Time Warner Restructuring Rumors

Major shareholders (led by financier Carl Icahn) of Time Warner (TWX), the world’s largest media company, are reportedly (by the Financial Times) planning to push for the company to be restructured into its constituent parts – cable, internet, publishing, and movie studios/television networks.

Icahn and his supporters – who together own 3% of Time Warner - plan to win a majority of the board seats through a proxy fight. Icahn has said that he believes that a divided Time Warner will function better and more efficiently. Icahn is reportedly speaking with the investment bank Lazard to develop restructuring strategies.

Shares of the company closed last night at $18.16 – having traded in the $15 to $20 range for the past two years.

Warner Bros Settles Payola Investigation for $5 Million

Warner Brothers (NYSE: WMG) has agreed to pay $5 million to settle the Payola (bribes paid by record companies to radio stations in return for airplay) probe that NY Attorney General Elliot Spitzer has been spearheading for the past few months. Warner is the second music industry corporate to settle, in July Sony BMG Music Entertainment (NYSE:SNE) settled by paying $10 million. The money will be used by the Rockefeller Philanthropy Advisors to fund music education in New York State.

Traditional Music Outlets Take a Back Seat to iTunes

The NDP Group (a research company that tracks digital downloads as well as music purchases through retail outlets) has just released a report stating that Apple’s iTunes now sells more music than both Tower Records and Borders. In 2005 iTunes also got 70% of the legal music download business. The big box retailers however still outsell iTunes – these include Wal-Mart, Circuit City, Best Buy, and Target.

Music Industry Ups and Downs

The company Nielsen Soundscan has released a report revealing that while digital music downloads tripled in size by May of this year – to 6.6 million downloads a week – by the end of October, that number had remained relatively stable at 6.7 million downloads per week. This news is alarming for the fact that the digital download business was expected by analysts to offset the fall in CD sales. Global music industry profits have been shrinking for the past six years falling by 6.7% in the first half of 2005.

Shares of Apple (NASDAQ: AAPL) – manufacturers of the iPod – have however skyrocketed – from $9.50 in 2001 to $64.95 at close of business today. Apple shares reached an all time high this week after an analyst at Bear Stearns upped his earnings estimate for Apple based on the thriving demand for iPods and the fact that the holiday gift buying season is coming up around the bend.

EMI Group PLC, (EMIPY.PK) just announced that revenues are on an upward swing for the first time in five years due to an increase in the company’s legal downloads and the fact that the groups Coldplay and Gorillaz released profitable CDs this year. Sales for the six months ended September rose by 5.8% to $1.6 billion.

Virtual Record Deals on Virtual Record Labels

Further to the news in my blog of a few days ago that MySpace.com was launching its own record label, news came out today that Warner Brothers is launching an “online label”. The company, called “Cordless Recordings” will be run by Jac Holzman (the guy who signed The Doors to Elektra back in the Sixties). Groups signed to this label will release music in three song ‘clusters’ that will be available for download at iTunes and Rhapsody. If the music becomes profitable as a download, then physical CDs will be manufactured and released. Cordless Recordings will be employing a person whose job it will be to troll the web looking for popular online bands and music.

An announcement was also made by Lycos, to the effect that they would also be launching an online record label. It looks like the music industry is experiencing a shift in how music and musicians become popular and produce recordings. It’s about time!

A Cultural Shift - The Firsthand Account

In speaking with Dawn Van Zant, the president of Econ Corporate Services, this morning (the owner of MusicIndustryStocks.com and InvestorIdeas.com) she described what she called "a cultural shift" after seeing a Rascal Flatts concert last night. What Dawn described ties in perfectly to the current integration of cell phones into every facet of daily life, including music. All of the major telecommunications companies have introduced cell phones with downloadable music players. What Dawn described from last night's show brings home the point of just how integrated cell phones have become into the mainstream of society.

I asked Dawn to write down her first hand observations for our blog readers:

"Last night I attended the Rascal Flatts performance at GM Place in Vancouver and felt like I was a witness to a cultural shift. I am a 46 year old avid fan of country and rock music and attended concerts frequently throughout my teens and twenties. I now make a point of seeing a concert every now and then when I feel like I can handle the crowds. My last concert previous to Rascal Flats, was Bruce Springsteen's acoustic tour this fall. At his concert, I sat quietly with my peers listening to a legend sing out his life story. There were moments of complete silence as we soaked him in. It did not prepare me for last night's concert at all.

Despite the cheap cowboy hats, drunk girls and too many people, the musical performance was great. The phenomenon that made me stand back as an observer and pause, was that instead of an audience that I remember in my twenties holding up their lighters in the air, I saw thousands of cell phones with cameras being held up by fans.

I had no idea that every teenage girl and everyone under 30 had a cell phone with a camera. I have to say I had one in my purse too, but I don't know how to use the camera.

The wireless wave took on a whole new meaning for me last night as I saw cell phones waving rhythmically in the air to Rascal Flats, taking photo after photo."

