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Media Hoopla: UMG Goes Month-To-Month With iTunes
July 13, 2007
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"When your customers are iPod addicts, who are you striking back against? The record companies now have to figure out how to stimulate competition without alienating Steve Jobs, and they need to do that while Steve Jobs still has an incentive to keep them at the table." -- Ken Hertz, an entertainment lawyer who represents artists including Beyoncé and the Black Eyed Peas. (From the NY TIMES article "Universal in Dispute With Apple Over iTunes,' July 2, 2007).
If you haven't already heard about it on the cable news channels, or read about it online at one of the dozens of websites that made it seem like this was the most important news story about the music business in years, the Universal Music Group (UMG) announced two weeks ago that they were not renewing their annual contract to sell music on iTunes, but would now go on a month-to-month basis.
The front page of the DRUDGE REPORT had this lead item about it all: "FLASH: APPLE FACES A REBELLION OVER ITUNES." OK, I know that's not the best source to get your news from, but millions hit the site every day and read those leads without digesting the whole story.
Rebellion? Gee, I dunno ... it sure didn't seem like that to me. Once you read the whole story you realized there was more to the story than meets the eye. Without having any knowledge of why UMG made this decision, I can only guess at some of the possible reasons why they would make such a decision.
The first thing that came to mind was it's all about the money. Maybe UMG wants to get more from Apple and increase prices of its music online. That sounds like good business sense, right? In my opinion, NO. iTunes has sold over 2 billion songs at 99 cents and has just started selling DRM-free music from EMI for $1.29. Any increases by any music label or group at this point in time when the industry is in dire straits (see the first two lead news stories below for further analysis) could very well drive those people now happy to BUY music at these prices, back to illegal downloading and file-sharing.
Another possibility, maybe UMG is planning to launch its own online music store. That would be a smart move, too, I guess. But now that iTunes is the global brand for buying music online, why would anyone want to limit a great distribution channel that's linked to the #1 portable music player in the world, the iPod? Launch your store, but sell your music everywhere you can to make it easier for everybody to find it and BUY it rather than steal it.
With over 2 billion songs sold, I don't think any artists getting those checks from iTunes are at all unhappy. I don't hear Bono complaining, or Bob Dylan, and I get e-mails from independent artists and labels who tell me they are thrilled to have their music on iTunes and get those checks. So if Bono and other artists want their music on iTunes, how will their labels stop them?
Yes, UMG is a BIG music company. Yes, I think that Apple would rather have their music on iTunes than not. So I assume so sort of agreement will come out of all this. But to blame Steve Job's for thinner profits from the sales of online music is just pointless and way off base. Before iTunes, rampant theft of music online. After iTunes, 2 billion SOLD = 2 billion fewer stolen. If the labels are unhappy about the 99-cent pricing, they should rethink CD prices yet again and lower them too a price that consumers feel is actually worth it to buy a disc that only contains one or two good songs.
Of course if the labels really want to increase revenues, they need to shift their focus away from the great majority of disposable music they are releasing to make quarterly numbers, and get back to building rosters with artists that make great albums. Because when great albums are made, the results at retail are huge. (e.g., Carrie Underwood is 5 million-plus and still selling, Chris Daughtry is 2 million-plus and still selling, etc.) In fact, nothing would expedite revenue growth faster than selling more albums and less tracks. Online or off.
Whatever the reasons for UMG's decision, it would be very unwise for any label or music group to create problems with any online retailer. Whether it be iTunes, amazon.com, Wal-Mart.com, etc.
With all the problems the industry has, the last thing anybody should be thinking about right now is building a better mousetrap. Just put something else in the trap other than cheese. Give the consumers something else for their money and they might bite. See what happens.
AND NOW THIS
In the last issue of the newsletter, I responded to an article in the Los Angeles Times about the alleged dispute between Kelly Clarkson and Clive Davis over her new album "My December."
I closed my commentary by saying "Commercial success (like Ms. Clarkson's last effort, which sold over 5 million) needn't compromise artistic vision."
I was most saddened to read in the New York Post's "Page Six" section this week that in the upcoming August issue of Blender magazine Ms. Clarkson says she told Clive Davis prior to the album's release: "I don't know you very well, and I am not a bull-[bleep]er. I get [that] you don't like the album. You're 80; you're not supposed to like my album."
Dear Kelly: First of all, Mr. Davis is NOT 80. Second: You don't know him very well? One would assume that after you sold 5 million-plus on your last album, you might have spent some time getting to know and thanking key executives at the label, especially Clive, who steers the ship. More important, every artist Clive's ever worked with has always talked about how accessible he was during projects he's involved with. If you don't know Clive very well, Ms. Clarkson, I'd say it's your fault, and as an artist with such a success story, I would think you'd want to spend more time with a man who has guided so many other artists to great success.
