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.”