snapshot 2/11/08

Random House to sell books by the chapter online: report
Random House Publishing Group, the world's largest book publisher, is planning to test selling individual chapters of a popular book to gauge reader demand, according to a report in the Wall Street Journal. Random House, a unit of German media giant Bertelsmann, will sell the six chapters and epilogue of "Made to Stick: Why Some Ideas Survive and Others Die" for $2.99 each according to the report.


Timbaland, Verizon making mobile music together
Hitmaking hip-hop producer Timbaland ("Shock Value") has announced a deal with Verizon Wireless to make the first "mobile album," which will be exclusively available to subscribers of V Cast, Verizon's mobile entertainment service. As Verizon's mobile producer in residence, Timbaland will produce one song per month throughout 2008. Each month, he will work with a different artist on a track while touring the country on the Verizon Mobile Recording Studio Bus, which will also capture making-of footage for V Cast subscribers on a dedicated Timbaland channel. He will perform in some tour cities to be announced, and Verizon will select subscribers to visit the tour bus in other cities to watch him work his magic.


Classical artists embrace digital culture
When British violinist Tasmin Little announced in January that she would be giving away her "Naked Violin" album as a free download, she tapped into a growing trend: classical music artists and retailers utilizing digital formats and business models. Thousands of tracks have been downloaded, and monthly page impressions on Little's Web site have increased from 5,000 to 150,000 since the announcement.

Classical fans are certainly purchasing more music digitally; in the United States, digital classical album sales surged 47.7 percent in 2007, accounting for 7 percent of the genre's 18 million total album sales, up from 4.4 percent the previous year, according to Nielsen SoundScan. Classical digital album sales burst through the 1 million barrier for the first time with a total of 1.2 million units.


Guy Hands to open EMI back catalogue
G uy Hands is throwing 300,000 of EMI's music tracks open to advertisers, TV producers and computer games makers in a bid to cash in on its vast back catalogue. EMI has struck a deal with London-based Ricall, which is poised to launch several EMI websites around the world allowing music-hunters to license its music much more easily. Terra Firma sees the so-called ''synchronised licensing" market - in which media companies pay to use music in their productions - as a key way of offsetting sliding compact disc sales.


360 + Change: Labels Pushing Harder on Broader Deals
Survival now depends on the execution of broader deals, according to many executives. The latest industry buzz surrounds the "360-degree deal," and the term carries more substance than hype. The reason is that the music business is far broader than recordings, and labels have been missing downstream profit opportunities for decades. That includes money from touring, merchandising, and advertising, among other areas.

Now, majors are pushing 360-degree deals quite aggressively, according to executives close to the negotiations. Just recently, one platinum-selling manager told Digital Music News that majors are almost exclusively interested in 360-degree relationships. And even if that is secured, investments in artists - new or old - are being made very carefully. "They go over and over the album, until they are positive it will work," the manager relayed.


Universal Music Starts Skinning, Ponders Mobile Modules
As an alternative, the Modu structure enables users to customize their phones with "jackets," an approach that allows a phone to reflect individual personalities and moods. Modu starts with a stripped-down device, the basis for a customized experience. That spells opportunity for media companies trying to crack the finicky youth market, including Universal Music Group.

Just recently, Universal started exploring the creation of artist-specific jackets, possibly for delivery by the end of this year. But the jackets themselves are more than just cosmetic covers. According to the pair, the jackets will contain design aspects inspired by the artist, but they will also include pre-loaded content and even music subscription offerings. That is part of a broader Modu customization agenda, one that includes an ecosystem of compatible consumer electronics add-ons.

snapshot 2/8/08

Spin Magazine Free Online
Spin has partnered with MySpace for a new free online interactive full edition of the popular music magazine. Rumor has it they’ll try to make us all pay for it in 12 months. (Good luck with that.) But for now you can enjoy all the music news and gossip any one sane person could handle. Check it out.

snapshot 2/7/08

Major labels 'face DoJ antitrust probe'
Two major labels have been served notice of a fresh antitrust investigation, a music business newsletter reports today. MusicAlly's daily Bulletin suggests that the as-yet-unlaunched TotalMusic service, currently backed by Universal and Somy BMG, has prompted notices from the US Department of Justice. The report suggests all four major labels have been contacted.

