soon tip. Bertelsmann CFO Thomas Rabe told German newspaper Frankfurter Allgemeine Zeitung the company "will be sitting down with Sony to look at whether we can optimize the joint-venture financially."

The details ended there, but Billboard.biz reported that the company is in talks with Sony Corp chairman Howard Stringer to possibly give Sony a majority share in Sony BMG for "an interesting price." Sony BMG is currently split 50-50 between Sony Music and Bertelsmann.

A majority share in the hands of Sony would come after a slew of executive changes. Sony Music canned Don Ienner and Michelle Anthony last month. Former Sony BMG chief executive Andrew Lack was replaced by Rolf Schmidt-Holtz.

Posted by Glenn at 10:24 AM | Link
|Sony BMG|

• Virgin France was fined for offering illegal Madonna downloads. The download site had ignored an exclusive given to a competitor by downloading Madonna's "Hung Up" single and re-selling it on its own site. Virginmega is to pay a fine of 600,000 euros. (BBC News)

• A profile on Downtown Records, which has the press-adored Gnarls Barkley on its roster. (BusinessWeek Online)

• Hispanics listen to the radio more than the average American -- 22 hours and 15 minutes per week versus an average of 19 hours per week -- but time spent listening is dropping. In the last 12 months, Hispanics' weekly time spent listening has dropped 15 minutes, reflecting changes seen in other listeners. That drop is due to men's listening habits only as women's time spent listening has remained constant at 24 hours and 30 minutes. (Billboard Radio Monitor)

• Jamie Foxx, Mary J. Blige, Chris Brown and T.I. were winners at last night's BET Awards in Los Angeles. (AP)

• Three men were arrested for allegedly writing a computer virus that used Sony BMG's infamous rootkit as an entry point into victims' computers. (Technology Review)

Posted by Glenn at 9:26 AM | Link
|Indies||Radio||Research||Sony BMG||Warner Music Group|

It's buried down at the bottom of a Financial Times article about some vague business plans for Sony Music, but this quote from Sony chief executive Sir Howard Stringer just leapt off the page.

"The problem with the music business was the US, he said, where music has become fragmented as a result of the consolidation of the radio industry. Urban music, which has dominated the US market for some years, typically travels less well to other countries.

'The US is not creating as much music that the world likes as it used to,' Sir Howard said."

And what urban music is Sony exporting? There wasn't a single Sony urban album in the top 100 last week. The Dixie Chicks, Billy Joel and Shakira are the company's top-selling titles right now. (Dixie Chicks' album is selling well outside of the U.S.) Stringer pointed to Sony Music Entertainment Japan as a model. "SMEJ has demonstrated that you can indeed defy gravity," he said, pointing to increased revenues through finding artist development and creative merchadising. "If you based the music business on the experience of SMEJ you would be very optimistic."

As for fragmentation, that's certainly a valid concern for an executive used to maximizing scale economies, and Stringer, like all heads of global companies, surely likes products that cross political boundaries. Marketing to more and more niche markets is not always an efficient use of resources for such a company. Still, a music company needs to act like a music company no matter how much fragmentation.

Posted by Glenn at 1:24 PM | Link
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• ASCAP honored songwriters last night at its Rhythm & Soul Awards last night. 50 Cent and Jermaine Dupri shared the songwriter of the year honor. (Hollywood Reporter)

• The Internatinal Music Feed, a pop music brand that's part of the Universal Music Group, has signed a deal with Verizon to offer video and channels of programming to Verizon's fiber-optic TV services. (Yahoo! Finance)

• An article on the Miles Davis estate with some noteable news. A remix album is due this fall, and Don Cheadle is set to play the jazz legend in an upcoming biopic. Also, Sony Legacy "plans to release more Davis recordings this year," claims the article. (AP)

• PricewaterhouseCoopers is optimistic on global digital music, especially in Asia, and predicts new technologies in the U.S. will offset physical declines. (Digital Music News)

• The Supreme Court declined to hear TVT's appeal in its case against Island Def Jam. A circuit court voided TVT's $132 million jury verdict over a dispite regarding Ja Rule and Irv Gotti. (Billboard.com)

• One Stop Digital Music is a new digital distributor that will seek to take music directly from recording studios. (PRWeb)

• Jill Sinclair, who set up ZTT Records with her husband, producer Trevor Horn, was accidentally shot by an air rifle and is in critical condition. (The Independent)

Posted by Glenn at 9:19 AM | Link
|Digital Music||Sony BMG||Universal Music Group|

• It's the new radio: The soundtrack to the Madden NFL 07 video game was revealed today. Artists include Anti-Flag, Cartel, The Rapture, Riverboat Gamblers, Keane, Spank Rock, Wolfmother, upcoming Virgin act Red Jumpsuit Apparatus and Suretone/Geffen trio The Pink Spiders. (BusinessWire)

