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RAIN NEWS for FEBRUARY 27: LABEL OFFERS KILLING STARTUPS, iTUNES #2 MUSIC SELLER, CBS DIGITAL PLANS

Posted on: 02/27/2008

DIGITAL STARTUPS BEMOAN LABELS’ “GOLDEN GOOSE KILLING SPREE: Why would record labels — starving for new revenue streams as their traditional business model crumbles — remain so adversarial to potential business partners who may indeed be the industry’s future? Online music entrepreneurs made their case at the Digital Music Forum in New York yesterday. They say major labels are killing startup businesses by insisting on lopsided deals to license music. To get access to major label music, these small, “pre-profit” companies are expected to ante up massive upfront costs and agree to lopsided percentage payouts. Paul Resnikoff, in his Digital Music News, quotes Music Choice founder David Del Beccaro, “There’s too much squeeze up front, and companies can’t survive five, seven years. This is a ten-year transition.” Ted Cohen (pictured), founder of digital consultancy TAG Strategic (and a vet of EMI), blames major label culture that pushes for the best deal, at any cost. Webcasters who’ve been trying to negotiate feasible licensing deals with SoundExchange since 2002 can certainly relate.

APPLE NOW NATION’S #2 MUSIC RETAILER: Only Wal-Mart sells more music than Apple’s iTunes store now, according to a new NPD study. Apple says it’s sold over four billion songs — 20 million on Christmas Day 2007 alone. NPD based their findings on “consumer reported” behavior, and counted 12 individual tracks as one “album.” NPD also says 48% of American teens made no CD purchases in 2007, compared to 38% in 2006. The report estimates that one million consumers overall just stopped buying CDs in 2007. Legal downloads now make up 10% of the total music acquired in the U.S. And while 5 million people bought music online in 2006, that number leapt to 29 million in 2007.

RAMSEY: INTERNET NOT RADIO’S BRAND EXTENSION, IT IS THE BRAND: What’s the point of building an online radio product that doesn’t take advantage of online features and strengths? Not much, says radio analyst Mark Ramsey after a visit to an anonymous new Internet radio station headquarters. After all, he says, what’s the point of starting an online outpost for your station’s brand if you simply buy a website template and re-broadcast your FM signal straight up? Ramsey describes the operation as stocked with “painfully young” video and digital content developers who will be taking the brand full force into the online arena. He applauds the effort, because, as he says: “For radio, the Internet is not a brand extension, contrary to conventional thinking. It is the new brand.” Read more of Ramsey’s sneak peak here.

MOONVES SAYS LATEST COST-CUTTING WILL HELP FUND CBS DIGITAL INITIATIVES: Last.fm posted a 92% increase in listening since the website inked deals to stream the catalogs of the Big 4 record labels, said CBS chief Les Moonves in the company’s fourth-quarter earnings call. “It is the content that is the engine driving us forward into the digital interactive future,” Moonves said. He also says that CBS is using its established media businesses, like TV and radio, to fuel the company’s online growth. “Whether it’s over the air or on the Internet, it’s about content, and online it’s our strategy to reach people wherever they are and bring our content to them.” More directly, Moonves also said that CBS has created capital to invest in digital assets by cutting funds for smaller-market TV and radio. Read more in Mediapost here.

ARTISTS COMPLAIN LABELS ARE HOLDING OUT ON SETTLEMENT MONEY: Many artists who’ve been promised a share of the Napster and Kazaa settlements with major record labels are still waiting for their money. Now, the New York Post reports, artist management is getting involved, and it may come to lawsuits. From The Post: “Most labels argue that corporate bosses are still deciding on how to split the money… Also, once the labels recouped their legal expenses from the whole ordeal, there wasn’t much left to pass along to the artists anyway.” An EMI spokeswoman said her label has “started the process of sharing proceeds with artists and writers whose work was infringed upon.” A Warner Music rep said the label is, in fact, “sharing the Napster settlement with its recording artists and songwriters” and that “nearly all settlement monies have been disbursed.” As for Universal Music, they say it’s their policy “to share its portion of various settlements with its artists, regardless of whether their contracts require it.” Read The New York Post here.



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