Digital Round Up: Google Music launches
Just about one year after Google had originally planned to unveil Google Music, a service that spent much of the last two years changing in concept and approach, and of course engaging in numerous negotiations with record labels, the (almost) fully-fledged music service was revealed yesterday. Three of the four (soon to be two of the three) major labels are onboard, with music available from Universal, Sony and EMI, while Warner Music is expected to be joining sometime soon. So how does it work? Basically it’s similar to how Google Music Beta worked, with a locker where users can upload up to 20,000 songs for free, regardless of where they originated, but now Google has its own digital music store tied to the Android market as well, where users can purchase music that automatically goes to their lockers. There’s also a tie-up with T-Mobile that allows customers of the carrier to download music and have it included with their monthly billing. And that “twist,” which was teased recently, is indeed a sharing feature. Users can share songs or albums with anyone on Google+, who can then listen to the song or album once in its entirety for free. Additionally there is an Artist Hub feature, a much more interesting twist for independent artists, who can create their own page within the Google Music marketplace, and sell directly to customers without a middleman and collect their 70% cut of each sale… Much of the discussion following the release of the new service has been approached in the Google Music vs. iTunes manner – Apple finally launched iTunes Match last week with less fanfare – but as some observers are astutely pointing out, it isn’t about an iTunes-killer for Google, at least not right now. There are differences – Apple has the ’scan and match’ feature which bypasses the lengthy upload process, but Google Music offers almost the same amount of cloud storage for free – Apple has almost a decade-long head start, but Google is putting links into YouTube music videos that go directly to the song in their music store. But what’s important to each user varies, and more importantly it has to do with what kind of device someone owns. Android-based smartphones hold over 50% of the market currently, and what Google really did, is fill the huge mobile music void on the platform… And when it comes to how all the new subscription music players fit in with the overall discourse, as Evolver.fm points out, they’re two different animals all together. The Spotify’s, MOG’s, Rdio’s, etc of the world put a plethora of music at your fingertips, but they don’t allow users to ‘own’ their music, which is still a problem for many people. However, they’re great discovery or sampling tools, because you don’t have to commit to buying something (or heading to the torrents) before being able to make it accessible across multiple devices. Will something new that is the best of both worlds come along? Time will tell.
11.15.11And then there were 3… EMI split, where does it lead?
Universal Music Group and Sony Music continue to dominate the music biz storylines this year with the unpredictable conclusion of the EMI auction, which saw the two industry leaders beating out the long-expected winning bidders in Warner Music and BMG Rights Management. It might be too soon to call it the era of the ‘big three,’ with the regulatory process expected to last well into 2012 after Citigroup’s auction split EMI into two – the recorded music going to UMG while EMI Music Publishing is set to fall under the ownership of an investment consortium including Sony Music, the estate of Michael Jackson, music mogul David Geffen and others – but however you slice it, the trend of contraction continues. And for all the growth and ‘turning point’ talk, including from the CEO of UMG parent company Vivendi, in the wake of an increase in music sales over last year, the revenue from those sales is still in decline due to the lowering of prices, as pointed out in a Bloomberg article this week… So where do things go from here?
Independent music company coalition IMPALA began saber rattling prior to the announcement of the EMI auction winners, and were quick to make public their intentions to block the acquisitions by both groups following the announcements on Friday. Industry insiders however are questioning the association’s ability to ultimately triumph in stopping the completion of either deal. Universal Music is expected to dispose of a certain amount of assets, particularly in European territories where they would now hold a market share well over 50%, and their key argument for approval will be that the music industry is in a much different place even from just a few years ago, and that they like others are at the mercy of technology companies like Apple in this new digital age. How well that justification will fare remains to be seen, as there are seemingly plenty of holes. One could easily look to how long it took Spotify to launch in the U.S. due to the process of acquiring licenses from the four major label groups, and further, that they negotiated equity stakes in the service in order to allow a launch in America… It will also be interesting to see how well Google does with the launch of a new music store, expected to be this week, with only two major labels onboard, Universal and EMI (coincidence?)… And while iTunes Match is expected to succeed, it’s clear that Apple feels comfortable with their current position and power in the music space, as they continue to expand their sites in new areas of media and content domination… And as far as the EMI publishing spoils go, many see the creation of the investment entity, of which Sony only holds a minority stake, as making the approval process easier.
