hypebot

It's Official: Sony Invests In IODA

This time the rumor mill proved correct. Sony Music Entertainment has entered into a global partnership with IODA which includes an investment in the digital distributor.  IODA will now provide digital services for Sony's RED indie label arm, as well as, offer expanded overseas opportunities. In return, IODA can now offer its labels physical distribution and the stability of a corporate partner with deep pockets.

How Will Independent Labels React?

The exact details of how the two companies will work together are still being worked out. But if as Thomas Hess, Sony Music's President of Global Digital Business, U.S. Sales and Corporate Strategy told Billboard, IODA will be "joined at the hip" with the major, it is unclear how an often firecely independent label community will react.

How The Record Industry Committed Suicide

"The mass-marketing practices that the Record Industry adopted and mastered in correlation with file-sharing’s rise into predominance may have, in turn, created the ultimate paradox.  Wherein the more the major labels focused on producing music that could be highly and quickly popularized, the more expecting  fans perceived these artists negatively, perhaps, avoided buying their albums, and preceded to file-share their potentially ‘short-lived’ songs instead."

Don't miss Kyle Bylin's latest essay
"Killing Itself to Live: How the Record Industry Conceived It’s Own Demise" and join the discussion.

Four Major Label VP's On The State Of The Industry

Jon Healey of the LA Times moderates "The Majors: Strategic Imperatives" panel at NARM 2009. Panelists include Mike Jbara of WEA, Amanda Marks from  Universal Music Group, Jennifer Schaidler of Sony Music and Darren Stupak from EMI Music.

WMG's Edgar Bronfman Jr. On "Risk Capital" And Artist Exploitation

"Fundamentally, we are the risk capital. We're prepared to take the capital risk on a new artist and we're building a company so that we can exploit on behalf of the artist all the revenue streams that are made possible by that initial investment."

- CEO Edgar Bronfman Jr. on signing half of the Warner Music Group's artists to 360 deals in an extensive Finanical Times interview.

More Major Label vs. Startup: EMI Sues Grooveshark

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Grooveshark has become the latest music startup to be sued by EMI.  Under the motto "Millions Of Songs. Find Yours", Grooveshark combs a database of 6 million songs spread across the internet for quick and easy playback.

But like Seeqpod and others who have tried to offer music online without first cutting difficult and xpensive deals with the major labels, it inveitably has come under fire.  Grooveshark says that it had been trying to make deals for a 50/50 as revenue splt, but to date no majors had signed on.  The full text of a statement on the lawsuit from Grooveshark via Media Memo is after the jump.

hypebot briefing:  Playable search engines like Grooveshark host no music, but rather grab it for play Google-like from across the web. Downloading is not enabled and unlike after a Google search, the location of the song files are never revealed. So why can't the industry offer blanket licenses that monetize these sites instead of enriching lawyers? The alternative is an endless game of global whack-a-mole.

imeem & WMG Dance Together Again

Just weeks after Warner Music announced that it had written off all $16 million that it had invested in imeem plus another $4 million in debt, the two companies are back doing business together. again. WMG will now take a larger share in the struggling  music startup according to Peter Kafka at MediaMemo. No cash has exchanged hands this time, but WMG is taking the shares in lieu of licensing fees now calculated at lower rates. 

The move by WMG is another sign that the major labels are starting to understand that making it too expensive for the most popular avenues of music discovery to survive is not in their best interests. Imeem reportedly has to raise another $4 million to survive for any length of time, but this new commitement by Warners makes that future more possible.

QUESTION: How, if at all, will artists be compensated if payment for streaming is in imeem stock?

eMusic CEO Blames Indie Labels For Price Increase

When eMusic recently added major label Sony to its previously indie only music subscription service, it also increased prices per download.  Still cheaper than iTunes and others, the reaction from many eMusic fans was strong and negative.

Since the initial announcement, the company has been on a bit of a campaign to clarify why the price hikes happened; and in an interview with Wired's Eliot Van Buskirk, eMusic CEO Danny Stein said that it was the independent record labels and not a deal with the big bad Sony that forced the price increases:

"Our existing labels, for the most part, have been asking us to raise prices for a long time. What I told the New York Times is that we were looking for a “catalyzing event” to do it. And really, the catalyzing event is adding catalog, adding more content. We used this as an opportunity to do it, but we didn’t do it because of Sony...

Virgin Media & Universal Launch Unlimited Download Service, But...

