Hey boys and girls! It’s been crazy hectic since Friday when my girl Missy and I took off to Boston for the weekend to visit the family and see my brother and his wife’s new baby (pictured here). We didn’t do any clubbing, just visited friends and family. So, there’s no big news to report on the Boston front. While I was away, I received the usual bombardment of press releases, Google News reports and other music-oriented musings, which I will parse for you below. Here goes…
Dell, one of America’s largest personal computer manufacturers announced they are droppping the Dell Digital Jukebox (DJ) from their product mix. Unable to compete with the Apple iPod, which some estimates give Apple around a 70% market share, the 5GB Pocket DJ, 20GB Dell DJ20, and 30GB Dell DJ30 will be discontinued. However, the company will continue to compete with Apple’s iPod Shuffle flash memory-based digital music player with its Dell Ditty, a comparable product that stores up to 220 songs on 512 MB of flash memory.
Last week, I blogged on the IPO of Digital Music Group, Inc, a Sacramento company purchasing back catalog and out-of-print music titles for conversion to digital format and distribution through online music retailers. In their debut, the company’s shares lost 5% of their value, but have since recouped much of the loss, closing at $9.64 on the second day of trading.
I’ll be watching this stock over the next few months as it’s a pure digital music play on the open market.
For more on DMG, Inc.’s stock move, see the full story at the Sacramento Business Journal Online.
We constantly hear the music industry complain about how downloading is hurting their bottom line and that the music business in general is in trouble. What we never hear about is how much money they are making on the publishing or sync licensing of the millions of songs they own. From radio play on terrestrial stations, the Internet and Satellite to video play on Yahoo, MSN and Real’s Rhapsody service and the money they get every time you hear a song played in The Gap, Banana Republic, American Eagle, Abercrombie & Fitch or any other store that is licensed for musical performance by ASCAP or BMI, record labels earn real dollars on the public performance of music. A song can also be licensed for a commercial, film or television program, which charges a sync license fee and then is paid additional on public performance on that work. (See How are Royalties Calculated at FreeAdvice.com or How Music Royalties Work at HowStuffWorks.com.
The music video network, Fuse, refuses to host Universal Music Group videos through their Fuse On-Demand video-on-demand service, because Universal wants .08 cents per play. That’s $40,000 for 500,000 views. That’s a huge premium on video spins over the web, when radio only pays .03 cents per play (I think…don’t quote me on that) and 500,000 people can hear it at one time, but the station only pay .03 cents for that spin. (For more insight into music radio, see a great article on music radio at Answers.com)
What sense does that make? Well, when webcasting first came around for a look by Congress, record labels were in a very strong position to push for high fees for playing music on the Internet, and the Library of Congress set adruously high royalty rates for the public performance of digital music tracks, basically figuring that if a listener heard a song over the web, it was worth more to the labels than if that same listener turned on the radio. In fact, this decision was so onerous, Congress had to pass a new law that asked the LIB to revise the rates for small web casters who could not afford to pay the same rates as the Yahoo’s or AOL’s of the world. Also remember, this is for audio only. For video, a web site now has to pay a P.R.O. (Performing Rights Organisation; i.e., ascap, bmi, sesac) for public performance of the audio portion AND pay the label directly for the right to show the video online.
With Yahoo alone serving over 1 Billion music videos last year, where are those dollars going? And, is Yahoo actually paying the $.08 cents per play. If they are, then that means they spent $80 Million on music videos last year. I don’t know about you, but I find that very, very hard to believe. Who in their right mind would spend $80 Mil on showing music videos, not to mention the few million it takes to run the system, pay the employees and pay for public performance of the audio portion based on their net revenues. And, if Yahoo actually did spend that money, then what about MSN, Real and other music services?
Add to the fact that if iTunes alone sold 500 Million tracks, then at .70 per track, that means a windfall of $350 Million dollars to the labels. Remember, there’s no packaging, no shipping, and few returns. Ask any one that’s every tried to return a digital music file what that experience is like. I personally don’t know anyone who has ever tried. I’m sure they wouldn’t get very far.
Here’s how a conversation between the customer and Apple would go:
“Hello, Steve…I just downloaded the latest version of Mariah Carey’s “Emancipation of Mimi” album, and I’m just not really diggin the audio quality. I’d like to exchange my download for the CD. Or even better, I’d rather have the song in Windows Media format, because I consider Microsoft’s technology better. Can you help me with my request?”
Sure, labels make more profit on the sale of album’s than they do through other distribution channels, but they also releases hundreds of records a year into the music marketplace that offer less value comparitively to other format such as DVD’s or video games. Whether a label invests $250,000 or $1,000,000 into an album, they’ll sell you that album for $20, with maybe two or three good songs on it. A movie studio will invest $100 Million and sell you the movie for $10 at the theatre and a few dollars on DVD. What’s the better value?
A recent AP and Rolling Stone report based on an Ipsos telephone poll of 1,000 adults, consisting of 963 music listeners, from all states except Alaska and Hawaii between Jan. 23-25 (margin of error is plus or minus 3%) concludes:
- 3 in 4 say compact discs are too expensive
- 58 percent say music is getting worse
- 80% of music fans consider downloading music stealing, but those who download think less so
- 71% consider .99 cents a track for the iTunes music store a good deal with some saying its a bargain
For more on the Music industry’s woes, see the full story at the Salt Lake Tribune (link expires in 14 days).
On February 3, MSNBC published “DJ Culture” an article by Newsweek writer Vanessa Juarez on the February 7th DVD release of “Delta Heavy,” a documentary about the 2002 Sasha & Digweed tour across Amercia. Juarez interviews Sasha about the release of the DVD and tried to get him to talk about the influence of drugs and alcohol on the dance/electronic music scene, which he deftly avoids, saying, “You know, Iâ€™d really rather not talk about drugs at all, especially not to NEWSWEEK. I think itâ€™s a really, really touchy subject. I think everyone has personal opinions about it, and itâ€™s just not really somewhere I feel comfortable talking about. I just think the way it looks on paper, it never reads