Ms. Clarkson goes on to say in the article: "One reason I don't like working with people at the label is that they lie ... If you're going with the flow and not fighting, that's settling. I can't take that. Life is just too short to be a pushover."
Well, what exactly did they lie about, Kelly? They gave you their best input, as all good responsible record people should do. To not do so would be irresponsible, and it would evidence a lack of attention to a very important project. If indeed Clive and other label executives did have some criticism about the project you didn't like, would you rather they not tell you? Then who would you blame later on if things didn't go the way you expected? Why, the label, of course. Or maybe your manager? (Ms. Clarkson fired her manager right before the new album was released and then had to cancel her summer tour due to poor ticket sales.)
I'm not going to start listing all the artists who have said great things about Clive. This isn't me doing a cheerleader piece for Clive. (And no, I've never worked for him.) He doesn't need that. But Ms. Clarkson's comments evidence a whole lot of unprofessionalism on her part. And what did she hope to accomplish by making such statements?
While Ms. Clarkson may have issues with Clive, a whole bunch of other artists and industry people don't. The UJA Federation of New York Entertainment, Media & Communications Division and Music for Youth is honoring Clive Davis at its 2007 Music Visionary of the Year Luncheon, July 26, 11:30a at the Pierre in N.Y.C.
I think it's a safe bet Ms. Clarkson won't be at the luncheon, but I bet there will be a whole lot of other artists there. Artists whom Clive has worked with through the years.
Artists who do know him.
AS I WAS SAYING...
First: Back in the June 6th issue of the newsletter, I wrote the following: "A tidal wave of digital music sales that don't offer the same profit margins and a whirlpool sucking away physical CD sales. How to stay afloat during this time will be the industry's greatest test."
This from IFPI chairman John Kennedy last week: "We hoped that the decline in physical sales would be offset by the increase in digital sales, giving us the 'holy grail.' But while digital sales have grown as expected, physical sales have fallen by more than expected," he said. The results "reflect an industry in transition." (Editor's note: In layman's terms, they ain't making the BIG profits they did for years with obscene pricing on CDs.)
Second: In the June 29th issue I started off my commentary, "Been Down So Long, It Looks Like Up To Me," with this quote from Warner Music Group chief Edgar Bronfman Jr: "This decline is steeper than we expected, but in some ways it means we'll get to the bottom faster, and after that there's growth." And added later in the commentary: "Mr. Bronfman was right about one thing, and one thing only. Based on the way the Warner Music Group and the industry is going, they will get "to the bottom real fast."
Warner Music Group stock is now at an all-time low, selling for as low as $13.91 this week. Mr. Bronfman is evidently getting his wish to "get to the bottom faster."
Third: Back in April 2004, I wrote the following in the newsletter: "If all the websites around the world offering free downloads could be eliminated tomorrow, it wouldn't stop people from burning multiple copies of CDs. If all the websites around the world offering free downloads could be eliminated tomorrow, it wouldn't change the fact that dozens more wouldn't spring up the very next day. "
This past week the Russian government shut down the popular MP3 download site, AllofMP3.com, after repeated demands from the US. But the next day, a replacement, Pp3Sparks.com, appeared, run by the same company and accepting its predecessor's access details. Again, evidence that all efforts to thwart downloading are still a waste of time.
Music Biz Sales Off For A Seventh Year
The global recorded music market fell for the seventh consecutive year in 2006, and the slide is accelerating in 2007, according to figures published by a music trade group. Sales fell 5% year-over-year to $19.6 billion, said the International Federation of the Phonographic Industry (IFPI), a London-based group that represents the major record labels.
Against a backdrop of shrinking CD sales and piracy, the value of physical music shipments tumbled 11% to $17.5 billion last year, the IFPI reported in its Recording Industry in Numbers 2007 study. Digital shipments through mobile services and the 500-plus recognized online music services jumped 85% to $2.1 billion.
Read more about it by clicking here.
CD Sales Drop, Digital Music Jumps In 1st Half '07
U.S. sales of digital music albums grew by 60 percent in the first six months of 2007 but failed to offset the rapid sales decline of compact discs, according to data from Nielsen SoundScan. Total sales of albums were down by 15 percent for both digital and CDs, with CDs alone falling 19.3 percent to 205.7 million units. Meanwhile, digital album sales jumped about 60 percent to 23.5 million units.