Some of the other big questions being asked by observers this week include, what is the fate of EMI Group CEO Roger Faxon? A role within Universal Music on the recording side seems unlikely, and while EMI’s pubco is expected to remain its own entity with Sony/ATV in a management and administration role, will there be room for Faxon to reunite with his former EMI publishing co-CEO Marty Bandier, and more importantly would he take a reduced-role? How does this play for current Sony Pub players Jody Gerson and Danny Strick? Will Warner Music be first in line to snatch up EMI recorded assets in European territories from Universal, particularly in light of their recognized weakness abroad and the shake-up among its international management structure announced by Lyor Cohen just last week? Will Edgar Bronfman Jr. now exit WMG completely as expected? Contrary to public comments from BMG Rights Management CEO Hartwig Masuch today that the EMI publishing purchase was not “necessary” for the company, those in the know believe that it was indeed a crucial acquisition for the KKR and Bertelsmann backed venture, and having failed to secure it, are wondering if KKR will now get out? Insiders share that the Germans are considering buying out KKR’s stake. And having purchased most of the mid-level music publishing business over the last couple years, including Bug Music during the EMI auction, will BMG now shift focus to unifying its management structure and operation?
Plenty more action to come…
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Quick Bytes: (Give It To Me Baby) Digital Royalties Lawsuit Against Universal Music to Proceed, Tunecore Launches Publishing Admin Service & More…
A federal judge is permitting a class-action lawsuit against Universal Music Group to move forward that involves a group led by Rob Zombie and the estate of Rick James. The issue at hand is digital royalties and the difference between treating downloads purchased at digital retailers like iTunes as a “sale” or a “license” as is relates to the artits’ split. This case follows similar litigation involving UMG and Eminem recordings, which was settled last year… Tunecore has launched a new songwriter publishing administration service that will register copyrights, collect royalties and issue licenses for users. The new service is among other recent entrants to the previously absent sector of expanded publishing admin for independent artists. More info can be found here… Spotify user numbers might be skyrocketing with the new Facebook integration, but it isn’t the only one – monthly users at MOG have quadrupled following the pairing up with the social network… Meanwhile, some are asking where the native Facebook music player app has gone, and what this means (if anything), for future music apps after it disappeared from the site this week… RIM will be launching its new BlackBerry Messenger music service this week… And Apple missed the ‘late October’ launch for its new iTunes Match service that was announced back in June, with no word from the company as to when it can be expected. [UPDATE: It appears that iTunes Match is still in the 'testing' phase.]
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Digital Round Up: New Music Economy, Steve Jobs Bio Reveals iTunes Dealings & more…
swimming upstream
An article on Rollingstone.com has been getting passed around this week, as magazine contributor and author of music biz treatise, Appetite for Self-Destruction, Steve Knopper, took a stab at outlining the “new economy” of music sales. Streaming-music services in particular are a hot topic recently among artists, record labels, music-tech start ups and those who observe and comment on all of their goings-on. Among the choice quotes from the piece includes one from Jeff Price, founder of TuneCore, who commented on the confusing nature of streaming royalty rates, saying “It is beyond complicated. It took me literally three months to understand this thing,” while MOG founder David Hyman chimed in on the record labels distribution of streaming royalties to artists, “Once they get that wad of money, how do they distribute it internally? I have no idea”… The biography of Steve Jobs and its contents has been another widely discussed subject recently, with various story lines that cross into the music industry sector as well, including the Jobs experiences dealing with major labels. A New York Post item today points to Apple’s iTunes negotiation with former Sony Music boss Andy Lack, as particularly difficult, with Lack asking for royalties on each iPod sold, and Jobs criticizing him for not understanding his own business. Meanwhile, other more obvious iTunes related revelations are made, such as the reason that The Beatles only recently appeared in the digital marketplace was due to ongoing and unresolved contractual issues between the group and EMI… Elsewhere, Twitter has made its first specialized music hiring, in former Disney Music Group marketing manager Tatiana Simonian… AOL SVP of business development Jared Grusd is reportedly heading to Spotify… In a surprising move, Coldplay has opted to not make their new album Mylo Xyloto (pronounced “@&*%^$”) available on streaming services like Spotify, Rdio, MOG, Rhapsody and others, in what could be seen as a stance similar to holdout artists whose material still isn’t available on iTunes and other digital retailers… And more clues about Google’s upcoming launch of a music store comes this week with evidence of an expanded Android mobile landing page for the new Google Music service.
