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Microsoft Makes Zune Pass Rent To Own; Subscribers Get 10 Tracks A Month For Keeps
Microsoft (NSDQ: MSFT) just added some lagniappe to its Zune Pass music subscription: effective now, 10 tracks a month can be downloaded for keeps. It's a nice gesture for subscribers—I am one so can attest to that—but it's also a very real PR effort to goose interest in the subscription model. To expand the $14.99 monthly subscription, the company crafted new payment agreements with all four majors—EMI, Sony, Warner Music Group, and Universal Music Group—and indie distributors INgrooves, Independent Online Distribution Alliance and The Orchard. Microsoft values the tracks at approximately $10 (not in the confusing conceit of Zune Marketplace points), which would take the cost of the actual subscription to about $5 a month for those who make all the permanent downloads.
-- Liner notes: The 10 permanent tracks can be burned to CD or moved to other devices even after the subscription ends. The Zune Pass currently allows subscription sharing between three PCs and three Zunes. An updated version of Zune's software started distribution Tuesday. Sony BMG and UMG also agreed to provide DRM-free MP3s, joining EMI, WMG and some of the indie labels. Microsoft says Zune's library soon will offer 90 percent of its music as MP3s.
-- Billboard: "To make the offer, the Zune team had to rework its existing licensing deals with labels so that it now provides a certain percentage of the Zune Pass subscription fee to all labels based on market share, and then allocates a separate payment to each label based on what music is downloaded for good."
-- First look/listen—not: Signing into Zune just now required accepting a new terms of service in an unnecessarily complicated multi-screen process. So far, I can't tell how I would know this option is supposed to be available—and I can't figure out how to make it work. For instance, when I add a song to the cart, then look at the cart, it's empty. Another variation brings up an error message. I'll try again in the morning.
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
Apple Talking To More Labels About DRM-Free Music
Apple (NSDQ: AAPL) is talking to the three remaining major labels about adding more DRM-free, MP3 tracks, a year after EMI signed on. UMG, Sony (NYSE: SNE) BMG and WMG are still talking to Apple, and at least one is close to an agreement, this News.com report says. Meanwhile Amazon's music store, Napster (NSDQ: NAPS), Rhapsody and other have already amassed on the MP3 deals with these labels, but no specific evidence yet that DRM-free has spurred the sales of song downloads in the last year. One evidence does point out that with price parity, users prefer DRM-free over DRMed songs...who wouldn't?
Meanwhile, that persnickety MySpace Music CEO hasn't signed on yet, has he?
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
MP3 'Inventor' Brandenburg Invests In DJTunes Dance Music Site
Karlheinz Brandenburg, credited with at least jointly "inventing" MP3, has joined with a German development bank to invest in DJTunes, a European music download site offering house, techno, trance and electro tracks in that very file format.
DJTunes targets DJs, club-goers and labels and claims over 300,000 tracks, all in the DRM-free format that is beloved of DJs for its lack of copyright locks - if not exactly for its high fidelity. The site lets users upload and sell their tracks and mixes, and will use the funds in part to branch out by launching a hip-hop site next year. The investment is made along with Beteiligungsmanagement Thüringen (BM|T) though the size is undisclosed; DJTunes also got seed funds in 2006. Release. More at paidContent:UK…
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
Theater Impresario Lloyd Webber Plans Content Push, Music Downloads
Phantom Of The Opera songsmith Andrew Lloyd Webber's Really Useful Group is targeting US entertainment consumers with an upcoming move to become a proper online content destination, we have learned. In a refresh of its rudimentary website, the stage, music, movie and magazine group plans to let registered users build their own personalised spaces on the site, themed around a variety of musical shows, plus post reviews and blog entries through a new "Backstage" area. They will also get audio and video content and other news. The new site will also offer a download store with recordings from shows and a monthly podcast hosted by Lloyd Webber's creative director Tris Penna.
Really Useful's digital director Douglas Glen told paidContent:UK: "The US represents our second biggest online audience - we're looking to build upon this. For example, Phantom Of The Opera was the number one show in Las Vegas. With content brands as strong as ours, we're looking to cater to the passion of our existing, loyal base who are eager to remain engaged with our content and, at the same time, attract a whole new audience who may not be as familiar with the length and breadth of Andrew Lloyd Webber's catalogue." Really Useful has also licensed secondary-ticket marketplace Viagogo to sell some of its tickets.
