Source: MySpace Music Considers Subscription Model

MySpace Music, that long slumbering music unit of the struggling social network, is considering whether to begin charging users, according to a source close to the negotiations.

The source said Wednesday that MySpace Music execs have spoken to some of the top labels about creating a subscription service. This apparently confirms a report published Tuesday by the Web site of Side-Line, a music magazine. Citing sources close to News Corp., parent company of MySpace, the publication said it wants to move MySpace Music to a paid model and that it's burning through a lot of money each month.

MySpace Music is a joint venture operated by News Corp. and each of the top four major labels.That MySpace is considering a move to a paid model isn't a surprise. First, MySpace Music has underachieved in terms of generating revenue, multiple music industry sources said. "Numbers have been dipping of late," said a music industry source. Meanwhile, News Corp. Chairman Rupert Murdoch has been a vocal proponent of charging for online content, at least for some of his company's digital ventures, including video portal Hulu and the online arm of The Wall Street Journal.
Warner Music Group, the third largest record label in terms of market share, has also apparently grown skeptical about ad-supported music services. According to the source who spoke to CNET, MySpace Music would like to launch a subscription service before the end of the year.

Courtney Holt, the music industry veteran who MySpace hired away from MTV in 2008 to operate its music division, issued a statement in response to questions from CNET.
"We're always exploring new monetization opportunities, but have no plans to change our current service which includes streaming free music," Holt said.
MySpace Music's discussions with the labels come at a time when the practice of offering free streaming music to listeners PCs and then paying for the songs by selling advertising, appears to be coming to an inglorious end. Many of the players that attempted this risky model have perished (SpiralFrog and Ruckus), or been acquired (Imeem).

For MySpace, prospects look almost as bleak. When Murdoch first acquired the social network, he was applauded for being an old media baron who understood the value of new media. Well, five years and $500 million later, MySpace has fallen out of favor with the all-important 18- to 35-year-old demographic, been completely eclipsed by rival Facebook, and has made hardly a peep about its stated plans to turn itself into an entertainment hub.

News Corp. is apparently scrambling to replace the $900 million advertising deal with Google that runs out in August. Google cut that deal when MySpace was still the social-network leader. News Corp. won't make anywhere near that amount now.

Greg Sandoval covers media and digital entertainment for CNET News. He is a former reporter for The Washington Post and the Los Angeles Times. E-mail Greg, or follow him on Twitter at@sandoCNET.

Limewire Sued Again by the Music Industry

Today eight members of the NMPA, among them the four major record companies, have again filed suit against Mark Gorton, founder of the popular p2p file sharing service Limewire.

Not surprisingly the claim once again is one of copyright infringement on a large scale.

As the plagued file sharing service is doing its best to convince the district judge, not to shut down the service, after a previous major victory of the RIAA, this new claim could not have come at a worse time.

The group of publishers made a request to the court, to order Limewire to cease violating their copyrights, and also filed a claim for $ 150,000 in damages, for each music file that was intentionally infringed, as well as $30,000 for all other types of infringements.

To date the amount of violating files trades through the service goes well into the hundreds of millions, so in case the plaintiffs win the amount to be awarded would be staggering.

While the RIAA has spent well over four years, doing legal battle with the P2P service, the timing for this new claim is typical to say the least, and makes one wonder why now?

According to the president of the NMPA, this is not a matter of piling case upon case, but a simple attempt from the music industry, to claim what is rightfully theirs, in order to divide this money amongst the 2500 companies and songwriters the organization represents.

In a response Limewire stated that it is in the process of recreating the service, and turning it into a legal one.

Back to the Stones' Age for the Music Industry

Reprinted from: The California Chronicle

Average revenue per user (ARPU) is a familiar concept in industries such as telecoms. It's less common in the world of content, but it's already finding favour in the music industry as a new way of charging.

I came across the approach when I interviewed Scott Cohen, the co- founder of US-based digital music distribution business The Orchard, last month at the Sensoria festival of film and music in Sheffield . His view is that the record industry has spent too long selling a single piece of product, the CD, to as Average revenue per user is finding favour in the music industry as a new way of chargingmany people as possible. Now download services, both legal and otherwise, have resulted in the quantum of music becoming the track rather than the album, and margins are being forced down. The only ways to boost revenue are either to charge more per transaction, tricky in a world where the price point has been set by someone who sells computers, or to drive more transactions.

Cohen argues instead that bands should work out how much their most avid fans have available to spend on their products, and then create enough material to soak up that spend. This pulls in the money from the highest spending part of the fan base, but also provides plenty for the less committed to choose from.

