snapshot 6/9/08

As CDs Decline, Wal-Mart Spins Its Strategy
Veteran rockers AC/DC are set to become the next major band to sell a new album only through Wal-Mart Stores Inc., according to people familiar with the matter, a move that highlights the growing music-industry clout of Wal-Mart. The AC/DC deal, however, comes at a time when the retail giant -- the largest seller of compact discs in the nation -- is signaling it may rock the music world by stocking fewer CDs. Such a move is part of a trend that would further accelerate the already steep decline of CD sales as consumers make the transition to digital music.

Such deals exemplify the kind of special treatment Wal-Mart increasingly seeks -- and receives -- from artists and record labels alike. These constituencies are willing to risk their relationships with competing retailers to keep Wal-Mart happy. Unlike the Eagles or Journey, AC/DC is under contract to a major record label, Sony BMG's Columbia Records, which brokered the pact with Wal-Mart and will also benefit from sales there. Columbia's decision to sell a major new release at only one chain has the potential to alienate retailers left out. (One competitor unlikely to complain is Apple Inc.'s digital iTunes Store, where AC/DC has never made its music available.)


Will flash memory cards emerge as the next CD?
This story is about the CD and its likely successor. The music industry - dragged kicking and suing into the 21st century by controversial Internet file-sharing technologies like Napster - is still adapting to the new reality. As more music is downloaded, CD sales have declined for years.

So what gizmo will replace the CD? Or will anything? The iPod and other MP3s, after all, come equipped with memory and functionality that require nothing akin to a disc. If SanDisk Chief Executive Eli Harari has his way, CDs will indeed have a physical replacement: tiny flash memory cards that already plug into many cell phones and other devices.


Labels eye variable pricing for digital sales
Arguably the No. 1 item on record labels' to-do list for the year is, "Establish variable pricing for digital downloads." As luck would have it, the No. 1 item on the to-do list of digital music services not named iTunes is converting their library to digital rights management-free sales. So it comes as no surprise that the labels have made an openness to variable pricing a prerequisite of any DRM-free licensing negotiations.

CDs remain the most popular source of music, at 32%, followed by FM radio (31%) and dropping sharply to paid online music services (8%). Peer-to-peer services follow closely behind at 5%. For those who did pay for music, 33% downloaded between 10 and 50 songs in the six months preceding the survey, while 26% downloaded less than 10.

How that's done is where the real science kicks in, which is why even those labels pushing for variable pricing most aggressively are still only in the test phase. The latest is Warner Music Group (WMG), which last month began a trial of a dynamic pricing system from Digonex. The company's system recommends raising or lowering the price of a track and/or album based on a variety of factors. In some cases, new releases selling very well may get priced higher, but so might catalog items appealing only to the die-hard fan willing to pay more. In other cases, the system recommends lowering the price of even new releases to spur more sales.

According to PassAlong CEO David Jaworski, the system on average priced full albums $1.18 less than what other services were selling them for -- between $4 and $6. Singles pricing also fell on average. However, revenue from the tracks included in the program increased an average of 122%, with some individual singles' sales spiking up to 500%.


Microsoft Looks To Improve Windows Mobile Music
Microsoft is well aware that one of the key allures of Apple's iPhone is its music-playing abilities. To counteract that, the software giant said it will focus on improving the music features on its Windows Mobile operating system for smartphones. Lees said the mobile music market represents a huge opportunity since consumers bought 10 times more music-enabled cell phones than iPods. Other studies forecast the market to hit $11 billion in three years.


Secret Life of Bebo’s online drama
Bebo is linking up withUniversal Music to create an online drama based on the music industry as part of a broader effort by the social networking site to bolster its music offerings. The Secret Life of Sam King, will tell the story of a junior Universal employee who starts her own record label and will feature artists and music from the world’s largest record company.


Lil Wayne & Universal Embrace Musicane
Universal Motown artist Lil Wayne will sell downloads of is new release, Tha Carter III directly to fans via his website, blog and social network pages using the Musicane widget - a viral player with embedded commerce capability. Musicane's network of websites, widgets and media players. To date, Musicane has generated over 50 million impressions and created incremental retail sales around album release campaigns of up to 55%. Recently, Musicane garnered attention for its distribution of Saul Williams' newest album The Rise and Fall of Niggy Tardust. Nine Inch Nails frontman Trent Reznor came out in support of the company's distribution services in an interview with New York Magazine.

Lil' Wayne's Musicane widget will be posted on all of his official sites offering fans a chance to buy the entire album and/or individual songs directly from his page. The player will also stream previews of the album, promotional interviews and, in the immediate future, merchandise and other products. The digital music downloads sold via Lil' Wayne's Musicane will be 320 kbps DRM-free MP3's.


Radio’s Popularity Declining Unevenly
Over the last 10 years, the average share of Americans listening to radio at any given time has shrunk about 14 percent, or 2.3 percentage points. Teenagers account for a well-recognized chunk of that decline. But Larry Rosin, a radio consultant with Edison Media Research in Somerville, N.J., points out that college graduates are also far less likely to listen to radio than nongraduates, a gap that has widened with time.


Rap star Ludacris launches online record label Wemix
Christoper Bridges, the rapper and actor better known as “Ludacris,” has put his celebrity power into an online music community called Wemix. The recently launched startup isn’t your run-of-the-mill music site. It’s a community for unsigned talent in the music industry — singers, songwriters, rappers, musicians and producers — who can register, create profiles and upload their original music. Users can offer tips and pointers, as well as collaborate on new songs. And recognition as a top performer on Wemix could get an artist a chance to collaborate with well known artists (like Ludacris himself) and jam out demos.


CBS spins digital record label
CBS will launch a digital record label in January, signing artists with the goal of breaking them via television show placement, iTunes and the Eye web's broadband channel. CBS Records will be launched primarily utilizing the existing infrastructure of CBS Entertainment and CBS Interactive. It will operate as a newly created unit within the entertainment division based in Los Angeles. The label will debut with three artists -- Boston rock act Senor Happy; Will Dailey, a John Mayer-ish singer-songwriter, also from Boston; and P.J. Olsson, an established indie-rock artist -- and is looking to sign another five acts in the first year.


Reading into Kindle, Sony Reader numbers
Are electronic readers really getting that big? An Oxford University Press executive crunched some numbers, and he says combined sales of Amazon.com’s Kindle and Sony’s Reader Digital Book (what a name) will reach 1 million by the end of the year. He came to that conclusion by looking at sales numbers of electronic books as well as the e-ink screens that both readers use. And, he points out, some “good old-fashioned guess-timation.” And hey, what about reading books on cell phones?