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Simple Economic Deduction
November 14, 2008
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"I believe in the Wal-Mart school of business. The less people pay, the more they enjoy it."
-- Garth BrooksI don't think it's necessary for me to report on economic conditions.
Things are bad out there and we all know it. How could we not with every cable news network talking about it everyday, and more companies asking for billions from the government for corporate bailouts, which we, the taxpayers, will get the bill for. And now "another one bites the dust."
In the continuing saga of the shrinking retail landscape for CDs, this week consumer electronics retailer Circuit City filed for bankruptcy protection. All of Circuit City's problems cannot be blamed on the economy. When you owe close to $400 million to a long list of creditors (including HP, Sony Computers, Samsung, Toshiba, Zenith, and more), things were obviously not going well for some time. The economic downturn probably accelerated Circuit City's problems, but I'm guessing there were other factors in play.
In any case, "according to filings obtained from the United States Bankruptcy Court for the Eastern District of Virginia, Circuit City owes one-stop music distributor Alliance Entertainment a massive $15,799,754, the sixth-largest debt on the books. The Coral Springs, FL-based Alliance distributes to various chains -- including Circuit City -- for the major labels, as well as a range of independents." (Source: http://tinyurl.com/6apf2p )
Needless to say, that ain't hay.
In the continuing saga of the shrinking retail landscape for CDs, this is the kind of news the industry did not need as the Christmas buying season gets under way.
There was also news this week that in this economy, "it's no secret that consumers are looking for stores that can save them money, Wal-Mart Stores' latest results offer plenty of additional evidence. The Bentonville, Arkansas based retailer says sales for the third quarter jumped 7.5% to $97.6 billion, while income from continuing operations gained 6.6% to $3.03 billion. And its comparable-store sales gained 2.7% in the quarter, excluding gasoline sales, while its Sam's Club division gained 4.5%." (Source: http://tinyurl.com/5nge8h )
I'm not suggesting Wal-Mart is the retail answer to the problems at hand, but I'll repeat what I wrote in the newsletter back in December of 2003: "Everybody loves getting more for their money. It's a whole NEW ECONOMY out there ... and price rules. Just ask the world's #1 retailer, Wal-Mart."
In October of 2006 I wrote: "The nation's #1 retailer is Wal-Mart. I don't think for one second it's because of the great shopping experience one finds when going there. Nope. It's 'Everyday Low Prices.' Other retailers are complaining that Wal-Mart's domination in the marketplace might destroy competition which in the end will hurt consumers. In the meantime, Wal-Mart opens more stores and finds success after success. It's a new retail marketplace out there in middle America, folks."
I'm not an economic analyst, but it sure doesn't take a whole lot of schooling to see that Wal-Mart and other progressive and aggressive retailers like Target, Best Buy, etc., have been where America has been shopping more frequently year after year. And again, it's not because of the "great shopping experience" people find in these stores. It's price.
Price.
The price of homes has plummeted. The price of cars has plummeted. The price of clothing has dropped year over year for over a decade. Consumer electronics are expected to drop even more this Christmas season, and post-season as well, as suppliers do everything possible to reduce inventories.
Now, more than ever, the music industry needs to react to what's going on and reduce CD prices ASAP.
There's a lot of disposable music on the radio now.
If the industry doesn't react to the realities of the changing retail landscape, they will soon find out that much of that music will be disposable at retail as consumers change their buying habits dramatically.
MySpace Could Develop iPod Competitor
ReutersChris DeWolfe, co-founder and CEO of MySpace, on Thursday said, "It's possible" that MySpace could develop a digital music player to rival Apple's iPod, although he said that there are no immediate plans to do so. "Right now, we're just focusing on the service," DeWolfe told an audience at the Web 2.0 summit, referring to the joint music venture his company recently launched with several major record labels.
The service, called MySpace Music, launched in September with the aim of becoming the de facto music destination on the Web. Among other things, the ad-supported site allows users to stream music from its partner catalog for free. McDonald's, Sony Pictures, Toyota and State Farm have sponsored the site. DeWolfe also presented early usage numbers of the new MySpace Music. Within the first few days of its launch, people streamed music more than 1 billion times, creating more than 80 million playlists. Some five million bands have uploaded their music to the site since.
Read more about it by clicking here.
