The news was so big it was on page B6 of today's Wall Street Journal. Microsoft had a Zune announcement today (read press release). One aspect of the news is the availability for purchase of some 800 television programs at the Zune marketplace.

The far more interesting (to me, at least) part of the news release had to do with Zune's new social functions. The new features involve online social and sharing functions, a leap forward from the first round of inter-device social functions. What looks to be the best function is the syncing of friends' Zune Cards to your device. (A Zune Card is a sort of widget that displays recently played tracks and favorite songs. It can be placed on social networking sites and integrated into Windows Live Messenger.) Zune Pass subscribers can sync the music from their friends' Zune cards.

Whether or not it's enough to start a migration toward the Zune and away from other devices, Microsoft's strategy is an improvement. The obvious problem with the Zune-to-Zune social features is that they required another Zune device to be within spitting distance. Spotting a Zune in the wild has been like stumbling across an endangered species or accidentally creating a new element. Cool inter-device sharing functions don't matter when you're all alone.

By expanding the online sharing functions, Zune users can at least take comfort in the knowledge their devices are not as endangered as they once seemed. It's a good way to get Zune users to share and the best way to keep the ball rolling.

Posted by Glenn at 3:00 PM | Link
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In a post yesterday, Mary Jo Foley at ZDNet wrote that she had heard Microsoft was working on a new entertainment store called Zune VideoX. (It's hard to imagine another product having the letters v, x and z in the name. ) The VP of Entertainment and Devices eHome Division is said to be leading the new initiative, and a source said "eLive was renamed and recrafted to Zune VideoX, and the eLive vision scaled down to focus on Zune." And what is the oddly-named Zune VideoX going to be?

Zune VideoX is not Zune Marketplace revisited, sources say. Instead, it is Microsoft’s attempt to apply the lessons learned with the success of the Xbox Live Marketplace to the Zune market, said one source who asked not to be named. It would be a single hub where Zune users could buy and download music, videos, TV shows and more entertainment content.

At his Digital Noise blog, Matt Rosoff has a good recap of what's going on with Microsoft's Zune that covers staffing, the success (or lack of) of Zune as a music player and possible future features.

I write all of this knowing that few people care about the Zune. But I think it's a decent music service that is well integrated with the Zune device. There's potential there. Somewhere.

Posted by Glenn at 11:10 AM | Link
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Microsoft's new Zune portable media players were unveiled Tuesday night. (Go to Engadget for the best coverage.) Two smaller devices were introduced, flash-based 4GB and 8GB devices that will cost $149.99 and $199.99, respectively. An 80GB device will cost $249.99, and the original 30GB size will cost $199.99.

A new feature will allow Zune users to wireless sync their music to their PC. An old feature was altered. In the past, a song transfered from device to device could be played three times in three days. Now those songs can be played up to three times but without a time limit. For some, the ability to sync television content recorded from the Vista's Windows Media Center is good news, though video doesn't get much use on these portables.

Also new is the Zune Social, a beta online community, and redesigned PC and device software. Those updates will be available in November. Microsoft is playing up the social as a "a new, more valuable kind of relationship with consumers" and actually got Nettwerk's Terry McBride to donate a quote for the press release. "The time is right to let go of the older business models and recognize that consumers want something different when it comes to music today," said McBride.

Engadget reported Microsoft will add over one million DRM-free tracks to the Zune Marketplace and will add podcasts and music videos, but no specifics are available. (Universal and EMI are the obvious catalogs to go DRM-free with Zune, and their combined catalogs is probably in the million-plus range.)

Read all info in the press release.

Posted by Glenn at 1:00 AM | Link
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• 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
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It's well known that the iPod and iTunes dominate digital music. There are a slew of hopefuls in both music store and hardware. For all the work they put in, not much of Apple's lead has been chipped away. What little market share the runners up have is splintered. The more patient and cash-heavy company will emerge as the runaway number two and, maybe one day, be in a position to challenge Apple's leader position. Two such companies are Microsoft and MTV.

Microsoft's Zune has its critics, but some of them freely point out that Microsoft's long-term strategy for the Xbox allowed the product to match and overtake Sony's PS3. (Matt Rosoff has a good Zune strategy overview at his Digital Noise blog at CNET.) I see the same kind of patience in Microsoft's Zune marketing and roll-out. What we've seen so far has been a purposeful launch with a lot of lifestyle marketing. The Zune team is taking it one day at a time and will tweak and augment the product over time. Zune's share of the hard-disk segment stood just over 9% in April of 2007.