TotalMusic, described by Rick Rubin back here, is reported to be a low-cost, multi-platform subscription service to be offered to consumers through ISPs and device manufacturers. The plan has few of the restrictions traditionally attached to subscription services, with the service provider or hardware manufacturer subsidising some or all of the mooted $5 monthly fee.


Amazon.com and Universal Music Enterprises Team Up for Unique Valentine's Day Promotion Featuring Musical E-Cards with Classic Original Recordings, Photo Puzzles, and More!
The first e-cards featuring original versions of hit songs are offered in Amazon.com's Music store just in time for Valentine's Day. These e-cards are not only free but they have a creative twist available only a few places online -- classic original music. Along with the choice of one of 12 classic original recordings by popular artists, the card can be personalized with a photo puzzle that when put together unlocks a secret written message from the sender. The free musical e-cards are also offered without the photo puzzle element. Customers can go to http://www.amazon.com/musicgifts through Valentine's day, February 14.


Music websites are fighting to be free
Social music sites Imeem and Last.fm — which offer on-demand, ad-supported free music — have grown rapidly to 20 million monthly users each. Their success has the music industry seriously exploring the viability of ad-supported, free music as the next big business model for online music.

Last.fm says it will launch a subscription service later this year. While ad-supported on-demand online music is clearly striking a chord, the category is so new that few analysts have factored in its growth. For now, JupiterResearch projects a $3.5 billion digital music industry by 2012, from nearly $2 billion in 2008.


Apple sued over iTunes Allowance features
Restricted Spending Solutions has filed a patent suit against Apple over the iTunes Allowance function on its web-based iTunes store. The feature allows members and friends to create accounts for automatically transferring chosen dollar amounts via a credit card to a recipient's iTunes Store account for use by the recipient. RSS cites its own patent, which describes a computer-based method for allocating funds in pre-established accounts for use by customers by creating a customer account file containing a record of funds deposited and limiting how the funds may be spend on audio and video entertainment.


Study: Blogging about music may triple its sales
A study by NYU Stern business school professor Vasant Dhar and partner Elaine Chang shows correlational evidence that blog posts increase online sales of recorded music. The study observed 108 albums over a course of eight weeks, and concluded that the amount of blogs about a certain album can actually predict how well it will sell. It also suspected that the amount of MySpace friends a particular band has acts as a "badge of popularity," actually generating more interest through that number alone.

Dhar and Chang found that of blogs, social networks, consumer reviews, online media and mainstream media, it was the blogs that had the most significant effect on sales. When more than 40 "legitimate" blog posts are made, sales of independent albums were three times higher than average, and five times higher if they were major label releases. They also found if blog chatter exceeds 250 posts, sales were six times higher than the average, regardless of being major label releases or not.

snapshot 2/6/08

Google planning China online music tie-up: report
Web search leader Google Inc is planning to boost its presence in China by tying up with a Chinese online music company to provide free music downloads, The Wall Street Journal reported on Wednesday.

The report, quoting people close to the situation, said Google was in the late planning stages of a venture and will likely offer access to tunes from three global music companies as well as dozens of smaller brands. The service could start in the next several weeks barring any last-minute problems, it said.


Warner Music posts $16M loss
Recording company takes first-quarter loss on higher expenses and goodwill impairment charge, but revenue beats Wall Street's forecasts. Warner Music Group Corp., whose artists include Led Zeppelin and Josh Groban, posted a first-quarter loss Wednesday, hurt by higher expenses and an impairment charge. The recording company reported a loss of $16 million, or 11 cents per share, compared with a profit of $18 million, or 12 cents, in the previous year. The results included an $18 million goodwill impairment charge, which reflects the reduced current value of an asset, as well as increased selling, general and administrative expenses.