MySpace Starts Record Label For Independent and Unsigned Artists

The website www.MySpace.com has launched its own record label in connection with Universal’s Interscope Records. The label will concentrate on unsigned and independent artists as well as compilations by artists from other record labels. The new label’s first release will be a compilation of tracks that have become popular among visitors and users of the MySpace.com internet phenomenon. MySpace Records has already signed its first act called Hollywood Undead, a band that has been listed on MySpace.com since June of this year.

According to the Hollywood Undead’s blurb on their MySpace page, “After 1 day of dropping their sound onto Myspace, their account exploded like TNT. The Hollywood Undead space grew in size in a matter of hours—starting out with an audience of 10 and blowing up into one that included several thousand users just in their first day of entry into the space. Thousands of adds per day on average. Tens of thousands of profile views. Close to 4000 DOWNLOADS PER DAY.” The band reached number one on the MySpace top bands chart after only 1 week, beating out bands like Nine Inch Nails, Coldplay, and System Of A Down.

Sad Songs Say So Much for the Music Industry

Year end music industry sales totals look set to be about 7% behind 2004 numbers. This disappointing result has been blamed on poor album sales, which has in turn been blamed on both legal and illegal downloads, and competing entertainment delivery systems. The truth is that 2005 hasn’t had any blockbuster sellers like 2004’s LPs by U2, Shania Twain and Eminem (and what a sad state of affairs when Eminem is considered a blockbuster… but that’s another article entirely).

Time Warner Increases Share Buyback, Posts 80% Increase in Third Quarter Earnings

Time Warner announced today that the board of directors had voted to approve raising their stock repurchase program from $5 billion to $12.5 billion. This news was hot on the heels of a third quarter earnings report showing an 80% increase over the same quarter last year. The increase in earnings was attributed to strong cable TV business – especially with syndications of “Sex and the City” and gains in advertising. Time Warner shares have been on the decline – share prices are still 75% lower today than they were in 2000 prior to the company’s agreement to be bought out by AOL.

October Music Industry Update

RealNetworks Inc. (RNWK) shares rose 44 percent in October after reaching a $761 million settlement with Microsoft Corp. (MSFT). The settlement closed RNWK’s antitrust case against MSFT and created a new partnership to distribute Real's music and digital-game services through the MSN network.

Clear Channel (NYSE:CCU) recently reported that their third quarter profits were down by 21% to $205.5 million. Lower third quarter profits were stated to be the result of shorter radio ads – the company is focusing on 15 to 30 second ads - and CCU’s restructuring costs.

Canadian company, Corus Entertainment Inc (Toronto: CJR-NVB.TO) announced that their fourth quarter profits were down to $9.7 million (22 cents per diluted share) from $14 million (33 cents per share) at the same point last year due to new copyright costs and the integration of several of its radio stations. On the TSX, shares in Corus fell 50 cents, or 1.51 per cent, to $32.69 in late afternoon trading.

Activision, Inc. (NASDAQ: ATVI), worldwide developer, publisher and distributor of interactive entertainment and leisure products, announced on October 26 a four-for-three stock split. Activision posted net revenues of $1.4 billion for the fiscal year ended March 31, 2005.

Two Terminated At Clear Channel Following Payola Investigation

Clear Channel (NYSE: CCU) announced today that two individuals had been dismissed following allegations of illegal ‘pay-to-play’ activities. The company also uncovered other instances of inappropriate conduct and those employees have been placed under disciplinary action. Clear Channel did not reveal the names or the positions of the terminated employees. The illegal activities were uncovered during a legal settlement between the New York State Attorney General Eliot Spitzer and the music company, Sony BMG.

Music Download Market Triples

The International Federation of the Phonographic Industry (IFPI) released a report on Monday stating that the digital music downloads market has tripled in the first half of this year. Downloads now account for 6% of total record industry sales, rising from $220 million at this time last year to $790 million today.

The increase in downloads neatly offsets declines in the retail sales of physical CDs and DVDs, which fell by 6.3%. The decline in physical sales was reported to be due to illegal downloading, CD burning, and lower retail prices for CDs and DVDs.

The increase in downloads is a result of faster broadband internet connections and more and better portable music players, including 3G mobile phones.

Apple’s iTunes accounted for 82% of the legal download market having sold more than 500 million single track downloads and 22 million iPod players. The recording industry is aggressively attacking illegal downloads, having pursued litigation against over 14,800 individuals in the US.

‘Thanks But No Thanks For The Music’ At Microsoft

Stating that the major labels want too big a cut of digital music sales revenues, Bill Gates and Steve Jobs have announced that Microsoft has “postponed indefinitely” plans to launch their own subscription based music service.

The industry's decline in physical CD sales has been bolstered by the increased popularity of digital music downloads, sales of which have more than tripled in the past year (to $790 million) which amounts to 6% of the industry's total sales of $13.2 billion.

