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.