Photo Credit: Tracey Nolan, some rights reserved
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EMI Music To Reorg; Divided Into Three Global Units; EMI.com's Limited Scope
You wouldn't wish your enemies the job of trying to restructure and revive EMI at this point, but at least they are trying: Elio Leoni-Sceti, the new CEO of the troubled music label, will announce a restructuring of the company today in London, as part of the company's first half 2008 earnings announcement, reports FT. The company will be split into three global business units: new music, catalog and music services, with additional resources being put into marketing functions. For the six months ending September 30th, the company made $92 million in EBITDA, compared with a loss of $22 million last year.
Leoni-Sceti, who is embarking on a three-week global tour to explain this reorg, said: "EMI is absolutely not bankrupt, far from it. EMI has never been in such a financially sound situation".
Late last month we reported that EMI had even missed its digital music targets, something of a rarity even among music labels. We also noted earlier that the company is a planning to launch a music portal at EMI.com: now the CEO says the site will be limited in scope, as we suspected, but provide "learning value for the consumer," he said. Highly unlikely that it would have any other label licensing music for the portal, unless, say, it ties up with a third-party online provider.
Photo Credit: EMI
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Beatles Game Confirmed: Due Christmas '09, Yoko's Blessing, Still No Downloads
MTV's Harmonix games studio and The Beatles' Apple (NSDQ: AAPL) Corps label have confirmed they are to develop "a music-making" video game allowing gamers to play some of the band's songs from its entire UK back catalog. The title has no scheduled release date but will be ready by "holiday of next year", the pair told reporters on a conference call - but there's still no prospect of digital downloads coming to retail…
The new game will not be an expansion pack for Harmonix's Rock Band but "a new full-blown custom game title production built from the ground up", Harmonix CEO Alex Rigopulos told reporters. Everyone on the call refused to give any details whatsoever about likely gameplay features because, Apple Corps CEO said, "The game is in development, which is why we don't want to talk about how it's going to turn out a year from now." But it's likely to come with musical game instruments and other features new from those already in Rock Band…
Rigopulos: "There will be interactive performance of The Beatles' music as well as a number of new dimensions to how to experience this music and the artistry of The Beatles that you haven't seen form us before. We have an unique opportunity for us to forge in to a new creative (direction) in the music game genre and do things which have never been done. We want to take players on a sort of experiential journey through the band's imagery and ideas and vision as they evolved over the course of their time together ... a visual exploration of The Beatles' imagery is a big part of the creative direction of this project." MTV's music unit president Van Toffler called it "an unique opportunity for fans to experience the band in a way they never have before".
-- Negotiations: Discussions between MTV and the label started at least 17 months ago and Harmonix has "been up and running for some time on this actually", Rigopulos said. Agreements have been struck between EMI, publisher Sony/ATV, Apple Corps and MTV, and the game has "the blessing" of Paul McCartney, Ringo Starr, Olivia Harrison and Yoko Ono, who all "have been part of the conversation, have seen demonstrations of the game, understand how it's going to roll out, what you're going to see on your screen", Apple Corps CEO Jeff Jones said: "(They) will be involved along every step of the way creatively and musically, in the way the music is presented with Giles, they'll be involved in the design and implementation of that design."
-- Play the original mixes: In a neat link to the past, Giles Martin - the Grammy-winning son of Beatles producer Sir George Martin - has been tapped to produce the game's music: "The idea we're trying to keep to as much as possible is for people to play the songs as though they're playing the originals; we will be adhering to the original mixes my father and The Beatles did back in the day and try to preserve the sound quality as much as possible."
-- Still no digital downloads: Despite Paul McCartney forecasting their arrival in 2008, Apple Corps CEO Jeff Jones told paidContent.org on the call: "We're still working out the details and we have no announcement to make. We have no date or any information, we're still working on the details."
Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
Beatles, Long Digital Hold-Outs, May Lend Tune To Rock Band Game
We're still waiting for The Beatles to finally start selling the back-catalog online, but the band looks set to take one more step in that direction Thursday. Their Apple Corps label and MTV will announce "an exclusive agreement to develop a global music project" at 10 a.m. eastern time (2pm UK)—and a number of people expect that the Fab Four's tunes will be included in the Rock Band video game.
MTV owns Rock Band developer Harmonix and PR staff for the game are listed on the announcement invitation. It seems likely that, though Beatles tracks still aren't available for legal download, fans will get to channel Liverpool's finest via the game's bundled drumkit, guitar and microphone. Such a deal may be a snub to Rock Band rival Guitar Hero - in June, FT.com reported Apple Corps was speaking with both Harmonix and Guitar Hero maker Activision (NSDQ: ATVI). Also expected at Thursday's event: no less than MTVN (NYSE: VIA) CEO Judy McGrath, Apple Corp CEO Jeff Jones and MTV's music unit president Van Toffler.
Games with well-known tunes have proved to be particularly popular in the last couple of years, not only with gamers but with musicians, who are increasingly seeing the titles as new distribution outlets: Guitar Hero has done or is doing Aerosmith, Metallica and Hendrix editions, and Rock Band has done an AC/DC track pack. A Beatles edition, if released in time, could be a big Christmas hit with older gamers.
Update: WSJ cites several sources who confirm a Rock Band deal but are avoiding details. Hard to believe they wouldn't launch for the 2008 holiday season but you never know.
FT.com's original source estimated the license to be "several million dollars". The Beatles' archive could be one of the most valuable yet to be unleashed on the digital world but has so far been a hold-out, mired in a patchwork of rightsholders that include EMI, band members, Sony/ATV etc. Various lawsuits were settled last year, though, and Paul McCartney himself forecast the digital question would be solved in '08. There's still no retail component, but at least this rumored news suggests greater digital licensing flexibility.
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Mark Logic Digital Publishing Summit, Thursday November 6, Westin Times Square. Insight and perspective from Outsell, Gilbane, Simon & Schuster, BusinessWeek.com, more. Evening cocktail reception. Cost is complimentary. Register now!
Digital Music Distributor TuneCore Gets $7 Million Funding
Digital music distribution firm TuneCore, based in New York City has received $7 million in funding, led by Opus Capital. TuneCore allows any artist to upload songs on their service, via an up-front fee (and no cut on royalties), and then distribute it to services like iTunes, Rhapsody and Amazon (NSDQ: AMZN). It recently announced a distribution deal with social music service iLike. The company, founded in 2005, also says it distributes between 150 and 250 releases a day and recently expanded to distribute full-length films, TV shows, live concerts, and documentaries to iTunes and others.
Interestingly, Guitar Center, the biggest music instrument retailer, has previously done a strategic investment in the company, and CEO Marty Albertson is on TuneCore board....the retailer promotes the service through its stores. More details in release.
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One For The Indies: MySpace Music Offering IODA Music
Now you can listen to indie songs before Steve Jobs puts them in a commercial. MySpace Music has signed a deal with digital music distributor IODA that will see over a million indie tracks on the social net's site, LAT reports. Full terms of the deal were not disclosed, though IODA CEO Kevin Arnold said the deal is short- to medium-term and its artists will get a cut of the ad revs in addition to royalties for each track streamed. Unlike MySpace Music's major partners, UMG, Sony BMG, Warner Music Group and EMI, IODA artists will not get an equity stake. The deal comes just after Facebook talked about its own musical offerings, revealing that it wouldn't want to deal with acquiring label's licenses—let alone give up equity—and would rather work more closely with its existing music partners rather than set up a new site.
MySpace Music expects to announce more partnerships within the coming months and is in talks with Merlin, an organization representing 12,000 indie labels. The venture has been widely panned since its launch for excluding content from the very artists who helped build up the music community in the recent years. Though one wonders, doesn't the inclusion of indie content in a multi-million dollar social net giant negate the meaning of the word "indie?"