ISP Virgin Media will begin offering a monthly subscription service that gives UK broadband customers the ability both stream and download unlimited tracks from Universal Music's catalog . A lower priced tier will offer streaming and a more limited number of downloads.

Downloaded music is portable and will be the users to keep on any MP3 compatible device. Virgin is also negotiating with other major and independent labels and publishers and anticipates a more complete catalog when the service is launches later this year.

But this juicy carrot comes with a fairly ugly stick. The two companies will also be "aworking together to protect Universal Music's intellectual property and drive a material reduction in the unauthorized distribution of its repertoire".  This will involve implementing a range of strategies to "educate file sharers about online piracy" and "raise awareness of legal alternatives". 

ANALYSIS:

Are Warner Music Insiders Dumping Stock?

Wall Street analysts continue to show confidence in the Warner Music Group and investors recently snapped up $1.1 in WMG bonds. But according to respected investment trade publication Barron's, insiders are "hearing a different tune" and last week unloaded $3 million in stock.

Barron's points specifically to Vice Chairman of Strategy and Operations Michael Fleisher who on June 2nd sold 400,000 shares for $3 million, an average of $7.41 a share. Fleisher, who joined the company as CFO in 2005 still owns 766,207 shares.

(more @ Barron's, subscription required)

More Trouble At EMI As Execs Squabble

EMI chief executive Elio Leoni-Sceti and Guy Hands who heads the label's ownership group at Terra Firma are fighting so frequently that Leoni-Sceti could be gone before the end of the year, according to Peter Lauria of the New York Post. The newspaper even commissioned the amusing graphic tonthe left to illustrate the squabbles. (Click on it to enlarge.)

It seems that first Hands ordered Leoni-Sceti to make executive Ronn Werre a "take it or leave it:offer" during contract negotiations.  But when Werre chose "leave it "and got a better job offer at Sony,  Hands reversed course and forced Leoni-Sceti to get Werre back at all costs. Days later Werre was back at EMI with twice the salary and a new expanded title.

On his way back in Werre also forced Leoni-Sceti to dump...

What Will A Record Label Look Like In 5 Years?

 

2009 2010  2011 2012 2013  

Martin J. Thörnkvist is a music industry thinker and strategist who operates indie label Songs I Wish I'd Written and is one of the founders of The Swedish Model consortium of labels. This article first appeared on the group blog Digital Renaissance.

The future. This undefined scope of time with a divine shimmer around it. When it comes to the future of music I’ve always consider myself an optimist.

For one, I’m certain that musicians and music fans have a prosperous future ahead of them. That’s because music is the single most important ingredient in the music business soup and music is, of course, a result of an artists creative minds. And it’s when musicians interact with listeners that a window for business is opening. Not before, and not just because some A&R person, marketeer or CEO opened their wallet. That the relationship between musicians and fans is the foundation of the business and the single most important piece of knowledge that we all have to submissively recognize. This is the key to the future for the middle men we call record labels – we have to encourage the interaction and realize that it will live without us.

We middle men have to remember that we always need to convince our customers (musicians and fans) why they should engage with us....

Sony Joins Universal's VEVO Video Service

Sony Music Entertainment (SME) has signed on to VEVO, the Universal Music Group (UMG) led and YouTube powered premium music video and entertainment service. The announcement was made today by Doug Morris, Chairman & CEO of UMG, and Rolf Schmidt-Holtz, SEO of SME. Terms were not disclosed.

VEVO is designed, in part, to give partner labels more control and revenue than YouTube does currently. Content will be available on YouTube through a newly created VEVO channel, on VEVO.com and through a VEVO embedded player. The service will also serve as a syndication platform for other sites.

In addition to SME and UMG, VEVO is exploring additional strategic participation by third-party investors to join this innovative entertainment platform as equity partners.

Joss Stone's Ode To EMI: Set Me Free

Joss Stone is so upset with EMI that she is ready to to sacrifice £2m to free herself from her album deal according to the UK's Mail. EMI has reportedly refused to let her go and begun legal action. Here Stone expresses her frustration in a new song "Free Meal" which she wrote about her battle with the major label.

Atlantic Announces A New Elektra Records Will Be Fueled By Ramen

Atlantic records is taking the iconic Elektra Records brand off the self to name a new freestanding label to be headed by co-Presidents Mike Caren and John Janick. Caren is Executive VP of A&R for Atlantic Records and Janick is the founder and President of  indie label Fueled By Ramen. Each of the execs will also maintain their current jobs and WMG's Atlantic Records Group will also provide resources and support.

