Archive for May, 2011

WaTunes: Facebook Speeds Toward 700 Million Users. Where Are They Coming From?

Source: Hypebot

<img class="asset asset-image at-xid-6a00d83451b36c69e201538ed8526f970b" title="image from www.google.com” src=”http://www.hypebot.com/.a/6a00d83451b36c69e201538ed8526f970b-120wi&#8221; alt=”image from www.google.com” style=”margin: 0px 5px 5px 0px;” /> Facebook continues to explode, and is now closing in to 700 million users. But much of the growth is coming from outside of the U.S. Brazil alone added 1.9 million new users to Facebook in May, according to SocialBakers. That's a jump of 11 %.  Here is a chart of the top growing countries for Facebook in May 2011.

<img class="asset asset-image at-xid-6a00d83451b36c69e201538ed850c7970b" title="image from www.socialbakers.com” src=”http://www.hypebot.com/.a/6a00d83451b36c69e201538ed850c7970b-450wi&#8221; alt=”image from www.socialbakers.com” style=”display: block; margin-left: auto; margin-right: auto;” />

May 31, 2011 at 5:11 pm Leave a comment

WaTunes: And Sony Makes 3. Apple Nears Cloud Music Launch

Sony_music

Source: Hypebot

Sony has become the third major label to make a deal to licence Apple's iTunes cloud music service, according to Bloomberg.  EMI and WMG have completed similar deals with Apple in recent days according to multiple sources. UMG is rumored close to signing on. But even 3 majors out of 4 places Apple much closer to a rumored launch during its June 6th Worldwide Developer Conference.

Apple must also complete deals with music publishers, but they have tended to fall in line once the labels have signed on.

As I wrote in yesterday's commentary, it appears that the labels, despite privately complaining about iTunes dominance, have handed Apple another major victory and left potential competitors in the dust.  Read more here.

May 20, 2011 at 2:50 pm Leave a comment

WaTunes: Tunecore CEO Jeff Price Defends Flat vs. % Music Distribution Fees, Venzo Music CEO Kevin Rivers Responds!

Jeffprice_tunecore

Source: Hypebot

 When Tunecore raised its yearly flat fee digital distributions rates recently, many users supported the change while a few vowed to leave the service. Yesterday, after competitor CD Baby offered a discount to artists to switch to its percentage based distribution, a heated debate raged among Hypebot readers over Tunecore's new rates and flat fee vs. percentage based distribution fees for d.i.y. artists.  As part of his response, Tunecore CEO Jeff Price shared a passionate argument in favor of flat music music distribution:

"I am by no means suggesting TuneCore is not a business, it is. And it does charge a flat fee for a service, but I feel I can look someone in the eye honestly when I do that, not when I take a piece of what they make when their music sells.

…You get what you pay for with no hooks left in you in the event you succeed…

I don't believe in pre-assuming artists are going to fail, and I don't believe when you have success others should be able to claw away as much as they can because you bet wrong"

Jeff has more to say in his comments to the original post here. It's an important debate. Jeff, CD Baby and others in the inudstry are paying attention. Tell them what you think.

Official Responses from Venzo Music CEO, Kevin Rivers:

Although I am more in favor of the percentage model, I think this issue was a bold, yet unprecedented move on TuneCore.

While I strongly agree with Jeff that no artist should be denied access to distribution, I have to disagree with his comments in regards to a percentage based model.

Don't get me wrong, I think what Jeff and Peter did with TuneCore is truly a masterpiece. They, like myself and CD Baby have really brought real innovation to the industry. I also would say that I do respect Jeff's opinions, viewpoint and his philosophies. That being said, I honestly don't see why artist should pay any flat fees in exchange to have their music on iTunes.

Base on recent study that an average TuneCore user only makes $178 a year, it is apparent that flat flee models may prove to be more expensive short term & long term than a percentage model. Many reasons could be due to high maintenance cost in hosting the albums on their servers, implementation and deployment on features (as this was practically the case), and of course maintaining the systems.

There are many reasons why I believe a straight-forward percentage based model works is the following:

1.) Its sustainable long-term.
2.) Provides investments to both the artist and the distributor
3.) Sales can be use to re-invest in distribution systems based on customer feedback (i.e. What do the customer really want? And how do we give it to them?).
4.) No increase in prices. Everything remains the same.
5.) Customers don't have to worry about using their credit cards to pay a distributor for renewal fees. Everything is already taken out. The artists are paid, distributors are paid, everyone stays happy.

Now here is where things gets juicy. Lets say for example an artist made $50,000 in a year with 50 albums. It is clear to say that through a flat fee distributor (charging $49.99 per year) they only have to pay $2,500 out of the deal as oppose to $10,000 (from a distributor taking 20% out of the back-end). Seems like a lot of cash right?

