October 5, 2007

Time Warner Cable Pushes Music Offering, Taps MusicNet

Time Warner Cable is now pushing a digital music offering, and tapping MusicNet on the backend. The cable giant is unveiling Road Runner Music today, a subscription and download store, and offering compatibility components as well.

That means easy music access and centralized billing, a major competitive advantage. "I have spent the better part of my career in the cable business, and to see the advances made in providing consumers with such broad access to music is very satisfying," said Alan McGlade, president and chief executive of MediaNet Digital, of which MusicNet is now a division.

In total, Road Runner Music carries a catalog of 3 million tracks, a healthy collection that leaves few gaps. In terms of pricing, subscribers will face a $9.95 monthly charge, a sum that also includes access to streaming radio channels and music videos. Portability on three different devices is allowed for an extra $5 charge. Details on content protection were not discussed, though the offering most likely features WMA-protected tracks - and iPod incompatibility.

Time Warner most recently reported a subscriber volume of 14.7 across its video, high-speed data and residential telephone properties. The launch also involves Synacor, a technology company that frequently partners with MusicNet.

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October 3, 2007

Citadel Asks Stations to Suspend Nighttime HD Broadcasts

Citadel engineer Martin Stabbert confirms to R&R that he sent out a memo to his company’s AM stations asking them to suspend nighttime HD Radio broadcasting pending further work with the technology’s developer, iBiquity, in an effort to reduce adjacent channel interference.  

Stabbert tells R&R, “We’re taking a step back to evaluate the performance and consider the feedback we’ve received.”  

Citadel stations complaining about the nighttime interference include news/talk WJR/Detroit and news/talk WABC/ New York -- both flame-throwing Class A 50,000 watt stations whose signals have massive nighttime multi-state coverage.  

In a statement to R&R, iBiquity said, "Since September 14, the vast majority of the feedback we’ve received on AM nighttime broadcasting has been positive. We understand Citadel’s caution and are working with them to understand what they are experiencing and to address their concerns." 

The FCC’s new rules governing HD radio took effect on September 14, allowing AM stations to broadcast HD at night. At the time, the FCC had resolved any of its prior concerns over interference and extended the permissible hours of in-band, on-channel (IBOC) interim operation for AM stations to include all hours during which stations are currently authorized for analog operation.

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Westwood One Comes to Terms with CBS

Westwood One announced late Tuesday (Oct. 2) that it has entered into binding agreements with CBS Radio that have been approved by WW1's board but are subject to shareholder ratification in first quarter 2008. WW1's current management, representation and other related programming agreements are set to expire on March 31, 2009.

Under the new distribution deal, CBS Radio stations will broadcast WW1 commercial inventory through March 31, 2017 in exchange for certain programming and/or cash compensation. The news-programming agreement, which provides WW1 with the exclusive national radio syndication rights to CBS Radio News, will also continue through March 31, 2017.

However, the management agreement and representation agreement between WW1 and CBS Radio will terminate. WW1 will manage its business directly and separately from CBS Radio and employ all of its officers. Employees of CBS Radio will resign from the company's board. As part of the termination of the historical arrangements between the companies, WW1 and CBS Radio are releasing certain claims they may have against each other.

In addition, WW1 will retire the existing 3 million warrants held by CBS Radio in WW1. CBS Radio has agreed to a standstill on the sale of its company common stock until Dec. 31, 2007.

"We are pleased to announce the execution of this new arrangement with CBS Radio," said David Dennis, chair of WW1's strategic review committee, which led the negotiation process with CBS Radio. "We believe the proposed transaction provides several benefits to the company and its shareholders, including continued long-term distribution of Westwood One programming and products to major-market radio stations, compensation tied to delivery of audience and an extension of non-competition provisions through March 2010."

WW1 chief financial officer Gary Yusko said, "With the negotiation process behind us, we can move forward with solidifying our financial structure and exploring initiatives to enhance shareholder value."

CBS Radio president/CEO Dan Mason said, "We're pleased to begin a new chapter in CBS Radio's long-standing relationship with Westwood One. From broadcasting local traffic across our owned stations, to CBS Radio News across the Westwood One network, CBS and Westwood create a content and distribution team that is unparalleled in the industry."
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NAB Says "FCC Approval of Sat Merger is Inconsistent

In a 10-page argument lodged with the FCC Wednesday morning (Oct. 3), the NAB says “the Commission would be discarding long-standing merger review standards if it approves this merger” between Sirius Satellite Radio and XM Satellite Radio.  

The NAB says now that it has had an “opportunity to review the voluminous economic analysis” filed with the FCC by the satcasters. “It is clearer than ever that the commission would be discarding long-standing merger review standards if it approves this merger,” the broadcasters’ group said. “Applicants’ strategy in this regard has not been subtle; they recognize that following the commission’s legal standards would kill the merger, so they try to kill the standards instead. The commission’s acquiescence to such an approach would be arbitrary and capricious, inconsistent with its own precedent, and set the commission’s merger review process on a risky course.”  

The NAB says that the “cornerstone to the satcasters economic analysis is the conclusion that the relevant product “market is broader than satellite radio, including other audio entertainment devices, content and services.” The NAB then refers to a report written by economist J. Gregory Sidak, a Georgetown University professor which was released Oct. 2 by the Consumer Coalition for Competition in Satellite Radio, also known as C3SR, that picks apart the satcasters’ argument that it competes in a much wider audio environment.  

C3SR is a group founded and funded by the NAB.

XM’s spokesman Chance Patterson declined to comment on the NAB’s filing, but Sirius senior VP of communications Patrick Reilly told R&R, “The NAB opposes the merger of XM and Sirius to protect AM/FM radio from competition, not to protect consumers. As more and more consumers voice their support for the merger, the more fearful of increased competition the NAB becomes and the more desperate their actions in response. NAB's misinformed and self-serving analysis is incorrect.” Reilly added, “We look forward to continuing to work with the FCC and are confident they will weigh the transaction on its merits and recognize that it is in the public interest.

Source: Radio & Records

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September 19, 2007

Small webcasters win subsidized rates from SoundExchange.  

There’s still no word on a rate agreement for commercial radio stations that stream. But SoundExchange says it has reached agreement with 24 small commercial webcasters to continue operating through 2010 with “essentially the same terms” that have existed since 1998. Political pressure appears to have helped the record labels swallow such a bitter pill. SoundExchange executive director John Stimson says “Giving small webcasters more time to build their businesses with below-market rates is something members of Congress wanted us to get done — and we have.” Small webcasters will still pay royalties of 10% to 12% of their revenue.