Chinese Search Engine Baidu In Illegal Music Download Battle

China’s biggest search engine, Baidu.com, was today in the first day of mediation in a copyright trial brought against the company by seven global music corporations. The music companies (including Warner, Universal, EMI, and Sony BMG) allege that the search engine provided links to sites that allows users to illegally download music. The search engine Baidu has of course stated that their service does not provide the illegal downloads, but merely points users towards the illegal sites. In an attempt to come to a mutually beneficial resolution, Baidu has agreed to proceed with mediation, if the mediation however is not successful then the case will go to trial. MP3 searching accounts for 22% of Baidu’s traffic. Netease, another of China’s major search engines recently stopped their MP3 search facilities in order to curtail similar legal action against them.

A Sign Of The Times

Is it a sign that classic rock is back in the spotlight when Oprah Winfrey opens her season with classic rockers Bon Jovi? I'd say so. And the worldwide success of shows like "Rockstar: INXS" makes so much more sense than the whole American Idol craze - finally singers with soul, showmanship, groove, and more importantly - who ROCK! Eagle eyed viewers of Rockstar: INXS will have noticed that the PA system used on the show comes from manufacturers SLS International (SITI.OB) - who just started selling their Q Line speakers in WalMarts across the country.

And for those of you who have unrequited Rock & Roll aspirations - check out www.RockAndRollDream.com - the classic rock themed digital recording facility whose goal is to help you, "Live Your Rock And Roll Dream".

iTunes Captures 80% of UK Digital Downloads Market

iTunes just released news that in the UK they have captured 80% of the downloadable music market. This feat was accomplished in less than 18 months of being in business. The news was released on the heels of a report by the Official U.K. Charts Company which stated that the UK had generated 13 million digital downloads so far this year, compared to 5.7 million for all of 2004.

The Dream Is Over For DreamWorks Nashville

It has now been officially announced that DreamWorks Records Nashville (DRN) is to be shut down by its parent company, Universal Music Group (UMG). DreamWorks SKG was purchased by UMG in 2003 for $100 million, and part of the deal was that UMG would have one year to use the DreamWorks name before being required to phase it out. Another factor in the company’s closure is that artist Toby Keith has left the label to form his own record company, Show Dog Records. Label mate and artist Scotty Emerick has also left DRN to sign with Keith’s new label.

Toby Keith has had great success in his music career up to this point selling 25 million albums, with 10 going platinum, and 21 No. 1 singles. Keith has sourced help in running Show Dog Records in the form of former DreamWorks Nashville executive, Scott Borchetta, who will also be running his own label, Big Machine Records.

Music Industry Update

In his opening remarks at this year’s NARM (National Association of Recording Merchandisers) convention, President Jim Donio spoke about his concern over poor CD sales, the growth of the digital music industry, and the effects of piracy on the industry. His concern over CD sales centered on the fact that at the same time in 2004 sales had grown by 9% over the previous year, while at the present sales were down by 7% over last year.

The International Federation of the Phonographic Industry provided a quantitative snapshot of the worldwide music industry in their August report. The report revealed that over 100,000 album titles were released in 2004. The UK had the highest per capita album sales with an average of 2.9 albums purchased annually by every man woman and child in the country. The US was reported to have the highest percentage of households with DVD players, at 94% of the population. Canada had the highest broadband uptake in North America, and Singapore placed first for the country with the highest number of CD players per household (390%). The US placed second in this category with 257%.

The growth of digital services reached a landmark as over 180 legitimate musical download services launching in 2004. The total number of legitimate services now totals over 300, with over 200 of those located in Europe. In the world of record companies, Vivendi Universal was the biggest with a worldwide market share of 25.5%, followed by Sony BMG with 21.5%, EMI at 13.4%, and Warner at 11.3%. Warner’s highly publicized IPO at the beginning of 2005 was overshadowed this past month by the release of the company’s third quarter results. Warner reported a net loss for the quarter of $179 million, or $1.41 per diluted share. This compares to a net loss in the ‘same time last year’ period of $91 million.

Also in August, FCC Chairman Kevin Martin began an investigation into allegations of ‘payola’ violations (the practice of bribing radio stations to air specific songs from major label catalogues – historically bribes have consisted of cash, drugs and prostitutes) between record companies and radio stations. Sony BMG, the second largest music conglomerate, recently made a $10 million settlement with the New York Attorney General Eliot Spitzer for their alleged involvement in ‘payola’ violations. It has been reported that EMI Group, Warner Music Group, Universal Music Group, Clear Channel Radio, Cox Radio, Infinity Broadcasting, and Entercom have been subpoenaed in the industry wide investigation. It is expected that fines to each company found guilty of violations will follow the Sony BMG example and will also be based upon the company’s market share.

Clear Channel Registers For Spin Off IPO

Clear Channel’s plans to spin off their outdoor entertainment division as well as the concert division were officially announced yesterday as the company filed with the SEC for IPOs. Clear Channel Entertainment (CCE Spinco, Inc.) will be a completely separate entity from Clear Channel, while Clear Channel Outdoor (Ticker symbol “CCO”) will still be 90% controlled by Clear Channel.