Live Nation To Sell Major Label MP3s On Artist Pages
(From WIRED) -- Live Nation, which has been on a tear recently with major artist signings and its own ticketing system that will soon replace a contract with Ticketmaster, has confirmed that it will sell unprotected MP3s from three of the four major labels. Rather than an iTunes-style database, Live Nation's MP3 store will route fans to artist pages somewhat similar to the ones found on MySpace.
The deal represents another major label move away from DRM, but it also strengthens Live Nation's position as a one-stop-shop for all things relating to its artists.
Read more about it by clicking here.
Long Live Ad-Supported Digital Music Models
Online music moguls took the stage at the Piper Jaffray Global Internet Summit 2008 in Laguna Beach, Calif., to debate business models for digital content. All agreed that an ad-supported free music model makes the most sense, but the biggest challenge for distribution channels has been to make money. For starters, the cost -- about 1 cent per track per stream -- doesn't allow sites like MySpace Music to sell ads at a CPM rate high enough to justify the spending.
Read more about it by clicking here.
Is Project Playlist Another Online Music Also-Ran?
The New York TimesFollowing former Facebook No. 2, Owen Van Natta's decision to take the top job at music startup Project Playlist, New York Times technology columnist Saul Hansell asks, "What does Owen Van Natta know about how to make money from music on the Internet that hundreds of others before him couldn't figure out?" Project Playlist, after all, is yet another fast growing music site that record companies are accusing of promoting piracy.
"From the original Napster to Rhapsody and iMeem today, music has been the Bermuda Triangle of the Internet, swallowing anyone foolhardy enough to try to navigate its treacherous waters," Hansell says. The reason for this is simple: Record labels want to charge higher prices for the right to play their music than service providers like iMeem can recoup from advertising or subscription fees.
Project Playlist fits right into that picture as a music search engine with its own media player that hopes to earn money by selling advertising and ringtones. Crucially, it also hopes to one day earn the blessing of the major record labels. "When you operate businesses like these, where you are trying to make money out of commerce and advertising, a lot of the leverage comes out of scale. Playlist does have scale," he said, to the tune of 9 million monthly users. Hansell points out that MySpace Music, by comparison, has 35 million users, and 5 million pages hosted by musicians and bands.
Read more about it by clicking here.
Judge In Napster Trial Plots Copyright Reform Plan
The judge who presided over the original Napster-killing trial seven years ago proposed a plan yesterday to reform copyright and establish both private and public organizations to license and enforce the law in this digital age. "There needs to be a comprehensive revision of the provisions that relate to the administration of copyright licensing, royalties and enforcement," Judge Miriam Hall Patel said.
Read more about it by clicking here.
Rolling Stone: The 100 Greatest Singers Of All Time
Aretha Franklin came in at #1. But see the whole list, which includes John Lennon, Bob Dylan, Paul McCartney, Ray Charles, Elvis Presley, Sam Cooke, Marvin Gaye, Johhny Cash, Elton John, Smokey Robinson, and all the rest, and read thoughts on the greats from Bono, Robert Plant, Mary J. Blige, James Taylor, Jackson Browne and more on the choices.
Read more about it by clicking here.
PizzaHut.com Adds Music Downloads To Its Menu
"This is a first for Pizza Hut," a company representative says. "Music has always been an integral part of our marketing, but this is the first time we've partnered with an online retailer like eMusic to make an exclusive offer available." He adds it is also the first time eMusic has been able to offer 75 free downloads.
Read more about it by clicking here.
iPhone News
The iPhone 3G deposed Motorola's Razr as the most popular mobile phone in the U.S. during the third quarter, according to market research firm NPD Group. It marks the first time a smartphone has become the top-selling consumer phone, and the first time in three years that the Razr has been bumped from the No. 1 slot.
Online rumors are circulating this week that the new iPhone OS v2.2 will be out by November 21st. That could just mean that developers will be getting an advance copy to test against their applications that day, but it could also mean that Apple plans to release the update as of that date. The update is reportedly going to bring iPhone users the Google Street View feature as well as over-the-air podcast downloads, among other things. An earlier report had pegged the release of that software for October, but that clearly hasn't happened.
In other news, Apple's iPhone has half the failure rate of RIM's BlackBerry in the first year of use, a study carried out by a mobile-phone warranty firm has found. The SquareTrade study released Saturday, looked at more than 15,000 handsets that were covered by the company's policies. It found iPhones had a malfunction rate of 5.6% in the first year, compared to 11.9% for Research In Motion's BlackBerry smartphones.