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September 7, 2007

New Devices Bring HD Radio to iTunes

Two new electronics devices have been announced that will allow HD Radio listeners to “tag” songs they like and then purchase and download those songs via the Apple iTunes music store. The devices, from Polk Audio and JBL, make use of Apple’s iTunes Tagging technology and will work with songs played on both primary and HD2 multicasts.

Polk Audio is introducing the I-Sonic Entertainment System 2, while JBL is launching the iHD. Both are compact desktop systems that feature HD Radio and an iPod dock with iTunes Tagging technology.

Here’s how it works: The iTunes Tag button on each device allows consumers to tag songs broadcast by HD Radio stations. Each device then stores information about the tagged songs to its memory and transfers the tags to an iPod when docked. When the consumer connects the iPod to his/her computer, iTunes automatically presents the songs in a new Tagged play-list for the consumer to preview, buy and download.

Following on the heels of the announcements by Polk Audio and JBL, Clear Channel Radio said it will offer HD digital radio broadcasts for devices supporting Apple’s implementation of the HD digital radio tagging feature. Clear Channel also said it is urging all radio broadcasters to fully support the new capability.

Clear Channel Radio president and CEO John Hogan commented, “Apple has been a strong supporter of radio, previously making an FM tuner available for the iPod, and we view their support of HD digital radio as an enormous opportunity. All of our FM stations broadcasting in HD digital radio will be available on these important and unprecedented devices. With substantial gains in online and on-demand programming already under our belt, there should now be no doubt of radio’s ability to constantly evolve and embrace new technology. The iPod is not a competitor to radio – it is a collaborator in connecting with consumers on a continual basis.”

The I-Sonic ES2 will be available from select specialty retail stores, Apple stores and direct from PolkAudio.com in October 2007 for $499.  No word yet on the cost and availability of the iHD.

Source: Radio & Records

 

 

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September 6, 2007

Satellite Radio Receivers Slow Sellers

Retail sales of satellite radio receivers were down again in July for both Sirius and XM.

Bank of America analyst Jonathan Jacoby reports that Sirius continued to outsell XM at the retail level, but its sales were down 30% from a year ago. XM sales were down 32%, for a satellite radio industry decline of 31%.

Both companies have said that their primary focus now is OEM sales through car dealers to drive growth. Jacoby is projecting that retail sales will decline 15% for Q3, although he notes that current trends are worse than that.
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September 5, 2007

Japanese Digital Biz Soars in Q2

The rapidly-growing popularity of ringback tunes and mobile-based full-track downloads helped power a 23% rise in digital-music sales in Japan to 111.6 million units in the second quarter.

In value terms, digital sales -- including mobile and PC-based downloads -- rose 40% to ¥17.6 billion ($152 million) in the April-July period, according to data released today by the Recording Industry Assn. of Japan (RIAJ).

Mobile-based master-ringtone sales accumulated by the RIAJ's 46 member companies in the quarter were down 2% from the corresponding period of 2006 to 54.7 million units, for a value of ¥6 billion ($51.6 million), up 1%. However, ringback-tune sales rose 63% to 21.5 million units, for a value of ¥1.5 billion ($13.2 million), marking a 105% rise.

Sales of mobile-based full-track downloads, meanwhile, increased 113% to 25.6 million units, for a value of ¥7.8 billion ($67.6 million), up 102%.

Overall, mobile-based downloads rose 24% to 104.8 million units, for a value of ¥16 billion ($137.9 million), up 41%.

Mobile hits during the April-July quarter included female vocalist Utada Hikaru's single "Flavor of Life" (EMI Music Japan), which since the Jan. 5 release of a master-ringtone version of the track has sold some 7 million units in various digital formats, according to the label.

Universal Music Japan, meanwhile, claims that pop group GreeeeN's "Aiuta (Love Song)," which was released as a physical single on May 16, is the first single anywhere to sell a million full-track mobile downloads. The label says that sales of "Aiuta" in all digital configurations total more than 3 million units.

PC-based music downloads in Japan in the second quarter were up 14% to 6.8 million units, for a value of ¥1.3 billion ($11.2 million), up 3%.

The RIAJ defines the PC-downloads category as comprising singles, albums, mini-albums and "other related content" sold over wired networks, with albums and mini-albums counting as single units regardless of the number of tracks they contain.

The association says that although the data doesn't differentiate between sales of single tracks and albums, singles account for the overwhelming majority of download sales.

The mobile category comprises sales over wireless networks of full single tracks, ring tones, master ring tones and other related content.
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September 4, 2007

iPhone Outsells All Smartphones in July

FRANKFURT (Reuters) - Apple Inc's (AAPL.O) iPhone outsold all smartphones in the United States in July, its first full month on sale, accounting for 1.8 percent of all U.S. mobile handset sales, research group iSuppli said on Tuesday.

ISuppli reiterated its forecast that Apple would sell 4.5 million iPhones this year, rising to more than 30 million in 2011.

The two models of the iPhone on the market sold more than Research in Motion's (RIM.TO) Blackberry series, the entire Palm (PALM.O) portfolio and any individual smartphone model from Motorola (MOT.N), Nokia (NOK1V.HE) or Samsung (005930.KS).

Sales equaled those of LG Electronics' (066570.KS) Chocolate, the most popular feature phone on the U.S. market, iSuppli said.

ISuppli classifies the iPhone as a crossover phone that competes with both smartphones, which have personal computer-like functions such as e-mail, and feature phones, which have extras such as cameras and music players.

"While iSuppli has not collected historical information on this topic, it's likely that the speed of the iPhone's rise to competitive dominance in its segment is unprecedented in the history of the mobile-handset market," iSuppli said.

"Apple achieved this in the face of numerous, well-entrenched competitors."

Most buyers of iPhones in the United States in July were male, under 35 and had a college degree, iSuppli said.

A quarter of those who bought an iPhone switched to operator AT&T (T.N), which has an exclusive service agreement for the iPhone in the United States.

The iPhone will go on sale in Europe later this year.

ISuppli gathered its data through a consumer survey of 2 million participants in the United States that it carries out online once a month.

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August 31, 2007

Amazon.com to Launch Music Service in September

Amazon.com has tentatively set a mid-September target for the launch of its music service, the New York Post report on Friday, citing sources familiar with the situation.

The store will offer songs in the MP3 format and give consumers an alternative to Apple's iTunes.