The recorded music industry is struggling in the early stages of a transition to digital formats, such as MP3, from the dominant CD format. CD sales are declining faster than industry executives and analysts have expected.
Read more about it by clicking here.
All Shook Up, Right Down to the Musical Core
SO omnipotent is the Apple digital music machine that just the possibility of one of its main suppliers holding back some of its music from Apple's iTunes music store is enough to make headlines and send shock waves. That is what happened last week when the Universal Music Group let Apple know that it would no longer grant the company guaranteed access to its coming releases. Officially, Universal had no comment, but an executive briefed on the negotiations said the music company was merely interested in keeping its options open as it does with most other retailers in the brick-and-mortar world.
The upshot is that Universal will provide music to iTunes on an "at will" basis. Thus, if someone offers Universal a boatload of cash for the right to sell the latest Bon Jovi or Rihanna singles exclusively on a rival download service, Universal is saying that it is open for business.
Read more about it by clicking here.
Digital Music Singles Flex Muscles, Album Sales Down
Sales of digital music can't stop, won't stop. The upward trend keeps on headin' up, as Nielsen SoundScan reports that digital music sales are 50 percent stronger through the first half of this year as compared to the same period in 2006. So far, Nielsen SoundScan reports that 417.3 million digital music tracks have been sold this year. For those of you keeping score, that's the total number of music tracks and ringtones sold in 2005.
Don't expect the music industry to break out the champagne, though. Good news for digital sales means bad news for the traditional album, which is down another 15 percent. People simply aren't buying physical albums the way they used to, and we've argued before that this is a natural effect of digital music sales. You don't need to buy an album anymore to get one or two songs you might like.
Read more about it by clicking here.
Sprint Takes Lead As 1st Sponsor Of File-Share Song
Sprint has signed on as the first company to underwrite a song to be distributed on file-sharing networks, agreeing to embed its logo on copies of tracks from Atlantic Records hip-hop artist Plies, sources told The NY Post.
The move represents another example of the music industry's evolving view of peer-to-peer networks as a potential new source of revenue instead of the bane of its existence.
Read more about it by clicking here.
TiVo, Amazon To Sell Movies Straight To TV Sets
TiVo on Tuesday said many of its customers can now order pay-per-view movies and television shows from Amazon.com's download service directly from their TV, without a personal computer. TiVo upgraded the "Amazon Unbox on TiVo" service to allow customers with high-speed Internet connections to select one of about 10,000 movies, shows or other video, using the TiVo remote control.
Read more about it by clicking here.
Review Roundup: The Worst Products of the Second Quarter
They are always testing at PC Mag. And, among all the great new products they see, there are least a few real duds. Some things seem good at first, but once their analysts dig deeper into their features and performance, they often end up pretty disappointed. And it's part of their job to let you, the readers, know what products to avoid. These 13 got our lowest ratings from April to June.
Read more about it by clicking here.
Court Rejects Webcasters' Plea For Relief
A federal appeals court has declined to grant a petition by Webcasters to delay the onset of new royalty fees that they argue could imperil their offerings. In a one-page order filed late Wednesday, the U.S. Court of Appeals for the District of Columbia said the opponents of the fees "have not satisfied the stringent standards required for a stay pending court review" and rejected their request for an emergency stay.
Barring an 11th-hour agreement, then, between Internet radio operators and the music industry, the new fees are scheduled to kick in on Sunday.
Read more about it by clicking here.
THIS WEEK'S 'WHO CARES?' NEWS ITEMS
ITEM #1: Nicole Richie is pregnant. I guess now she'll actually gain some weight.
ITEM #2: Lindsay Lohan is out of rehab. (For now, anyway.)
ITEM #3: Diddy split up with his longtime girlfriend, Kim Porter. Evidently Diddy's ego is as big as his collection of white suits.
CONGRATS
CONGRATS #1 TO: To Ornette Coleman, who was the big winner at the Jazz Awards 2007. Coleman took home four awards in all, including Musician of the Year. Earlier this year, Coleman became only the second jazz musician to win the Pulitzer Prize for music.
CONGRATS #2 TO: To Christina Aguilera and husband Jordan Bratman who are expecting their first child together. The couple married in November 2005.
'BRUCE JUICE' FOR THE HOLIDAYS?
Sources all over the web are claiming Bruce Springsteen is planning to release his first album with E Street Band album since 2003's "The Rising" in time for the holidays. Where there's smoke there's usually fire, so Bruce is probably working with his bandmates again in the studio. Whether he makes a Fall release date remains to be seen.
A YELLOW SUBMARINE FOR APPLE?