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Bits & Pieces: Spotify Closing Final Deals for U.S. + New Funding, NMPA Wants Piece of the Cloud & more…
There have been many past reports of Spotify launching in the U.S. “soon,” but is it really happening this time? After recent news that the service signed on Universal Music Group, the company’s European general manager told an audience in London this week that the “remaining deals” (Warner Music Group) are being signed right now. While there still hasn’t been any official or unofficial reports that a WMG is in the bag, those comments as well as a confirmed new funding round of $100 million from DST, Kleiner Perkins and Accel, lead many to believe a launch is really happening, and soon. Whether or not the timing lends credence to previous rumors of the labels stalling Spotify in order to let Apple to get their new iTunes Match service out of the gate, the landscape is now slightly altered after Amazon, Google and Apple have all unleashed new services… President and CEO of the National Music Publishers Association, David Israelite, is urging members to create a more streamlined solution for digital music companies to license rights, so as to not miss out on new opportunities. That might come in the form of new agencies which act in the interest of all publishers for sync and mechanical rights – the process of tracking down various writers, composers and publishers that have interests in a tracks, has proved to be time consuming and frustrating to new music services seeking rights… Elsewhere, I.R.S. Records is being relaunched as a frontline label by EMI Music in partnership with Crush Management… After an initial pop for Pandora when shares first started trading earlier this week, the price settled back down, and continues to fall… And congrats to Jon Pikus, who has been named the Creative Director for Imagem Music in the U.S., Pikus comes to Imagem after previous A&R positions at MySpace Records, Columbia Records and Interscope…
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More Bits & Pieces: Apple Cloud a Done Deal with Labels/Pubcos, MP3.com Relaunching & more…
CBS to relaunch site
An article on the New York Times Media Decoder blog yesterday claims that Apple now has agreements in place with Universal Music Publishing and Sony/ATV for its cloud service, while a report in the New York Post this morning has Apple with deals now in place with “all labels and their publishing units,” which would include EMI Music Publishing and Warner/Chappell Music as well. The Post story, citing sources, also pegs advance payments of between $25 and $50 million going to each label, which it points out, would likely mean that Google will have to pay even higher upfront fees going back to the bargaining table. Multiple reports have the iCloud service probably being free at first to customers purchasing music from the iTunes store, with a subscription price later being tacked on, presumably when the service is expanded beyond just music purchased from iTunes. While all the talk has centered around negotiations with the major music groups, in what appears to be the first public comment from independent labels, today Billboard has an editorial piece from Merlin CEO Charles Caldas addressing indies being once again left out of the conversation… Meanwhile, CBS is planning on relaunching MP3.com this summer, which it acquired as part of its purchase of Cnet Group… Pandora has set its IPO price at between $7 and $9, a public offering that would end up valuing the company at over $1 billion… And Interscope Records has announced a new label endeavor with producer Alex Da Kid called KIDinaKORNER. Da Kid’s recent hits include Eminem’s “Love the Way You Lie” and B.O.B’s “Airplanes”… Those in the know expect to see more hit-producer helmed labels soon being launched from the top music groups, as they continue to be reshaped after recent executive shake-ups…
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Bits & Pieces: Apple Announcing iCloud, Gaga Weighs-In on Album Pricing, Bob Cavallo Stepping Down & more…
Jobs set to unveil iCloud
Apple has announced that Steve Jobs will participate in the company’s WWDC developers conference next week, and that his presentation will indeed include iCloud, Apple’s new cloud service offering. While music will only be a part of the new iCloud features, in music and tech circles the streaming-music component has been receiving a lot of attention recently with the reports of Apple securing licensing deals with three of the four major labels, leaving agreements with Universal Music and major music publishers as the final pieces to the puzzle. While unlikely, it’s possible that music could be left out of the presentation, or abbreviated, if the remaining deals aren’t reached in time, but a bigger question on industry minds is how much of a ‘game