Record Industry
10 Most Disastrous Music Industry Deals via Digital Music News
Aug 18th
File this one under too good not to mention.
If you don’t already read Digital Music News, you should. This is the brainchild of Industry pundit Paul Resnikoff. Established in 2004 (I think) this is one of the places I go for my up-to-date music industry info… Today’s post (excerpted below) is just a taste of the daily fodder. Also featured daily is a Job Board for all of those looking for a gig. Overall a pretty great resource and a good excuse to re-post the following:
The 10 Most Disastrous Music Industry Deals
(1) Terra Firma’s acquisition of EMI, $4.7 billion (2007)
Even Guy Hands admits he made a colossal mistake on this one. One of the last super-leveraged buyouts before the bust, EMI has now become a $4.7 billion-plus toxic mess for Terra Firma.
(2) CBS’ acquisition of Last.fm, $280 million (2007)
Scrobbling is cool and all – and this is still a very cool site – but few would “recommend” this deal today. Amidst predictable ad monetization challenges, the company has since switched to pay-only in certain European countries, outsourced full-length videos, and bid adieu to the original founders.
(3) Bertelsmann’s investments in Napster, $100 million (2000-onward)
In retrospect, Bertelsmann was the forward-thinking maverick. But in the moment, that stance created a legal sinkhole for the company, accused of facilitating widespread infringement by keeping the P2P alive. The in-fighting lasted years before expensive settlements torpedoed Bertelsmann with hundreds of millions in losses.
(4) MP3.com acquisition by Vivendi, $372 million (2001)
Before MySpace was even conceptualized, MP3.com was setting huge records for IPO valuations, label lawsuits, and band profiles. Problems quickly followed the inflated purchase, and the site was quickly dumped by Vivendi Universal in 2003.
(5) The Robbie Williams 360-Degree Deal, $160 million (2002)
Williams loves being able to walk the streets of Los Angeles without being recognized. EMI, which structured the pricey deal, is somehow less thrilled by that freedom.
(6) The Sony BMG Joint Venture (2004)
The 50-50 JV was like “tying two sinking rocks together,” according to one executive, and this seemed like a dead weight from the beginning. Bertelsmann walked away, and the combination was ultimately purchased by partner Sony Music Entertainment by 2008.
(7) WMG’s Investment in Imeem (2009)
“We do not intend to make more digital venture capital investments,” WMG chairman Edgar Bronfman told investors after suffering a $16 million write-off on Imeem in 2009. MySpace subsequently scooped the property for well under $1 million.
(8) WMG’s Purchase of Bulldog Entertainment, $16 million (2007)
Bulldog Entertainment Group was best known for coordinating tony concerts in the Hamptons. The company eventually cratered with estimated losses of $30 million.
(9) Any Deal Involving PlaysforSure…
This was a mistake that caused endless suffering, for music service (Yahoo Music, MTV Urge, Wal-Mart), player (Sony, SanDisk, Samsung), and consumer alike. In fact, even Microsoft bailed on its DRM-heavy solution with the launch of Zune.
(10) Best Buy’s Exclusive on Chinese Democracy…
Some comebacks are better than others, and Best Buy was left carrying a truckload of Guns N’ Roses CDs. That did little to kill the big box exclusive, however, as plenty of big-name artists have used the concept to shift serious tonnage.
For the complete article and to see others go here. Also be sure to follow them on Twitter for up to date coverage…
Subscribe to this… my personal case study
Jan 29th
Well, I know I have been a bad bad boy. My blogging as of late has been a bit lack luster and non-existant. If you are still reading. Thank You.
I have been in the process of working on my taxes over the past week or so and I had a bit o an epiphany. You see, when you are relegated to staying in the States while all of the talking heads of the music industry are in Cannes at Midem, you will find yourself enjoying the time you have by filling it up with things like tallying your own personal music tab from the past year for the purposes of writing some of it off (I am in the MUSIC business after all).
Point being… the buzz this year is all about Subscriptions. Subscriptions are going to save the music industry. Well- we knew this- that is why we created the Naxos Music Library years ago. Subscriptions are a very important part of our business model. It is good to hear all of this new buzz- But with the likes of Bob Lefsetz, Donald Passman, and other touting how this really could be the paradigm shift gives it a whole new value in my mind. The fact that you cant have a talk about digital music without Spotify coming up tells me that this is a move that is coming sooner than later.
