snapshot 5/12/08

Music industry hopes upgrades boost mobile sector
Perhaps no single device has had more impact on mobile music than Apple's iPhone. While only 6.7 percent of overall mobile customers use their phone to listen to music, rising to 27.9 percent for smartphone users, a full 74.1 percent of iPhone owners reported using the device as an MP3 player, according to M:Metrics.

The majority of this music, however, is transferred from the computer, rather than purchased through the phone and downloaded wirelessly. That may change this summer once Apple unveils what many expect will be a new version of the iconic device, featuring access to high-speed third-generation (3G) wireless networks.


HBO might be coming to iTunes, with flexible pricing
Porfolio.com is reporting that you might soon be able to find Tony Soprano in the iTunes Store. HBO, the premium cable channel known for their original programming, is in talks with Apple to add their programming to the iTunes Store.

This is good news for fans of HBO shows, but the real story here is the deal that HBO has reportedly managed to wrangle out of Apple. Portfolio's sources say that Apple has agreed to flexible pricing for HBO, which might mean we'll have to pay more than $1.99 per episode for that content. This is the structure that NBC, and many other studios, would love but Apple has been resistant to in the past.


Amazon Unbox on TiVo getting HD content
TiVo users have been able to rent and buy movies from Amazon.com's Unbox service for over a year now, but lately the service has felt a little outdated compared with competitors like Vudu and Apple TV, which offer HD downloads. Well, thanks to a comment by TiVo's VP of product marketing, Jim Denney, it seems like that's going to change soon. In an article on TV Week, Denney claims TiVo and Amazon will announce HD capabilities "in the not too distant future."


Music & Money: Will They Ever Learn to Dance?
In a discussion Thursday at the SanFran MusicTech Summit, venture capitalists acknowledged the incredible sexiness of the space, though they also recognized a treacherous path towards success. "The bar is a bit higher on music investments, and there tends to be an oversupply of ideas and entrepreneurs in the space," said Toni Schneider of True Ventures. "There is still that prize out there of figuring it all out, though it is risky and a lot of money has been lost. So people are very, very gun-shy."

Not only that, but successful growth frequently involves complicated and risky legal pitfalls. In fact, the less-than-legal route is now becoming a viable and recognized strategy. "The standard playbook in digital music is to infringe like crazy, get to scale, and gain some leverage against labels," explained Tim Chang, a principal at Norwest Venture Partners. "Once you get their attention, they come knocking with a lawsuit, which is basically foreplay to a licensing deal. At that point, you go raise venture money and try to pay off the labels, and convince them to convert some of that infringement suit penalty into strategic equity."


Music Revenues Move Up at RealNetworks; Gaming Moves Out
RealNetworks revenues improved during the first quarter, thanks partly to music-related increases. During the three-month period ending March 31st, music-related revenues bumped 12 percent to $38.1 million. Broader revenues increased 14 percent to $147.6 million, and most units showed gains during the period.

The music increases happened despite stagnant subscriber levels. The company reported a music-specific subscriber total of 2.675 million, level with year-ago totals. The figure lumps subscribers across Rhapsody and RadioPass, a combination that makes an isolated analysis difficult.


Activision SEC filing via Coolfer
From Activision's May 8th earnings call: "Consumers have already downloaded more than 15 million individual songs for Guitar Hero."