Neil Young addresses labels, piracy & more

Vevo CEO Rio Caraeff, made the first public statements regarding the video site’s profitability at the digital media conference this week, putting it plainly, “We are making money, yes,” with a reported $150 million in revenue last year. In terms of the future, Caraeff predicted that the joint-venture, which includes Sony Music, Universal Music and EMI, could be a billion dollar business in a “short period of time”… Meanwhile, Edgar Bronfman Jr. lauded Spotify as being artist-friendly and not detrimental to download sales, during his interview, and called Google Music an oxymoron, explaining that there’s no “beef” between Warner Music and Google, but they need to decide if they want to be a content platform… And Neil Young addressed a number of topics including audio quality, record labels, piracy and how he and the late Steve Jobs has discussed how to reconcile the current issues facing the digital music era by combining all three.

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.

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.

Going beyond beta

Back as a hot topic in the music + tech arena this week is Google Music, which follows the company’s halfhearted initial step into the cloud-music sector earlier this year with Music Beta. Now it appears that Google will be launching a digital music store in the coming weeks, but with a “twist,” as it is being reported, following Android chief Andy Rubin’s appearance at the AsiaD conference this week. Cnet reports that the twist will likely be social features, which will enable sharing capabilities among users – social enhancements are being touted as a big driver behind Spotify and similar services recent rapid growth. According to multiple reports, the only major label close to an agreement with Google right now for the new music service is EMI, while a number of independent labels are apparently already onboard. Other bits concerning the new Google Music talk include whether or not it will have a ‘mirroring’ component or ’scan and match’ that finds music already on a users’ computer – a feature that Apple’s upcoming new iCloud music offering will feature. Or as noted by Evolver.fm – if Google follows up their digital store by offering their own streaming-music subscription service, it could achieve the same outcome. Currently users of Music Beta have to upload their music to Google’s cloud-based music locker. While seemingly late to the game in all this, some observers are noting what a huge advantage and launching pad Google-owned YouTube will be for any new music service they bring, as the video site continues to reign as the largest free music site around… Following the recent acquisition of Napster, veteran music-subscription service Rhapsody continues on the publicity trail, with executives recently interviewed by Business Insider among others and speaking at this week’s CMJ Music Marathon conference. The biggest question has been about sustainability and relevance in light of all the new similar services, mainly Spotify, and how they plan to compete. But Rhapsody maintains that their business is healthy, they received a boost from all the press surrounding the aforementioned European startup’s launch in the U.S., and with the new Napster customer-base and planned wireless and cable provider deals, they’re doing just fine, and without a free offering to entice new users, for now… And how much of all the optimistic talk surrounding the bourgeoning on-demand and streaming music territory is hype vs. substance? A new report from the NPD Group, studying music listening habits, does show that in America at least, newer ways of accessing music are gaining real ground on traditional radio and CD listeners, with possibly the most revelatory statement being that “a tipping point is approaching when vehicles and portable devices move from a tethered connection to a more integrated one” – read more in the press release… In other quick items… Pandora has named its first chief marketing office in Simon Fleming-Wood… New music service Beyond Oblivion Inc., also known as Boinc and partially owned by News Corp., is reportedly close to finalizing licensing agreements with the four major label groups… Jimmy Iovine isn’t the only Universal Music exec with a penchant for high-end audio, as music industry veteran and co-CEO of Sanctuary 5B Artist Management, Carl Stubner, has been named to the advisory board of high-definition audio company Max Sound… And the popular music curating and aggregating site The Hype Machine has reached 1 million users.

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.

Google Music unveiled today?