First Review of Sony BMG's MusicPass MP3 Card
This writer tested several cards including Ultimate Santana, a collection of 18 tracks and three bonus music videos. MusicPass.com began to automatically download four songs at once, but due to the large number of tracks and high file size (the videos were around 80 megabytes each) I ran out of time before all the material had transferred. Upon logging in again later, the site remembered me (via the pin/serial numbers) and picked up where it had stopped. Before long I was sweating on a spin bike grooving to “Oye Como Va” on my iPhone iPod.

Other items of note (from the post and the MusicPass FAQ:

• Each card has a scratch-off PIN code and serial number combination that are entered at the MusicPass site.
• After the consumer has downloaded the album, there is an opportunity to purchase a complete catalog album from the same artist.
• Said Sony BMG Nashville's VP of Digital Business,"They have to be activated at the register just like any other gift card purchase."
• The cards have no expiration date.
• The files are watermarked with "a unique code indicating that they belong to Sony BMG" but no personal information.
• Users are not required to enter anything other than the PIN code and serial number. An email address is optional (to receive artist info).

To watch a video about the MusicPass cards, go to the website and click on the "What Is MusicPass?" link.

Pirated by iTunes, Artist Turns to BitTorrent
The Flashbulb, aka Benn Jordan, became so outraged when he discovered that iTunes was effectively pirating his music, that he uploaded copies of his latest album to BitTorrent. TorrentFreak caught up with Benn to learn more about the decision to stop distributors and ‘coked-up label reps’ from getting all the cash.


Cablevision Will Let You Watch Movies The Day Of Their Release, If You Buy The DVD
We were surprised that even Apple was forced by the movie industry to delay the release of online movie downloads until a month after the DVD release. This seemed totally pointless and self-defeating by the movie industry (though, hardly the first time that's happened). However, it looks like Cablevision has discovered an interesting workaround to this "window" between releases: it's launching a video-on-demand (VOD) system that will let you watch movies the day they're released on DVD. The trick? You need to actually buy the DVD first, via Cablevision. Then, while you're waiting for the physical DVD to arrive in the mail, you're free to watch the movie via the VOD offering. Of course, this sounds something like what the original MP3.com used to do, allowing people to access MP3s of CDs they just bought, while they wait for the CD to arrive. And, as I'm sure many of you remember, the entertainment industry sued MP3.com and actually won that lawsuit.


Earnings: Napster Slims Losses In Q4; Revs Gain 15 Percent; DRM-Free Downloads By June
Napster narrowed its net loss to $2.8 million ($0.06/share) in Q4, compared to a net loss of $9.5 million ($0.22 /share) last year. Revenues continued to grow, reaching $32.8 million, up 15 percent from Q406’s $28.4 million. The company may also be starting to arrest subscriber losses, which were down less than 1 percent compared to Q307. The online music service also offered a look at its with cash holdings on a consecutive basis: by the end of the quarter, Napster had $69.3 million in “cash, cash equivalents and short-term investments,” an increase of $900,000 from the prior quarter.

Earlier this week, Napster bumped up subscription prices from $9.95 per month to $12.95 monthly - a 30 percent hike. Aside from that, Napster has also been focusing on building up its mobile services outside the U.S., particularly in Japan and Latin America. For the full year, the company’s revenues were up about 18 percent to $96.6 million from $89.1 million. However, total cost of revenues were also up, rising from $57.4 million to $68.4 million, a 19.2 percent increase.

