10 Most Disastrous Music Industry Deals via Digital Music News

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...

American Idol + Ellen Degeneres = FAIL

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.

The Music Industry's New Digital Problem

I was recently sent this article from Business Week speaking of the growing digital issues facing the Music Industry. Streaming VS Downloads... that is the question...

My take on this is that Streaming Services need to be paying the right's holders whether it be through a pro-rata share of advertising profits, PRO's, or what-have-you. I wonder though... Is it the streaming media's fault for declining sales, or are the declining sales are part of a larger shift in the music purchase paradigm? It would be arguable that terrestrial radio could have ruined record sales in the earlier parts of the 20th century... No-one was complaining then. What is so different about streaming internet radio and other services? I guess that answer will help us get to the bottom of this sinking music industry economy.

How the Music Business Spent the Summer Killing Itself... r.e.c.a.p.

Sorry. Hello World. I owe an apology it seems. In the past two whirl-wind months, I have been an absentee landlord with "Is This Binding?". Work has been killing me it seems and when I haven't been at work, I have been out at the lake enjoying what is left of my summer.

To anyone who cares, I must say I'm Sorry.

Now on with the good stuff..

I just received this off of the "Pho" mailing list... really good stuff from "Advertising Age" of all places... The title says it all and Simon Dumenco really is beating a dead horse with his commentary here... but it is nice to hear someone else say it in a new venue... Hopefully, Muxtape will find a way through the RIAA BS in time to actually come back and do some good things. God knows they had a great underground following. As for Pandora, I am afraid I am going to miss it quite a bit once it is gone. I dont know how they can possibly hang on with the terms of the licenses they will need looming overhead.

http://adage.com/mediaworks/article?article_id=130766

So Without further adieu:

How the Music Business Spent the Summer Killing Itself Labels Pull Albums off iTunes, RIAA Goes After Internet Radio -- When Will They Ever Learn?

By Simon Dumenco

Published: September 08, 2008 A few weeks back, as I was having dinner with a media-industry colleague at a trendy restaurant in a trendy New York neighborhood, I realized that the music coming over the sound system was transporting me to another time -- specifically, 1986. As song after song by various "it" bands of the moment, such as Black Kids and the Virgins, played, it was as if we were listening to a time-warped or parallel-universe version of the "Pretty in Pink" soundtrack. Because really, the "it" sound of the moment would work seamlessly in just about any John Hughes movie circa the mid-'80s. 'Pretty in Pink': Today's 'it' bands would fit right in. 'Pretty in Pink': Today's 'it' bands would fit right in.

In fact, I suggested to my dinner companion that there might be a niche market in this: Somebody should create a soundtrack titled "Pretty in Pink 2: The Original Motion Picture Soundtrack to the Movie That Never Got Made." (Same deal with "The Breakfast Club" and "Sixteen Candles.") Of course, in the iTunes Age, the conventional wisdom is that nobody buys albums anymore -- but they do buy compilations. (Witness the continuing global success of the "Now That's What I Call Music!" franchise; the latest U.S. "Now" compilation, the 28th in the series, was released in June and went platinum last month.)

As it happens, my colleague ended up buying "Partie Traumatic," Black Kids' debut CD, on iTunes. He doesn't really read music criticism, so he didn't know -- and wouldn't have cared -- that Rolling Stone and The Guardian loved the record or that Pitchfork hated it. He just really liked the Black Kids song we heard over dinner ("I'm Not Gonna Teach Your Boyfriend How to Dance With You"), got hooked and became a customer.

All of that got me thinking about the economics of music discovery, whether by hearing new music in a restaurant, in a movie theater or on the internet. Speaking of which, the deeply troubled music industry, rather astonishingly, has been spending its summer making it harder for music fans to encounter new music online. Last month, for instance, Muxtape, which I raved about in this column when it launched earlier this year, went dark. Created by former college-radio DJ Justin Ouellette, the hipster favorite made it simple for music fans to create virtual mix tapes -- short lists of songs your friends (and other Muxtape users) could listen to but not download, because Muxtape used streaming technology. (Muxtape, in fact, offered links to Amazon's MP3 store to make it easy for users to buy songs they had just heard.) But now, a simple, sad message appears on the Muxtape home page: "Muxtape will be unavailable for a brief period while we sort out a problem with the RIAA" -- the Recording Industry Association of America. A brief period? We'll see.

Likewise, the hugely popular internet radio station Pandora is "approaching a pull-the-plug kind of decision," as founder Tim Westergren told The Washington Post, because the federal government, prompted by the music industry, doubled the "performance-royalty" rate that internet radio stations must pay (to record companies) to stream music -- twice as much as satellite radio. Traditional terrestrial radio stations, mind you, don't have to pay performance royalties: They pay only publishing royalties to songwriters. The new internet-radio royalty rates kicked in as of July, and they threaten to kill not just Pandora but the rest of the fledgling internet-radio market.

Meanwhile, we're seeing artists and labels pulling music from iTunes in hopes of juicing album sales. Warner, for instance, just pulled Estelle's entire album "Shine" from iTunes because it didn't want fans to be able to buy just its ubiquitous hit single, "American Boy" (featuring Kanye West). It's kind of sweetly principled that Estelle -- and/or the suits at Warner -- think that "Shine" is a complete work of art that must be purchased in its entirety and then presumably listened to from start to finish. Principled but idiotic -- and the proof is that "Shine" and "American Boy" are both now in freefall on the Billboard charts. (Your neighborhood drug dealer wouldn't do so well either if he forced all his customers to buy in bulk.)

All in all, it's been a depressing summer for the delusional record industry. We're seeing a total disconnect between labels' unrealistic, old-school revenue expectations and what the market can bear. On the streaming-music front in particular, the sad reality is that advertising revenue isn't, and may never be, there to fully support the music industry's wishful-thinking profit margins.

As Advertising Age Editor Jonah Bloom said to me last week, labels "can't help looking at what they used to earn from a big band's latest release and wondering why they can't score that. ... The trick is to get your costs in line with your anticipated sales based on current revenue rather than former revenue."

But the music industry, stuck obsessing about exactly that -- former revenue -- would prefer that you only listen to music when and where they want you to. And that's no way to figure out the path to future revenue. In lieu of the usual Media Guy's Pop Pick giveaway, this week I'm randomly giving away one copy each of Black Kids' "Partie Traumatic"; the Virgins' eponymous debut; and, for old times' sake, the "Pretty in Pink" soundtrack. To be eligible, send me an e-mail with "Black Kids" or "The Virgins" or "Pretty in Pink" in the subject line on or before Oct. 8. You must be at least 18 and have a valid U.S. mailing address.

~ Ciao for Niao