Amazon had said in the spring that it would launch such a digital store by the end of the year.

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August 28, 2007

Teenage Spending hits $179B in '06

The spending power of teenagers reached a stunning $179 billion in 2006 as the 13-19-year-old crowd lead the way on trends in fashion and cutting-edge technology, according to a report by TRU -- a subsidiary of Research International -- released as a part of An Industry White Paper by the RAB.  

The TRU study found that nearly all of teens’ income from jobs, allowances, gifts, etc., is disposable since they don’t have the obligations of mortgages, rent, medical or vet bills, and sometimes not even auto, gas or insurance payments.  

The average teen has about $180 a month in disposable income, says the report.   A study by BizRate Research finds that the top five categories to spend money on among teen girls are apparel and accessories, music, books, DVDs/videos and health and beauty products. Teen boys spend their money on video games, music, DVDs/videos, apparel and accessories and computer software. A similar 2007 study by the Harrison Group found that the top spending categories for teens of both genders are clothes, eating out, cars, movies and cellphones.  

“Teens are spending an enormous amount of money on food,” said Rob Callender, TRU trends director. “When they just want to get out of the house, they have a fairly limited number of places they can go where they feel welcome, where they can hang out, and where they don’t feel like they’re being harassed. They can’t go to a nightclub, because they’re too young. So they go to a restaurant, eat a meal and socialize.”  

In a semiannual 2007 survey by Piper Jaffray and Co., teens listed their three favorite restaurants as Starbucks, Olive Garden and Applebee’s. Meanwhile, in another study by Decision Analyst and the Hypothesis Group, the teen participants chose Subway, McDonald’s, Taco Bell, Olive Garden and Pizza Hut as their top five restaurant chains.  

And brand names are important. Most teens say they “stick with a few of the brands they really like,” particularly when it comes to computer equipment, shoes, MP3 players, cellphone service and clothes. “Individual brands earning high marks among the teen consumers included Apple’s iPod, American Eagle Outfitters, Axe, Baby Phat, Facebook, Google, Hollister, MTV, MySpace, Vans and YouTube,” the survey reports. Asked for their preferences in clothing brands, researchers heard names such as Wal-Mart, Target, Tommy Hilfiger, Nautica, Levi’s, Gucci, Armani and Tiffany’s.  

And there was one clear winner.  

“Nike has been an absolute phenomenon in our research,” reported Callender. “For as long as we’ve measured our ‘coolest brands,’ Nike has never failed to finish first. It’s been a juggernaut in an otherwise fairly dynamic set of data. But Nike’s success can actually paint kind of a false picture of how teens deal with brands. You can’t necessarily assume that once you’ve put out a good product that it’s always going to be on top. Nike is the exception to the rule.”  

Callender continued, “Teens actually tend to cycle through brands in a way that isn’t representative of what Nike has been able to achieve. One of the main reasons behind their success is that the brand offers consistency as well as constant innovation; they’re always delivering something new for their customers, but they maintain their consistency.”

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August 27, 2007

SoundExchange, Satellite Radio Discussions Continue

Over the past few months, SoundExchange has been wrangling over internet radio royalty rates. But the label and artist representative has also been discussing future rate structures with the satellite radio industry. In June of this year, XM Satellite Radio and Sirius Satellite Radio entered proceedings with the Copyright Royalty Board (CRB), an arm of the Library of Congress. According to recent filings posted by Sirius, a rate proposal of 0.89 percent of total satellite subscription revenue was initially floated. That has now been amended to a rate of $1.20 per copyrighted sound recording for 2007, subject to increases or decreases based on subscriber gains or losses.

The satellite renegotiation was first sparked in the fall of the last year, at which point SoundExchange pointed to a drawn-out, multi-month process. The organization also proposed a flat, 10 percent revenue payment from the satellite groups, though reports has since pointed to far higher demands. SoundExchange may be empowered by a favorable decision on webcaster rates recently offered by the CRB, a result that has framed a number of post-decision negotiations with internet broadcasters. "They just asked for something really high and actually got it," one major label executive noted. SoundExchange recently resolved a number of royalty-related disputes with larger internet broadcasters, and formally floated discounted terms to smaller webcasters.

Source: Digital Music News

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August 24, 2007

SNL Kagan Releases New 10-Year Wireless Projections

In a just-released study, SNL Kagan estimates that 84% of the US population, including consumer, business and double users, will have mobile phones by the end of 2007, with this percentage surging past 100% by 2013.

SNL Kagan's research also shows that US cell phone subscriptions will grow at a rate of about 3% per year over the next decade versus total population growth of only 1%, despite decreasing net additions as 100% penetration is approached. These projections anticipate increased data use, including text, Web and video, which could be accelerated by new player business models where multimedia services get partially subsidized by advertising, similar to the approaches just starting to be tested by Google, YouTube and others.

SNL Kagan expects total industry average revenue per user (ARPU) to grow at an inflation-paced compound annual growth rate of 1.5% over the next 10 years, from $52.38 today to $61.09 by 2017. Industry hopes run much higher for data ARPU, which is already in the high single digits and grew a significant 45% from the first quarter of 2006 to the first quarter of 2007 — from $5.92 to $8.58.

"If carriers can hold onto their position in the revenue chain, data is poised to give them a second growth spurt," says SNL Kagan senior analyst Sharon Armbrust. "While subscriber units and voice revenue will inch along, we expect data revenue to grow at a compound annual 14% rate over the next 10 years, rising to at least 22% of service revenue, compared to under 10% today."
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August 23, 2007

DiMA Strikes Deal with SoundExchange

Following top-level negotiations this morning, SoundExchange and DiMA-member webcasters have announced that they've reached an agreement to cap minimum "per-channel" fees to $50,000 per company per year. And while webcasters gained no further ground in the CRB-determined royalty rates, a DiMA spokesperson tells RAIN that negotiations will continue.

Webcasters conceded to providing full "census" reporting on the music they play within 6 months; and, while they will not be forced to implement specific anti-"streamripping" software, the webcasters agreed to form an on-going joint study committee with SoundExchange to examine the issue.

Source: Radio & Internet Newsletter

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August 22, 2007

Report: Piracy Has Cost U.S. $12.5 Billion

A new study released today by the Texas-based Institute for Policy Innovation (IPI) estimates that global piracy of recorded music has cost the United States $12.5 billion in economic output and 71,060 jobs annually.

Wal-Mart Selling Digital Music Free Of Copy Curbs

Wal-Mart Stores Inc said on Tuesday that it was now selling digital music downloads on its Web site without the customary copy-protection technology that limits where consumers can play the songs.