Disney is great at this, as any parent who has shelled out for all three High School Musical DVDs, plus the backpack, pyjamas, special edition of Twister and so on will confirm. But the concept is illustrated just as well by the reissue of The Rolling Stones' Exile On Main Street. There's the album on CD, the Deluxe CD edition, the vinyl edition and, of course, the Super Deluxe CD/DVD/ vinyl edition. Cohen's view would undoubtedly be that the Super Deluxe edition is the fountainhead from which all the others flow, separating, as it does, the die-hard Stones fan from pound 159.99 while creating the other versions to be monetised separately.

Since the early 1980s, the release schedule for bands has been an album every two or three years, allowing time for the band to tour all major markets and thus maximise sales of the latest album. The ARPU model would see a return to the days when the likes of the Stones would record two albums a year, and pause briefly in their touring to knock out a couple of singles that wouldn't appear on albums.

Other types of content have yet to feel the full effects of digitisation and illegal file-sharing, although the iPad has brought that day a lot closer for the book trade. One of those effects is to show that formats once thought immutable are just artefacts of technology and commerce.

The serialisation of novels, commonplace for Charles Dickens, died out early last century. But if the emphasis turns to increasing numbers of transactions on the internet, as Cohen says, then the hardback may be replaced by the pay-as-you-go serial, which is only later available as a collectors' edition, including interviews with the author and a documentary about its writing directed by Julien Temple.

Copyright: Centaur Communications Ltd. and licensors

(c) 2010 New Media Age. Provided by ProQuest LLC. All rights Reserved.

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British Recorded Music Sales Rise for the First Time in Six Years

Reprinted from the Times Online

Susan Boyle, Lady Gaga and Take That helped the British music industry to grow in value for the first time in six years, according to official sales figures released today.

Record labels, which have faced a slump in CD sales and a long-running battle against internet piracy, experienced a rise in income from music sales from £916 million to £929 million in 2009, the British Phonographic Industry said.

The surprise increase marks the first time that the growth in income from digital services such as iTunes has outweighed the decline from sales of CDs. Income from digital singles and albums leapt by 53 per cent, to £154 million, while physical formats dropped 6 per cent to £740 million.

Album sales, which dropped in value by 7 per cent, would have fallen even farther had it not been for Boyle, the Britain’s Got Talent finalist, whose album - I Dreamed a Dream — became the fastest selling debut album of all time, selling more than six million copies worldwide.

Lady Gaga topped the single sales charts for the year, with Poker Face, helping combined digital and physical sales grow by 40 per cent, to £91.3 million. Another surprise boon for the industry came in the form of Take That. The boyband’s DVD, The Circus — Live, sold more than 570,000 copies, propelling music DVD sales up by 16 per cent, to £33.1 million.

The biggest growth came from advertising supported services such as Spotify, we7 and YouTube, which accounted for a 247 per cent growth in revenue, to £8.2 million. But despite the huge leap in income from the cutting-edge companies, their contribution to the music industry still consitutes less than one per cent of the total income.

Record labels have spent the past six months engaged in furious lobbying efforts to persuade MPs to pass the Digital Economy Act, which creates new measures to temporarily disconnect the internet connections of those who consistently flout piracy laws, as well as take down websites that host illicit content.

The Act was passed this month after a behind-the-scenes deal between Labour and Conservative MPs. But music industry executives are still not certain that the measures will come into force; the Liberal Democrats have vowed to use their influence in a new Parliament to repeal the new laws, which the party says will criminalise teenagers.

Geoff Taylor, chief executive of the BPI, said: “It’s encouraging to see industry revenues stabilise and even show modest growth in 2009. This is testament to continuing investment by UK labels in talented artists despite challenging economic conditions, and the innovation labels have shown in licensing new digital services.

“But let’s put it in broader perspective: 2009’s modest result follows a five-year drop in annual income, and total industry income has not exceeded £1bn since 2006. The CD continues to show greater resilience than many predicted – it is an excellent digital product.

“The pace of growth of new digital services is encouraging, but the size of the market continues to be constrained by competition from illegal downloads.”

Disney to Close Lyric Street Music Label

Reprinted from The Wall Street Journal

By KATHY SHWIFF
Walt Disney Co.'s music division said it will close Lyric Street Records, its label in Nashville.

Lyric Street has produced recordings by artists Rascal Flatts and Shedaisy, as well as Aaron Tippen, Love & Theft, Sarah Buxton, and "American Idol" alums Josh Gracin and Bucky Covington since it opened in 1997.

"Given the changing nature of the music business and the more streamlined priorities of the [Disney] Studios, we need to find alternative ways to create and market new artists and their music to consumers," said Bob Cavallo, chairman of Disney Music Group.

Disney said it will phase out Lyric Street operations while keeping a core promotions team to market and promote the label's current records. Rascal Flatts will be moved to another Disney Music Group label, which will release the group's fall album. Disney Music Group handles all Walt Disney Studios' recorded music and music publishing operations, including Hollywood Records, Walt Disney Records and Walt Disney Music Publishing.