If there was ever any doubt about Microsoft's level of commitment to Zune, that was answered with the (almost certainly costly) Zune Live at the BBQ, a hip hop concert and BBQ at the Empire-Fulton Ferry State Park in Brooklyn, New York. Last weekend's concert, which was preceded by similar events in Chicago and Los Angeles, offered performances by LL Cool J, Clipse, Brand Nubian and others at a scenic setting between the Manhattan and Brooklyn bridges. (Read show review at Blender.)

MTV's URGE, a decent but unherladed online music store/service, is doing a bit of lifestyle marketing itself. I attended one of the URGE Nights concerts a few weeks ago, Pelican and Earth, at the Bowery Ballroom in New York City. The URGE Nights concert series is curated by URGE programmers and editors that ties in artist playlists and some exclusive content at the URGE store. URGE is not a very popular service, though. Back in December, URGE had a 3.8% installation rate even though it is integrated into Windows Media Player.

Other than the URGE posters on the walls, I don't recall seeing or hearing an URGE presence at the concert. Posters on a venue's walls is nothing more than going through the on-site marketing motions. There's little else to bring home the message.

Visibility is important to lifestyle brands, and neither URGE nor Zune have much of it. During my summer in New York, I have done an experiment and searched for other Zune users. On trains and subway platforms, at crowded public areas and in music venues, I have searched for a wireless signal from other Zune devices.

Over one million Zunes have been sold. There are eight million people in New York City. Just about everybody walks around carrying some type of gadget. One would figure a Zune sighting would be frequent events, right? Wrong.

Maybe searching for a signal wasn't the best way to search for a Zune. For the sake of battery life, I regularly leave the wireless off. My backup plan, therefore, was to spy what people carried. While on the subway and while walking around town, I tried to see which portable media player people carried. I did not see a single Zune. Maybe Zune owners are shy, I thought, as opposed to the conspicuous consumption exhibited by iPod owners. For a few weeks I carried my Zune around in my hand, out in the open, as if to coax out the other Zunes out into the open. Again, nothing. Eventually I ran across one Zune, held by a thirtysomething man on the D train leaving Coney Island, Brooklyn. He was showing a video to a friend.

After weeks of searching, I did finally found a Zune signal...at the Zune BBQ of all places.

Posted by Glenn at 1:23 PM | Link
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• 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
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• Private equity firm Terra Firma has extended its deadline for its offer for EMI again, this time for one week. (BBC News)

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

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

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

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

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

Posted by Glenn at 7:09 AM | Link
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• There's money in them hills: The just-completed Bonnaroo music festival, put on by Superfly Productions, sold out its 80,000 tickets and raised about $17 million in ticket sales -- up from $14.7 million last year. (Billboard.biz)

• Contrary to popular opinion, digital music has been no better for the environment than CDs, wrote Billboard's Anthony Bruno. Discarded MP3 players leak heavy metals and chemicals into landfills, and consumers are buying more blank CDRs to burn the music they have acquired digitally. The Consumer Electronics Association has launched www.MyGreenElectronics.com to help consumers responsibly use their electronic devices. (Billboard)

• Verizon now offers full track, over-the-air downloads from Wind-Up Records artists such as Creed, Scott Stapp, Evanescence and Finger Eleven. An over-the-air track costs $1.99 and comes with one copy for the PC and one for the mobile handset. (Press release, via Digital Music News)

• The Canadian Private Copying Collective (CPCC) announced it has distributed more than $100 million from private copying levies in just four years. In Canada, the CPCC collects levies on blank media, such as CDRs and cassettes, and gives the money to rightsholders. (Press release)

• Inside the guts of a Zune Marketplace desktop software file are hints that Microsot's Zune may be preparing a content partnership with MTV, VH1 and CMT. (Engadget)

• You know there's a premium on news for anything relating to both digital music and the Beatles when news of a Ringo Starr digital reissue makes waves across the Internet. (Billboard.com)

• Music attorney Chris Castle dissects a Washington Post op-ed by the Electronic Frontier Foundation's Fred von Lohman. (Digital Music News)