Now ask yourself this question: Would it be easier to give a distributor $10,000 to ensure that they are in business long-term? In which they could utilize the funding to not only improve their systems but also their marketing efforts?

OR

Would it be easier to pay $2,500 and hoping that other users are paying the same amount to keep them in business long-term?

Now lets be more realistic. Say an average artist makes $178 a year off of one album. A flat fee company would take $50 while a percentage base company would only take $35.60 (20% taken out).

Overall, I would say that the core function of a business is to make money. Whether or not the model will work in anyone's favor is his or hers own opinion.

May 17, 2011 at 5:41 pm Leave a comment

BLOG: iTunes Service Venzo Music Steps In After TuneCore Raises Prices

Tunecorecash

From Digital Music News:

This is one of those things you only notice when you notice. For example, when your annual renewals are due within 30 days. And in the past few weeks, Tunecore has more than doubled its album distribution renewal fees, from $19.98 to $49.99.       

Actually, that's a 150% increase, and $30 means something to most artists.  We talked to a Tunecore customer service rep about the shift, who confirmed that the price hike actually happened April 6th.  But of course, Tunecore wasn't about to trumpet the change.  Singles and ringtone distribution renewal charges remain the same – at $9.99 per year.    

We had little trouble locating pissed-off artists. "This is a highly alarming event and many artists consider it blatant fraud," one artist wrote on the Velvet Rope forum. "The sign-up deal was $19.98 per year to renew an album. I want you to know I will immediately be contacting the Better Business Bureau, the Consumer Protection Agency and RipOff Report."  

Tunecore does reserve the right to change rates, and the company has been notifying artists – but typically within 30 days of renewal.  That technically allows time to shop around, though shifting contents to another service can be a huge hassle.  And, there are serious penalties for non-renewal.  "You must renew by the date above to keep your music live on the online stores you selected," the Tunecore letter states.  "If you do not renew, your release will be taken down from the online stores after the renewal date.  You will lose all your reviews, comments, future sales and your TuneCore Media Player. "

Official Response from Venzo Music (VMG):

We are very aware on how the distribution market has shifted. Due to these changes, more and more competitors are now able to take advantage of what seems like a grave error to music artists around the world. I am proud to say that Venzo Music has a much broader approach to getting people's music on iTunes. As the only iTunes platform that never charge any flat fees, we are opening our doors to any music artists who wants to gain access right into the iTunes Store.

 

In exchange for 20% of sales made, we are offering everyone to sell unlimited music, music videos, ringtones, and iTunes LPs on iTunes. Unlike other services out there, we grant users the ability to literally upload their music directly on iTunes, giving them more leverage and control of their music. Our business model is a non-changing model. We are very excited to be able to offer our services to any artist and record label without charging and increasing prices – Kevin Rivers, CEO Venzo Music (VMG).

For more information on Venzo Music check out their video at: http://www.youtube.com/itunesdistribution

May 11, 2011 at 2:35 pm Leave a comment

PRESS RELEASE: Facebook App WaTunes Launches Marketing Strategy For Indies

Watunes_t1

May 9, 2011 at 6:21 pm Leave a comment

WaTunes: OFFICIAL: Warner Music Group Sold For $3.3B

Source: Hypebot

ACCESS INDUSTRIES TO ACQUIRE WARNER MUSIC GROUP

In $3.3 Billion All-Cash Transaction

NEW YORK, May 6, 2011 – Warner Music Group Corp. (NYSE: WMG) and Access Industries, the U.S.-based industrial group, today announced the execution of a definitive merger agreement under which Access Industries will acquire WMG in an all-cash transaction valued at $3.3 billion.  The purchase includes WMG’s entire recorded music and music publishing businesses.

The purchase price of $8.25 per share represents a 34.4% premium over the volume-weighted average share price of $6.14 over the previous six months.

Under the terms of the merger agreement, WMG’s stockholders will receive $8.25 per share in cash at the closing of the transaction.  WMG’s Board of Directors approved the transaction and recommended that WMG’s stockholders approve the transaction.  In addition to stockholder approval, the transaction is subject to the satisfaction of customary closing conditions and regulatory approvals.  It is anticipated that the transaction will be completed in the third calendar quarter of this year. 

WMG’s Chairman and CEO, Edgar Bronfman, Jr., said, “We believe this transaction is an exceptional value-maximizing opportunity that serves the best interests of stockholders as well as the best interests of music fans, our recording artists and songwriters, and the wonderful people of this company.  We are delighted that Access will be the new steward of this outstanding business.  They are supportive of the company’s vision, growth strategy and artists, while bringing a fresh entrepreneurial perspective and expertise in technology and media.  Most importantly, Access supports Warner Music’s commitment to our recording artists and songwriters who are the foundation of our current and future success.”