Once the home of The Doors, Judy Collins and The MC5, the newly reincarnated label has announced its first signings: Grammy winner and Gnarls Barkley partner Cee-Lo, acclaimed French electronic music duo Justice, and new UK dance sensation Little Boots. Elektra has also just released the soundtrack to the HBO Original Series "TRUE BLOOD".

JOHN JANICK & FUELED BY RAMEN

Like Elektra founder Jac Holzman, John Janick launched an independent label from his dorm room at the University of Florida in 1996. Feuled By Ramen spread the word via hard-touring bands, mail order, and an active online and street presence. In 1998, FBR released Jimmy Eat World and in 2003 came Fall Out Boy, both marking the launch of hugely successful careers.

Fueled By Ramen built a collaborative environment where bands participated in all aspects of their identity...

WMG To Pay 9.5% On $1.1 Billion In New Notes

PLUS HOW EDGAR & LYOR CAN HELP SAVE WMG $230 MILLION AND STILL KEEP THEIR JOBS

Last week the Warner Music Group surprised analysts by selling twice the number of secured notes than it had previously announced.  The $1,100,000,000 raised showed increasing confidence on Wall Street for the major label group and publishing company.

The funds raised plus $335 million in existing cash will be used to pay off previous notes according to documents filed with the SEC this morning.  The $1.1 billion in new notes carry a 9.5% interest rate and come due in 7 years.  At that hefty rate, the company will pay just over $410 million in interest to investors over the short life of the notes.

HOW TO SAVE $230M WITHOUT CUTTING A SINGLE JOB

Despite WMG loosing $1.1 billion (a number which coincidentally matches the amount of the notes) in the fiscal year that ended October of 2008,  the two top executive Edgar Bronfman Jr. and Lyor Cohen received bonuses of $3 million and $3.25 million repsectively. Aknowledging that these bonds may not allow an early payoff, if the two execs kept their salaries ($1 million at Bronfman and $3 million for Cohen), but the board applied their bonuses to the bond debt each year, it would save WMG more than $230 million and pay the debt off a year early. (Details of the calculation after the jump.)

More Trouble At EMI? Terra Firma Dumps In Another $45 Million

Financial statements released earlier this month by EMI pointed to a turnaround for the major label group. The company admitted to being hit by an industry-wide 10% sales downturn, but pointed to cost cutting and a few successful releases as proof of its health.

Now just 3 week's later, EMI owners Terra Firma Capital has been forced to put in an additional £28 million ($45 million) to help the company avoid defaulting on a multi-billion dollar loan from Citigroup, sources told the Wall Street Journal. Adding to fears, the chief financial officer of  EMI's music division has chosen to leave the company.

Warner Music Grabs $1.1 Billion. Will $'s Finance Another Bid For EMI?

Investors scooped up a whopping $1.1 billion in new debt securities issued by the Warner Music Group (WMG). This more than doubles the expected $500 million haul that the WMG announced that it was seeking just yesterday.  Unless one dismisses the sale as Wall Street insanity, the sale of secured notes has to be seen as a vote of confidence for Warners, particularly given the state of both the recorded music industry and the global economy.

Some of the money will be used to refinance debt, but Media Memo shared that Pali Research analyst Rich Greenfield found language in the offering allowing Warners to redeem the notes early “if a major music transaction occurs”.  To Greenfield (and Hypebot) this means that Edgar Bronfman Jr. & Company still hopes that they can somehow hook up with EMI; a merger that both label groups have talked about on and off for almost a decade.

Frustrated With EMI, Danger Mouse & Sparklehorse Release A Blank CD-R

Dark Night Of The Soul with Danger Mouse, Sparklehorse & David Lynch

(Updated) Upset by a lack of support from label EMI for his new "Dark Side Of The Soul" project, Danger Mouse is self-releasing a 100 page booklet of photographs along with a blank CD-R and asking his fans to do the rest. The artist sent this message:

"Danger Mouse's new project Dark Night Of The Soul consists of an album length piece of music by Danger Mouse, Sparklehorse and a host of guest vocalists, along with a collection of original David Lynch photography inspired by and based on the music.

The photographs, which provide a visual narrative for the music, are compiled in a limited edition, hand numbered 100+ page book which will now come with a blank, recordable CD-R. All copies will be clearly labeled: "For Legal Reasons, enclosed CD-R contains no music. Use it as you will.

