Wednesday, March 12, 2008

snapshot 3/12/08

War against Web tops music biz "screw-ups" list
The talent scout who turned down the Beatles has long been credited with committing the music industry's biggest gaffe. But Dick Rowe's billion-dollar boo-boo has been beaten to the top spot on Blender magazine's list of the "20 biggest record company screw-ups of all time" by the failure of record companies to capitalize on the Internet.

The major labels took top dishonors for driving file-sharing service Napster out of business in 2001, instead of figuring out a way to make money from its tens of millions of users. The downloaders merely scattered to hundreds of other sites, and the industry has been in a tailspin ever since. "The labels' campaign to stop their music from being acquired for free across the Internet has been like trying to cork a hurricane -- upward of a billion files are swapped every month on peer-to-peer networks," Blender said in the report, which appears in its newly published April issue.


Handleman Company Reports Third Quarter Fiscal Year 2008 Results
Handleman today announced results for its third quarter of fiscal year 2008, which ended January 31, 2008. The Company also announced that it has entered into an amendment to its credit agreements that, at its request, is intended to provide sufficient liquidity to fund the Company's day-to-day operations through May 31, 2008. Handleman intends to use this three-month period to finalize its fiscal 2009 business plan and then revise the terms of its credit agreements based on that plan. Revenues for the third quarter of this fiscal year were $346.9 million, compared to $485.0 million for the third quarter of last year. The decline in revenue was due primarily to the termination of the Company's unprofitable music supply agreement with ASDA in the United Kingdom (UK) at the end of August 2007 as well as lower music sales in the United States. This decline was offset somewhat by an increase in higher margin fee-for-services and video game revenues. Operating income for the third quarter of this year was $8.0 million, compared to $7.8 million for the third quarter of last year. Net income for the third quarter of this year was $2.4 million or $.12 per diluted share, compared to $4.2 million or $.21 per diluted share for the same quarter of last year.


Are Carriers Crushing US-Based Mobile Music?
The US-based mobile media market has always been a giant step behind its European - and especially Asian - counterparts. But what is stunting growth in the stateside market? Plenty of factors are potentially in play, including awareness problems on newer music formats like ringback tones. But major cultural and consumer differences cannot be ignored. After all, Americans have the disposable income to purchase mobile media assets, just like they have the money to purchase expensive iPhones, subscribe to high-end wireless plans, and barrel though endless text messages.

That introduces the question of whether carriers are killing an early-stage media market by imposing heavy percentage demands. According to Chris Brunner, Vice President of Mobile Content & Services at Univision Communications, carriers are cramping entrants and innovation with heavy access percentages. "We do all of the marketing, branding, content creation, billing, and customer care, but we get less than the carrier does," Brunner explained to Digital Music News during the Mobile Monday symposium in Los Angeles. "40 percent goes to the carriers, without us ever seeing it."
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Carriers see the issue differently, especially given the upfront, multi-billion dollar sunk costs associated with their networks. But Universal Music Group digital and mobile executive Rio Caraeff pointed to heavy differences between Asian and American carrier demands. "The average carrier revenue share for off-deck transactions in the US is 35-40 percent," Caraeff said. "It would be as low as 9 percent in Japan."


Are music graphics dead post-digital?
The music industry is set for massive upheaval, with digital distribution destabilising long-held business models. How will this affect the designers who create the all-important visual imagery? asks Adrian Shaughnessy

But Saint is critical of the way labels view digital work. ‘Their thinking is that if it’s digital it must be cheap. There almost seems to be a naive attitude that things should cost less when created for digital usage when we all know that in commissioning terms the cost and value remain the same no matter what the usage. Ethical photography, image-making or graphic design do not become cheaper to produce just because the end usage lives in a virtual medium.’


Amazon.com Music's First Ever "Live In-Store" Band Performance, Presidents of the United States of America
Mark your calendars! On Saturday, March 15, at 10pm PDT, the Presidents of the United States of America will be celebrating the release of its new album, These Are the Good Times People, with a performance at Seattle's Paramount Theatre, and we'll be broadcasting the show worldwide right here from our music blog. Be sure to tune in to catch this exciting performance.


Disney: 4 Million iTunes Movies Sold
Silicon Alley Insider is reporting that Disney CEO Robert Iger announced today at the Digital Hollywood Media Summit that the company has sold 4 million movies on iTunes since the movie store launched in 2006, along with 40-50 million videos.The site extrapolates that the total revenue from these sales is just under $123 million USD. Disney recently announced a $1 billion digital sales goal for 2008, which includes revenue from advertising online (i.e. ad revenue from online video viewing or from any of its sites), subscriptions to online games, downloads of movies and music, and e-commerce that is not related to its theme parks. For perspective, Disney had sold 1.3 million movies by February 2007 after 3 months of the iTunes movie store being in operation.


iTunes makes $570m
Although Apple has often maintained that the iTunes Store is a vehicle for sales of the iPod rather than a source of profit, the company may have earned $570 million in pre-expense income for 2007 alone, according to calculations by the music chart keeper Billboard. Using as a yardstick Apple's recent revelation that it had sold four billion songs since the store opened in April 2003, the publication estimates that Apple sold about 1.7 billion tracks last year. This amounts to more than just $1.7 billion, however: as stores in Europe and elsewhere often charge more than 99 US cents per track, Apple is more likely to collect $1.9 billion.

After factoring in Apple's roughly 30 percent direct earnings from every song sold, this leaves the Cupertino, Calif.-based company with about $570 million of its own versus the 70 percent left to the labels. The income doesn't translate to a similar amount in profit for iTunes. Apple has explained in the past that its portion of the song price is largely used by bandwidth and maintenance costs, though the company has never broken down its revenues in public statements.


Apple sued over foundation to iPod + iTunes franchise
ZapMedia Services, Inc. has filed a lawsuit against Apple Inc., claiming to have conceived the underlying principles of the iPod + iTunes franchise a full two years before the first iPod went on sale.


Report: gamers still hot and heavy for CDs, DVDs
Entertainment is big business and, while sales of physical DVDs and CDs are down, consumers are spending on video games in a big way. While conventional wisdom may say that more time and money spent buying and playing games leeches profits from other forms of media entertainment, a new report from the NPD Group says that gamers actually spend more money on non-gaming entertainment products, making them an important target for companies worried about withering sales.

"While it's true that growth was centered on gaming last year, core gamers—those who played video games daily or several times each week—still spent most of their entertainment budgets on non-gaming entertainment," the NPD Group states. "These consumers remain more likely to buy a DVD or CD than they are to purchase a new video game. In fact, 58 percent had purchased a new DVD in the past six months, 46 percent bought a CD, and 43 percent purchased a game for a console."

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