Posted by Glenn at 7:31 AM | Link
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• Reuters reports that Warner Music Group is "likely" to offer an increased bid to top the $4.73 billion bid for rival EMI submitted by private equity firm Terra Firma. Could be worth it if Coldplay plans to release an album any time soon. (Reuters)

• At the urging of a House Judiciary Subcommittee, SoundExchange has offered small webcasters break in royalties. (Billboard.biz)

• In a lawsuit similar to Cheap Trick's complaint against Sony BMG, FBT Productions and Em2M have sued Aftermath Records and Interscope Records over digital royalties. The plaintiffs allege they have been underpaid and should have received half of net receipts from ringtones and downloads. (Billboard.biz)

• Defend Distribution has teamed up with former Caroline Distribution GM Rick Williams, who will act as a consultant, to expand its label roster and increase its label services. Good thing Defend now goes through Ryko. (CMJ.com)

• A profile of Sonos founder John MacFarlane. He's a big believer in the subscription model. "As broadband connectivity becomes ubiquitous, MacFarlane sees an inexorable shift to the music dial-tone model -- which is more conducive to a raft of innovations, such as social networking and recommendation engines, that are currently unfolding." (Business 2.0)

• An IFPI investigation has resulted in a shut down of a voucher system for Russian download site allofmp3.com run by a London-based agent. (PC Pro UK)

• Here's a video of the unboxing of a Halo 3 edition of a Zune portable media player. The player's design isn't much, but it shows the kinds of cross-promotions that Microsoft can utilize to help its Zune player get marketshare. (Zune Insider)

Posted by Glenn at 12:04 PM | Link
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• 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
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• EMI and AOL Europe will run an ad-supported music video streaming site. (NewMediaAge)

• Rumor: Microsoft is developing a Zune phone. (CrunchGear, via Billboard.biz)

• Just as Norah Jones hit the top of the charts, concerns about the company's debt burden caused Standard & Poor's to downgrade EM's long-term rating to BB- from BB. (Forbes.com)

• Expectations of a weak first quarter earnings -- which will be announced Thursday -- dropped Warner Music Group's stock 3.4% yesterday. (Reuters)

• Columbian music star Juanes, who already has a recording contract with Universal Music Group, has signed on with Universal Music Publishing. (Monsters & Critics)

• Sting on the digital revolution: "I genuinely do not believe that the digital download phenomenon is as big as the websites are suggesting, certainly not in the album market." (The Australian)

• Reminder: The 2007 Plug: Independent Music Awards, which celebrate independent artists, are this Saturday at New York City's Webster Hall. (PlugAwards.com)

Posted by Glenn at 8:20 AM | Link
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• Target to partner with upstart label 180 Music to release exclusive, adult-centric CDs with a $9.99 price tag. (Reuters)

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

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

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

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

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

Posted by Glenn at 9:49 AM | Link
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Microsoft doesn't have the reputation for digital music that Apple has, but they're trying. The company's digital music endeavors have been in the news quite a bit lately. The Zune has been a steady topic of discussion, and the recent release of the Vista operating system offers a look into Microsoft's vision for digital entertainment.

paidContent has an interview with Microsoft's Bryan Lee, corporate VP-Entertainment Business. Lee talks about the Zune's WiFi capabilities ("We didn’t push WiFi so you can walk into McDonald’s and buy a $0.99 track"), the company's dedication to Zune ("We entered this knowing it was a multi-year service") and the Zune's relationship with the Xbox ("there are so many points where we’re starting to intersect").

CNET reviews the new Windows Media Player 11 for the Vista operating system (they're joined at the hip) and says it's "an excellent tool for managing your music and videos--and even photos."

From the Financial Times, Microsoft's Brad Goldberg, product manager for the Windows Client business, said, "We look at Vista as the platform for how the digital lifestyle will evolve."

As mentioned earlier today, XM Radio is now included in Windows Media Player 11.

In other Zune news, I'd throw out an old link (sorry, been terribly busy lately) about label-dictated restrictions on Zune-to-Zune sharing. (Read this post at Engadget.) Last week, the blogosphere was afire with reports that some major label tracks could not be transfered from one Zune to another -- even though the sharings, called "squirting" -- is a major selling point for the device.