Rolling Stones Roll Out DRM-Free Albums

London-based 7digital has become the first digital media delivery company to make available EMI's Rolling Stones catalog as DRM-free MP3s.
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August 21, 2007

MTV Networks, RealNetworks & Verizon Join Forces

MTV Networks, RealNetworks and Verizon Wireless have joined forces to create a new, integrated digital music service, which will replace the services each company currently offers.

The core of the new offering is a joint venture between RealNetworks and MTV, under which the two will merge their respective digital music services into one. The joint venture will be called Rhapsody America, and the combined service will retain the Rhapsody name.

RealNetworks will own 51% of the new company, with MTV owning the remaining 49%. Under the terms of the deal, MTV will commit $230 million over five years for “hard advertising” purposes, as well as include “free” promotions in MTV programming and other integrated marketing efforts.  


The move marks the end of MTV's Urge service. The Urge.com Web site now redirects to Rhapsody and existing Urge subscribers can now use their same login information to access the Rhapsody service. In the coming weeks and months, Urge subscribers will be asked to replace their existing Urge program -- currently embedded in Windows Media Player 11 -- with Rhapsody's software.

However that's not to say the Urge experience goes away. Michael Bloom, who oversaw MTV's music service, will serve as GM of the venture, and Rhapsody will absorb much of Urge's editorial staff, playlists, programming and music recommendation services. Although Urge struggled to attract much attention from consumers, critics praised the service's blogs, reviews and recommendation services.

The result of the integration will be a complete transformation of the existing Rhapsody service. Rhapsody is not simply providing the back-end technology to a new MTV service like what it does with Best Buy's digital music store. Rather, it is creating an entirely new service that both Rhapody and Urge subscribers will share. The new service will also replace Verizon's digital music offering.

The VCast Music store, which allows users to purchase and download tracks from mobile phones, is based on technology from a company called WiderThan, which RealNetworks acquired last year. The service delivers one copy of a purchased song to the mobile phone, and another to the user's computer. Verizon customers can also buy music directly from their computer if they wish from a Verizon-branded service, which recently scored exclusive rights to the entire AC/DC catalogue.

Under this deal, Verizon will replace this existing PC-based service with the new Rhapsody client. Songs purchased from Verizon phones will then appear on the Rhapsody online service as well. Additionally, Verizon plans to release mobile phones compatible with the Rhapsody service so users can transfer subscription music to their devices as well.

In time, Rhapsody and Verizon hope to let wireless users download music on a subscription plan over the air as well, with the monthly Rhapsody fee added to the Verizon bill. However, sources at both companies say the technical and billing hurdles associated with such capability likely won't be resolved for at least a year.

All parties involved are planning a strong marketing push behind the new venture, kicking off Sept. 9 during the MTV Video Music Awards show.

Source: Billboard.biz

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August 21, 2007

SoundExchange Has Discounted Rate Agreement for Small Webcasters

SoundExchange has started sending formal offers to qualified small webcasters that would allow them to continue operating through 2010 under most of the terms of 1998's Small Webcaster Settlement Act (SWSA), the company announced Tuesday (Aug. 21).

Qualified small commercial webcasters (defined as those earning $1.25 million or less in total revenues) would be guaranteed the same rates through 2010 that they have received since 1998 for the use of sound recordings owned by SoundExchange members. Sound recordings of non-members would still be subject to the new rates.

The Copyright Royalty Board on March 2 raised statutory webcast royalties to .08 cents per performance in 2006, rising to .19 cents by 2010, with a minimum annual fee of $500 per streamed channel. In July, SoundExchange agreed not to enforce the higher royalty rates, which went into effect on July 15, as long as good-faith negotiations continue.

As part of this new agreement, small webcasters would pay royalty fees of 10%-12% of revenue. SoundExchange says the proposal also includes a "usage cap to ensure that the subsidy is used only by webcasters of a certain size who are forming or strengthening their businesses."

Small webcasters have until Sept. 14, 2007 to accept the agreement. Those who do not will be responsible for paying the new rates set by the Copyright Royalty Board.In its statement, SoundExchange said that while it "can extend this offer only on behalf of its members," it "ultimately hopes for an industry-wide resolution" that would be implemented by the Copyright Royalty Board.

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August 20, 2007

More than 25% of Brits now listen to digital radio.

The RAJAR ratings consortium offers its first glimpse into the penetration of digital radio and it shows that in the U.K. – which took a completely different approach to digital – the technology’s fueling an upsurge in listenership. The Telegraph newspaper quotes Digital Radio Development Bureau’s Ian Dickens saying that older listeners in particular like digital: “They find it is much easier to use than traditional radio, because they don’t have to remember the frequency of their favorite station and are no longer frightened about losing it.”

These figures represent listening to digital-only radio which includes DAB (Digital Audio Broadcasting), Digital Television and the Internet).

The traditional U.K. radio dial has never sported the variety of signals of even the average U.S. small market, and digital has meant many more signals are now available. But here’s one trend that is visible on both sides of the Atlantic: the Telegraph says “The RAJAR figures also showed that mobile phones are replacing traditional radio boxes.” One in 11 mobile phone owners over the age of 15 “now use the gadget to listen to the radio.” Interestingly, podcasting – which hasn’t gotten much buzz here in the U.S. lately – is rising quickly in the U.K.

Souce: Radio-Info.com

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August 17, 2007

Analysts Report Positive on Terrestrial Radio Streams

People are going on the Internet and listening to terrestrial radio streams in droves. It’s hot, it’s happening and it’s now. And if you think that’s coming from some radio company-hired flack, think again.

The analysts at JP Morgan on Friday (Aug. 17) morning report that “Terrestrial operators drive year-to-year growth for total unique visitors. With growth of close to 27% year over year, the terrestrial group more than offset an 8% decline for the Internet pure plays (driven by tough comps) to drive a 4% year-to-year increase for all of internet radio.”
  
In their 10-page “Internet Radio Scorecard” for June 2007, analysts John Blackledge and Aaron Chew say, “Internet radio has experienced solid gains in unique visitors since 2006, up over 2% per month, with terrestrial operators up 5% per month during that time period.”  

“Unique visitors to Internet radio increased 4% in June 2006, both sequentially and on a year-over-year basis,” reports the duo. “Though the terrestrial operators experienced 1% sequential growth from May's levels, the improvement was largely driven by a 7% sequential growth for the Internet pure plays.”  