BRITNEY AND JUSTIN DO MADONNA
Britney Spears and Justin Timberlake joined Madonna onstage last week during Madonna's show at Dodger Stadium in Los Angeles. During "Human Nature," Spears emerged, sharing the singing duties with Madonna before being lowered into center stage to make her grand exit. Justin Timberlake also showed up later in the night, joining Madonna as he often does for the song "4 Minutes."
FACES TO REAPPEAR
Rod Stewart has confirmed that he and Ronnie Wood are planning a Faces reunion. "Yes, absolutely. We have our first rehearsal on Monday," Stewart said of the Faces, who broke up in 1975.
BETTER THAN A GOOD ROYALTY CHECK
Lars Ulrich's famed Basquiat painting "The Boxer," as featured in the Metallica documentary 'Some Kind of Monster', hit the auction block yesterday at Christie's. The painting netted $12 million.
SPITZER GETS OFF EASY
Manhattan U.S. Attorney Michael J. Garcia announced last week that former N.Y. State Governor Eliot Spitzer will not be charged with a crime for patronizing a high-priced prostitution ring. (Editor's note: He should be charged with extortion for what he did the to the radio and record industry)
I GUESS ANY EXPOSURE THESE DAYS IS MEANINGFUL
The Foo Fighters will appear on reality show Top Chef to guest judge a special Thanksgiving episode. "Foo Fighters' Thanksgiving" will air on November 26th.
RED HOT REALITY
Red Hot Chili Peppers frontman Anthony Kiedis is reportedly developing a drama series based on his "unconventional, rock n' roll childhood." "Scar Tissue" will document Kiedis' life as his father sold drugs and hung out with rockers in Hollywood.
CMA NODS
Congrats to Kenny Chesney, who was named Entertainer of the Year. Other CMA winners include -- Male Vocalist of the Year: Brad Paisley; Female Vocalist of the Year: Carrie Underwood; Vocal Group of the Year: Rascal Flatts; Vocal Duo of the Year: Sugarland; New Artist of the Year: Lady Antebellum; Album of the Year: George Strait, "Troubadour."
LIVE MATTHEWS
The Dave Matthews Band will release a pair of live albums on December 16th. "Live At the Mile High Festival" features DMB's July 2008 concert in Denver, while "Live Trax Vol. 13" captures the band's June 2008 St. Louis show.
GENE BEATS KIDS AND DOES GOOD
Kiss' Gene Simmons proved he was more intelligent than the average elementary school student after raking in $500,000 on the game show "Are You Smarter Than A Fifth Grader." Simmons will donate the sum to the Glaser Pediatric AIDS Foundation.
BILLIE JOE SNEAKERS FOR GOOD CAUSE
Green Day's Billie Joe Armstrong has become the latest rocker to get his own signature pair of Converse shoes. Portions of sales from Armstrong's hemp-and-leather shoes will go to the Global Fund to Fight AIDS.
WORLD MUSIC NODS
Coldplay was victorious at this year's World Music Awards in Monaco, winning both the ceremony's "World's Top-Selling Act" and "Rock Act of the Year" awards. Beyoncé and Kid Rock, who won the "Male Pop" award, performed at the event. Ringo Starr was also on hand to accept the "Diamond Award" on behalf of the Beatles. The Diamond Award is given to those few artists who manage to sell over 100 million albums. Other winners included Leona Lewis for the "Best New Artist."
XM AND SIRIUS FINALLY ONE
XM and Sirius satellite radio stations merged this week. Each sides' premium channels and talent mostly stayed intact, with stations like Howard Stern, the Grateful Dead Channel and Eminem's Shade 45 all making the jump to XM users, while Sirius listeners acquire Bob Dylan's Theme Time Radio Hour, Tom Petty's Buried Treasure and B.B. King's namesake blues station.
NO REASON TO SHOUT YAHOO
Things are just turning from bad to worse at Yahoo. First came the turning down of Microsoft's $31 and $33 per share offers, and then came the eventual collapse of its proposed search deal with Google. Now, Yahoo is trading at close to $10 per share.
PASSING
Ex-Jimi Hendrix Experience drummer Mitch Mitchell was reportedly found dead in a Portland, Oregon hotel Thursday morning. Early reports indicate he died due to natural causes. Mitchell is the second drummer associated with Hendrix to die this year: Hendrix's Band of Gypsys bandmate Buddy Miles also passed away in February.