Posted by Glenn at 10:30 AM | Link
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• Sony BMG is merging the sales of its physical and digital distribution. The combined sales force will be headed by Thomas Hesse, president of the brand new Global Digital Business & U.S. Sales unit. This is more than one of those syngergistic, money-saving moves. This is a combination of entirely different cultures. The music folks and the computer folks. A good, inevitable move. (Read article at Billboard.biz)

• Richard Bengloff has been named the permanent president of the American Association of Independent Music (A2IM). Bengloff was the VP of Finance and Administration and CFO at WYNC/New York Public Radio. Peter Gordon was the interim president. (Read article at FMQB)

• Word on the street at CES was the Microsoft plans to stop development of its PlaysForSure DRM technology, something Microsoft denied it would do when the Zune was announced. Napster CTO Wiliam Pence is on the record as saying he believes Microsoft will continue to support PlaysForSure. (Read article at PC Pro)

• Wonder what impact a Sony PSP campaign can have on a developing artist's awareness and single and album and sales? Not much so far (at least for sales). Kenna's "Out of Control" has sold 1,138 units in a digital-only release. The album, Make Sure They See My Face, will be released in April. You may remember Kenna from Malcolm Gladwell's book "Blink," which looked at the contrast between industry expectations and poor sales of his first album. (Read post at The Tripwire)

• Hypy's second wave may just be getting started in the Bay Area. The Federation's It's Whateva (Reprise) is scheduled for an early 2007 release, and Thizz Entertainment may have got major distribution. (Read article at East Bay Express)

Posted by Glenn at 8:16 AM | Link
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• The Digital Media Assn released a study conducted by InsightExpress that shows the positive effect of digital music. According to the study, digital music consumers listen to more music, purchase more music and attend more concerts that before they began listening to and purchasing digital music. A quarter of survey participants have discovered "a lot" of new artists. Almost 70% are listening to more musical genres. More than 35% are talking about music more than before going digital. (Read article at Billboard.biz)

• Digital Music News reports "a big four major is now preparing a significant, MP3-based push." The unnamed label is likely to release more information later this week. I don't know which label it will be, but I'd bet against it being from Universal Music Group. Doug Morris experiment with MP3? That would be a shocker. (Read post at Digital Music News)

• The Australian government wants its musicians to crack the U.S. music market. The 2007 Australia Week exhibitions in New York and Los Angeles will feature The Veronicas, Porcelein and Rockstar: INXS contestant Mig Ayesa. (Read article at the Herald Sun)

• Musicrypt, which offers secure digital distribution, finalized a deal that will offer it up to $10 million in financing. The company plans to use the funds to increase its growth in the U.S., expand its Adstream service in Europe and improve its radio and television advertising delivery initiatives. (Read press release)

• Long Beach, CA's VIP Records faces uncertainty after its location changed ownership last week. You may recall VIP as the setting for scenes from Snoop Dogg's "What's My Name" video. (Read article at Long Beach Press-Telegram)

• The Zune Marketplace is not carrying music from CD Baby. I occasionally run across some new releases (on majors and indies) that are not yet in the store. (Read post at Digital Audio Insider)

• RIP Atia Jo, guitarist for Orchestra Super Mazembe. (Read article at Kenyan News Network)

Posted by Glenn at 7:57 AM | Link
|Digital Music||Research||Zune|

Good Morning Silicon Alley reports that Microsoft has applied for a patent that will enable a users to get receive incentives for when shared music files are purchased by others. If this sounds like Weedshare technology, you're on the right path.

"Patent application No. 10/326678: "'Redistribution of Rights-Managed Content and Technique for Encouraging Same' -- which, incidentally, figures prominently in a Microsoft Research whitepaper on digital media sharing commissions -- describes a system that adds tracking data to DRM-protected media files when they are purchased and uses that data to assign incentives, such as commission payments, when the files are shared with and re-purchased by others. It was originally developed by John Beezer, president of Shared Media Licensing, Weedshare's parent company. But Beezer later assigned his rights to it to Microsoft, which has since applied for its own patent on it."

(via paidContent)

Posted by Glenn at 4:35 PM | Link
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• Borders filed its 10Q report yesterday. Bad news for record labels. Comparable stores sales in the music category were down 17.8% for the 13 weeks ending October 28, 2006. Total sales were up 1.8% over the same period last year. Net loss improved to $39.1 million over $14.1 million last year. (Go to Borders SEC filings page)

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

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

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

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

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

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

Posted by Glenn at 10:43 AM | Link
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After all the hype, backlash and criticism, Microsoft's Zune is available for sale. Coolfer got project manager Scott Erickson on the phone to ask a few questions about some controversial aspects of the new product.