• Universal Music Group announced yesterday that it has bought Vale Music, Spain's largest independent record company. (Hollywood Reporter)

• Sandi Thom, the British singer-songwriter who attracted attention for fluffing up (some say fraudulenty) her webcast-to-riches story, will get a September 12th street date in the U.S. via Columbia Records. (PR Newswire)

• Sony BMG Nashville dropped John Randell and Jessi Alexander. (Billboard Radio Monitor)

• Another axe: Island/Def Jam dropped Fefe Dobson. (Fefe Dobson MySpace page, via The Velvet Rope)

• As Fred Bronson points out in his Chart Beat column, Taylor Hicks' #1 single, "Do I Make You Proud," is the fifth number one for an "American Idol" contestant and the 15th to make the Hot 100. Also of note is the length of stays atop the chart this year: no song has remained at number one for more than five weeks in 2006. (Billboard.com)

Posted by Glenn at 9:07 AM | Link
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An article at Reuters reports that BMG Music Publishing has sent financial information to 15 possible suitors. Of that 15, four are major music groups -- which are Warner Music Group, EMI, Sony Music and Universal Music Group -- as well as some private equity firms. First bids are due in about a month, said Bertelsmann's CEO, Gunter Thielen.

Bertelsmann is selling its music publishing unit to help raise the cash that will help it buy out its minority owner and avoid an IPO. Thielen said Bertelsmann thought about borrowing against its stake in Sony BMG but chose against restructuring the joint venture. "We want to stay in Sony BMG," he affirmed, which makes sense now that Bertelsmann has a better standing at the music company than when Andrew Lack was in charge and before Ienner and Anthony were let go.

Posted by Glenn at 12:03 PM | Link
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• Warner Music Group has signed a deal with China Unicom Ltd. to sell its music over the mobile phone operator's network. The Chinese digital music market is estimated to grow to $1.6 billion in 2010 (versus $450 million in 2005). (Reuters)

• Sony BMG Nashville has assigned Allen Brown to a newly created role: Director, Syndicated & Satellite Radio. (Music News Nashville)

• Rock 'n' Roll Soldiers have severed its relationship with Atlantic Records. The Eugene, Oregon-based band has been given the ability by Atlantic to release its shelved album on its on RNRS Records imprint. The band is happy just to have its tapes back after repeatedly being sent back into the studio to re-record songs. (The Reigster-Guard)

• A&R exec John Kalodner is set to retire after 35 years in the business. He is given credit with reviving the careers of Aerosmith and Cher, and he worked with artists ranging from Genesis to Bon Jovi. (Billboard.biz)

• A Dutch website that links to MP3s has been shut down after what has been called a landmark decision. Zoekmp3.com was found to be in violation of the law even though it was not hosting any infringing content. The site claims it warned users not to violate copyright laws, to which the court ruled, "Such a warning ignores the reality that the lion's share of visitors are looking for unauthorised MP3 files." (BBC News)

Posted by Glenn at 8:55 AM | Link
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Hits does the music media version of going to the OTB by wondering what the new Sony BMG will look and act like after Don Ienner's (often celebrated) ouster.

"The reaction is said to have been similarly upbeat in the offices of merger partner BMG, where staffers were rumored to be celebrating the news of Ienner's removal. That's hardly surprising, considering that BMG's executive team will assume a more dominant role and a louder voice in the combined Sony BMG infrastructure under the leadership of Rolf Schmidt-Holtz with Ienner and Michele Anthony out of the picture."

Posted by Glenn at 2:30 PM | Link
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And so the Sony BMG saga continues.,,

As many expected, Columbia Records president Steve Greenberg will leave the company on Friday, Billboard.biz reported today. His future was in question after Don Ienner and Michelle Anthony left Sony BMG last week. Greenberg was brought to Columbia be then CEO Andrew Lack, who has since given up the reins to Rolf Scmidt-Holz. It has been reported that Greenberg had since clashed with Ienner.

Greenberg founded and had served as president of S-Curve Records. Prior to that he helped break Hanson, Joss Stone and Baha Men.

Posted by Glenn at 9:42 PM | Link
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• Sony BMG is entering into a partnership with Indiana's Monkey Wings Records, which will involved marketing titles through the company's new age imprint, Windham Hill. "I think we're going to breath new life into Windham Hill," said Monkey Wings co-founder Jon Gillespie. (Greater Fort Wayne Business Weekly)

• After each one of his concerts on his 18-city U.S. tour, Bruce Springsteen will select a song to be broadcast by AOL, along with photos and the evening's set list. (Hollywood Reporter)

• File under "improvements necessary to carry digital music into the future": Warner/Chappel announced its pan-European digital music licensing initiative. It will streamline the licensing of songs, which previously required separate licenses from at least 25 different collection societies. (MarketWire)