-- Conference call: Chairman and CEO Chris Gorog began by saying he believes that the shift to the MP3 format will make things less complicated for consumers and for Napster, as the company prepares to offer DRM-free downloads at its download store within the first six months of this year. He twice boasted that Napster reduced its ad spend in Q4, yet still managed to generate more subscription trials, which he presented as proof that the company’s subscription is working. He believes the introduction of MP3 sales will attract more users to its subscription service.

snapshot 2/5/08

Apple unveils higher capacity iPod, iPhone models
Apple Inc on Tuesday introduced models of its popular iPod touch handheld computer and iPhone with double the memory available in previous versions. Apple, which said in January it had sold more than 4 million iPhones since sales began last June, says the iPhone will now also sell with 16 gigabytes of memory.

The iPod touch, a wireless touch-screen device that plays music and videos, adds a 32 gigabyte model. Both devices will sell for $499, Apple said. Apple will continue to sell its iPhone with 8 gigabytes of memory for $399, and two lower-capacity versions of the iPod touch, 16 gigabytes and 8 gigabytes, for $399 and $299, respectively.


Sales Bath Continues In January, Double-Digit Declines
The recording industry tailspin continued in January, a development that places more pressure on label reinvention plans. The month featured a 10.3 percent year-over-year decline in album sales in the United States, a drop that falls below an already-depressed 2007. For the period ending January 27th, cumulative album sales topped 30.6 million, according to figures released by Nielsen Soundscan.

As usual, the digital story showed gains, though growth rates are slowing. During the month, downloads increased 28 percent over the same period last year. That represents a more subdued gain over previous periods, and suggests a possible sales plateau ahead. In 2007, downloads increased 45 percent to 844.2 million units. Meanwhile, CD-specific sales were positively scary in January, dropping 15.9 percent to nearly 25.5 million units.


Reble, Reble, I Like Your Playlist
Reble is a scrappy YCombinator startup. The software is built on the Jabber open-source instant messaging platform You are basically IMing with your friends and hooking into their iTunes or other music library. You can only see the music of friends on your contact list, and can only stream a song if no one else is listening to it at the same moment. It is a one-to-one system.

But the more friends you invite, the bigger the music library that you can access. The software only works on Windows machines right now, and only streams DRM-free MP3s. Eventually, it will let you buy songs that you like from digital music stores like iTunes or Amazon.


...And Then There Were Two
...er, actually, three. That is Rhapsody, Napster, and Microsoft as the remaining major players in the on-demand subscription music service business. This deal more or less mirrors what Napster and AOL did, and Rhapsody and MTV did, not all that long ago. Jupiter remains as bullish as anybody on these services, which are awesome products that, so far, only appeal to a niche audience of music aficionados. We're projecting the $235M market (US, 2007) will grow to $600M in 2012, but we did lower our forecast a bit, as the business has remained sluggish and we've learned more about customers who subscribe. That forecast is in comparison with $1.1B in US downloads projected to hit $2.8B in five years.

Yahoo hopes to migrate its customers -- we estimate several hundred thousand -- over to Rhapsody during the first half, and will offer pro-rated refunds if necessary. SanDisk's very cool WiFi Sansa Connect device for YMU is history. While the potential of Yahoo's marketing clout behind the Rhapsody service is there, I've got to admit it didn't make YMU a leader. Yahoo did a few TV ads and plenty of promotion on its Music web channel -- which continues to be a great, ad-supported business for Yahoo -- before it soured on the subscription business and decided to narrow its focus. The proof will be in the execution of that joint marketing, and in integrating other Rhapsody services into Yahoo Music (and vice versa, if it makes sense).

snapshot 2/4/08

Yahoo says Rhapsody will handle its digital music
Internet media company Yahoo Inc said on Monday its music service will now be handled by Rhapsody America, an on-demand subscription service run by RealNetworks Inc and Viacom Inc. Yahoo, which previously said it would replace its in-house built Yahoo! Music Unlimited service, said it would migrate customers to Rhapsody over the coming months, while allowing subscribers to access their music library from a new Rhapsody account. Yahoo Music's monthly subscribers, who currently pay around $9 a month will eventually have to pay around $12.99 a month for Rhapsody when their existing contracts expire.