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Indie Music Site CDBaby's Sale Price: $22 Million
Back in August we reported that CDBaby, one of the largest online sellers of music for indie bands, was finally sold, to CD and DVD duplicator Disc Makers. At that time the price was not disclosed, but now the founder Derek Sivers has disclosed to VentureVoice that the sale price was $22 million. Sivers owned 100 percent of the company he founded in 1998. Now you're in the know…
Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
Stock Music Library AudioMicro Secures First Round
Stock music marketplace AudioMicro has closed its first round of financing from DFJ Frontier. The LA-based company will use the undisclosed amount to improve its offerings and content, as well as for working capital. After musicians and sound designers upload their music and other sound effects to the site, AudioMicro sells the content to clients seeking affordable music and sound effects. Prices start at $1 per minute of audio and monthly subscription packages are available. All of its content is pre-cleared for use in any project, eliminating the need for additional fees or licenses. Release.
Update: GigaOm pegs the funding at $500,000 and says it will help the company, founded by Ryan Born, expand to four employees from three and improve its SEO.
EconWomen, Oct. 29, 2008 | Edison Ballroom | New York City Our panels are jam-packed with top women’s media executives. Register: http://econwomen.eventbrite.com
Music Social Network Imeem In Play; Hires Bank; Laying Off 25 Percent
Online music-focused social network Imeem is on the block, according to our sources, and has hired investment banker Montgomery and Co. to lead the sale. Coincidentally, we have also learned that the company is announcing some layoffs internally today—as much as 25 percent of its around 80-strong workforce. These layoffs are mainly on the technical back end and services side.
The company has done its on-demand streaming music deals with all four majors, and has also been working with a slew of indies. As it has built out its platform (it recently relaunched its site/service), and done most of the biz dev deals, the focus now is on growing audience and monetizing the platform...it won't be needing as much technical expertise going ahead, the sources say, and hence the layoffs. Of course, Imeem is a Sequoia-portfolio company, which means it is all but obligated to heed to the VC firm's recent call of cost and employee cuts.
Lots more after the jump…
Why sell? On the sale, the company's thinking is that despite the economic troubles and music industry's continued troubles, the time is right with lots of activity in the sector—the hype around MySpace Music's launch, the imminent launch of Facebook's own music service (and for now, iLike's dominance there), and music becoming part of a bigger social media play—and the company would do well as part of a bigger one. It has been in the process of raising more money from strategic investors, some of whom have expressed an interest an acquisition. The company has previously said it has about 30 million registered users, and 100 million users across its network of widgets/apps and through usage on other social sites. On the actual making money side, its efforts are more recent, and it has been focusing on branded experiences with advertisers, something similar to what Pandora also does.
Imeem has raised above $50 million in funding over the last two years, including a $15 million round from Warner Music Group (NYSE: WMG) earlier this year. Other previously disclosed investors include Sequoia Capital and Morgenthaler Ventures...we have also learned that DAG Ventures was the last one to invest in the company this summer, with the valuation north of $200 million. They would probably like more than that, but with the current market, anything in nine figures would be, well, reality-rational.
The Palo Alto-based company earlier this year acquired Snocap, the digital music start-up founded by Shawn Fanning. Last year, it resolved a copyright infringement lawsuit brought by WMG by striking a rev share deal.
While we're at it, who is going to put Pandora out of its streaming-royalty misery?
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UK Digital Music Royalties Grow; YouTube Becoming A Big Money-Spinner
UK songwriters and music publishers will make another nine percent less money from CD this year, but overall earnings will have grown thanks to online licensing and plays by hairdressers et al…
-- The MCPS-PRS royalty collector expects royalties from broadcast and online use of songs to grow 11.6 percent from last year to £173 million for 2008. That still won't make up for a 13.8 percent fall in royalties from physical formats, to £131 million - but public performance and international revenue will help grow the overall pie 3.5 percent to £582 million.
-- Some truly huge figures show how influential digital is becoming compared with tired old music radio - the society is giving songwriters money from 500,000 iTunes plays and 14 million YouTube plays recorded in just the last quarter, against just 12,000 from radio....
