Monday, December 3, 2007

snapshot 12/03/07

Digital developments could be tipping point for MP3
Warner Music Group (WMG) and Sony BMG Music Entertainment are feeling increased pressure to follow EMI and Universal Music Group's lead in distributing music in the MP3 format, which forgoes restrictive digital rights management technology.

Labels said they have been watching the success of an MP3 test that Universal Music Group (UMG) began in August. The major label continues to allow the sale of 85 percent of its current catalog as MP3s. Sources said UMG is on the verge of permanently embracing that digital format. But a source close to the testing insisted that the decision is still up in the air while the company awaits conclusive results from the trial, which are due in mid-January.

Another factor driving the labels' decisions, sources said, involves mass merchant Wal-Mart alerting WMG and Sony BMG that it will pull their music files in the Windows Media Audio format from walmart.com some time between mid-December and mid-January if the labels haven't yet provided the music in MP3 format.


WalMart Goes Mobile
WalMart is getting into the mobile content business. According to Mobile Entertainment Magazine, the retail giant has launched a new WAP portal that will sell ringtones, images, games and more. Content aggregator PlayPhone is behind the portal, providing the technology and the content, while WalMart provides the brand and the marketing. One interesting element-artists that WalMart promotes in its stores nationwide will also get mobile exposure. For instance, WalMart launched the mobile service offering an exclusive $2 ringtone by The Eagles to match its exclusive on the classic rockers new album.


AOL uses Amazon for video sales
AOL on Friday scrapped its year-old pay-for-download service in favor of Web retailer Amazon.com Inc.'s technology for selling movies and TV shows online. Financial terms of the deal were not available, but Amazon said it will share revenue with AOL.


NBC Takes Its Shows Off iTunes And Goes Home
After a very public rift, NBC and Apple are finally kaput. With its contract now expired, NBC has taken all of its shows off iTunes, with the exception of some NBC news podcasts. The move was expected. See the list of TV networks featured on iTunes at right? NBC used to be right after National Geographic. Its absence leaves a very noticeable hole, and is a marked reminder of how Apple is not able to dominate digital video to the same extent that it has digital music. NBC will now distribute its own downloads NBC Direct, which works only with Windows machines.


The Digital Pricing Conundrum Part IV: The Loss of Resale
In a comment to Sub Pop records' recent announcement of the sale of digital downloads, one potential customer summarized the shortcomings of digital downloads relative to compact discs: But one difference wasn't mentioned -- the right to legally sell or trade a disc that you don't like or have simply grown tired of. (Or, to be cynical, one that you've already ripped to mp3, though ripping and then selling/trading a disc is considered a "fair use" no-no.)


Perspective: Flailing the latest digital whipping boy
Recently, Michael Eisner placed the economic woes of the entertainment industry at the feet of Steve Jobs and iTunes. According to Eisner, Apple has forced movie studios and television producers to execute deals that do not fairly compensate them for their content. Though Eisner has essentially called Jobs a bully, it is likely a case of seller's remorse. Eisner and his cohorts may have undervalued their content to participate in what, at the time, was the iTunes juggernaut.

The movie studios and television producers are to blame for the economic woes of their industry, not Jobs or Apple. When iTunes expanded to include video, the studios and producers were thrilled to have a means to deliver content on demand over the Internet to consumers and be able to be paid. Hindsight is 20/20, but in Eisner's case he may be looking back through cracked glasses. Some could argue that being able to deliver content through iTunes stemmed the tides, or at least slowed the currents, of BitTorrent and peer-to-peer delivery streams.


Fox-y iTunes in the works?
Pali Research's well-informed media analyst Rich Greenfield is reporting in a blog post this morning [reg. req.] that Fox is in negotiations with Apple to offer its movies via iTunes beginning early next year.According to Greenfield, Apple has apparently agreed to a modest increase in the wholesale price it pays the studios from roughly $14 per new release to somewhere around $15. That's still less than brick-and-mortar retailers pay for a DVD, but Greenfield speculates that Fox might be willing to offer them the Apple price if they agree to a no-returns deal.Greenfield also notes that Fox has recently begun experimenting with including a digital copy of a movie on the DVD for transferring to a PC or portable device for a premium price. Since the device most consumers are likely to want to transfer their movies to is an iPod, Fox has to reach some sort of accommodation with Apple anyway, which could form the foundation for a broader deal.


Live Music Revenues Could Exceed Music Sales
Two of the main trends in the music industry right now are the decline in music sales and the simultaneous increasing revenues from live music. Combine those two trends with the right data, and you can estimate when live music revenue will eclipse recorded music revenue, assuming current trends continue.


Movie fans saying "bah humbug" to DVD purchases has studios concerned
VD sales are still tanking—a trend that has been ongoing for some time now. This news isn't exactly shocking, but Natixis Bleichroeder analyst Alan Gould says that early fourth quarter results are bad despite a strong box office season. The nearly 30 percent reduction in per-film profits undoubtedly has movie studios worried, even though other movie-watching methods are growing in popularity.

A major movie would have been able to sell 20 million DVDs in the past, Gould wrote in a research note issued last week and recounted by ContentAgenda. Such is no longer the case, however, with top movies struggling to hit the 10 million mark. Still, Wall Street apparently expected this quarter's sales to do better than they did, "given the strong summer at the box office," wrote Gould.

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