changer’ an iTunes cloud component will be. While exciting to those watching the space over the last few years, the reality is that at least initially, the offering may be less exciting when actually unveiled. The so-called ’scan and match’ component is a fait-accompli at this point, but will the ability to access one’s music from the cloud be limited to music purchased from the iTunes store, and how will users be able to include past purchases if that’s the case? Given that Google was reportedly offering the labels as much as $100 million to get licenses in place for their music service, and still came to an impasse over piracy, it’s not hard to imagine that Apple’s new service will come with some sizable limitations. This again will leave those taking a wider view of the changing industry landscape to soon be reiterating the slow process of evolving, and that along the way there will be benchmarks, but not any one watershed moment… Amazon, who released their new Cloud Drive service without label deals in place, gave a two-day digital offering last week of Lady Gaga’s new release for $0.99, which helped boost consumer recognition for the music service as well as make Born This Way the first million-plus selling debut in quite some time. While a variety of aspects to (and results of) the promotion have been debated, what might get the most attention is the artist’s own admission that she believes 99-cents is a worthy price and value for a digital album…. Elsewhere, Disney Music chairman Bob Cavallo has announced that he will retire in January of next year, with Ken Bunt tapped to takeover the reins upon Cavallo’s departure… And Coachella Festival founder Paul Tollett expounded upon the decision by Goldenvoice to offer back-to-back festival weekends in 2012, in an interview with Billboard, saying, “We feel that there will be even more that want to go, so we’re trying to create more room for them. The options would be to sell more tickets on one weekend or have two weekends, and [the latter] is the option we went with.” Event producers are attempting to offer identical lineups for both weekends.
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Bits & Pieces: Apple’s Looming Cloud, Amazon Goes Gaga, Facebook Music & more…
Spotify & Facebook Joining Forces?
Last week saw reports that Apple has signed licensing agreements with EMI Music and Sony Music for its imminent cloud-music service, leaving Universal Music Group the sole holdout, though word seems to be that a deal is on the cusp. While many of those watching are predicting an announcement of the new service at Apple’s annual WWDC event in June, the other remaining issue is having deals in place with the major music publishing companies, which right now they don’t appear to have. According to a report on CNET, despite Apple’s previous stepping out with increased iTunes song-sample lengths without the approval of publishers that created a contentious situation, there isn’t much keeping the two sides apart on a cloud-streaming agreement… Most are already hailing Apple as the fait-accompli winner of the cloud music ‘wars’, though Amazon made a big wave this week by offering Lady Gaga’s new album Born This Way at a deeply discounted price, a move that the WSJ paints as an offensive on the iTunes digital music dominance, though Amazon is still a long way from making a dent in iTunes stranglehold. According to the article’s sources, Born This Way sold between 250,000 – 350,000 across both online marketplaces in its first day… Over the weekend news surfaced that Access Industries and Len Blavatnik’s offer for Warner Music was not the highest, a group including Sony Corp., Guggenheim Partners and Ron Perelman offered 3% more at $8.50 a share, though the deal would have been contingent on Sony board and partner approval. How this will effect the multiple shareholder lawsuits Warner is currently facing is yet to be seen… Speaking at e-G8 in Paris this week, Sean Parker made comments, as MediaMemo notes, that may explain his interest in the recent bidding on Warner Music, and could also portend future involvement in bidding on recorded music companies, an excerpt: I think that there is a pretty dramatic change in the way music is monetized that is on the cusp of happening. Back catalogues of record labels are going to become extremely valuable…If you believe this transformation is occurring, if you believe the broken distribution systems are on the verge of being fixed, those recordings are dramatically undervalued… And speaking of labels for sale, Forbes has a profile of EMI group CEO Roger Faxon, framing him as the key in the label’s recent turnaround, including major digital breakthroughs with Beatles and Pink Floyd catalogs, though his future at the company may depend solely on who the new owners will be… And is Facebook Music launching soon and on the back of Spotify?