But it doesn’t happen on the cheap. The report notes that “these gains were driven in part by the terrestrial operators investing more capital into their digital/online operations. While it is difficult to quantify among the capital expenditures for the terrestrial radio operators into their Internet operations, we believe the operators are investing in and developing their Web sites and adding rich content and webstreaming functionality to attract more users in order to drive advertising revenue.”  

Clear Channel claims the largest total Internet audience with about 17% of an estimated audience of 27 million unique users. “We believe Clear Channel’s growth is instrumental in driving growth for terrestrial operators as a whole,” say Blackledge and Chew, who arrived at their conclusions using data from CommSource Media Matrix and making JPMorgan calculations. But Clear Channel Internet sites saw a 3% decline in June which “likely restrained growth for the terrestrial group as a whole.” NPR didn’t help either with a 19% slip, CBS declined 6%, and, according to the report, traffic at the Greater Media sites in Detroit and Philadelphia fell almost 30%.  

So who made up the difference?  

"The two bright spots for the terrestrial group during the quarter were at Citadel, where unique visitors increased close to ninefold to 1.2 million as its Internet initiatives began to take hold,” finds the report. Also growing at a brisk pace was “Last FM (recently acquired by CBS), where unique visitors grew 9% to 2.5 million; and at Radio Disney (still owned by DIS), which was up close to 16%.”

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August 17, 2007

Radio’s royalty bill could be a lot less than first thought.

The record industry is pointing to the rates paid by Western European countries as a model for what American stations could be faced with — and it’s significantly lower than initial estimates. While U.S. stations presently pay no performance royalty, stations in Europe pay from a high of 5.58% to a low of 2.35%.

If those rates are applied to America’s $20 billion commercial radio industry, the high-low range would be $1.116 billion to $470 million. That’s considerably less than some estimates of $2 to $7 billion. “That’s a gross over exaggeration” says MusicFirst coalition spokesman Tod Donhauser. He says “The NAB is using scare tactics to convince stations that it would be bad for them.”

But NAB spokesman Dennis Wharton says “Given the fact that free radio airplay of music has generated billions in revenue for the mostly foreign-owned record labels, it’s preposterous for the RIAA to suggest a performance tax, period. It matters not whether the money grab would be $7 billion, $2 billion or 470 million.” Opposition among radio operators is fierce. Radio One CEO Alfred Liggins says “All they’re doing is making it more difficult for us to survive. If they’re going to do that they should free us up to run these as commercial enterprises as opposed to stewards of the public service.” He says radio should charge the record labels for “shelf space” just like Wal-Mart does “particularly if we’re going to have to pay additional dollars.” No legislation has been introduced in Congress to do away with the exemption, but Rep. Howard Berman (D-CA) is expected to submit a bill after the August recess. “There’s a growing interest in Congress about this issue to address the disparity,” says Donhauser.

Source: Inside Radio

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August 9, 2007

Universal Music Group Ramps Up DRM-Free Testing

Universal Music Group, which has the largest market share of all the major labels at an estimated 26% of the global market, unveiled a plan to test the sales of digital music without digital rights management (DRM) on a massive scale.

From now until January, UMG will begin selling "thousands" of albums and individual tracks without DRM via such digital outlets as Rhapsody, the Rhapsody-powered Best Buy store, Wal-Mart, PureTracks, and Transworld, as well as the Amazon.com service once it goes live.

The test will also include sales conducted from all participating artist and label-branded websites. Additionally, UMG will use Google’s AdWords search-based advertising program to drive digital music purchases through a social commerce site called gBox.

Noticeably missing from the test is Apple’s iTunes.

In most cases, the DRM-free tracks will sell for the same cost as their protected counterparts, although in a variety of file sizes depending on the retailer.

UMG says the test is designed to measure various factors such as consumer demand, price sensitivity and piracy effects of selling unprotected files versus those locked by DRM.

One of the most challenging aspects of selling music in digital form is the matter of interoperability. The iPod is the dominant digital music device in the market today, but only music purchased on iTunes is compatible with it. Tracks purchased via competing services can’t be played on the iPod, and as such those services—and the digital download market in general—has suffered.

EMI Music Group was the first to embrace DRM-free digital sales, eliminating the restriction from its entire catalog. Starting with iTunes, EMI spent the summer rapidly striking deals with various digital outlets to sell DRM-free tracks, at a higher bit-rate, for 30 cents more per track than lower-quality DRM-protected files.

While not exactly jumping on the anti-DRM bandwagon, UMG’s test shows the label is at least running closely behind it.

"Universal Music Group is committed to exploring new ways to expand the availability of our artists' music online, while offering consumers the most choice in how and where they purchase and enjoy our music," said UMG chairman and CEO Doug Morris in a statement announcing the move.

"This test, which is a continuation of a series of tests that UMG began conducting earlier in the year, will provide valuable insights into the implications of selling our music in an open format."

While UMG may have dabbled with DRM-free tracks in the past, this test represents a major escalation. Instead of dipping its toes in the DRM-free waters with relatively obscure or emerging acts, UMG is committing some of its biggest sellers and front-line releases to the effort.

This includes such acts as Fall Out Boy, Amy Winehouse, 50-Cent, Black Eyed Peas, Daddy Yankee and Common, whose new release “Finding Forever” currently reigns as the No. 1 album in the country this week.

The gBox/AdWords element is perhaps the most interesting element of the trial. Fans using Google to conduct Web searches for participating artists will see a link to buy that act’s music via a sponsored link in the results page. The gBox service is a sort of music widget developed by Navio Systems that lets music fans sell music by their favorite artists on their blogs, websites and other sources, adding a viral nature to the effort.
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August 7, 2007

Record labels’ performance royalty could take 10% to 35% of radio’s total revenue.

Wachovia analyst Marci Ryvicker comes up with an astounding total figure - $2 billion to $7 billion. It’s so big, she says “we find it highly unlikely that the RIAA will be successful” because “we cannot see how taxing an already-struggling industry will provide for better programming” or be “in the best interests of the public.” To give you some sense of the proportion here, radio’s annual revenues have been glued at around the $20 billion mark since about 2000. Forcing music-playing stations to pay even $2 billion to fund a new performer’s royalty would send investors toward the exits. And as Cox Radio’s Bob Neil said last Thursday, some stations would just quit playing music altogether – and that certainly isn’t in the best interest of musicians. I still think this comes down to emotions, and the MusicFIRST Coalition is going to have some highly effective speakers – musical icons – on its side. NAB had better keep coming up with more arguments, beyond just “we helped make them stars.”