Disney Studios, which for two quarters last year reported its first operating losses since 2005, has shifted its strategy to focus on films that are essentially brands--like a planned Muppets movie--that can be exploited across its network of theme parks, videogames and commercial products.

Chairman Dick Cook was replaced last year by Disney Channel head Rich Ross, whose mandate from Disney Chief Executive Robert Iger was to redefine the studio in much the same way he had rebuilt the company's cable-TV network. Mr. Ross reinvented the cable network--formerly a sleepy outlet for old Disney movies--by creating tween-oriented entertainment like "High School Musical" and "Hannah Montana," that drove profits for the radio, consumer products, recorded music and live-events divisions.

Write to Kathy Shwiff at kathy.shwiff@dowjones.com

Commerce Dept. Backs Radio Royalty Bill

Agencies, Intellectual Property
Thursday, April 1, 2010 5:44 PM
Reprinted from www.nationaljournal.com

By Sara Jerome

The Commerce Department voiced support Thursday for legislation that would require AM and FM radio stations to pay performers a fee when they air their songs.

"In today's digital music marketplace, where U.S. performers and record labels are facing both unprecedented challenges and opportunities, the department believes that providing [incentives for artists and recording companies] is more important than ever," Commerce Department General Counsel Cameron Kerry wrote in a letter to Senate Judiciary Chairman Patrick Leahy, D-Vt.

Performance rights legislation was approved by both the House and Senate Judiciary committees but remains fiercely opposed by broadcasters. Music industry groups argue that musicians are paid by satellite and Webcasters for playing their songs and AM and FM radio stations should have to pay as well.

"The Obama administration is the latest, but not the first to support congressional efforts to close the loophole in copyright law that allows radio stations to earn billions without compensating the artists, musicians and rights holders who bring music to life and listeners' ears to the radio dial," said Martin Machowsky, a spokesman for the MusicFIRST Coalition, which represents a dozen music industry groups. "This is a great momentum builder for our fight to win fair pay for airplay for American artists and musicians in the U.S. and around the world."

Broadcasters say performers benefit from the exposure they receive from free radio airplay and argue the fees would place a big financial burden on local stations that are still struggling from the weak economy.

"We're disappointed the Commerce Department would embrace legislation that would kill jobs in the U.S. and send hundreds of millions of dollars to foreign record labels that have historically exploited artists whose careers were nurtured by American radio stations," National Association of Broadcasters spokesman Dennis Wharton said in a statement. He noted, however, the support broadcasters have from 260 House members and 27 U.S. senators who have signed on to a resolution opposing the performance rights legislation.

Citigroup could veto EMI licensing deal-sources

EMI in talks for North America licensing deal, sources say

By Simon Meads and Kate Holton

LONDON, March 22 (Reuters) - EMI Group [LNDONE.UL] is talking to rivals about licensing its music in North America but could fall foul of a requirement that Citigroup (C.N) approves any deal, sources familiar with the situation said.
EMI, owned by Guy Hands' buyout house Terra Firma [TERA.UL], has been talking to Universal (VIV.PA), and a couple of other unnamed parties, about leasing its recorded music in the United States for a period of five years for about 400 million pounds ($597.9 million), one of the sources said. However EMI's U.S. assets form part of Citigroup's security on its 2.6 billion pounds in loans for the business, meaning EMI will need the approval of the U.S. banking giant to push ahead with the sale, a separate source said.

Universal is the world's largest music company, owned by Vivendi, while EMI is currently the fourth largest, and it has always struggled in the United States.
EMI, which recently posted a 1.56 billion pounds full-year loss, is set to fail a test of its banking covenants at the end of March, meaning it has until mid-June to inject money to get the business back within the terms of its debt. [ID:nLDE62F1E1]
Citigroup would not withhold its approval of a deal, should EMI be able to show it was in the music company's best interests. However, should it believe a deal is not in the interests of the wider stakeholder group, it could decide not to approve it, the source added.

Another music industry source who asked not to be named pointed out that an agreement of this sort had not been done before on this scale, and said it would be very difficult to agree in such a short space of time. The industry source pointed out that any agreement for the world's biggest and most influential music market would have to resolve issues such as dealing with royalties, who would provide tour support and antitrust issues. Executives within the industry also questioned the price as it is not clear how much the entire EMI recorded music business would be worth.

At three times historic EBITDA, the recorded music division could be worth around 1 billion pounds, before any discount to peers to reflect its recent loss of some artists. Music industry sources say EMI, which has such artists as the Beatles, Coldplay and Lily Allen, has held talks with lots of groups to discuss its options. Assets that are often touted as possible disposals include EMI Japan or the classics division.

Forrester analyst Mark Mulligan told Reuters any licensing deal would be very complicated but he said the company was under pressure to bring in cash.
He also said that EMI was historically weak in the United States and may be willing to try alternative options there, as opposed to other markets where it is stronger.

(Additional by Yinka Adegoke in New York; Editing by David Cowell)