Following the announcement last Friday morning that Len Blavatnik’s Access Industries was the winning bidder in the Warner Music Group auction, late rumors bubbled that rival bidder the Gores brothers were considering an after-the-buzzer increased offer. While it would be possible, though it could create a hefty fine if the Blavatnik deal was broken, most have written it off as billionaire posturing, and expect the deal to finalize as announced.  Other fallout from the Access deal seems to include the possiblity of legal action from shareholders, concerned that their best interests were not represented in the accepted bid, with Dallas-based Kendall Law Group leading the charge… Meanwhile, Google is reportedly set to reveal their long-awaited music service today at its I/O presentation in San Francisco, in a ‘beta’ version, which has the company moving ahead without licensing deals in place with the four majors. Very similar to Amazon, Google Music for now will act as a basic ‘locker’ service, allowing users to upload music to a central server (cloud), and then stream music from Android devices. The main difference from Amazon is that Google doesn’t sell music, and most don’t expect any partnership with an outside digital music service to be part of the announcement. And while just as with Amazon, Google is expected to continue its negotiations with the labels in order to release a more robust service in the future, most are already crowning Apple as the winner in the so-called ‘cloud wars’ even though the company has yet to release any specific details. Apple, who is rumored to have already completed at least one licensing deal with the four major music companies, will surely complete deals with all four before stepping out, and the technology for the service is also said to be in place. Will June see an iCloud announcement?… Elsewhere, CKX, parent company of American Idol producer 19 Entertainment, has been sold to private equity firm Apollo Global Management. CKX also has interests in Elvis Presley’s Graceland and the image and name of Muhammad Ali. The deal is said to be valued at around $509 million… And composer Hans Zimmer has signed with William Morris Endeavor. The move is part of a string of defections from the Gorfaine-Schwartz Agency (GSA) that has also included David Newman and David Holmes. Amos Newman, formerly of GSA, is said to have been behind the moves after being recently brought into WME to start up a new division focused on moving touring clients into film, TV and videogames, as well as expanding the business of composers beyond traditional platforms.

[UPDATE: TechCrunch has a preview of the new Google Music Beta, which was unveiled this morning as expected.]

Free Music Service Back Online

The latest news on what Apple is planning for a cloud-based music service comes from Bloomberg, who reported yesterday that the company is negotiating with all four major music groups to expand the flexibility they offer users for accessing their music.  The expansion would provide a backup for music content and do away with current limitations, giving users the ability to download music multiple times on devices linked to the same iTunes account, similar to the way apps work. The changes are likely to be tied to the renovations that are being planned for Apple’s MobileMe service, and could be the initial step towards a streaming music service in the future. No word as to dealmaking with the music publishers. Apple ran into a publisher roadblock with their initial efforts to expand song-sample clips recently, and reports have had Google Music hitting delays with publishing companies being reluctant to allow multiple downloads of the same music… Today Qtrax, the previously failed free on-demand music service that flopped before launch in 2008, is back and making the rounds online with tons of free music from EMI, Sony Music and Universal Music Group. For more details head to Evolver.fm… And Coca-Cola Music is real, and ready to launch as part of the company’s 2020 Vision global initiative. Later this month the campaign will kick off with Maroon 5 taking part in a “24hr Session” that will have the band holed-up in a London studio interacting with fans before emerging with a new original song…