Source: Radio-Info.com

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July 31, 2007

Sirius Satellite Radio Inc. (SIRI.O: Quote, Profile, Research) on Tuesday posted a narrower quarterly loss that beat expectations as it added more subscribers and spent less to sign them to its pay radio service, sending shares up 3 percent.

Sirius, the No. 2 satellite radio service which has agreed to purchase bigger rival XM Satellite Radio Holdings Inc. (XMSR.O: Quote, Profile, Research), said its second-quarter net loss was $134.1 million, or 9 cents a share, compared with a loss of $237.8 million, or 17 cents, a year earlier.

Wall Street had expected the company to post a loss of 10 cents per share, according to Reuters Estimates.

Revenue at Sirius, whose lineup includes the National Football League, shock jock Howard Stern, lifestyle guru Martha Stewart and the Catholic Church, jumped 51 percent to $226.4 million from $150.1 million.

The average analyst forecast was for revenue of $228.3 million, according to Reuters Estimates.

Sirius said it added 561,493 subscribers in the quarter, and ended with 7.1 million subscribers. That compares to 8.25 million at XM, which started its service a year before Sirius.

The U.S. Federal Communications Commission and the Justice Department are reviewing the deal that would combine the only two providers of satellite radio service in the United States.

The results came about a week after Sirius Chief Executive Mel Karmazin said XM and Sirius would offer subscription plans costing up to 46 percent less than current offerings. The move was largely seen as a bid to allay regulators' concerns that a merger would raise prices and limit choices.

Sirius said its second-quarter subscriber acquisition costs per gross subscriber addition fell to $108 from $131 a year earlier.

However, its monthly churn, or the average rate at which customers leave, rose to 2.1 percent from 1.8 percent last year, while average revenue per user slipped to $10.71 from $11.16.

Sirius said it expects to end the year with revenue "approaching $1 billion" and over 8 million subscribers.

Analyst on average expect the company to have revenue of $948.7 million, according to Reuters Estimates.

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July 26, 2007

NAB President Slams XM, Sirius Programming Promises

Source: Allaccess.com

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July 26, 2007

XM Increases Net Subs by 338,000 in Q2

XM Satellite Radio on Thursday (July 26) reported ending the second quarter with $277 million in revenues, up 22% from the $228 million it reported during the same period in 2006. XM's 2007 second quarter net loss narrowed to $176 million, representing a 23% improvement compared to the 2006 second quarter net loss of $229 million.  

The Washington, D.C.-based company had a net loss of $175.7 million, or 57 cents a share during the three-month period ending June 30, compared to $229.1 million, or 87 cents a share, in Q2 2006. The Q2 2007 loss included a 12-cent per share charge related to an investment in Canadian Satellite Radio. A Thomson Financial poll of analysts called for a 44-cent per share loss.  

XM said it ended the quarter with more than 8.25 million subscribers compared to 6.90 million subscribers in the prior year period. The company said it recorded 942,000 gross subscriber additions during Q2 and had 338,000 in net subscriber additions compared to 926,000 gross additions and 398,000 net subscriber additions in the same period in 2006. Chairman Gary Parsons sounded almost relieved during a morning conference call when he noted that it was “the first quarter in over a year where gross additions were up over the previous quarter -- it was a tough year of quarters.”  

The company also said the cost of getting new subscribers or subscriber acquisition costs (SAC), increased to $75 compared to $67 in the second quarter of 2006. XM said that Q2 2007 SAC included $10 for inventory -- related charges as well as a $10 increase as a result of continued new vehicle growth from increased production by its newer automotive partners.  

"During the second quarter, XM's revenue grew and losses narrowed. XM added more automotive gross subscriber additions than during any quarter in the company's history," said Hugh Panero, XM’s CEO. "XM's partners include the nation's largest and fastest-growing automakers and XM is well positioned for this segment to provide sustained subscriber growth as production of XM-equipped vehicles ramps up for the 2008 model year and beyond."  

XM reports having $275 million in cash compared to $218 million at the end of December 31, 2006. It also has full availability of its $400 million credit facilities resulting in total available liquidity of $675 million.

During the opening of the morning teleconference with analysts, Panero recalled how he joined the company nearly a decade ago when XM “was a PowerPoint presentation” and there was “scant belief than anyone would pay for radio.” He said he was heartened by the recent consumer response to the Sirius-XM merger proposal that showed 4-to-1 respondents in favor of the merger “reaffirming out view that the merger is in the public interest and should be approved.” On Tuesday, Panero announced that he would leave XM, handing his authority over to president/COO Nate Davis until the merger is approved and then closed at year’s end or early next year, making way for Sirius CEO Mel Karmazin to take the reins.  

Said Panero, “the merger has progressed to a significant level, hit a number of milestones… and it was time to move on.”

Source: Radio & Records

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July 24. 2007

Apple Shares Fall on Initial iPhone Numbers

NEW YORK (Reuters) - Shares of Apple Inc (AAPL.O) fell 4 percent on Tuesday after AT&T Inc (T.N) issued initial subscriber numbers for customers of Apple's iPhone that were below analyst estimates.

Shares of Apple were off $5.70 to $138.02 on Nasdaq after AT&T, the exclusive service provider for iPhone, said it signed up 146,000 iPhone customers as subscribers in the first two days of iPhone sales, well below analyst estimates for sales.

Pacific Crest analyst Andy Hargreaves said that while iPhone sales figures for coming months would be more telling than the first few days, AT&T's number had disappointed investors as some analysts estimated sales "north of 500,000."

Hargreaves had himself estimated 400,000 iPhone sales for the first two days, he said.

"The difference (between sales and activations) is going to be what was sold on eBay or activations that didn't happen immediately. There were some problems with activations but from what we heard it was minimal," the analyst said.

Apple and AT&T had attracted long lines of gadget enthusiasts to their stores when the much-hyped iPhone first went on sale in the evening of June 29.

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July 16, 2007

DiMA Accepts SoundExchange Royalties Cap Offer

The Digital Media Association on Saturday (July 14) confirmed in a letter to SoundExchange that it will accept SoundExchange's offer to cap the per-channel minimum royalty fee for webcasters at $50,000 annually through 2010. As R&R reported earlier, the offer was made at a Thursday (July 12) House Energy and Commerce Committee round-table meeting hosted by Rep. Ed Markey.

DiMA represents major webcasters including Yahoo!, Live365, AOL, RealNetworks and Pandora.