Len Blavatnik, Chairman and founder of Access Industries, said, “I am excited to extend my longstanding involvement with Warner Music.  It is a great company with a strong heritage and home to many exceptional artists.  I look forward to working closely with the many talented people within the company.” 

Jorg Mohaupt, Head of Media at Access Industries, added, “The music industry is at an inflection point where digital adoption is rapidly gaining momentum.  Warner Music, as one of the most progressive forces in the music business, is well positioned to capture this opportunity for music creation and distribution.”

Scott Sperling, Presiding Director of WMG, said, “It has been our great pleasure working with the extraordinary team at Warner Music over these past seven years.  The company has managed to significantly increase market share and profitability during our ownership period and consistently outperformed even during a challenging period for the industry. Len Blavatnik and Access are likewise deeply committed to the music business and we know that we will be leaving the company in good hands.”

Following the closing of the transaction, WMG will become a privately held company and its stock will no longer be traded on the New York Stock Exchange.  The company will retain the Warner Music Group name and will continue to operate out of its current facilities.  

Thomas H. Lee Partners L.P. and its affiliates, Bain Capital Partners, LLC and its affiliates, and Edgar Bronfman, Jr., who together hold approximately 56% of the company’s outstanding shares, have entered into a voting agreement with Access under which those stockholders have agreed to vote their shares in favor of the merger. 

Access has secured committed financing from Credit Suisse and UBS Investment Bank.  These funds, in addition to equity financing from Access, will finance the cash consideration to WMG’s stockholders.

Goldman, Sachs & Co. and AGM Partners LLC acted as financial advisors to WMG, and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as the company’s legal advisors.  Credit Suisse and UBS Investment Bank acted as financial advisors to Access, and Debevoise & Plimpton LLP acted as Access’ legal advisors.

Quarterly Results Announcement

WMG noted that with the proposed transaction, it will not host a conference call to discuss results for the second quarter of fiscal 2011.  The company expects to file its Quarterly Report on Form 10-Q for the period ended March 31, 2011 by May 10, 2011.

Additional Information and Where to Find It

In connection with the proposed transaction, WMG intends to file relevant materials with the SEC, including a proxy statement.  INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THESE DOCUMENTS (IF AND WHEN THEY BECOME AVAILABLE) AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT WMG, THE PROPOSED TRANSACTION AND RELATED MATTERS.  Investors and security holders may obtain these documents (and any other documents filed by WMG with the SEC) free of charge at the SEC’s website at http://www.sec.gov.  In addition, the documents filed with the SEC may be obtained free of charge by directing such requests to WMG’s Investor Relations department at 212-275-2000, or by visiting the Investor Relations portion of WMG’s website at investors.wmg.com.  Investors and security holders are urged to read the proxy statement and the other relevant materials when they become available before making any voting or investment decision with respect to the proposed merger.

Participants in Solicitation

WMG and its directors, executive officers and certain other members of WMG’s management may be deemed to be participants in the solicitation of proxies from WMG’s stockholders with respect to the proposed transaction.  Information about WMG’s directors, executive officers and members of management is contained in WMG’s most recent proxy statement and annual report on Form 10-K.  Stockholders may obtain additional information about the directors and executive officers of WMG and their respective interests with respect to the proposed transaction by security holdings or otherwise, which may be different than those of WMG’s stockholders generally, by reading the definitive proxy statement and other relevant documents regarding the proposed merger, when filed with the SEC.  Each of these documents is, or will be, available as described above.

“Safe Harbor” Statement under Private Securities Litigation Reform Act of 1995

This communication includes forward-looking statements that reflect the current views of WMG about future events and financial performance. Words such as “estimates,” “expects,” “anticipates,” “projects,” “plans,” “intends,” “believes,” “forecasts” and variations of such words or similar expressions that predict or indicate future events or trends, or that do not relate to historical matters, identify forward-looking statements.  All forward-looking statements are made as of today, and we disclaim any duty to update such statements.  Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them.  However, we cannot assure you that management’s expectations, beliefs and projections will result or be achieved. Investors should not rely on forward-looking statements because they are subject to a variety of risks, uncertainties, and other factors that could cause actual results to differ materially from our expectations.  Please refer to our Form 10-K, Form 10-Qs and our other filings with the U.S. Securities and Exchange Commission concerning factors that could cause actual results to differ materially from those described in our forward-looking statements.

About Access Industries

Access Industries is a privately held, U.S.-based industrial group with long-term holdings worldwide. Access was founded in 1986 by its Chairman, Len Blavatnik, an American industrialist. Access' industrial focus spans three key sectors: natural resources and chemicals; telecommunications and media; and real estate. (www.accessindustries.com).

