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. Read 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.]
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.
'chairman of the bored'
Today came the announcement that Edgar Bronfman Jr. will be exiting his role as CEO of Warner Music, a post he has held since 2004. He’ll remain on as chairman of the board at Warner Music Group, while Stephen Cooper will take up the reins as new CEO. Cooper’s track record, primarily as an interim CEO with a focus on turning around troubled companies, includes stints at Metro-Goldwyn-Mayer, Krispy Kreme Doughnuts and Enron, among others. It’s expected that Bronfman’s focus will transition to the current bid for EMI Group, continuing his long-desired goal of combining the two companies. If merger efforts fail, his continued involvement at Warners is questionable… Research In Motion is reportedly working on a new music service that will utilize the popular BlackBerry Messenger service, with some major labels supposedly already onboard, though it’s unclear exactly which ones. The service as it’s being described, though not by RIM, would be far from robust, but it’s being characterized as possible positive note for the struggling smartphone maker… A legal fray that has the Village People‘s original lead-singer attempting to regain copyright control over his share of a number of works including “Y.M.C.A.” may prove to be telling in the coming battle over “termination rights,” that will pit many big-name artists against labels – a storyline that hit the mainstream media this week… Music and imagery from The Beatles are featured in a new anti-piracy video as a part of the UK-based Why Music Matters campaign. There’s a bit of irony here, as pointed out by Peter Kafka on AllThingsD, in that the Fab-Four’s music is still only (legally) accessible digitally in one place, that being iTunes, where it was first made exclusively available 10 months ago. With a plethora of other new digital music services out there, one can wonder how long it will be before the group’s music will be more widely available… Elsewhere, Music Ally has obtained a report that provides insight into Spotify‘s subscriber numbers, particularly for the period following new restrictions on free accounts that were in acted earlier this year. Get the details HERE, but essentially with the changes, the number of free user accounts dropped by over 1.5 million, while the paying user base increased by roughly 1/3 of that amount. The conversion of users from free to paying isn’t insignificant, and that’s good news for Spotify, who has to pay royatlies regardless of whether a user pays for the service or not, but losing over 1 million potential listeners is not exactly good news for artists… And a group music publishers who joined a class-action lawsuit against YouTube-owner Google in 2007, came to a settlement this week, a resolution that in part will see pubcos given the opportunity to enter into a licensing agreement to receive royalties for musical works included in videos on the site. According to at least one person familiar with the situation, artists should expect to start receiving accounting for YouTube royalties from publishers right around the time they start receiving it from the record labels.
Multiple reports have Spotify launching in the U.S. this week, with the most recent scuttlebutt claiming the release will be invite-only initially, with members allowed to distribute invites as well – a strategy that has been employed by other notable services such as Gmail. A splash-page that went up last week allows people in the U.S. to signup to receive an invite to use Spotify “soon,” and while there has been no official announcement about a Warner Music licensing deal, it is believed to be as good as done… More details as to what the startup is planning for the U.S. were summarized on AllThingsD from ad pitch materials obtained, which include a target figure of 50 million users in the first year, with an estimated 150 million Facebook users that “will start to see music on their feeds” exposing them to the new service. That is far from an official (or exclusive) deal between the two companies though, and details about how the service will actually integrate with Facebook are still sketchy at best. Meanwhile it appears that other similar services like Rdio and Rhapsody are looking to incorporate functionality with the social network as well. Spotify’s deck also mentions the massive amount of free publicity the startup has already received – now over two years of speculation and coverage about a U.S. version – and will continue to get when the launch is official. Even with all that, and presumably more up their sleeve, many are questioning the lofty first year objective. Using the service’s existing European numbers as the only available measurement, it is indeed difficult to conceive of the target user-base being reached so quickly… However, in addition to Facebook, significant publicity and even telecom carrier tie-ups being rumored, an important aspect being overlooked by many is the record labels themselves. Speaking with label folks familiar with the situation, the once reticent labels are now heavily getting behind the service. While the licensing agreements are the sticking point in just getting off the ground, it’s the additional marketing and promotional programs that can become a major factor in succeeding. There are other new music startups already operating that offer essentially the same major functionality as Spotify, but according to those in the know, there has not been another digital music service that the labels have lined-up behind this much since iTunes…
[UPDATE: The service officially launched the morning of Thursday, July 14, and the invites are for access to the 'free' ad-version only, the 'premium' and 'unlimited' subscription levels are now active.]