Super Bowl XLII Stuns; Music-Related Ads Proliferate

• As expected, Pepsi and Amazon proved a potent combination, thanks to a quick-moving ad spotlighting Justin Timberlake. The Pepsi Stuff spot featured Timberlake being magically dragged around town by a Pepsi-sipping fan, a teaser for a massive redemption program involving Amazon and its MP3-based download store.
• But superstar artists weren't the only ones featured during the game. Developing singer-songwriter Kina Grannis, winner of the Doritos "Crash the Super Bowl" contest, enjoyed an amazing promotional showcase during the first quarter. Grannis recently signed with Interscope.

If Yahoo can’t do it . . .
The deal leaves Rhapsody, Napster and Microsoft's Zune Pass as the last subscription services standing, with Zune Pass being available only to consumers who buy a Zune MP3 player. Previous casualties include MTV's Urge, AOL's MusicNet, Sony Music and Universal Music Group's Pressplay, and Circuit City's MusicNow. Put another way, some of the biggest names on the Web, the music industry and electronics retailing have ventured into the subscription music market, only to be forced into retreat.


Breaking: In The Middle of The Storm, Yahoo! Acquires Israeli FoxyTunes
A couple of weeks ago we reported several rumors of acquisition of Israel-based FoxyTunes a Firefox plugin that allows users to control their favorite media players from the browser. According to several sources the acquisition has been completed for an undisclosed amount of money. This happens as Yahoo decided to shut down its premium music service and reroute it to Rhapsody. Prior to Microsoft’s acquisition offer, Yahoo was intending to open an R&D center in Israel: FoxyTunes would probably become the intial operation. It is unclear however for now what would happen in the case of an acquisition by Microsoft.


Slacker Portable Player. Like Pandora To Go.
The system starts with the Slacker Radio service and 2 million songs organized into 100 pro stations, 10,000 artist stations and an unlimited number stations that you create. Like Pandora, your stations evolve over time by rating your favorite songs and banning artists or songs you don’t like. You can even fine tune your stations to play older or newer music, more hits or more eclectic music, or to help you discover more artists.

With the addition of the new Slacker Portable you automatically connect to Slacker over Wi-Fi when in wireless range or USB and instead of streaming, the player fills itself up with your selected music. This means you don’t need a continuous connection to play Slacker Radio. There are ads inserted into the streams but you can eliminate them by paying a monthly fee.


Go To The Movie, Get The Soundtrack For Free
Mark Cuban, who has actually been at the forefront of many of these ideas (and, also happens to very involved in the industry, though more on the independent side) has an interesting new suggestion. He points out that only a small number of people actually buy the soundtracks associated with movies -- but if you want to attract more people to go to the movie, why not give them the ability to download the soundtrack of any movie they go see in the theaters. Put a special code on the ticket stub that takes them to a download store -- and on that store include the soundtrack as well as extras, such as the script from the film. Obviously, this content will be spread around and can be accessed by others, but many will value the fact that by seeing the actual movie they get access to the official content. As Cuban notes, this can also be a win for the music industry, as a portion of the movie ticket sales can be used to compensate them as well.

snapshot 2/1/08

Keeping track of digital music
While Qtrax claimed to have done deals with all the major music labels, Sony Ericsson has completed a deal with 10 labels, including three majors, that will see an additional five million tracks added to its PlayNow Arena service. Initially launching in Scandinavia, Irish music lovers should be able to download music, games, ringtones and wallpaper directly from the service sometime before the summer. Sony claims its service differentiates itself by ensuring "the majority of the content is DRM free". DRM, or digital rights management, is the software that limits copying of digital music in order to protect the interest of the copyright holder. It is, however, a major irritant for people who listen to digital music they have bought on multiple devices.