The Zune Marketplace asks consumers to pay for downloads with Microsoft Points, which are unfamiliar and unnatural for those of us who are not gamers. XBox players will be familiar with the Points system and the procedures involved (buy Points then redeem at the store). Digital music consumers are familiar with paying with dollars and cents. Songs cost 79 points apiece. Album prices vary according to the wholesale prices charged by the label, which means there's a range of album prices at the Zune marketplace.

So why use the points system? It's good for people who don't use a credit card online, explained Erickson, who thinks it "will become second nature" once Zune users start using Points. Time will tell, but I think the Points system is too drastic a change for music purchases. In theory it's very simple. In practice it is very unlike other the payments systems music consumers have experienced.

Zune allows songs shared via WiFi to be played three times or held for three days (3x3) before becoming inert. The 3x3 system is another question mark on the Zune. Erickson said the choice to do 3x3 was based on research and coversations with lables. The 3x3 is open for change and improvement, Erickson told me. "We'll look at 3x3, be flexible, listen to consumers, listen to labels." (Zune group leader Robbie Bach told Newsweek's Steven Levy that the 3x3 system was "a really good first step," which also implies future improvements are possible.)

The iPod is the king of accessories. Zune has a lot of catching up to do here. Erickson said there about 110 companies interested in making Zune products, and at last count had 100 to 125 products. "We'll get better," Erickson said of Zune accessories.

Reviews of Zune have ranged from good to poor with most holding their four-star awards until WiFi capabilities are improved and the sharing function is improved. Newsweek's Steven Levy had some positive things to say about Zune, which was a surprise since he's such an Apple envangelist. Overall, though, Levy places Zune well behind the iPod, and he points to what the Zune could become, not what it currently is. True. Microsoft has some work to do. In a year, the Zune and the Marketplace should be much improved. Microsoft has a long-term outlook for the Zune. So should we.

Posted by Glenn at 1:40 PM | Link
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Ever since news hit about Universal Music Group's deal with Microsoft -- that will pay UMG at least $1 for every Zune sold -- the topic has brought out a wide range of opinions.

Could such a deal be a slippery slope? In theory, yes. In reality, no.

Is it a sign of things to come? Not likely.

The reality is that the UMG-Microsoft deal was one of those very rare instances in which an unstoppable force (Microsoft) meets an immovable object (UMG). It would be a slippery slope if there were more industry giants lauching at the same time a piece of hardware and an online download store for which the company was rushing to get in place all the necessary licensing deals. Is there another company that will build its very own portable media player that is part of a full-service ecosystem? There are none on the horizon. The two companies that could do it -- Apple and Microsoft -- already have done it.

Some believe UMG's Doug Morris has laid out a blueprint for other labels to follow. Am I to believe labels are going to feel emboldened by UMG's deal and will take a pitbull attitude to the negotiating table when their deals with Apple come due? Today Hits wrote that labels are "fantasizing about a scenario in which the Big Four had split up $3-4 for every one of the 70-80 million iPods sold to date." What a fantasy. Labels don't have the same leverage -- or any leverage -- in negotiating with Apple. What toughness have we seen when dealing with Apple? Sony BMG held out when Apple launched iTunes in Japan...only to cave after the store's launch.

UMG saw the uniqueness of the Zune launch and knew it had more than the usual amount of bargaining power. The world's largest music group played hardball -- and won. Microsoft gave up $1 for every Zune sold, which may or may not end up being much money. That's a small price to pay -- relative to Microsoft's cash reserves, of course -- to get UMG's catalog in the Zune Marketplace in time for the launch. There's a big difference between holding out at an upstart with no sales and pulling catalog from one of the biggest music retailers in the country. That difference is the reason why labels aren't going to get a cut of iPod sales.