DiMa executive director Jonathan Potter said, "DiMA appreciates SoundExchange's acknowledgement that the minimum-fee issue is critical to our member companies. With the minimum-fee issue off the table, our companies are hopeful that we can quickly meet with SoundExchange to negotiate a fair royalty rate that will support a sustainable business environment for Internet radio."

The Copyright Royalty Board on March 2 raised statutory webcast royalties from .07 cents per performance to .08 cents in 2006, rising to .19 cents by 2010, with a minimum annual fee of $500 per streamed channel. Late last week SoundExchange agreed not to enforce the higher royalty rates, which had been set to go into effect on Sunday (July 15), as long as good-faith negotiations continue.

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June 21, 2007

Hearing Called on CRB Royalty Rate Increase

The House Committee on Small Business will hold a hearing entitled "Assessing the Impact of the Copyright Royalty Board Decision to Increase Royalty Rates on Recording Artists and Webcasters."

The hearing will examine the decision to raise rates, the impact it will have on Internet Radio, and the challenges of providing fair compensation for copyright owners while maintaining a business environment that allow small Webcasters to thrive.

The committee will hear testimony from various Internet Radio outlets, as well as music artists that stand on both sides of the issue.

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June 20, 2007

Source: Billboard.biz

Reports have surfaced suggesting MySpace parent company NewsCorp is considering trading its ownership of the popular social networking service to Yahoo in return for 30% of the combined company.

Based on Yahoo's current value of $37 billion, that would translate to an $11 billion payout for the transaction, the Times of London estimates, offering a hefty return on NewsCorp's original $580 million acquisition of MySpace in 2005. The Times says that NewsCorp is also dangling its shares in game network IGN.

It is as yet unclear whether yesterday's departure of Yahoo CEO Terry Semel could cloud the future of such a deal.

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June 12, 2007

Bridge Ratings today released its current Internet advertising projections for 2007. With a strong first quarter of nearly $4.7B spent on all Internet advertising, the company is now projecting full year 2007 Internet Ad revenues to surpass $19 billion.

 

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June 6, 2007

Internet's Ad Share Surpasses Radio

Internet's share of ad dollars surpasses radio for the first time. Radio's share of advertising revenues held flat in the first quarter with 6.6% of the spending. But for the first time the Internet had a larger share of 7.7%. TNS Media says radio is now fifth - behind TV, magazines, newspapers and the Web.

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June 5, 2007

Bearish Album Sales Patterns Persist, US-Based Slide Continues

US-based weekly album sales dropped a modest 3.2 percent over the previous period, and a gaping 16.2 percent over the same week last year. The figures, recently published by Nielsen Soundscan, cover the week ending May 27th. On a cumulative basis, yearly albums sales remain far behind comparable, 2006 levels, a problem that shows little signs of subsiding. Specifically, aggregated sales recently surpassed 185.4 million, about 16.6 percent less than year-ago figures of 222.4 million. The gulf suggests that second quarter sales are not recovering, and first half figures are likely to mirror recent first quarter returns.

Meanwhile, paid download sales continued their heady increases, moving to 340.2 million for the year, up more than 50 percent over comparable volumes last year. For the week, digital tracks topped 15.1 million, up 42.1 percent over the same week last year.

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June 4, 2007

Local Online Advertising Explodes

Local online advertising is expected to hit $7.5 billion this year, a 31.6% increase over 2006, according to new estimates scheduled for release Tuesday (June 5) by Borrell Associates.

While local ad growth began to slow in 2005, it is still growing faster than national online advertising, which is expected to see a 20.7% increase to $22.1 billion.

Newspapers will continue to pull the dominant share of local online advertising at 35.9%, followed by pure-play Internet companies (such as Google, Yahoo and Monster) at 33.2%. Yellow pages are  expected to control 11.7% of ad dollars. Local print magazines have 9.2%. TV stations have 7.7% and radio stations, 2.2%.

For 2007, newspaper online ad revenue is expected to reach $3.2  billion, while TV stations will pull in $602 million and radio stations, $189 million. "If newspapers are engaged in an online feeding frenzy and TV stations have set out on the hunt, radio stations are rubbing their sleepy heads and wondering what's for breakfast," the Borrell report noted. Although radio stations have doubled their share of the local  online ad market, Borrell pointed out that the growth has come at the hands of a few aggressive operators such as Cox Radio, Emmis  Communications and Clear Channel.

During the past year, companies making a play for local online  advertising focused on building their organizations to capture more dollars; several media companies appointed corporate-level interactive executives. Some of the largest local sites now employ two dozen or more online-only sales people.

Most local media operators are generating 2% to 5% of their revenue from Web operations. Some media companies, most notably newspaper companies, are getting more. Online ad revenue represents 10.7% of the Washington Post's gross revenue; the New York Times and Morris Communications, 8.1%; Scripps, 7.0%; and McClatchy, 6.6%.

Source: Mediaweek.com

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May 30, 2007

CBS announced Wednesday (May 30) that it has paid $280 million in cash to acquire the global, community-based music discovery network Last.fm, which the company says has more than 15 million active users in more than 200 countries.  

Working with the CBS management team, Last.fm founders Felix Miller, Martin Stiksel and Richard Jones will continue to run the online network, which they founded in 2002.  

"Last.fm is one of the most well established, fastest growing online community networks out there," said CBS Corporation president/CEO Les Moonves. "They have a great management team that understands how to build an engaged and passionate community where users learn, discover and share music globally. Their demographics also play perfectly to CBS’s goal to attract younger viewers and listeners across our businesses. Last.fm adds a terrific interactive extension to all of our properties and also is a huge step in CBS Corporation’s overall strategy of expanding our reach online to transition from a content company into an audience company."

One obvious synergy CBS plans to explore is between Last.fm and the CBS Radio division. “Music has the unique ability to unite large groups of people and engage them around a shared passion. CBS Radio has given us a powerful way to create such communities for decades. With Last.fm, we’re adding a next-generation platform to allow audience to communicate with us and each other as never before,” Moonves added.

-Radio & Records

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May 23, 2007

Sprint to Offer Pandora Streaming Audio

Sprint Nextel Corp has teamed up with Pandora Media to deliver personalized streaming audio to its mobile phone users. The music service has attracted 6.9 million users since launching in November 2005.

The Sprint/Pandora service is now available free for the first 30 days of use but will cost an additional $2.99 per month with a Sprint Data plan. Sprint is the first mobile carrier to offer Pandora, but if the Oakland-based startup has its way, other cellular networks will follow suit.