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.
Meiko completes new album; finding new label home
As the News Corp. sale of MySpace is close at hand (with an announcement expected in the coming weeks), so too is MySpace Records shuttering, for good this time. Early 2010 began the initial dissolving of the label, which was formed in 2005 and aligned with Universal Music Group label Interscope Records via a P&D deal that has now lapsed, and since last year the operation has continued under a skeletal staff and somewhat ambiguous circumstances – a partnership with Downtown Music was announced back in September. However, with the writing on the wall as to MySpace’s future, and a scaling back of many divisions, MSR began to be dismantled, a process which was guided by label GM David Andreone who took the helm just over a year ago. Among many duties, Andreone has also helped the artists signed to MSR find new label homes, and even get master recording rights back – some albums previously released by the label have already been pulled down from digital marketplaces such as iTunes… One former MySpace Records/Interscope artist, and now free agent who is getting a lot of industry attention, Meiko, has just completed a new album produced by Styrofoam and Jimmy Messer, and mixed by Brian Malouf. We hear that labels on both coasts are talking to the songstress, who already has a strong track record with sales, touring and film & TV… And word is that Andreone, a veteran of both the music publishing and record label arenas, is likely to transition to one of a handful of digital music companies in play, after he departs his post at the end June… Stay tuned.
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?
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.
LimeWire's founder could face $1billion in damages
The trial to determine damages owed by Lime Wire founder Mark Gorton to the top record labels represented by the RIAA (a separate settlement with the National Music Publisher’s Association was previously reached back in March of this year), began this week in New York. The maximum statutory damages that could be awarded is more than $1billion, from a $150,000 fine for each of the 9,715 albums released through the P2P network. Notable claims made by both sides as reported on CNET and Bloomberg, included the RIAA’s claim that Lime Wire alone holds significant blame for the 52% decline in music sales during the years 2000 to 2010, as part of the overall accusation that Gorton’s service financially devastated the record labels. Meanwhile the attorneys representing Gorton called into question the notion of financial devastation for the labels, citing revenue from the likes of Internet radio, royalties from video games, and ad dollars from YouTube – even calling attention to high-level executive salaries and compensation still in the 7-figure range and higher. They also produced past notes and referenced comments from prominent music group CEO’s such as Doug Morris and Edgar Bronfman Jr., which seem to indicate the labels are aware that piracy is a consumer problem more than anything, likewise adding that recent history shows any time a file-sharing service has gone offline, the public just shifts to the next best option…. Elsewhere, Spotify has released a new and improved app that has many seeing it as an aggressive move on Apple‘s iTunes store and a clear indication that the start up’s aims remain high (and possibly that a U.S. launch is even closer). The new version allows users to directly sync music on iPods, and in a further affront, the service has also introduced the selling of downloads, coming in the form of bundles enabling users to purchase playlists. Said CEO Daniel Ek, “From today, Spotify really is the only music player you’ll ever need”…
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…
A piece on Showbiz411 yesterday, revealed that Michael Jackson‘s publishing company MiJac Publishing, which is currently administered by Warner/Chappell Music and includes songs such as “Billie Jean” and “Beat It,” among others, will soon be moving to Sony/ATV Publishing. The shift was reportedly written into the contract with WCM, who has administered the catalog for years. It also comes on the heels of the announcement that Warner Music Group is shopping for a sale, most likely of its publishing arm, putting them in direct competition with Citigroup‘s plans for EMI Music. Insiders share that this is one of multiple similar scenarios WCM will face in the coming years… After abundant commentary last week on Sony Music‘s possible intention to abandon iTunes, following a report in an Australian publication, a comment from a Sony Network Entertainment executive indicates that is in fact not the case, saying Sony Music has “no intention of withdrawing from iTunes, they’re one of our biggest partners in the digital domain.” Today also saw the announcement that Sony is launching its “iTunes rival” music service Qriocity in the U.S., though still without a mobile component. Currently Sony is focused on Playstation 3 as the primary vehicle for the music service, though it has plans to move into mobile in the future, and most likely on the Google Android platform first… More Google Music talk arose this week, with a Motorola executive tipping that the service will be included on Google’s new version of Android, Honeycomb, which will be tied to the new Motorola Xoom tablet… Following the details revealed this week by Apple for its new content subscription service, music services are upset over the 30% share for each subscription that goes to Apple, in addition to the fees already being paid to content owners. Among them, Rhapsody, has gone as far floating the possibility of legal action… Elsewhere, Topspin has announced a move into offering their direct-to-fan platform for all users… Through a sponsorship effort, Converse has saved the legendary punk enclave the 100 Club in London from closing… And this Death of the Music Industry chart, is getting lots of attention.