Although PlayNow Arena has been around since early 2004, like all mobile music services that facilitate "over the air" downloading, it has failed to catch the imagination of consumers. The backing of labels such as Sony BMG, Warner Music, and EMI could change that. Games will be provided from publishers such as EA Games, Gameloft, THQ, Glu, Digital Chocolate, while PlayNow Uncut will feature new and emerging acts. Access to the PlayNow WAP portal will be automated from new handsets. They will also feature the TrackID function, currently only available on Walkman and other high-end Sony Ericsson handsets.


Quality doesn't equal popularity
The more interesting finding was the complete randomness of the songs that became popular in each group. There was almost no connection between "objective quality" (as measured by the control group) and popularity--the song "Lockdown" was ranked number 26 in terms of quality, but its popularity in the other groups ranged from number 1 to number 40. True, the very bad songs almost never finished near the top, and the best songs seldom finished near the bottom. But overall, finishing in the top five in quality only guaranteed a 50% chance of finishing in the top five in popularity in any given group.

Record company executives and marketers hated the study because it seemed to invalidate their genius at picking hits. But it's great solace for the countless talented songwriters and musicians who've received little reward apart from the music itself.


Digital-download tax legislation gaining momentum
Legislation that would impose a sales tax on downloaded music, movies and audiobooks is picking up steam in the Indiana General Assembly. Other e-tailers, such as Amazon, do not charge sales tax on digital downloads and may be affected if the legislation becomes law.


PassAlong Networks and Signifi Partner to Bring Millions of New Music Titles and the 'On Demand Digital Content Experience' to Consumers at Retail Stores
PassAlong Networks™ today announced a partnership with Signifi Solutions Inc.™, developers of Digital Kiosk Solutions, including QuickTUNES™ for digital music at retail, to bring the 'digital content experience' to retail stores. The partnership combines the powerful Signifi QuickTUNES retail music solution and PassAlong's deep catalog of licensed content. Consumers can choose from PassAlong's catalog of more than 3 million songs and by using an intuitive user interface, they can browse, select and buy mixed content and full albums and then download the content to their device or create a custom printed CD with attractive labeling. The same content is available for downloads online.


In Other News: RealNetworks Lays Off About 10 Employees In Music Division: Confirmed
Has been confirmed by RealNetworks music PR...offices affected are Seattle, New York and San Francisco. These layoffs happened two weeks ago, and affects about 10 people, not 20 as we reported earlier.


Vimeo Co-Founder Planning Online Music Venture
Vimeo co-founder and self-portrait artist Jakob Lodwick is planning some sort of online music venture called Normatism. The American record industry is in bad shape. It's not that bad, yet. But I don't want to wait around for it to crash. I don’t want to watch it get worse. Instead, I intend to capture the spirit of rebuilding. I want to pretend that the major labels were each hit with a hydrogen bomb, and now all these musicians are standing around, asking, "What do we do now?"

It also means that if you want to make money from music, you're going to have to pull your weight, or you will be left behind. In the old model, a small number of artists created a living for hundreds of label employees. When those artists realize they can split the money with a couple of partners instead, will they? I'm betting the answer is yes, and every musician I talk to seems to agree with me. I'm going to keep quiet about what I’ve accomplished so far, except to say that I've already signed one artist.


Vinyl Frontier: Left-for-Dead Music Is Resurrected for the Digital Age
Sure, iTunes has millions of tracks, but don't go looking there for obscure or out-of-print treasures like, say, the seminal stoner-rock stylings of Sir Lord Baltimore. Fortunately for music geeks, help is on the way. Keith Abrahamsson, an A&R rep for New York-based indie label Kemado Records, recently launched the first all-digital reissues label. At prices similar to those of Apple's square mass-market store, Anthology Recordings offers high-fidelity (320 Kbps), DRM-free rips of supercool, ultrarare titles — from late-'60s Swedish psych-rock to British postpunk and early-'80s dub.


A guided tour of the new AppleTV