Access Industries’ holdings in the digital media sector currently include significant stakes in Perform Group (the online sports broadcaster), Acision (the leading mobile broadband and value added services provider), ICEnet (mobile broadband services provider in Scandinavia), ViKi (the international video site, translating the best of TV and movies into over 150 languages) and Mendeley Research Networks (the social Web application for sharing research papers, discovering research data and collaborating).

About Warner Music Group

Warner Music Group became the only stand-alone music company to be publicly traded in the United States in May 2005.  With its broad roster of new stars and legendary artists, Warner Music Group is home to a collection of the best-known record labels in the music industry including Asylum, Atlantic, Cordless, East West, Elektra, Nonesuch, Reprise, Rhino, Roadrunner, Rykodisc, Sire, Warner Bros. and Word.  Warner Music International, a leading company in national and international repertoire, operates through numerous international affiliates and licensees in more than 50 countries.  Warner Music Group also includes Warner/Chappell Music, one of the world's leading music publishers, with a catalog of more than one million copyrights worldwide.

May 6, 2011 at 9:35 pm Leave a comment

WaTunes: Michael Robertson: YouTube Legal Battle Ain’t Over

Source: Hypebot

<img class="asset asset-image at-xid-6a00d83451b36c69e201538e4f8cf4970b" title="image from www.google.com” src=”http://www.hypebot.com/.a/6a00d83451b36c69e201538e4f8cf4970b-120wi&#8221; alt=”image from www.google.com” style=”margin: 0px 5px 5px 0px;” /> Viacom suffered a resounding defeat in their lawsuit against Youtube, but that was just the first round and Viacom promptly appealed. Now a higher court will examine the issues. This isn't just ceremonial. Lower court's rulings are routinely overruled even in copyright cases. In fact the Cablevision case was (thankfully) completely reversed by the higher court. With that in mind, I decided MP3tunes should file a brief of support in the Youtube case. We scoured internal Viacom documents in the case and uncovered evidence of elaborate schemes to market movies, TV shows and music using Youtube. To improve the effectiveness, they masqueraded their corporate actions as those of motivated fans. So thorough was the deception that Viacom itself couldn't track what was authorized and what was not making it impossible for anyone else (including Youtube) to know.

While Viacom is telling the court that Youtube is a giant piracy operation their own words tell a completely different story. Rather than me summarizing I thought it would be most interesting to pull quotes directly from internal emails.

Viacom emails on fake leaks, hiding their actions and altering videos:

"THIS MUST BE VIRAL AND NOT DIRECTLY CONNECTED TO US."

"It should definitely not be associated with the studio – should appear as if a fan created and posted it."

"Noone can know that Fanscape or MTV is involved in this."

"Dana wants the clip to look as though it was leaked out by production instead of purposely placed by Spike or the UFC."

"In light of the fact that the goal is to make [the video] look 'hijacked' we won't blur the round number on the clock. Steve actually suggest we throw (if technically possible) visual time code on it to add to the hijacked effect."

"It's also completely finished footage so maybe we want to 'rough it up' with some time code before we release it virally."

Emails from Viacom and others demanding content THEY placed on Youtube be removed:

"We need your help with something. All of the Last Kiss content that we uploaded has somehow been removed-not per our approval. How can we get this back up? How does this happen?"
(Youtube responded it was taken down to an infringement notification.)

"We did it yet again! We issued a take-down on a video that was living in one of our channels."

"This is the second time in as many months that our channels have been disabled. I do understand that Youtube is not to blame for these disruptions and instead it more systemic of what occurs in big companies like our clients where one department isn't aware of what another department is doing."

"Can you please reinstate the Youtube account warnerbrosonline? I believe we sent notices to YouTube regarding warnerbrosonline and we would like to retract the notices."

"Viacom is cease-and-desisting the content from MTV off YouTube and has caused our account to be disabled, making all of the MTV videos we have on that account inaccessible."

"All three of our Fanscape YouTube channels have been disabled. We have copyright infringements from Viacom or MTV related companies (i.e. record labels) that we need to take care of as soon as possible. If we can't keep a YouTube channel live then it makes it very difficult to blast out the MTV videos provided by you to promote new/existing shows."

While Viacom tells the court that YouTube knows or should know what videos are pirated these documents tell a different story. Because media companies use the net for marketing they often don't know what's authorized and that is partly because they because they're large organizations partly because they intentionally hide their own actions.

There are striking similarities between the Youtube case and the MP3tunes' case. There's even references to "record labels" in some of the emails. In MP3tunes' legal battle EMI lied to the court claiming they don't distribute promotional songs online when they clearly do. In that case users helped gather evidence of EMI's deception.  In Youtube's case the words written by Viacom employees themselves reveal the truth and why the appellate court should AFFIRM the lower courts ruling.

May 6, 2011 at 1:10 am Leave a comment

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