Back to my taxes. I noticed a really interesting fact as I added up my tally from Amazon, , iTunes, eMusic, Classics Online, etc. The really interesting thing is I REALLY did spend more money on subscriptions this year than I did on a la carte purchases. This is a bit freaky to me as I spend a good deal of dough on music. But it is true. eMusic got the lion’s share of my money. This could be attributed to a number of things. 1st of all, I use eMusic as a discovery tool and as a catalog builder. I would never set out to buy Starship’s Greatest Hits, Gogol Bordello, or Boston, but eMusic facilitated this for me. These are what I consider great catalog fillers. I may not want to put them in queue on my iPod touch, but some time I may wish to hear them again and therefore I bought them… Move over to my iTunes and Amazon purchase patterns. The vast majority of music purchased through these outlets last year were singles. Radio hits. One Hit Wonders… whathaveyou. Call it what you want.. the crazy thing is I spent less on these than I did at eMusic. This tells me that I am either a) wasting too much money on eMusic.. of b) I would rather keep my monthly tab knowing that I can exhaust it on any mundane old albums my heart desires than go looking for those albums to pay for them in real time. I wonder if the rest of the music buying public would agree with this…?
I dont know if this proves any of the great music business thinkers’ concepts as this still neglects the difference between my eMusic subscription and a Spotify subscription. But it does make one thing evident. I WILL spend more money on music by the Album than I will by the single and eMusic’s model of giving me an allowance each month will continue to feed my album fetish. This is mostly a behavioral thing I suspect- but I still find it incredibly interesting.
Ok- thats all for now- I will try to be a better blogger in 2010.. Thanks
Oh.. and Happy 2010.. here’s a video to celebrate.
What is Sound Exchange?
Dec 1st
Very good question. Most of us know Sound Exchange is the digital PRO created to deal with royalties generated over the internet and through digital music devices, however it is still quite vague to a vast majority of the musicians and writers what EXACTLY Sound Exchange does.
Thanks to Youtube, these questions can now be answered in 2:26 .
Enjoy
Music City Interactive (http://www/musiccityinteractive.com)
Nov 14th
I want to tell you about Music City Interactive. MCI is a site that was dreamed up over some great greek food with my friend Tony Groticelli. Tony and I were commenting on the fact that there were multiple factions of tech-minded folks in Nashville.. but they were quite scattered. I mean… we have Barcamp , Podcamp, Geek Breakfast, Digital Nashville, and probably a dozen other gather places for like-minded geeks but there was not one place you could go to find information on all of these… let alone learn about other interesting happenings around music city.
We decided that we would try to do something about it. We would establish a blog aggregator. A “Mashable” for Nashville’s music and technology set. Hence the brand spanking new blog: Music City Interactive. This is very young and at this point.. we are still REALLY working out the kinks, but the idea is- we will have multiple bloggers who write on various issues surrounding technology and music contribute via their RSS feeds. Here in one place- you will be able to find and learn about (hopefully) every facet of the music, social media, technology and where they all intersect.
CHECK IT OUT! More on this later.
Flash Sales sites make holiday shopping a breeze… perhaps the music industry could learn a thing or two..
Nov 9th
I love flash sales! I love everything about them. They are discounted, quick, dirty, and in limited quantities. They are urgency and discount bundled into one fantastic package that I as a consumer cannot resist. Obviously, they have been around for a while now. Amazon.com has often push urgency marketing on their customer base and many other sites have attempted to emulate this tactic with varied levels of success. However it seems that just lately, companies are starting to figure out the value in this type of marketing and sales. Now more than ever… sites like Woot, Rue La La, Gilt, Haute Look, and others are popping up for everything from consumer goods, to clothing, wine, t-shirts, etc. And they are smart about their marketing… these sites are “invitation only” (click above for “invitations”)… they build scarcity around the deal. Scarcity is power! If it is an expiring deal, or a limited number of deals… it is much more attractive isnt it? Combine this with top-notch social media networking and you have a powder keg of cash drawing, deal making, fantastic-ness (yes I just invented this word).
So… when is music gonna wise up and get on the bandwagon?
Great question.