Posted by Glenn at 12:37 PM | Link
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• EMI boss David Munns hinted that the Beatles catalog may go digital soon. (Read article at Times Online)

• Jeff Leeds has an article on the grants that indie rock bands are getting from their governments. Groups from Canada, Sweden, New Zealand, Australia, Scotland, Finland and Denmark are mentioned in the article. It's good money, and because they're grants they don't have to be paid back. The Figurines, from Denmark, have received more than $18,000 in 2006. Canada's Broken Social Scene has received over $140,000 over the years. (Read article at New York Times)

• A judge ruled that a defendent could challenge the RIAA's $750-per-song claim to statutory damages. (Read post at Slashdot)

• After the nightclub fire at a Great White concert in Rhode Island, music venues around the country are seeing the repurcussions. In some states, clubs are mandated to install sprinkler systems. (Read article at Pollstar)

• An explanation of Microsoft Points, which is the currency used at the Zune Marketplace. (Read post at Medialoper)

Posted by Glenn at 7:27 AM | Link
|EMI||Live Music||RIAA||Zune|

The phrase repeated near and far is "the music industry's model is broken." It turns out the changes that are most directly and immediately affecting bottom lines are the ones like the deal Universal Music Group has with Microsoft. UMG, Reuters reported yesterday, will receive a payment for every Zune sold. UMG, and other labels, are interested in two things: Weakening Apple's digital music domination and receiving money from hardware sales.

"(UMG's Doug) Morris said the deal could set a precedent in negotiations with other device manufacturers, including mobile phone makers, who are increasingly seeing music as important to the future of their businesses. Microsoft, which has already had early talks with other labels about the fee, said it is keen to work closely with artists in the development of Zune.."

The New York Times' Jeff Leeds has more:

"The company is expected to receive more than $1 for each $250 device, according to executives who were briefed on the pact. Under the deal, Universal, the world’s largest music corporation, will receive a percentage of both download revenue and digital player sales when the Zune and its related service are introduced next week. The pact comes after weeks of tense talks and averts a standoff that might have crippled Microsoft’s attempt to compete against the iPod."

Posted by Glenn at 6:36 AM | Link
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• If there had to be only one reason why you're glad YouTube wasn't sued into submission, it's this fantastic clip -- replayed in Zapruder-like fashion -- from last night's Country Music Awards that shows Faith Hill's outrage when Carrie Underwood won Female Vocalist of the Year. That's one for the books. Naturally, Hill said it was a joke. (Via Idolator)

• EMI Music Publishing is moving to the Chelsea Market building in Manhattan. Enjoy the crosstown bus, folks. (Read article at the NY Post)

• The media finally put two and two together; amazingly, I haven't seen the word ironic used yet, though this certainly qualifies. Word broke that Microsoft's Zune will not play protected WMA tracks purchased from the soon-to-be-defunct MSN Music store. This is old news that just hadn't been spelled out yet. Besides, given MSN Music's market share, this news directly touches few consumers. (Read article at FMBQ)

Posted by Glenn at 5:36 PM | Link
|EMI||YouTube||Zune|

It must be the official Zune review day. Engadget has a lengthy video that runs the Zune through its paces. It also has a photo gallery with some commentary.

Posted by Glenn at 4:32 PM | Link
|Zune|

Gizmoodo has a comprehensive review -- with pictures and YouTube clips -- of the Zune player and Zune Marketplace.

Two things mentioned are new to Coolfer. One is the upgradeable software. As it relates to the WiFi, "the Zune should be able to possibly do stuff like share songs over the internet, wirelessly sync with the computer, stream music/video to other devices, and much more." The first edition won't have those features, but software updates could allow for them.

Second, Gizmodo describes a feature called guesting. "A friend can take his Zune over to your computer, set up a 'guest' relationship with your Zune Marketplace software (as opposed to a regular owner relationship), and you're free to drag songs and pictures from your library onto her device. These songs do not have the 3 play 3 day limit on them."

Posted by Glenn at 2:24 PM | Link
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What kind of music sells best at digital stores? Indie rock. What type of person tends to wear earbuds seemingly day and night? An indie kid. The MP3 player is as much a lifestyle choice as it is a source of entertainment. Microsoft obviously sees its target market and has hired super-hip publicity/marketing company Girlie Action to help market its Zune media player (which comes out in a bit over two weeks).

Girlie Action is getting the word out about a limited edition Zune that is being created for The La Brea Takeover. Streetwear Design Kingpins Union, UNDFTD and Stussy will each auction off two of the limited edition Zune players. (Read article at XLR8R.)