Too Legit - Legal Downloads Grow Faster Than Illegal Ones

A new study done by the International Federation of the Phonographic Industry (IFPI)revealed that the number of legal music downloads tripled to 180 million in the first half of 2005 compared to the same period last year. The IFPI credits part of the surge to an increase in availability and affordability of broadband connections, faster computers, and an increase of ownership of portable media players. Illegal downloads rose by just 3%, from 870 mullion in January to 900 million.

According to a study by American market research firm, The NPD Group, which was released last month, U.S. residents downloaded 243 million songs from illegal sources and bought 26 million songs from online music stores. The reports stated that the main reasons for the decreasing growth of illegal downloads are fear of prosecution and the likelyhood of computers getting loaded up with spyware and viruses.

Munch Music Launches Classic Rock Themed Studio Targeting a Rapidly Growing Teen Fan Base and a Generation of Rock and Roll Dads

Rock & Roll Dream Machine Launches – Munch Music Grand Opening Celebration Features Recording Artists ‘White Noise’ and South Delta Pop Idol Winner Mackenzie Snape.

Delta, B.C., July 19th, 2005 - Munch Music, Inc. - www.MyMunchMusic.com and www.RockandRollDream.com. On July 15th Munch Music, a rock themed recording studio and music facility opened its doors in Delta, B.C., Canada, to rock and roll fans and performers aged from 13 - 54. Munch Music launched with a VIP/Media event attended by avid followers of White Rock based recording artists "White Noise". The successful event proved that music has no age barrier and that rock music is on a "roll", further evidenced by the fact that rock singers had a face and voice at G-8 meetings and through their efforts to change the face of poverty at the Live 8 events.

Before the White Noise performance, Mackenzie Snape, the recent South Delta Pop Idol competition winner, took to the Munch stage. Mackenzie was backed musically by her brother Patrick Snape and Munch Music’s founder and President: Taylor Van Zant.

White Noise followed with a powerful, rockin' set comprised of songs from their latest CD, “Listen”. The performance was very well received by the Munch crowd, who then had the opportunity to have copies of “Listen” autographed by the band. “Listen” will also be available for sale at Munch Music, as well as online through the website www.MyMunchMusic.com.. Munch owner, 16 year old Taylor Van Zant said, "This band is exactly the kind of music my friends and I love," as he smiled for the first time in many weeks, following weeks of stressful preparations for the opening launch. Click here to view White Noise’s site: www.ThisIsWhiteNoise.com

The opening weekend allowed residents of Tsawwassen to tour the Munch premises; make musical purchases; book studio recording time; sign up for guitar lessons; and a number of young musicians brought in their instruments leading to impromptu jam sessions on the Munch stage. A number of “Rock & Roll Dads and Moms” also toured the premises, and were excited to hear that Munch Music will feature special evening events for them to strut their musical riffage. The Rock & Roll Moms and Dads events will be in addition to regular Jam Nights which will be open to musicians of all ages.

The concept behind Munch Music is simple: “You have a Rock & Roll Dream and we provide the means for you to live that dream”. Life at Munch Music is never boring, and here you're never too old or too young to be a bona fide 'Jukebox Hero'! Munch Music provides the fulfillment of musical dreams through a state of the art digital recording studio, the opportunity to promote your new CD both in-store and online, and a staff of experienced lifelong musicians who are available to instruct and guide you through your musical journey. And to top it all off, we are able to offer our services and expertise at extremely affordable prices that should suit the budget of even the youngest new chart toppers.

The Munch Music website features an extensive list of music industry links from classic rock to copyrighting your own music for avid music fans. Click here for more details: www.MyMunchMusic.com/music_links.htm

About us: “Live Your Rock & Roll Dream” at Munch Music – CD recording, music lessons and live performance experience are now within the grasp of all musicians: www.MyMunchMusic.com/About_Us.htm. Check us out online at www.MyMunchMusic.com and www.RockandRollDream.com where you can view a complete description of our services, facilities, price list, menu and merchandise.

Contact:

Brian Noer or Taylor Van Zant
bnoer@investorideas.com
604.948.1811
Unit 11 - 1835 56th Street, V4L 2L8
Delta, BC - Canada

Guitar Center Opens 150th Store

The Guitar Center (Nasdaq NMS: GTRC) retail chain reached a milestone on July 14th as they opened the doors of their 150th store in Greenville, South Carolina. The 9,500 square foot facility is toouted as a state of the art instrument and technology center.

"The opening of our 150th store, in Greenville, is a landmark moment for Guitar Center and for our customers nationally," said Marty Albertson, CEO and Chairman of Guitar Center in a company press release. "Our success in reaching this milestone reflects how well our strategy of bringing the best technology and products to the widest number of people in cities throughout the U.S. has been received. The new store in Greenville, like all the Guitar Center stores, underscores our ongoing commitment to music and the people who love it."