Music services hot at CES

It’s 2011 and streaming music continues to be a hot topic. Spotify is still getting headlines, but questions now surround not when the service will be launching in the U.S., but if it will ever see life in the states. It appears that labels are continuing to ask for extremely high upfront payments from the startup, due to uncertainty in results from the service’s model. Spotify is betting on a high rate of conversion from free to paid accounts, while content owners remain skeptical. If the company doesn’t go public, is the answer to be acquired, and should Amazon be that buyer?… While the clock ticks on Spotify, not to mention Google Music and a streaming service from Apple, lower profile services that have already launched continue to made progress in the new digital music arena, with a number of key announcements coming out of this weeks Consumer Electronics Show in Las Vegas. MOG will be coming preinstalled on Verizon’s new 4G LTE phones, as well as being included in Toyota connected cars, along with Pandora… Slacker also announced new changes to its service this week, including a new on-demand subscription tier, that sees a third level of access for users, adding to the non-interactive internet radio service it already provides… Meanwhile Sony took the stage at CES to announced the launch of its new Music Unlimited service in America in the coming months. Already live in the UK, the service will be available to users via Bravia TVs, Blu-ray players, Vaio PCs and PlayStation 3 consoles… Elsewhere, in expected news, Lucian Grainge, who officially assumes his CEO seat at Universal Music Group, announced contract renewals for Universal/Republic rulers Monte and Avery Lipman this week – also re-upped with UMG was SRC Records founder and CEO Steve Rifkind… S&P Equity Research adds credence to the talk of a likely Warner Music Group acquisition of EMI, as they make their 2011 media predictions, stating [WMG] could finally be poised to make a successful bid for the recorded music operations of EMI Group… And sales data for music in 2010 comes in with news of continued decline for both physical and digital albums, while single tracks all but flatlined. Last year saw a 12.8% decline from the 2009 level in album sales, while single song sales were up by 1%. More stats including 2010 highest sellers are here…

App Approved

In case anyone had forgotten about Google’s plans to unleash a music service, a reminder comes in the form of new reports that the company is still in the process of negotiating with the labels for a launch next year, and their biggest, and most obvious bargaining chip, is lots of money, tens of millions in fact according to recent speculation. While it was originally thought that Google would first unveil a paid download type of service by the end of this year, similar to iTunes, ahead of moving toward the primary goal of a online music locker, indications now are that they’ll bypass a download store in favor of cloud-based streaming right out of the gate. Reasons for the delay in launch may include infighting over control of the music project, and failure to acquire an already built infrastructure in the form of Spotify or Rhapsody, rather than building something completely new. Matt Rosoff has the scuttlebutt at SAI… Speaking of music streaming, start up mSpot has gotten approval for their free iPhone app, which essentially provides the same desktop-to-mobile music synching feature that everyone is waiting for Apple or Google to launch, though as MediaMemo points out, the company currently has no licenses with the labels. A situation that seems to leave the company in a position to either be targeted for legal action or acquisition… The crux of the digital music dilemma is most often that technology innovators and content holders find themselves at an impasse, with the new distribution system, telecommunication companies, keeping their distance from the wrangle. Looking to the future, comments this week from Jean-Bernard Lévy, CEO of Vivendi, parent company of Universal Music Group among many others, could be seen as revealing. In discussing the company’s expanding umbrella and concentration on new businesses, Lévy said, ”The worlds of telecoms networks and content are merging,” – “And we are in the middle.”… Elsewhere, Yahoo has confirmed the already well documented layoffs, that total 600 staff members, or roughly 4% of its workforce… NBC is planning to launch their own American Idol rival, The Voice of America, which will start airing next spring, well ahead of the planned fall launch of Fox’s other Idolesque series, The X Factor… And MTV in partnership with The Echo Nest has launched a new algorithm-based music discovery site called MTV Music Meter, which puts focus on emerging artists alongside those already established, and is being seen as another step to maintaining the recently achieved online music dominance over Vevo…

Starbucks Digital Network Launches w/ iTunes, LinkedIn & more

CMJ is in full swing this week in NYC, and the Village Voice music critics discuss who could be crowned this years’ “breakout” act, and what that really means… The L.A. Times catches up with Cee-Lo and asks whether or not he lets his own children listen to his viral anthem… Meanwhile Starbucks in partnership with Yahoo! has launched something called the Starbucks Digital Network, which can be accessed at any of the retailers free wi-fi spots and will provide a collection of hand-picked premium news, entertainment and lifestyle content along with local insights and events. Content providers include iTunes, LinkedIn, the New York Times and Foursquare – in case you were wondering, Starbucks wi-fi is accessed 30-million times a month, and more than half of those connections are wireless… Elsewhere, former Rhapsody VP Tim Quirk has landed at Google, setting off a fury of speculation as to his taking of the Google Music top spot, though it appears that is not the case… And Irving invades Nashville with B.A.D. Management…