Due to an ongoing dispute with EMI Danger Mouse is unable to release the recorded music without fear of being sued by EMI. "

Danger Mouse remains very proud of Dark Night Of The Soul and hopes and that people lucky enough to hear the music, by whatever means, are as excited by it as he is."

NPR, STARS & COPYRIGHT LAWS
The album began showing up on file sharing networks several days ago and a copy was sent to NPR which is now streaming the album in full on its web site.  A plethora of artists signed to other labels also appear on the project including:

Warner Music Offers $500 Million In Secured Notes

Is the company worth another $500 Million?

Late on Monday The Warner Music Group announced that its subsidiary, WMG Acquisition Corp. will offer $500 million in new senior secured notes due 2016. The net proceeds from the offering will be used to repay a portion of the term loans under its existing senior secured credit facility. 

Though serious obstacles remain for the entire recorded music sector, the value of the company has risen in recent weeks along with the overall stock market's rally.  Two major analysts have also upgraded the stock to a "buy" recommendation and on Monday the stock jumped 11%.

Sony CEO: "We Could Have Beaten Apple"

"Sony hasn't taken open technology very seriously in the past. Its CONNECT music download service was a failure. It was based on OpenMG, a proprietary digital rights management (DRM) technology....

This approach, however, created a problem: customers couldn't download music from any Websites except those that contracted with Sony. If we had gone with open technology from the start, I think we probably would have beaten Apple Inc. of the US."
- Sony Chairmen & CEO Howard Stringer

And the cow jumped over the moon...

Sony Sues EMI Over Failed Deal With New North Amercian COO Ron Werre

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UPDATED (2): Sony Music is suing EMI alleging that executive Ron Werre had used them as a "stalking horse" to obtain his promotion last week to Chef Operating Officer of EMI North America and Mexico.

According to documents obtained by Hypebot, the lawsuit filed in the Supreme Court of The State of New York charges that on February 13th, Werre, who until recently served as EMI's head of music services,  had signed a 3 year deal to join Sony as the president of commercial music when his contract with EMI expired in March of 2010.  Sony filed the lawsuit on May 8th, less than 24 hours after Werre's EMI promotion was announced.

In the suit, Sony claims that it had terminated another executive based on Werre's acceptance, but that Werre "never intended to fulfill his contractual obligations to Sony Music, (he) was merely using his contract with Sony Music as a stalking horse to solicit a more lucrative contract from EMI with enhanced job responsibilities". Werre is also named a a co-defendant in the lawsuit.

PDF OF SONY VS. RON WERRE AND EMI COURT FILING

Seeqpod Saga Continues

A downed Seeqpod may be farther from relaunching than CEO Kasian Franks had hoped. Microsoft is interested in buying some of Seeqpod's assets form Chapter 11 as Hypebot reported Friday. The problem for Franks and the many fans of his playlistable search engine is that the tech giant does not appear interested in the music part of the Seeqpod's assets and only wants the others if they come at fire sale prices. "Seeqpod is indeed speaking with Microsoft, but not about an outright acquisition. Rather, it is trying to negotiate a piecemeal sale of its technology a ssets and find new jobs for its core technology team," reportes Techcrunch's Erick Schonfeld.

Score one more Pyrrhic victory for the major labels: another popular music discovery engine has been destroyed.

EMI Names Werre & Kassler As COO's

EMI Music has appointed Ronn Werre and David Kassler as Chief Operating Officers.  They will oversee EMI’s operations in 32 countries.

Based in Los Angeles, Werre will oversee all of EMI Music’s operations in North America and Mexico. He will also continue as President of EMI Music Services, the global business unit established last year to provide artists with a suite of services - from sales and distribution to brand partnership, licensing, and merchandising. Kassler is new to the company and will oversee the company's operations in all other countries in the rest of the world from his base in London.

From the press release:

EMI Gains Strength Thanks To Cost Cuts And Currency Fluctuations. Digital Gains Left Vague.

While the numbers lack the specificity of a public stock filing,  figures released by privately owned EMI point to a turnaround for the major label group. Driven in large part by cost cutting and currency fluctuations, EMI also maintained its 9.5% global market share increasing its US share by 1.5%.