The choice of publicists fits with the choice of target market and overall campaign. The device will come pre-loaded with music from indie labels like Sub Pop and Astralwerks, the latter of which has a Zune-sponsored tour starting soon. Zune is throwing a parties at this year's CMJ, too. Zune ads can be seen on a range of blogs. A quick glance at the Coming Zune website (pictured above) will show the underground aesthetic Zune is going after. After a few months of marketing, the Zune is less about functionality and more about the the lifestyle of the indie yuppie.

Will this corporate-averse crowd react to such underground marketing? Out of piqued curiosity, I eagerly await the embrace, indifference or backlash.

Posted by Glenn at 12:02 PM | Link
|Zune|

• The Eagles follow in Garth Brooks' footsteps by creating a "long-term strategic marketing agreement" with Wal-Mart. The Eagles' stated reason for being attracted to Wal-Mart is the company's position on sustainable business practices. While Wal-Mart is indeed getting serious about its responsibility to stakeholders, I'm sure The Eagles were attracted to the control and expected revenue from the deal. (Read press release)

• Australia's music download tally is predicted by one research company to double next year. Analyst Marc Ganz of Ibis World sees the CD now going past the maturity stage and into the life-cycle's decline phase. I don't agree with one thing he said, though. Ganz thinks the lower price of digital music will drive down CD prices. All I've seen from labels -- other than Universal Music Group -- is extra content and stable prices, not less content and lower prices. Next year, EMI will add content to every CD. Do you think it's going to drop prices? I don't. Not in the next year or two. (Read article at ABC.net)

• Orange Country emo-ish band Midnight Hour has signed with Interscope Records. (Read post at Punknews.org)

• Not a surprise, but it's nice to have it in writing: JupiterResearch predicts the iPod's market share is safe from Microsoft's Zune for 12 to 18 months. (Read article at Digital Trends)

Posted by Glenn at 11:06 AM | Link
|A&R||Research||Wal Mart||Zune|

• Gadget blog Gizmodo talks of a rumor of a feature Microsoft "may" include a system for giving credits to Zune users whose song sharing leads to purchases at the Zune Marketplace. As usual, the real fun can be found in the comments section. (Read post at Gizmodo)

• If the flash drive format just doesn't work for you, maybe the Playdisc will be more to your liking. The 128MB device, made by a Korean company, is a pre-loaded audio player with fixed content. Could work if music is ever going to be disposable...or if Jet makes any more albums. (Read post at Engadget)

• Piracy is a big time vice: The Boy Scouts of America, with the help of the Motion Picture Association of America, have introduced a program to raise awareness about copyright. Scouts can earn a "Respect Copyrights" patch for the ol' uniform. No joke. (Read article at InformationWeek)

• Ads are everywhere: Verizon Wireless is a sponsor for The Killers' new video for "Bones," which will air across the MTV family of channels tomorrow. "Presented by Verizon Wireless" will appear at the beginning and end of the video. (Read article at Billboard.biz)

Posted by Glenn at 6:11 PM | Link
|Piracy||Zune|

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

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

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

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

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

Microsoft released a press release this morning with details on its Zune portable media player and the complementary Zune Marketplace store.

The Zune will be released on November 14th and will have a price tage of $249. Price is key, but I'm more interested in the preloaded content and specifics about the Zune Marketplace. The preloaded content is heavily slanted toward indies like Sub Pop (Band of Horses, CSS, Chad VanGaalen), Astralwerks (Small Sins, Darkel) and V2 (The Adored, The Rakes). The device will come stocked with nine tracks, 12 videos and three film shorts. That's about $25 worth of content. Few, I suspect, will take that into account when assessing the price of the Zune -- but free content never hurts.

The Zune Pass, a subscription service akin to Rhapsody and Napster To Go, will cost $14.99 per month. That's a standard price for a subscription. Individual tracks will cost 79 "Microsoft Points" each. While I'm personally not a fan of prepaid accounts (I would prefer to have each purchase charged against my credit card), a post at Joystiq sings the praises of Microsoft Points as used for Xbox purchases. Joystiq wrote that one US dollar buys 80 points (which means each song at the Zune Marketplace would cost a fraction of a cent more than $0.99) and the Xbox marketplace "makes spending so much easier than any other shopping experience most of us have ever experienced."

Engadget already has a post on the press release, so stop by and read the always entertaining comments.

Posted by Glenn at 9:48 AM | Link
|Portable Music Players||Zune|

• 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 abou