• An article on EMI's data management and how it has changed the company's ability to track digital sales. (vnunet.com)

• Mixed signals: A message at Wu-Tang Clan's website said Raekwon had signed to Dr. Dre's Aftermath Records. Sources at Interscope say no deal has been signed. (SOHH)

• A correction to last week's article about Ziggy Marley's exclusive deal with Target: The deal is for one year, not perpetual. (Billboard)

• RIP: Vince Welnick, the Grateful Dead's last keyboardist. (Billboard.com)

Posted by Glenn at 8:59 AM | Link
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Big, big news out of 550 Madison yesterday as Dony Ienner and Michelle Anthony both resigned their top executive posts at the Sony Music Label Group. (As with most cases in corporate America, the word resigned is used instead of the more accurate phrase forced out.) Ienner was chairman of the label group, Anthony was president. Rob Stringer, chairman and chief executive of Sony BMG's British unit and brother of Howard Stringer, Sony's chairman, will take over as head of the Sony label group.

For a good recap, read the NY Times article by Jeff Leeds or Chris Morris's article at the Hollywood Reporter.

For a good thread on the subject with plenty of anonymous candor, read this thread at The Velvet Rope.

Hits pointed to three factors that lead to the duo's dismissal: a tepic year of new release sales until last week's Dixie Chicks' album; executive turmoil since the Sony BMG merger; and a move by Sony BMG head Rolf Schmidt-Holtz to bring the Sony and BMG cultures together by moving in Rob Stringer.

The full email from Rolf Schmidt-Holtz to employees after the jump.

Continue reading "Sony Music Shake Up: Ienner, Anthony Out" »

Posted by Glenn at 11:35 AM | Link
|Firings||Sony BMG|

Yesterday the The Business Online reported that prior to EMI's failed bid for his company, Warner Music Group's Edgar Bronfman is exploring the possibility of obtaining Bertelsmann's music publishing unit "in the event it become available." The theory is that a larger Warner Chappel music publishing would offer Bronfman a better exit strategy in the event WMG is acquired by EMI, which would lead to the sale of WMG's publishing and leave Bronfman as head of the indepedent publishing company.

If Bronfman has even a tenth of the ego people say he does, he will need to be in the business of recorded music. Though he songwriting on his resume, Bronfman should know that music publishing the less glittery, more practical cousin to recorded music. Labels are where the great egos and personalities can be found. They get the attention, the Page Six mentions, the more widespread adulation (and ridicule).

In the first three months of 2006, Warner Chappel had lower revenue that in the previous year -- $129 million versus $154 million. For the six months ending March 31st, 2006, revenues were lower -- $260 million versus $309 million the previous year. Operating income was steady, though.

Posted by Glenn at 1:20 PM | Link
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Bertelsmann, which owns half of the Sony BMG music group, will buy out the 25% of its stock that is owned by Albert Frere and expects to sell BMG Music Publishing to help fund the deal. The privately held company wanted to avoid seeing Frere publicly list that share of the company it did not own.

The company will borrow the money to buy back the shares at a price of $5.75 billion, and it stated the loan would be pain off over 12 to 18 months with cash from operations and also the "expected proceeds from the divestiture of BMG Music Publishing."

One estimate of the sale price of its publishing unit, which has 12.5% of the global market, puts its value at $1.5 billion euros. Bertelsmann will start lining up bidders in June. Vivendi's CEO is on the record as saying his company is interested in a "significant set" of music publishing assets.

Posted by Glenn at 10:45 AM | Link
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• Sony is teaming up with Proctor & Gamble to put some of its artists at the website Beinggirl.com, a site that helps girls cope with puberty. Alongside articles on bodily changes are currently audio streams by The Fray, Teddy Geiger, Miranda Lambert and Natasha Beddingfield. Branding of major consumer products is just another reason the majors aren't going to die out. This is a high-exposure area that is virtually off limits to indies. (NY Times)

• Tower Records is selling exclusive Blue Note Records compilations priced at $8.99. Titles are themed, such as Blue Bossa Nova and Great Jazz Organ. Eight of the ten titles have tracks previously unavailable on CD. (Jazz Times)

• Lari White, who produced Toby Keith's White Trash With Money, is the first woman to produce a hit album for a contemporary country star. (The Tennessean)

• Master P has sued Sony BMG for refusing to get airplay for his son Lil' Romeo's new single. Seems there's a lil' beef between Lil' Romeo and another Sony BMG young rapper, Bow Wow. That, allegedly, is the root of the problem. (PR-Inside.com)

• Last.fm, an online music recommendation and radio service, just got its first round of financing. (Digital Music News)

• A Robbie Williams-less Take That has signed a £3 million deal with Polydor Records. (BBC News)

Posted by Glenn at 8:57 AM | Link
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On the heels of Cheap Trick and the Allman Brothers' lawsuit against Sony BMG that alleges they've been shortchanged on royalties for digital sales, Coolfer received this note from Elmo Shropshire of Laughing Stock Records.