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More Bits & Pieces: Apple Inks EMI Deal For Cloud Service; Close to Landing Sony & Universal
Apple reaches agreement with EMI for cloud-music service
The news of Apple inking a cloud-music deal with EMI Music was first reported late yesterday on CNET, and according to the industry sources the report is based on, the company is close to reaching similar agreements with both Sony Music and Universal Music Group – a deal with Warner Music was reported to have been reached last month. By now having licensing agreements with two of the four major label groups, the implications are numerous, but mainly it’s that Apple will likely once again be the driving force behind the latest shift in the digital music arena, and that Amazon and Google jumped too soon by releasing services without label deals in place… While lately the tech and music industries have been hot on the cloud-music future and closely watching developments unfold, it remains to be seen how much consumer demand there is, and on a large scale, what are people willing to pay. A new survey from Nielsen that targeted people with ‘connected devices’ (smartphones, iPads, etc), asked how much they would be willing to pay for a monthly subscription for various types of content (music, TV, movies, news, etc), and the average seems to come in right around $10/month. That falls in line with some current services that are available, and isn’t a bad number, but of course that is all in theory, and an important point to keep in mind is that an overwhelming majority of people still do not use smartphones or other high-priced ‘connected’ devices… Some attention has also turned to Apple’s patent-pending pre-buffering technology that is supposed to make its streaming experience better than other current services, though as Evolver.fm points out, Pandora and Spotify have been using similar technology for some time already… And in related news, which is receiving less excitment than the Apple-EMI deal, is that EMI Music has now also reached an agreement with digital music subscription service eMusic.
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More Bits & Pieces: Blavatnik’s Inside Track at EMI, Bronfman Testifies in Lime Wire Trial & more…
Bidding over before it starts?
An official auction of EMI by owner Citigroup has yet to begin, but a piece in the NY Post hints that the bidding might be over before it starts. Citing unnamed sources, the story indicates that recent Warner Music Group winner Len Blavatnik has already been holding meetings with Citi about a possible EMI deal, which would see it combined with Warners, adding that they see Blavatnik’s Access Industries as the suitor with the deepest pockets. Though there are plenty of other well-funded potential bidders who would likely make a run, including KKR-backed BMG Rights Management, the Gores brothers whose bid for WMG failed, and a number of other private-equity players… Meanwhile, Edgar Bronfman Jr. took the stand in the trial to determine damages owed to record companies by Lime Wire yesterday, in an attempt to add credence to the claim of industry “devastation” caused by Mark Gorton’s P2P service. Appearing as the ‘face’ of an industry that has suffered at the hands of Lime Wire, Gorton’s attorney’s were quick to paint Bronfman’s as one that has not suffered much by the industry downturn – pointing to layoffs under his watch, while his salaries and bonuses have totaled in the millions for the past five years. They also read from a transcript of a 2007 speech from Bronfman, which included the line, “By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find, and as a result, of course, consumers won.” More coverage on CNET… And the general concesus of those who have been invited to the private beta of Google’s new Music Beta, seems to be that while the features are neat, it could be so much better. What can they do to make it better? Secure agreements with the major record companies of course. The main points of contention between Google and the labels that are being reported, include disagreements over money (upfront advances to labels), piracy (labels trying to use a deal to leverage changes in the search engine’s results relating to piracy sites), and a lack of vision on Google’s part for what they wanted the service to be, combined with the fear by labels of upsetting the Apple cart, by getting in bed with a competitor. For all the talk of needing someone to step up and create a meaningful iTunes competitor, it looks as though Steve Jobs will have the upper hand with labels once again… And in related gossip, there have been rumors of a Lady Gaga tie-in with the public launch of Google Music, including a claim on Fast Company that the singer was recently shooting a commercial for Google in New York, for a promotion that would coincide with the release of her new album later this month. Such predictions might seem highly dubious, considering Universal Music is said to have been one of the main holdouts on a Google deal, however her manager is no stranger to Silicon Valley and gaming company Zynga just announced a major partnership with Gaga this week.
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