IAC Shares jump on Sale of Vivendi Universal Entertainment Stake

IAC/InterActiveCorp has sold their 5.44% stake in Vivendi Universal Entertainment (VUE) LLLP to NBC Universal for $3.4bn (in cash and shares – 56.6 million IAC shares worth $1.4bn). IAC shares gained 4.8% ($1.17 to $25.81) in early trading today (Wednesday) upon release of the news. This leaves VUE now wholly owned by NBC Universal, and the deal cancels litigation that was pending between the two companies (IAC and VUE).

The Rolling Stones Top List Of May Events

With tickets going for upwards of $5,000 (who has this kind of money…?) The Rolling Stones’ upcoming tour has topped a list of events for May. Mick & Co. beat out the Boston Red Sox, The NY Yankees, U2 and Paul McCartney. The new Stones tour begins August 21st at Boston’s Fenway Park, and features opening acts Pearl Jam, John Mayer, and Maroon 5.

Here’s the complete list:

1. Rolling Stones
2. Boston Red Sox
3. New York Yankees
4. Chicago Cubs
5. U2
6. Paul McCartney
7. Wicked
8. Spamalot
9. Kenny Chesney
10. Neil Diamond

The Podcast Race Is On

America’s two largest radio stations are planning to make some of their content available through Podcasts. Infinity plans to air free daily Podcast editions of their newscasts from their nine news radio stations, starting in July, with WINS (1010 Wins) New York. Next March the other eight stations will follow suit (WCBS-AM New York, KFWB and KNX Los Angeles, WBBM-AM Chicago, KCBS San Francisco, KYW Philadelphia, WBZ Boston and WWJ Detroit). Infinity recently launched an all Podcasting formula station - KYCY (KYOU Radio) San Francisco, for which they have already received over one thousand entries for broadcast. The second company, Clear Channel, is making use of the new fashionable industry buzz-word, “repurpose”. The company plans to 'repurpose' already produced content from their morning shows making them available for download as, yes you guessed it, that other trendy industry buzzword: Podcasts. Clear Channel’s offering starts on June 6 with WHTZ (Z100) New York.

EMI Profits Nosedive

Subsequent to Coldplay frontman Chris Martin's statement last week that EMI’s shareholders were the 'greatest evil of this modern world', the company is expected to release a profit statement showing a marked decrease in earnings. The expected number is a decrease of 13%, which EMI is blaming on delays in albums from Coldplay and Gorillaz as well as a slump in album sales from other bands on the roster. EMI's response to the 'shareholder' remark was the issuance of a statement saying: "We don't expect or want our rock stars to be stockbrokers”.

Biting the Hand That Feeds

A news story came out this morning saying that Coldplay frontman Chris Martin (Mr. Gwyneth Paltrow) hates the fact that his band sells so many records that EMI’s stock price reacted to the release of their new album. In the Reuters article, Martin is quoted as saying, “I think shareholders are the great evil of this modern world. Deadlines mean nothing to us. We'll sink the whole company (EMI) if we have to". Martin was also “uncomfortable” with all of the publicity surrounding the release of the band’s new album, stating, “All these cameras make us feel like we're on 'The Apprentice’”. Poor, poor millionaire rock star married to a hot Hollywood actress and living in a mansion.

If Anyone Needs Me I’ll be in St. Louis

St. Louis is the latest US city to host a Cabo Wabo Cantina. For those of you not in the know – the Cabo Wabo Cantinas are owned and run by Van Halen frontman Sammy Hagar (until I hear news to the contrary I’ll continue to write that he’s still in the band). The first Cabo Wabo was opened in 1990 at Cabo San Lucas, Mexico, and a second one followed last year at Lake Tahoe, Nevada. The latest Cantina is expected to open in the spring of 2007. In addition to the very successful cantinas, Hagar also develops, manufactures, and distributes his award winning brand of tequila, also called Cabo Wabo.

Gervais and Merchant Host Show on London’s XFM

Ricky Gervais (David Brent on the original UK mockumentary The Office) and Stephen Merchant (Ricky and Stephen were the writers and producers of that show) have announced a new Saturday afternoon show on XFM (104.9 Xfm if you live in the UK or http://www.xfm.co.uk to listen live on the internet). Their six week stint will start Saturday May 28th, and run from 1pm to 3pm (UK time). This will be their second series of shows for XFM, and the first series is archived for download on the station’s website. The comedic pair are said to be working on a new sitcom called, “The Extras”, co starring Kate Winslet, Ben Stiller and Jude Law. In an interview about the new series, Gervais said, “I play a grumpy and sarcastic character who hates being around actors and showbiz types, preferring to lie on my couch at home watching TV. It’s a stretch but I think I can pull it off.”

Jimmy Page Rocks The NY Stock Exchange

Anyone who watches say, more than twelve hours of MSNBC a day, was yesterday treated about once per hour, to a clip of Jimmy Page playing, “Whole Lotta Love” onstage at the New York Stock Exchange. The Jimmy love didn’t help the stock however as the pps dropped 60 cents, from the opening of $17.00 to about $16.40 by the closing bell.