Bob Lefsetz figures that it will begin with concert ticket sales… How cool would that be? Well- we already have scarcity (there are only a number of seats you know..)… so add to that an expiring deal and you may just have something great!
I would like to see it in recorded music as well. Obviously, there are great daily deals to be found in e-commerce with Amazon and iTunes leading the pack but these dont really count in my book. The sites listed far above are deal of the day sites. Sites people who love technology, fashion, t-shirts, etc. go to on a daily basis and accept “spam” from because they ASKED FOR IT in order to get a great deal… Why haven’t we embraced this yet as a Music industry? It wouldn’t be too hard… In my book you have general music lovers and genre specific lovers… take the top 10 genres and hook up a deal from each every two days or so… JACKPOT! I think this will be a great way forward should anyone have the chutzpah to pull it off (I am available to consult- since it was MY IDEA).
I think the industry could do well to take some notes from these other folks. This may not be the idea to right the ship, but it does help bail some of the water. Til that happens… much of my holiday shopping will be relegated to name brand handbags and sunglases rather than that great Pink Floyd box set I had my eye on…
Making your way as the “conductor” of your success
Oct 7th
Today as I read my daily liturgy of various blogs and blog posts I stumbled upon a short statement brought forth on Hypebot.
“Raise Your Baton” was the title of this post. This struck me on a number of levels as both a musician, lover of classical music, business person, and last but not least… the son of a conductor (not train, but music).
In this short post he spoke of the vast amount of resources available and the ease at which one can enter the business community these days whether it be as a record label, publisher, artist, or tech startup. He goes on to surmise that trying to do it all yourself will drive you nuts and the smartest of entrepreneurs should surround themselves with capable people who can help achieve and accomplish the task at hand. The smartest entrepreneur will raise their baton and become the conductor of the project.
This analogy is really great. Some of the people I respect most in this world were the ones willing to admit they didn’t know how to do everything. One such person always used to say- “I don’t know how to do everything… that’s why I surround myself with experts like youself (moi?)… who do.” Until now I always took this sentiment to be nothing more than a nice statement.. but in fact he is right. He IS the conductor. You see, as Bruce Houghton points out- the conductor doesn’t know how to play every instrument in the orchestra… but he(she) does know how to read music and he knows what the symphony should sound like. The source of my admiration IS the conductor of his business and it’s success.
So how do you become the conductor? Bruce accurately puts it as this… ” Start by learning your business. Assemble the players. Then raise your baton.” How simple… and perfect! Music to my ears.
American Idol + Ellen Degeneres = FAIL
Sep 11th
Well everyone,
It was announced this week that Ellen would be the new American Idol judge replacing Paula Abdul. No matter how you feel about Paula, it is hard to even infer that Ellen has 1/10th the musical prowess of her predecessor. This coupled with the news I just received of Ellen’s utter disrespect for music and the makers of music through her show’s refusal to pay royalties on the music “featured” on her show tells me that she no more belongs on AI than I do as the King of England.
According to Digital Music News, All four majors have now filed suit demanding that royalties be paid. The show’s producers have denied royalties to the copyright owners because they “did not roll that way.” This pathetic disregard for music, music makers, and copyright law proves to me that she has no place anywhere near this industry.
Her appointment as a judge on American Idol proves to me that the show’s producers are catering to the lowest common denominator, looking for the popular vote and continuing to dumb down this show until it falls into the oblivion. Let’s face it, it has been going down ever since season 1 and with this move it will continue to do so. No offense is meant to Ellen, as I do find her funny enough however she would be better suited alongside “The Hoff” on America’s got talent… save the music judging for musicians.
Okay I’m Done. Happy Weekend Everyone.
PS: Sorry about my laziness in posting lately… my cup overfloweth.
Royalty Free Music VS Classical Cues
Jun 22nd
(This is a Simul-post from ClassicalCues.blogspot.com a music licensing blog that I contribute to.)
I happened to stumble upon a fantastic blog post today while looking at my Google Alert updates. The post comes from a blog called MediaMusicNow. This is the blog of a British entrepreneur named Lee Pritchard who started a royalty-free music company which goes by the same name. The reason I make it a point to bring attention to this blog is the great simplicity in which Lee explains the licensing process. Starting with the conventional old-school major label model and moving to his own royalty free model, he explains much of the intracacies in very easy to read graphs and visuals that help even the most un-initiated get a feeling for the processes involved.
