Digital Music Conference - The Who's Who

Music Industry's 6th Annual Digital Music Forum and Mobile Music Leadership Summit (www.digitalmusicforum.com) being held at the Museum of Jewish Heritage in New York City on Tuesday, February 28 through Wednesday, March 1, 2006 participants include record labels, music publishers, producers and distributors, technology companies, wireless companies, rights organizations, industry bodies, radio, advertising, attorneys, artists, investors and venture capitalists.

The conference will discuss the role of digital and mobile technologies in the future of music with
topics to be discussed being :
-- Mobile Music –- Metrics, Predictions, Provocations and Analysis &
Mobile Music Leadership Roundtable
-- The State of the Online & Mobile Music Markets: How are record labels
(major and independent), music and mobile companies, telephone carriers and
technology providers positioning their businesses to take advantage of
opportunities in the digital music market?
-- The Growth of The Indie Sector: The role of the Internet, mobile and
digital technologies in the recent success of the independent sector
-- Reaction to RIAA Lawsuits
-- Selling Music to the College Market: The Challenge to Convert Students
Into Paying Customers
-- The MySpace Phenomenon
-- Digital Commerce Opportunities for the Music Industry
-- What are the likely catalysts to creating a vibrant digital music
market?
-- The Future of Radio: What are the "killer apps" that are changing
traditional radio?

Amazon and Google enter music sector

The buzz in the Music industry - apparently industry executives have confirmed they are in discussions with Amazon and Google to create new music services to compete against Apple's share of the digital music market

American Idol draws larger audience than Grammys

28.3 million people watched "American Idol" Wednesday, versus the Grammy Awards with 15.1 viewers. Apparently it was the least-watched Grammy Awards in Nielsen records dating back to the 1970s.

Does that say the music fans are more interested in new emerging talent versus the mainstream?

American Idol plays to the hopes and dreams of the average person, while the Grammy's are a venue for elite, established successful performers dressed in designer clothes .

Maybe it is a statement of the current state of the music industry

future music industry trends

According to research issued by http://www.strategyanalytics.net/ North American conventional music will remain dominant between 2005 and 2010, but revenues from this channel will decline slightly from $11.4 billion to $11.0 billion. Online music will be the biggest gainer, with revenues more than doubling in the five-year window.

On another note...

Loved the Grammys seeing my two favorite men- Bruce and Bono . I personally would have liked to have seen Bruce win best song with "Devils and Dust" . I think its his best album to date and I have loved his work from the beginning

Even Prince offers MP3's

The digital music age is changing everything and artists and industry change or goes the way of the dinosaur. Prince has seen the light and is offering Mp3’s to compete with the new age of emerging talent that understands the power of MP3's online and going mobile
Another big trend going back to the roots of music sales -" singles" - where music lover can buy one song for $0.99 instead of whole CD

mobile viewers can now watch the latest music videos

SmartVideo Technologies, Inc. (OTCBB: SMVD) announced mobile viewers can now watch the latest music videos on all Internet enabled devices, such as cellphones, PDAs, and laptops connected via cellular, Wi-Fi, and DSL networks. SmartVideo in partnership with the Digital Music Video Network (DMVN), today launched its groundbreaking, advertising-supported channels featuring videos by the music industry's top artists. A unique feature of this service is SmartVideo's use of an advanced Digital Rights Management (DRM) system that protects the copyright and security of the music.

Wal-Mart Soundcheck

Wal-Mart Stores Inc. http://www.walmart.com (WMT) has launched an online music video and audio service featuring exclusive studio performances as part of their market strategy for the music industry

Called "Wal-Mart Soundcheck", the new service includes studio performances and interviews with new and established artisits and bands ranging from rock, pop, punk, country, hip-hop and R&B

The artist's music will play for free on http://www.walmart.com as well as television screens in the Wal-Mart electronics departments. . Acts will be updated monthly.
This should draw in the demographics of the MTV audience and the music fans that search online as part of the explosive trend for free or alternative music

Starbucks from music coffee house to MP3's

Starbucks (NASDAQ: SBUX) , www.starbucks.com has entered new markets as the company's ventures extend into motion pictures with its new deal with Lionsgate and expands the Hear Music™ Coffeehouse they say in a press release " The new stores represent the full integration of a classic coffeehouse experience with an extensive digital and physical music inventory and underscore the Company’s steadfast commitment to extending its Entertainment initiative. The unrivalled combination results in a compelling third place destination for customers to connect over coffee as well as explore, discover, personalize and buy quality music in a warm and inviting environment."
Now the company is talking about entering the MP3 market as the industry changes to that direction

Digital Music Group IPO

Digital Music Group - http://www.digitalmusicgroupinc.com/Home.aspx
listing for NASDAQ - pending symbol - DMGI

The company provides digital music recordings to online music stores for purchase by consumers, with rights to sell over 200,000 music recordings in digital format

The estimated price range for the pending IPO has increased to $9 to $11 per share from $8 to $10.

Digital music expands globally-new report says

New Digital Music Report - Digital music expands worldwide
http://www.ifpi.org/site-content/library/digital-music-report-2006.pdf
If you want to know the details on the digital music industry and how it is transforming the music industry and the digital economy - this 24 page report will tell you all the details

A few hi-lites-

In 2005 the number of legitimate music download sites reached 335, up from 50 two years ago. In just two years the volume of music made available online by record
companies has increased to over two million songs.
Digital & mobile sales of $1.1 billion for record companies - up from $380 million the previous year, and making up 6 percent of all music sales.

read the report and find out how this influences you and the music industry moving forward

Music Group International digitizing 100,000 recordings

The ongoing changes in music - its all about the downloads -

Universal Music Group International (UMG.XX), the world's largest music company by market share, Wednesday said it was digitizing 100,000 previously deleted European recordings in order to make them available over the Internet.
Universal will take recordings from what it claims is the music industry's largest archive, including music from Marianne Faithfull, Fairport Convention, Nirvana and Jacques Brel.
The global music industry has been hit over the past five years by illegal downloads over the Internet but sales of legal digital downloads in 2005 showed huge growth in the U.K. and U.S.
The global music trade body, IFPI, reported last October that the value of digital download sales have now overtaken the value of the global singles market.
Global sales of recorded music fell 1.9% in the first half of 2005, the latest period for which figures are available, while physical music sales fell 6.3% over the period, however digital music sales tripled over the period to 6% of total record industry sales.
full story: http://www.thebusinessonline.co.uk/DJStory.aspx?DJStoryID=20060118DN005920

Digital Music in China

Digital Music in China - Recent Research report issued by instat.com
http://www.instat.com

Summary
This past year in 2005 saw strong take-off signals from China’s digital music value chain. The online original-creation music market is booming, while most of the 120 local Chinese publishers license their songs online without a flat royalty guarantee. Piracy is still the key blocking issue to developing China’s digital music industry, but online piracy is being attacked both by the government and industry music labels. The end of 2007 will be the turning point for China’s legitimate digital music market. Unauthorized music companies are now in the process of, or have already made their services legitimate. Also, with the emergence of mega online music stores, legitimate online music will become a dominant service for users. By 2008, China will be one of the most important digital music markets worldwide, with an estimated online service revenue of US$222 million, the equivalent of an annual download of 1.8 billion songs. Installed portable music devices will exceed 150 million units at the end of 2008. Growth of the legitimate digital music market will be strong over the forecasted period, with a CAGR of 317% from 2005–2008, which is unsurprising in an emerging market. This In-Stat report focuses on China’s new online value chain and emphasizes market drivers and barriers. Three year forecasting shows decision makers the best timing for investment.

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).