Bill Gates Doesn’t Like The iPod

Bill Gates was quoted in a German newspaper saying that in his opinion the iPod craze won’t survive in the long run. In his view the cell phone will supplant the iPod as the portable music player of choice in the longer term. In an interview Frankfurter Allgemeine Zeitung Mr. Gates was quoted as saying: "As good as Apple may be, I don't believe the success of the iPod is sustainable in the long run. If you were to ask me which mobile device will take top place for listening to music, I'd bet on the mobile phone for sure.”

New Yahoo! Music Service Sends Competitor Shares Plummeting

Yahoo! today announced plans to enter the online downloadable music business – and at a price that will undercut all of their competitors. Yahoo’s music service will cost $6.99 per month compared to $14.95 for Napster and $12 per month for RealNetworks' Rhapsody. Yahoo’s service will feature over one million songs to choose from and the monthly fee will let subscribers download as many songs as they want. The songs from Yahoo! will play on the Windows Media Player application or any MP3 type portable player.

Upon release of this news, RealNetworks share price dropped 21% and Napster went down 32%. Yahoo! shares on the other hand rose 14 cents. Of course all of these companies are trying to take on Apple’s iPod dominance – which I personally don’t get – iPods only play songs that have been either downloaded through iTunes or have been converted through the iTunes program. You can’t change the batteries on them yourself; you have to pay Apple a hundred bucks to do it for you. Through the Yahoo! Napster and RealNetworks song rental model, however, your portable music player has to be synchronized to the website once per month to ensure that your subscription fees have been paid. And if you want to burn those songs to a disc then an extra fee applies.

I may be a technological philistine, but I think I’ll continue to buy my music in a shop. One day I might even make the move from vinyl and eight track cassettes to some of those newfangled CD things.

Warner Music IPO Tomorrow

On Wednesday May 11th Warner Music Group launches their IPO (under the symbol WMG) with a pps below the initially suggested range of $22 to $24. Insiders are throwing around a $19 share price and there has also been talk of a reduction in the previously announced 32.6 million share deal size, to 27.2 million shares. Warner Music, who is $2.5 billion in debt, hopes to raise $517 million from the IPO.

Educated, Well Off Men Like Satellite Radio

A survey by the Media Audit shows that the audience for satellite radio is made up mostly of men. The surveying company seemed surprised however at the low number of respondents who said that they actually listened to satellite radio. In a press release for the report, Bob Jordan, president of International Demographics, Inc. said, “We were surprised at how little market penetration has been achieved by satellite radio.” International Demographics Inc. is the 34-year-old market research firm which produces The Media Audit. The report showed that the market demographic which makes up satellite radio listeners are affluent and educated with 73% of listeners earning more than $50,000, and 55% had at least one college degree. The age demographic is also different to what the surveyors first assumed – 76% are over the age of 35.

Great News For Tenacious D Fans Worldwide!

News hot off the presses from the mighty ‘D’ website: “05.05.05 Yes the rumors are true....Tenacious D has begun recording new music for their upcoming film PICK OF DESTINY. John King is the producer behind the board and don’t be surprised if there are a few special guests on the album as well. We will keep you posted on some studio reports and perhaps some pictures from the studio as well. Stay tuned!”

In a Billboard interview, 'D' guitarist Kyle Gass expounded on the album's creation: "Gass says the D may try to recruit some of the stars that played on the duo's self-titled 2002 Epic debut for the upcoming sessions. "We'll try to beg Dave Grohl to come back," he says. "Best drummer ever. We liked all the old players. But let's face it. Everyone is dying to play with us, so we can just get on the phone. I'd love to go in and play all the instruments, but I just don't know how.""

EMI Signs Up For Legal Music Sharing With Napster Founder

Musical giant EMI (EMIPY.PK) announced plans today of a deal with legal peer to peer company Snocap. The Snocap Company was founded by the original Napster, Shawn Fanning, and features a digital fingerprint copyright solution to ensure that downloaded songs are used under appropriate restrictions. According to Snocap’s website, the company provides, “the complete range of music that is currently available on peer-to-peer services to the paid digital music marketplace. The company is committed to dramatically improving the consumer’s digital music experience and growing the overall market for music sales.”

In a Businessweek article, David Munns, chairman and chief executive of EMI Music North America, commented, “This sends a signal to music industry critics who claim we are technophobic".

News Flash: Regular Radio Listeners Don’t Like Commercials

A new study out from Arbitron (an international media and marketing research firm) and Edison Media Research states that 47% of listeners would listen to “A lot more” radio if there were fewer commercials on-air. The study also reveals that 80% of Americans think that the presence of commercials is a fair price to pay for free radio. In a press release, Bill Rose, senior vice president, of Marketing for U.S. Media Services with Arbitron stated that, “"The overwhelming majority of radio listeners continue to value the time- honored trade of free radio programming in return for listening to commercial messages. This study reveals that consumers are beginning to notice stations with few spot breaks."