Now that the iPhone launch is out of the way, rumors are flying that Apple is once again floating the idea of launching a limited-edition Yellow Submarine iPod, with every single Beatles album preloaded on it. Though rumors of such a device were more abundant earlier this year, some inside sources are now saying the Beatles iPod might be become reality. What's more, it'd be launched to tie-in with Beatles tracks finally going on sale on Apple's iTunes Store, possibly as a one-month exclusive before becoming available through rival digital music services.
LIVE EARTH SETS ONLINE RECORD BUT BOMBS ON TV
MSN declared itself the new record holder for the biggest online entertainment audience, reporting more than 10 million streams Saturday for its coverage of Live Earth. Streams do not equal viewers, just the number of requests made for a video feed. The previous record holder for live entertainment was coverage of the Live 8 concerts two years ago by AOL, which reported 5 million unique visitors, as opposed to streams. However, though the event may have been one of the largest in global entertainment history, NBC's three-hour broadcast of concert highlights on Saturday night averaged only 2.7 million viewers, a figure that put it in last place among the four major networks.
AND NOW, 36 YEARS LATER, WHAT DIFFERENCE DOES IT MAKE? WELL, IF YOU WANT TO SELL YOUR BOOK, A BIG DIFFERENCE
This week a former Paris nightclub owner announced that he has come out with a new book claiming Jim Morrison died of a heroin overdose in a toilet stall of his club on July 3, 1971, rather than of heart failure in a bathtub, as legend has it. Sam Bernett writes that he found the Doors frontman lifeless in the restroom and says he believes two drug dealers carried Morrison back to his apartment and placed him in the bathtub in a final attempt to revive him. No autopsy was ever performed.
KELLY'S NEW MANAGER
Kelly Clarkson has hired Narvel Blackstock, who is married to Reba McEntire, to steer her career.
MONTANA MANIA
"Hannah Montana 2: Meet Miley Cyrus" debuted at #1 on the Billboard 200 two weeks ago after selling more than 325,000 copies. This is the first solo recording effort from Billy Ray Cyrus' 14-year-old daughter, who also currently has the number-one album and the top two most-downloaded TV shows on iTunes. The first soundtrack disc from Miley's Disney show has already gone triple platinum.
UND ZEY VILL BE REMEMBERED!
A monument to the Beatles will be constructed in Hamburg, where the Fab Four launched their international career 45 years ago. Obviously, the local Hamburg politicians came up with this idea to drive more tourism. Construction is expected to begin this year.
Quotes of the week
"Having been bumped from 'Larry King' last night for Paris Hilton, I am beginning to take things personally. The priorities in this country are seriously askew."
-- "Sicko" director and filmmaker Michael Moore. Hey, Michael, head back to Cuba since you think things are so much better there."I think my height intimidates people...When I tower under people, it's horrible."
-- The 5'2" Paula Abdul, on her new Bravo reality show. Hey Paula, it's not your height that bothers people. In fact, you intimidate nobody. Maybe they just don't like being around you because you act like a whack job 99% of the time."I think people see the cliché of the Rock Star. We're supposed to get married every three years ... trade in, trade out - I don't dare say 'trade up.' I made a good deal the first time. If Angelina Jolie came in today, I wouldn't trade."
-- Jon Bon Jovi, on his successful 18-year marriage to wife Dorothea, to Parade magazine. A stable, long-term married rock-star. A genuine rarity and a breath of fresh-air these days."The job would have been less appealing to me. It would have required a lot more thought...If it turns out it wasn't a perfect fit, then, you know, I'll do something else that's really exciting and fulfilling for me."
-- Katie Couric in an interview with New York magazine, discussing her problems on the CBS Evening News, which has finished in third place repeatedly."Nicole Richie has finally confirmed that she is pregnant. Richie said she could tell she was pregnant when she started throwing up twice as often."
-- Conan O'Brien
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Disney Family Vacation Ruined By Walt Disney Company
ORLANDO, FL-A magical Walt Disney World family vacation was ruined last weekend by the stringent policies and protocol of the Walt Disney Company.
"They call Disney World 'The Happiest Place On Earth,' but being there was oddly stressful and upsetting," said David Mahaffey, 36, a Dover, DE, insurance-claims adjuster who, along with his wife and two children, endured a four-day visit to the Orlando theme park. "Why did Disney have to ruin the Disney magic for everyone?"
Plagued by everything from park rules strictly governing conduct to wildly overpriced concessions, the Mahaffeys had hoped to lose themselves in a wonderland of fun, but were thwarted at every turn by the entertainment giant.
Read the rest and laugh here: http://tinyurl.com/yudcu4.
The Blogs
Check out a great blog (that I contribute commentary to) 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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