From the 3 main aspects of licensing
To the “old” standard of music licensing
Normally I am not an outspoken fan of royalty-free music as many companies in the sphere have (in my own opinion) de-valued recorded music – at least commercial recorded music. (I believe the phrase “Royalty-Free Music” is a bit of an oxymoron) Many of their buyout plans and bargain basement pricing make it nearly impossible for a label to compete and it just tends to make life a bit more difficult for folks like myself who represent a record label. The only saving grace for a record label is to rest assured that the superb quality of your recordings will out-weigh the discount of having picked your music up from a royalty free music library. Even with my internal feelings about the concept of royalty free music, I am able to find quite a few comparisons in the usage of Classical music for licensing projects and these royalty free one-stops. I would say approximately 85% of the deals I do involve music that is in the public domain, thus removing the publisher from the equation. At that point, I am basically serving as a one-stop licensing solution much as MediaMusicNow and the other companies in that part of the business. One-stop shopping and quick turnaround on deals is one of the things we pride ourselves on and no-doubt this is something that is important to filmmakers and other professionals on a tight production time line.
I urge anyone wishing to learn more about the process of music licensing, copyright and the music industry to check out Lee’s blog as it is chalked-full of great information. Heck, I even urge you to license some music from him for your next project as long as it isn’t Classical music . For that, you of course know to look here!
10 Most Creative People in Music?
Jun 17th
Fast Company just announced their 100 Most Creative People in Business, and subsequently their 10 Most Creative People in Music lists for this year. Many of the names on the music list are recognizable and some might even be deserving this recognition, but come on… Soulja Boy as the #1 most creative person in the industry simply because he is a shameless self-promoter and used Myspace and YouTube to promote his “Superman Dance” and ultimately launch a career. Ridiculous! There are no doubt some folks on the list (read: Tim Westergren, Alex Patsavas, and Gregg Gillis (Girltalk) who no-doubt deserve to be there, but I think they are stretching it a bit with Soulja Boy and Pharrell.
Creativity in the music business means coming up with new ideas. Changing the way people think and changing consumer and fan habits. Shameless self-promotion is a great thing and these folks are rewarded for all of their hard work in album sales, sold out concerts and endorsement deals. It does not, however qualify as creativity and I don’t think it should be rewarded as such.
Therefore- I am generating my own addendum to this list. People/groups/companies who really and truly ARE creative. Who have ACTUALLY pushed the envelope. Added to this list should be (in no particular order):
Gerd Leonhard
Radiohead
Spotify
Slacker
Jim Griffin
I am sure I missed a few, but these at least round out that list and make up for the idiocy of adding Hip Hop stars to a list of industry creative powerhouses.
Yo Ho, Yo Ho a Pirate’s Life for me (not really)
Apr 20th
AAARGH!
So just in case you have been under a rock for the last 5 days, the ruling is in… the founders of Pirate Bay have been found guilty in a Swedish court of law. They have all been sentenced to one year in prison and will have to pay approximately $3 Million in damages (after the appeals process- if the ruling stands).
So what now?
The facilitators have been stopped, but what does that mean for all of the users (Pirates) populating Pirate Bay? What does this mean for the bay? Will it suddenly dry up? No. In a word… No. This really means nothing. The Swedish courts have placed their finger in the dyke… they have stopped the spillage for a moment, but the flood waters will remain. The Pirate Bay remains active… servers housed safely outside of Sweden… and the pirates sail on.
There is a lot of debate going on over whether the founders of TPB were injustly convicted… whether the ISPs should be held responsible as well. I think there are a lot of people at fault here including all named previously and in some way, I would love to see them held responsible. However, I am a realist. I understand that the times are changing and our industry needs to find better ways of making a living (outside of suing). Ultimately, the results of the pending appeals will leave a legacy of rulings that will affect the way our courts view file sharing for years to come. The next few years will no doubt be an interesting lot… time will tell.
As a sideline to this story, there has been a recent study stating that “pirates” are 10 times more likely to buy online music than law-abiding non-pirates. The number of participants in the study was rather small (less than2000), but I find it quite interesting and wonder if this is in fact the way it is… according to the comments below the story- the pirates doubt it as well.