-- When you consider MCPS-PRS processed 35 million transactions across all categories, it's clear how important YouTube is becoming to songwriters' pay packets. MCPS-PRS was first to ratify YouTube last year; it now says the site hosts 10 million videos that contain its members music, of which its systems have recorded over 1.5 billion such plays to date. Still, for its license, YouTube gave MCPS-PRS a flat fee, which we still don't know so it's unclear if artists' income is rising proportionately. Continued at paidContent:UK…
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Searching For a Business Model in La La Land: Lala Tries Again With Another Music Service
At least you have to give it marks for trying...again and again. Lala, the three year-old polymorphous online music startup that started as a CD swapping service and changed its business model twice and then almost closed down, is now launching a new online music streaming service, with a twist. The new service works like this (and if I have to use bullet points to explain it, you know what that means for consumer adoption):
-- The site first analyzes a user's existing music collection on their PC, and creates an online virtual locker of all their songs, which can be played as streaming songs online for free. Sounds similar to what MP3.com tried eons ago and got sued out of business.
-- Songs not in user's collection can be streamed once free, and then for 10 cents, streamed unlimited times online.
-- For downloads, prices are similar to iTunes and Amazon (NSDQ: AMZN), but that 10 cents in streaming can be credited towards an MP3 purchase.
-- It has signed on all four major labels, and four major labels, and over 170,000 independent labels and distributors.
Competition is heavy, from much more high profile (and free) ventures like MySpace Music, imeem, Rhapsody and many others. Having a $20 million in investment from Warner Music Group does help though… WMG is also an investor in imeem, by the way. To make this model work, the company tells NYT that it will have to convince about 3 to 4 percent of its customers to pay for music. Lala splits the cost of both the 10-cent online streaming and the full MP3 with the labels, and makes a greater percentage on the online song, reports Billboard.
WMG's Michael Nash, EVP of digital music strategy, hypes it up big time in the Billboard story, but with $20 million sunk in, he has to. "What I think is really interesting is the idea of virtual ownership--creating a value proposition that's between the sampling of a stream and the purchase of a download." Reading between the lines, sounds a bit too nuanced...oh wait, did I mention Lala Land?
Update: Another thought: And lets say if the company does prove the model (or even if they come halfway to broader adoption), what's to stop the other bigger companies, with lots more audiences, from copying it?
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Social Media Deals Report: This 199-page report, filled with charts and data, examines the categories, number and size of VC and M&A deal in social media from 2007 through 2008. Visit the ContentNext Reports page
Weekend Video: EconMusic: Mobile Music In Decline—What's The Problem?
The big questions at our mobile music panel at last month's EconMusic conference: why is mobile music in decline and what will an effective business in this sector look like? Tom Erskine, Head of Go-to-Market, Nokia (NYSE: NOK) Music explained the problem to lie in the relationship between the digital industry and music labels, while Ian Henderson, VP Digital Business EMEA, Sony BMG, gave a pessimistic view, saying that mobile music was a lot bigger proportionally a year or two ago. Tom McLennan, Head of Music for Mobile Internet and Content Services, Vodafone UK, and Julian Zmood, Head of Business Development, Music, O2, joined the panel that was moderated by Mark Mulligan, VP and Research Director, JupiterResearch.
Coverage of full writeup and Tom Erskine on Nokia's Comes with Music program are on our EconMusic channel.
EconWomen, Oct. 29, 2008 | Edison Ballroom | New York City Our panels are jam-packed with top women’s media executives. Register: http://econwomen.eventbrite.com
Pandora Lays Off 20 Employees; Almost 15 Percent Of Total Workforce
Pandora, the online music streaming service, has laid off 20 of its 140 employees today, founder Tim Westergren announced in a blog post. The list of startups cutting staff and other costs in the face of mounting economic pressure is growing and few are immune to the challenges knocking on everyone's door. Some are reacting swiftly on the front end to help soften the blows and absorb additional losses before the depths of this recession are even known. But worse yet for so many startups just getting off the ground is not knowing how much change is needed to plan for tough times ahead. "Letting go of an employee will, for me at least, always be the most gut-wrenching thing there is," Westergren wrote. Still, there are positive signs the company can hold on to for the time being: the pending royalty rate resolution is moving along and its userbase is growing. No cuts were made to the company's ad sales force and indeed it plans to hire more in that area.
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