Mumford sells 31K on Grammy day
While Glassnote Entertainment‘s Mumford & Sons didn’t walk away with a Grammy award Sunday night, they did see a huge bump in one-day sales for their debut album Sigh No More. It currently is sitting atop the iTunes album chart at #1. Other winners and performers from the night, which saw the largest ratings for the award show in over a decade, are also getting a sales spike in the wake of the event… As anticipated, Pandora filed for an IPO last Friday seeking to raise $100 million, making it the first Internet-music company to go public since Napster went bankrupt in 2002. In filing, it was revealed, among other things, that the company spends half of its revenues on acquiring content, a fact that AllThingsDigital‘s Peter Kafka points out, isn’t a bad thing… Reports over the weekend have Apple considering the possibility of turning its paid MobileMe storage service, into a free “locker” for personal memorabilia such as photos, music and videos – reigniting talk of the company’s move into offering a streaming-music function. Meanwhile today, Apple announced the launch of a content subscription system for music, videos, newspapers, magazines and other forms of content, which will work similarly to app purchases, except that customers choose their type of subscription. As for what it might mean specifically for music, Evolver.fm points out; on-demand subscriptions like MOG, Rhapsody, Napster and Spotify, and the paid version of interactive radio services such as Last.fm, Pandora and Slacker, can now charge you for a subscription right within iTunes, with the same convenience for you — and the same loss of revenue for them... Radiohead has announced details about their new album The King of Limbs, which will see a digital release this weekend, a month ahead of a physical release via XL Recordings. The band’s co-manager explains to Music Week the reason behind not releasing the new album in the same manner as In Rainbows… Former EMI Music A&R prexy Nick Gatfield has been named President Of Music Division for Sony Music UK, reporting to Chairman and CEO Ged Doherty… And does Guy Hands really want to double down and make a bid for both Warner Music and EMI?
Who will get out of the gate first?
In another 2011 industry horse race, contradictory reports and speculation continue to surface about the launch of digital streaming music services from high profile companies like Google, Spotify and Apple. Sony Music recently inked a deal with Spotify, becoming the first U.S. label to do so. And that was quickly followed by rumors of a U.S. deal with EMI being closed in on, however the effects on such a deal by the label takeover this week by Citigroup are yet to be known, but it’s likely not good for the European start up. Even if an agreement was reached, would it be valid when new ownership takes over? Regardless of an EMI deal, or even Warner Music Group, the biggest target for Spotify to get the service off the ground in America is still Universal Music Group, who boasts the largest market share and a significant stable of current hit artists. What will it take to land the other majors? Lots of cash, and most likely a number of concessions in the area of how much free music it offers… Meanwhile, Google has plenty of cash, and reports continue to indicate that it has no problem plunking it down for labels to launch Google Music. While rumored timelines for a launch continue to contract and expand, a possible major stumbling block for Google, and other services in the same cloud, is music publishers. Matt Rosoff wrote a piece this week citing a source that claims publishers want to be paid for every download. Meaning that the key aspect of the locker-based service would conceivably force users to pay multiple times for the same song when downloading at different locations and on multiple devices. Something consumers will surely scoff at… The end of last year saw plenty of anticipation and predictions about a streaming service from Apple, however the talked has quieted this year as the company remains mum. However recent comments from Spotify executives have accused Apple of putting pressure on labels in an effort to keep the service from launching in the U.S., presumably to give themselves more time to finish working on a yet-to-be confirmed streaming version of iTunes. Not unheard of when considering the continued pressure it puts on artists and labels who do business with Amazon… Stay tuned.