The study continued to show that the majority of listeners (69% at work and 49% at home) do not turn the channel immediately when an advert comes on. Only one third of listeners in cars said that they turn the channel when an ad comes on. Interestingly, the study also looked at quantity versus quality, and found that younger listeners were more annoyed by the quantity of commercials while older listeners were also more likely to factor in the “annoyance factor” of just plain stupid advertising.

The Rise of Podcasting

I see a trend happening here, (man, is my finger on the pulse of the industry...) and if you’ve been following my last few blogs you’ll see it too. The rise of Podcasting (or at least the rise of Podcasting within traditional radio programming)! Let’s hope it doesn’t turn into this generation’s CB radio, (am I dating myself here…?). Today’s Podcasting news is that Sirius Satellite Radio Inc. (SIRI) will be launching a daily four hour Podcast show starting on May 13th on Sirius channel 148, a talk-radio station that does carry commercials, unlike Sirius' other all-music channels. The show will feature MTV personality Adam Curry. In a written statement Sirius said that their show will, "feature highlights and insights from the world of Podcasting and showcase new talent and artists from around the world, including new music". One more nail in the Clear Channel coffin? (See my last blog for the Clear Channel rant.) The Podcasts will be selected from submissions to the website Podshow.com, a company run by Curry. Podshow.com is aimed at "promoting Podcasting to listeners, Podcast producers and advertisers wishing to reach Podcast audiences". A subscription to Sirius (and XM Satellite Radio) costs $12.95 per month. The radio industry has recently been suffering from sluggish revenues due to decreasing advertising dollars. Clear Channel is also rumored to be jumping on the Podcasting bandwagon, but in the other direction – making Podcasts of their radio shows available online. Where do I sign up?

Clear Channel Announces IPO

Today, the Clear Channel Communications radio conglomerate announced plans to spin off their entertainment division as well as 10% of their outdoor advertising business through an IPO. Clear Channel, despite their previous iron grip monopoly of the concert and radio industries, got on the nerves of certain artistic and consumer sectors (let’s call them ‘people of discerning musical taste', shall we?) by inflating concert ticket prices and dictating radio station airplay lists right into the territory of true homogeneity. Of course the ‘American Idol and Britney Spears loving’ pure vanilla crowd weren’t bothered by the shift – you never go broke pandering to the masses – but the name Clear Channel has grown synonymous with mass manufacturing and marketing of watered down musical entertainment.

Be that as it may, Clear Channel is offering a special one time $3 dividend to current shareholders as well as a 50% increase in its annual dividend. At market close on Thursday Clear Channel shares were trading at $32 per share (the company’s 52 week high is $43.44 and during 2000 the pps was closer to $80). The stock dropped 25% in the last year due to a ‘radio advertising slump’, and profits for the first quarter were down 59%. The company also just came off of one of the weakest years in terms of concert attendance revenues, and has begun to revert branding of live music presentations back to local promoters. The popularity of subscription based digital radio services such as XM Satellite Radio and Sirius Satellite Radio, as well as the amazing growth of the iPod and downloadable music solutions can probably take credit for a lot of the company’s decrease in revenues.

File Sharing = Prison Time

"So what are you in for?"
"File sharing..."

A new law (The Family Entertainment and Copyright Act) has just been put into effect stating that file swappers who share even a single pre-release (copies of films that have yet to be released theatrically) copy of a movie can be imprisoned for up to three years. The law was signed yesterday by President Bush after copies of “Star Wars: Episode Two”, “The Hulk”, and Tomb Raider” were shared online before their release to theatres.

Further to yesterday’s Podcasting blog – a new search engine has been unveiled, the first to cater specifically to Podcasting, called Podscope. The engine works by way of an audio and video ‘spider’ which crawls each Podcast using a ‘Speech to Text’ algorithm. Therefore when you search Podscope it trawls through its collection of transcribed texts and then allows you to play the entire broadcast, just the section which mentions your search terms, or to visit the site itself.

Infinity Podcasting and XM Radio Numbers

News just hit the wire that Infinity Broadcasting will be incorporating the Podcasting craze as a lynchpin of their new media strategy. The programs will be made up entirely of listener Podcasts and will launch on May 16th at San Francisco’s Talk KYCY-Am, and will be streamed online at www.kyouradio.com. Good news for those of us who are tired of the Clear Channel monopoly on what passes for musical taste and culture.
Podcasting is now officially the new fashion ‘black’ with thousands of new shows on just about any topic under the sun being published every day by regular people with internet access.
In other news, XM Satellite Radio (Nasdaq: XMSR) announced over 541,000 new subscribers (a 68% increase over last quarter’s additions) along with their first quarter 2005 financial results. The company’s revenues were a 140% increase over those of the fourth quarter 2004. Despite the increase however, the company’s first quarter 2005 revenue results still show a net loss of $119.9 million. The company’s new subscriber forecasts beat analysts' financial estimates, but shares were still down 2.7 percent during morning trading. XM said that they remain on track to reach 5.5 million subscribers by year-end.