Earnings before interest, taxes, depreciation and amortization rose 200% to £163 million ($245M US) driven by a £48 million ($72M US) reduction in returns and savings from restructuring ; EMI says it is on track to deliver the £200m in cost savings identified at the time of acquisition one year ago.. The comoan generated cash flow of £190 million ($286M USD) during the year up from £142 million ($214M US) in 2008. Net sales increasesd just 4% io £1,072 million ($1612M USD). Excluding the currency impact, sales were down 10%, slightly more than the contraction in the overall industry.
 
DIGITAL REVENUE?
The report did not break out digital sales as a separate revenue stream preferring to include it with other...

WMG Quarterly Losses Widen To $68M

Warner Music Group (WMG) losses widened to $68 million or 45 cents per share for the fiscal quarter ending March 31; up from $37 million a year earlier. The loss included major write-downs of investments in 2 lala and imeem totalling 22 cents oer share

Revenue fell 17% to $668 million. A poll of seven analysts by Thomson Reuters had predicted a loss of 25 cents a share on revenue of $739 million. Blaming its own release cycle, WMG reported

Andria Vidler Named President EMI UK & Ireland

Andria Vidler has been appointed President of EMI Music UK and Ireland. A former Managing Director of Capital Radio and of Magic 105.4, Andria is currently Chief Marketing Officer at Bauer Media. Bauer is home to 53 consumer magazines, including heat, GRAZIA, Closer and leading music titles Q, Mojo and Kerrang!, 42 radio stations including Magic 105.4 and Kiss, and TV channels including 4Music through its joint venture with Channel 4.

In her new role, which she will take up this summer, Vidler will lead all of EMI Music's operations in the UK and Ireland, reporting to David Kassler, EMI Music's President, Europe.

From the press release:

Eminem Uses Album Cover To Tease New "Relapse" Release

To tease the upcoming release of his new album "Relapse", media savvy rapper Eminem has combined  the modern self-inflicted leak with a very old school marketing tool, the album cover, and delivered the message to his 39,000 Twitter followers.

"This is getting getting very real," wrote Marshal Mathers aka Eminem accompanied by a link to a hidden Interscope web page displaying only the new cover which recreates his image using thousands of pills .This morning a new tweet states, "I'm with Angela Yee on Shade45 Thursday morning. Listen carefully." Shade 45 is a Sirius satellite hop hip station co-created with Enimem.

In the iTunes age, album covers have been relegated to postage stamp size graphics if visible at all.  Many complain about the loss, while others have tried to reinvent it.  For Eminem and his fans, what's old is now new again.

EMI Teams With MYPLASH For Artist Branded Prepaid Visa Cards

EMI is partnering with MYPLASH, a prepaid Visa Card program. The two companies will offer artist-themed cards to consumers alongside an awards program through which cardholders can redeem points for artist merchandise. as well as, discounted downloads and special promotions. 

The artist branded cards provide access to online transactions that have previously been difficult for non-credit card carrying teens. The plastic also offers a public badge of honor for the fans; in addition to being, another tool in the viral music marketing toolkit. Previously the company had partnered with individual artists and celebrities like Brisco and Chingy for artist branded cards.

EMI Launches "Your SoundCheck" Online Music Research Community

EMI has quietly launched Your SoundCheck, "an exclusive online research community of people with a passion for music". This new extension of an initiative which began in December with the relaunch of EMI.com will be gathering data about how people discover and purchase music.

Email invites began going out Friday to some registered users of EMI.com offering free access to pre-release content and an opportunity to share what they "think about new music, new bands and advise us on our music-making decisions".  Opinions will, the invite promises, "go straight to the heart of one of the world's leading music companies, helping to shape tomorrow's music." 

Suggesting that Your SoundCheck is still beta, one question in the introductory five minute online survey asks the user to rate alternative names for the service.  Other questions ask age, location  music discovery and purchase habits, but nothing about the styles of music favored. No other content is offered thus far.

The Music Business Is A Crap Shoot, So Why Not An EMI Music Lottery?

This is not an April Fools joke.

I swear.

EMI has teamed with Pollard Banknote,  a producer of instant lottery tickets, to launch a global music-themed lottery. Pollard Banknote manufactures instant tickets for 45 lotteries worldwide, including some of the largest in the U.S., Canada, Europe, Asia, and Central and South America.

Players purchase music-themed instant lottery tickets and can win downloads, ring tunes, merchandise, and “one-of-a-kind” experiences from EMI artists. Winners redeem downloads using a unique code on their ticket at websites created for each lottery by EMI.