snapshot 1/14/08

Netflix lifts limits for movies watched over Web
Video rental company Netflix Inc said on Monday it was offering subscribers unlimited access to movies and television shows to watch via the Web on their personal computers. The feature will be open to all subscribers already on one of their unlimited monthly video rental plans, with no extra charge. Netflix said it offers about 6,000 movie and television titles to watch over the Web.


CEO Interview: Warner Music Group
Madonna was just the latest example of the lousy news plaguing Warner and the recorded-music industry in general. Artists like the Eagles and Paul McCartney have also sought distribution channels outside the traditional recording labels. CD sales — roughly 80% of Warner's business — were down about 20% in the first 10 months of 2007 and could drop another 25% in 2008, according to Pali Research. Warner's stock price, $8, is down from the $20s a year ago.

Even so, Bronfman, 52, thinks that the death of the music business has been greatly exaggerated. "We are in the midst of a transformation," he says. His supporters argue that artists still require the label's marketing and promotional muscle and that Bronfman has what it takes to weather the slump. "Edgar Bronfman is smart and curious and can figure out whatever challenges there are," says Barry Diller, chairman of IAC/InterActiveCorp.


Music Industry, Souring on Apple, Embraces Amazon Service
The major record labels lined up with Pepsi-Cola and Apple four years ago to give away 100 million songs through Apple’s online store, unveiling the promotion in a Super Bowl commercial with music from the band Green Day. The effort helped spread the word about Apple’s iTunes offerings. Pepsi’s promotion is back this year on a much bigger scale — but with the star wattage provided by Justin Timberlake instead of Green Day, and Amazon in place of Apple.

The switch is an indicator of the continuing tension between the music industry and Apple. Pepsi’s earlier ad, set to Green Day’s version of the song “I Fought the Law,” prodded music fans to quit pirating music online and instead buy songs — legally — from Apple’s then-fledgling iTunes. Four years later, iTunes is by far the biggest digital music store, and the industry is taking a liking to Amazon’s rival music service, introduced in September.


Teenagers think vinyl's groovy again, Time says
Audiophiles never gave up on vinyl, but now the kids are driving the current LP boom. Kristina Dell's feature article in Time magazine looks at the trend, and noted that even 15 year olds are turning to vinyl to escape from the awful digital grime of downloads and MP3s, "Bad sound on an iPod has had an impact on a lot of people going back to vinyl." Another teenage vinyl devotee noted, "Most things sound better on vinyl, even with the crackles and pops and hisses." And when you figure LPs usually cost a little more than CDs and iTunes, you can conclude some kids are willing to pay more for what they truly value! Wow, the kids really are alright!

Sure, the retro appeal of vinyl, the large format, cover art, and the tactile feel of the vinyl experience are responsible for the resurgence. The Warner Music Group posted a 30% increase in vinyl sales last year, and indie labels are cranking out new vinyl titles all the time. Used LPs, selling for a buck or less are easy to find at yard sales, used bookstores, and I've personally found dozens of perfectly good records on the street. CDs' future may be in doubt, but vinyl will be around for the long haul.


DRM Is Dead, But Watermarks Rise From Its Ashes
With all of the Big Four record labels now jettisoning digital rights management, music fans have every reason to rejoice. But consumer advocates are singing a note of caution, as the music industry experiments with digital-watermarking technology as a DRM substitute.

Watermarking offers copyright protection by letting a company track music that finds its way to illegal peer-to-peer networks. At its most precise, a watermark could encode a unique serial number that a music company could match to the original purchaser. So far, though, labels say they won't do that: Warner and EMI have not embraced watermarking at all, while Sony's and Universal's DRM-free lineups contain "anonymous" watermarks that won't trace to an individual.


More artists mulling the Radiohead path
Now another revolt is brewing at EMI. The Times of London reports that EMI recording artist Robbie Williams is withholding his next album to protest cost-cutting by Terra Firma, the British private equity group that bought the London-based music company last year. The Times says Coldplay, another one of EMI's biggest acts, might do the same. In short, it looks like two more major pop acts are tired of being pushed around by their record labels and want their independence.

At least, that's how it looks at first glance, but maybe there's more than meets the eye here. "The big question is, is this something that's inevitably going to happen with bigger acts?" says Jon Cohen, co-president of Cornerstone Promotion, a New York-based company that has worked with Coldplay and Radiohead over the years. "Or is this just a situation where the new management isn't clicking with the artists? It could be a combination of both."


Wal-Mart looking at Net video do-over
Wal-Mart Stores, after shuttering its initial paid video-download service in December after less than a year in business, appears to be actively looking to restart a similar service on its own. At the 2008 International Consumer Electronics Show this week in Las Vegas, Wal-Mart executives met with digital rights management firms to gather information about what technologies are required to offer a paid download service, according to executives at one of those firms. Specifically, the retailer’s reps were interested in how to allow downloaded movie files to be burned onto discs, for playback on a separate DVD player. That is a feature Wal-Mart’s first service didn’t offer.


Apple May Need to Play Better with Others
But for Apple to make the most of its peerless products, experts say it will need to improve relations with the folks who create the content to run on them, especially after the series of spats that marked 2007. Recall the refusal by Universal Music Group, the world's largest record label, to re-up its long-term contract to supply music to Apple's iTunes Store, or the move by General Electric's (GE) NBC Universal to pull its TV shows from iTunes.