Online Music Set For (More) Explosive Growth

According to In-Stat, a research firm in Scottsdale, Ariz., the worldwide online music market is expected to grow 134 percent in 2005, reaching $1 billion for the first time. The report states that, “more than 200 sites offering digital downloads are now available. While Peer-2-Peer (P2P) and piracy issues have not entirely disappeared, consumers are showing heightened awareness and interest in legitimate online music services.”
MusicIndustryStocks.com recently reported that RealNetworks (RNWK) now has more than one million subscribers to its subscription music services. And how many teenagers and people on busses and trains do you see without an iPod?
You do the math.

SLS International News + Steve Vai Update

News just arrived that SLS International (OTCBB: SITI) – manufacturers of loudspeakers using new Planar Ribbon technology – announced that their RLA/2s speakers will be the speaker of choice at the next Naples Winter Wine Festival, to be held in Naples, Florida. SLS also recently announced record breaking first quarter revenues – up 62% over fourth quarter 2004 figures. For those of you not yet familiar with SLS’s merchandise, you can read up on how impressed I was with their HTA Surround Sound System here. They’re definitely worth a spin round the musical block.

For those of you wondering how my rock star stalking went this past weekend – the Steve Vai (ex guitarist for Frank Zappa, David Lee Roth, Whitesnake) show in Seattle was very impressive. As you can see from the photos below, I was fortunate enough to meet Steve. We chatted for a while, he signed every bit of paper I threw at him, and then as if I wasn’t happy enough about the whole ordeal, he let me play "Evo", his personal Ibanez Jem guitar. Yes I was in musician heaven. Afterwards during the show I had to wonder to myself if Steve’s amazing band was indeed human… If you get a chance, definitely catch the Vai band if they come to a town near you, I highly recommend it, if extreme musicianship is your bag.

My thanks to Steve Vai for humoring an old die hard fan for so long!

Brian meets Steve Vai

Brian playing Steve's Ibanez Jem, "Evo"

Virtual Guitar Customization

Will wonders never cease? The originators of the world’s first digital modeling guitar, Line 6 have just released their Variax Workbench customizing software. In conjunction with a Variax guitar or bass it is now possible to design your dream axe on your computer and then to download it into your instrument. Musicians can choose between wood types, pickups, pickup positioning, body and neck type, volume and tone knob tweaking, and all through a USB connection between your computer and instrument. Wow. It all sounds very intriguing, but speaking as someone who loves the smell of sawdust and nitrocellulose lacquer, I won’t be putting away my jigsaw and router just yet. But I can imagine that as a tool for testing out different combinations of components before putting saw to wood, this tool will be invaluable. Click here for the full details.

The blogging on this column will be taking a short break as I’m off to Seattle on Friday for the Steve Vai show – armed with backstage tickets. Let the rock star stalking begin!

Music Products Sales in U.S. Hit Record $7.3 Billion in 2004

Good news for the music instrument manufacturing industry. NAMM (the International Music Products Association) recently released the results of a national survey revealing a record-setting level of musical instrument and product sales in 2004. Last year's sales were an increase of 5.2% over 2003. I would blame the prevalence of cheap home recording software for PCs and Macs (Cubase, Cakewalk, Nuendo, Pro Tools) for encouraging more people to start playing an instrument, and then to record their own number one hit singles as MP3s for use in their PODCasts and to trade on P2P networks (assuming that the RIAA doesn't shut them down first). The peripherals (audio interfaces, microphone preamps, USB controllers) market should also be seeing an upsurge in interest as the technology becomes more mainstream and therefore cheaper.

To read the full report click here:

Creating The MusicIndustryStocks.com Portal

When my boss gave me the go-ahead to work on publishing a portal where stock market investors could research stocks and companies within the music industry I was shocked to find that no such information resource already existed. It was therefore difficult (but enjoyable) to compile the information and resources necessary for an investor to get a good handle on the companies within this industry, and to compile a network of informational sources with which to update such a site on a daily basis. We have however completed what we view as the definitive destination of its kind, with no real competition from any other source. I invite investors to view the site at www.musicindustrystocks.com and to let us know what type of information you as an investor would like to see, which would be helpful in your due diligence efforts. You can contact me at bnoer@investorideas.com

Inaugural Blog!

Good Day and welcome to the inaugural MusicInvestorNews blog spot.

MusicInvestorNews is written and maintained by Brian Noer on behalf of InvestorIdeas, and is published in tandem with news and information that is posted daily to the Web Portal at http://www.musicindustrystocks.com/. The MusicIndustryStocks.com portal (MIS) features information that is vital to those investors who choose to include Music and Entertainment related stocks within their portfolio (InvestorIdeas.com features a suite of Stock Market Investor resource and due diligence portals). MIS is updated daily with stock news and more general news and articles, as well as a comprehensive list of public companies in this sector, which provides savvy investors with a starting point for their due diligence and research efforts. MusicInvestorNews will highlight the important events of the day as it relates to investment in this industry.

I welcome comments and feedback on this column – please address your remarks to me at bnoer@investorideas.com