Two years ago, when Sony first received digital payments from a 3rd party called Zingy; instead of paying me 50% as called for in my contract, they treated the downloads as physical CD's sold individually by Sony. Sony deducted 15% for "net sales," 30% for packaging, 50% for new configuration and "audiophile recordings."

The 15% "net sales" does not apply in digital since the digital downloads are not broken or returned. The 50% configuration - my recording was not an "audiophile" recording, and a digital "configuration" costs nothing as compared to a physical CD which cost at least 60 cents to produce.

When Sony received $1.12 for a ringtone, they paid me 6 cents instead of the 56 cents my Sony contract allowed me. In the past two years, Chuck Fleckenstein, at Sony has not answered any of my requests to review the situation.

Keeping my fingers crossed that Sony will live up to their contract.

Posted by Glenn at 2:04 PM | Link
|Digital Daily||Legal||Sony BMG|

Bertlelsmann, the owner of half of Sony BMG, had a first quarter profit that nearly doubled last year's figure. Earnings were $64.5 million. Last year's first quarter was hampered by restructuring charges releated to BMG's merger with Sony Music.

Also, the Mohn family, the owners of 74.9% of Bertelsmann, are preparing to take out a loan to buy back the shares owned by Belgian tycoon Albert Frere.

Posted by Glenn at 12:39 PM | Link
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• A report that Bertelsmann's Mohn family is preparing to take out a loan to finance the acquisition of Groupe Bruxelles Lambert SA's 25.1% stake in the company. The acquisition, which could also be financed by selling off a stake in Sony BMG, would prevent an IPO on GBL's stake in the privately owned company. (Forbes.com)

• Radiohead's announcement of a North American tour -- playing at relatively small venues -- has the country buzzing. (Billboard.com)

• Charles Duhigg on KCDX-FM, "where the song choices are as chaotic as a schoolyard at recess," and interiews the station's mysterious, reclusive owner/programmer named The Guru. "The Guru acknowledges that part of the reason he continues spending about $200,000 a year to run KCDX is so he can listen to the songs he loves." (LA Times)

• An interview with Jeff Castelaz of Cast Management and Dangerbird Records. (OnMilwaukee.com)

• A Little Rock, Arkansas, record store owner is running for governor. (Arkansas News Bureau)

Posted by Glenn at 9:25 AM | Link
|Sony BMG|

Additional information is now available on the lawsuit that pits Cheap Trick and Allman Brothers against Sony BMG. At the hear of the lawsuit is how royalties are handled for digital sales.

Digital Music News has an informative post and a copy of the complaint (PDF), which alleges Sony BMG has paid the artists and producers "only a miniscule percentage of royalties owed for licensing of the recordings" to various online music stores. For each 99-cent download, the plaintiffs say they receive about 4.5 cents.

The complaint claims Sony BMG wrongly treats digital sales the same as physical sales and underreports sales, takes unauthorized deductions (that are typical for physical sales, such as packaging and container deductions). It also takes issue with Sony BMG's withholding reserves, which is a necessary part of physical sales due to product returns. Obviously, there are no returns in digital sales.

For 1,000 downloads, the current method gives the artist $45.05 in royalties. It includes the following deductions: 15% for net sales deduction, a 20% container (packaging) deduction and a 50% audiophile deduction.

The "correct" method,claims the complaint, would result in royalties owed in the amount of $315.50.

Posted by Glenn at 11:47 AM | Link
|Legal||Sony BMG|

• Have the Dixie Chicks resigned to move on from their old fan base? Hits points out that even though country radio isn't eager to play the single "Not Ready To Make Nice" the song is #1 on the iTunes country chart. The song was co-written by Dan Wilson (Semisonic, Trip Shakespeare) and produced by Rick Rubin -- not household names in country-loving homes. The next single is going to country radio, let's wait and see how that goes over. (Hits Rumor Mill)

• Read the transcript from Sony's fourth quarter earnings conference call held yesterday. (Consumer Electronics Blog)

• DJ Shadow has signed with Universal Records and will have a new album -- with guest vocalists -- out this summer. (Internet DJ)

• Cheap Trick and the Allman Brothers have started class-action procedings against Sony BMG over the royalties formua the company is using for digital music. (Digital Music News)

• Austrailians are complaining about the high prices they pay for digital downloads. Their CDs ain't cheap either. (Sydney Morning Herald, via Slashdot)

• Good news: Rhino is reissuing remastered Jesus and the Mary Chain albums. Finally. Bad news (to the many who are haters): They're DualDisc format. The DVD side of each will contain the album in high-res audio and a paltry three videos. (Pitchfork)

Posted by Glenn at 9:40 AM |