PASSING
Jamaican music legend Byron Lee passed away last week after a battle with cancer. He was 73. Along with being the founding member of the Dragonaries, he also help establish the studio Dynamic Sounds, where the likes of David Bowie and the Rolling Stones would record.
Quotes of the week
"I voted for Obama and woke up the morning after he was elected and I asked myself 'Did I make a mistake voting for this guy?'... I mean, I make a million a year on a radio show working with Howard Stern and watching strippers ... do I REALLY want change?"
-- Comedian Artie Lange on David Letterman."The Eagles use of 'all-in ticketing' is the first step in Ticketmaster's transformation to an all-encompassing entertainment company to allow artists to connect to their fans in both new and innovative ways."
-- Ticketmaster CEO Irving Azoff, announcing this week that Ticketmaster will eliminate the convenience fees on Eagles tickets for the band's upcoming January 2009 shows."His drinking problem got the better of him. He wasn't at his best. So it was a very tricky time in that sense. But even Keith Moon at his worst was amazing. You can't keep a drummer out of work. They have to drum. You have to get that energy out."
-- The Who's frontman, Roger Daltry, at a Los Angeles screening of "The Who: At Kilburn 1977" this week, to Rolling Stone."See, this one even comes with a phone. So he can break up with other dolls."
-- Taylor Swift, taking a dig at ex-boyfriend Joe Jonas's doll, on her MySpace vlog"I am still, at heart -- and always will be -- just a punk kid with tattoos."
-- Angelina Jolie, on how she sees herself, to 'Harper's Bazaar'. And how disingenuous of you, Angie. You see, "punk kids with tattoos" don't have gazillions of dollars, fly around the globe in private jets, and have expensive wardrobes."Tired old diva bitch."
-- Cher, once again being totally honest in describing who she really is despite her ever-changing look, on "The Ellen DeGeneres Show""You do look good in my shirt. And out of it! But that's a different story."
-- Keith Urban, making wife Nicole Kidman blush in the audience, at a party for his recent hit song, "You Look Good in My Shirt""He's producing my next record."
-- Bette Midler, joking about another collaboration with rapper 50 Cent, after working together to open The Curtis "50 Cent" Jackson Community Garden in Queens, N.Y."There's no holds barred for anything. It's really the future and can go anywhere. It's exciting to challenge myself in that way and explore."
-- Christina Agilera, commenting on her next studio album.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
CEDAR RAPIDS, IA-Kevin Higgins always hated gym class. Like many of his classmates, he questioned the relevance of things like "exercise" and "physical fitness," and wondered if these skills would ever provide any practical, real-world benefits. Though he endured more than 720 hours of gym over 12 years, the 32-year-old accounting clerk said Monday that he has still never used physical education once in his life.
"I don't know why they bothered teaching us all that stuff," said Higgins, who since graduating has not once encountered a situation that required him to move his body at a sustained pace or keep himself in healthy shape. "I mean, come on, when will I ever need to physically exert myself for an extended period of time?"
Read the rest here and laugh: http://tinyurl.com/54u9dm.
THE RADIO INTERVIEW on 'THE AMERICAN PERSPECTIVE' - From newsblaze.com
"Steve Meyer is on the front line of global music sales and distribution which he expects will soar to pocket-bursting levels. What's more, he shares his insight and ingenuity with us. Steve gives us both historical perspective and futuristic vision as he chats with Judy about the love of his work, trends of the business and his personal points of view about success, happiness and blending life with the lust for life. Steve joins Judy and helps us discover the thrill of having it all with a sense of balance and purpose. "
You can listen to an interview I did with Judy Piazza of 'The American Perspective' by clicking here: (It runs about 15 minutes)
http://www.thesop.org/index.php?id=10306.
The Blogs
Check out a great blog by Jerry Del Colliano, the Director Executive Programs, Clinical Professor Music Industry & Recording Arts, at the Thornton School of Music,University of Southern California, by clicking here: http://www.insidemusicmedia.blogspot.com.
Box Office
Check The Daily & Weekly Box Office (and more film info) at: www.boxofficemojo.com.
TinyURL
Check out www.tinyurl.com where you can make a smaller URL that will work for any webpage you wish to link to or reference. (As you can see, I'm using it in my news stories above!)
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