Read the Forbes article here.

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May 22, 2007

SoundExchange Extends Offer to Small Webcasters

SoundExchange today offered to extend to small webcasters through 2010 the terms of prior legislation known as the Small Webcaster Settlement Act (SWSA) with some minor modifications. The 2002 act that sunset in 2005 had set temporary below-market royalty rates for small Internet radio stations in order to provide them additional time to build their businesses. SoundExchange’s offer to extend the core SWSA terms represents a continued subsidy for these small webcasters in the form of lower payments to artists and content owners. Read news release here.

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May 22, 2007

Text messaging is quickly going beyond teenagers.

The average age of a texter is 38. And 40% of American mobile phone users say they sent a text message during the month of March. And 15% sent a photo. 10% used their phone to access the Web for things like news, email and gaming. The bottom line – people are becoming more familiar with their cell phone’s applications. And that presents opportunities for radio.

Source:M:Metrics

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May 14, 2007

Radio listeners in 15 new markets now have access to HD2 multicast programming. According to a Monday, May 14 announcement from the HD Digital Radio Alliance, HD Radio technology has reached the nation’s top 100 markets.

This milestone comes less than 18 months after the Alliance launched a $200 million ad campaign -- later increased to $250 million -- to accelerate HD Radio’s adoption by consumers, which has been sluggish compared to the eagerness of broadcasters to launch HD2 channels.

The new markets, followed by their rank, are Gainsville, Fla., 86; Charleston, S.C., 87; Greenville, N.C., 88; Columbia, S.C., 89; Daytona Beach, Fla., 90; Des Moines, Iowa, 91; Spokane, Wash., 92; Mobile, Ala., 93; Wichita, Kan., 94; Madison, Wis., 95; Colorado Springs, Colo., 96; Melbourne, Fla., 97; Tri Cities, Tenn., 98; Lakeland-Winter Haven, Fla., 99; and Lexington, Ky., 100.

Broadcasters are also adding a variety of formats to the existing list of HD2 multicasts. Some of the formats include ABC Radio’s “e-Spanol,” -- a combination of hard rock and Latino music; Bonneville’s “iChannel,” which plays independent and unsigned artists; “Young Punk – Next Generation Alternative” from Emmis; and Entercom’s channels for rock albums from the ‘60s, ‘70s and ‘80s, “Passport” and “Subterranean.”

According to president and CEO of Greater Media, Peter Smyth, “HD Radio and HD2 multicast formats selections that the Alliance has helped to allocate will broaden the horizons of radio, enabling us to provide unique programming and compelling content, such as Deep Trax, Live Rock, Irish music and other new, exciting formats.” He continued, “The additional channels will give young artists the opportunity and ability to be heard on the airwaves.”

When the Alliance formed in December 2005, only one HD Radio receiver model was available in stores. Today, more than 50 HD Radios receivers for the home and car can be purchased in national retail outlets, including RadioShack, Best Buy and Wal-Mart.

And, in the next 18-24 months, 11 automotive OEM’s (original equipment manufacturers) will list HD Radio receivers as an optional feature on 55 models.

BMW currently offers HD Radio as a factory-installed option in all of its models. HD Radio receivers will also be available in Hyundai and Jaguar’s premium sedan product line in 2008.

Source: Radio & Records

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May 11, 2007

$48M Lawsuit Headed for Sirius

Sirius admits its employees told receiver makers to flout the FCC’s interference rules. Broadcasters
have been carping about the interference to terrestrial stations for ages — and a year ago FCC finally opened an investigation. Now Sirius comes clean. It admits that “Sirius personnel requested manufacturers to produce Sirius radios that were not consistent with the FCC’s rules.” They’re not disclosing which employees were the culprits — or how high in the chain of command it goes. Sirius also isn’t saying if any of those employees have been fired. The company says it only learned of the mistakes during an internal review and says it’s taking “significant steps to ensure that this situation does not happen again.” One receiver maker (U.S. Electronics) has already filed a $48 million suit against Sirius. The FCC continues to look into the interference issue — but so far it hasn’t taken any action.

Source: INSIDE RADIO

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May 9, 2007

eMarketer Offers Broad, Optimistic Music Industry Outlook

After years of major label losses, RIAA lawsuits, and brick-and-mortar bleeding, the industry is finally recognizing broader music industry gains. Sectors like live concerts, publishing, and mobile music have been blossoming for years, and non-traditional CD retailers and independent labels have been multiplying their market shares.

Despite the gains, a lopsided view frequently prevails. Major labels have always played a significant role in the larger business, and their plight seems to dominate media coverage and casual conversation. In contrast, discussions related to performance licensing, t-shirt sales, and sponsorships deals are harder to digest. But non-label sectors are feeding off of increased consumer appetites for music, the result of unprecedented levels of media access and consumption.

Just recently, researcher eMarketer started to quantify the broader music industry gains. The company projected North American industry revenues of $26.5 billion by 2011, an average annual growth rate of 2.8 percent from $23.1 billion currently. Live concerts and publishing will fuel the gains, while digital and mobile assets will offset physical decreases, according to the research group. "Every major category of the live music industry has been growing and is poised for continued expansion, including ticket sales, merchandise sales, ancillary venue revenue and tour and special-event related sponsorships," the group noted. Additionally, the group pointed to stronger branding opportunities ahead. "The climate for marrying brands to musical artists has never been more favorable," said Paul Verna, senior analyst and author of the report.

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May 8, 2007

Ticketmaster Layers Free Downloads Into Ticket Purchases

Buy a ticket, get a free download. That is what Ticketmaster customers can now expect, thanks to a recently-unveiled sales strategy. The program will offer every online ticket buyer access to a ten-song download sampler of emerging artists. In addition, buyers of summer concert tickets will receive access to a free iTunes download, an offer that runs between Memorial Day (May 28th) and Labor Day (Sept 3rd). "Ticketmaster's concert program gets digital and live music directly to the fans, enabling them to experience new and undiscovered music," said Sean Moriarty, president and chief executive of the company. Fans will appreciate the freebie, though bands included in the gesture may ultimately reap the greatest benefit. The reason is that selected groups suddenly gain an immense promotional toehold, one that can fuel future interest and purchases.

For Ticketmaster, the move is part of a broader partnership with iTunes, announced in February of this year. Already, the duo has delivered exclusive, pre-order album download access to ticket buyers, most notably for Bob Dylan. The Dylan initiative, which revolved around the album Modern Times, was sparked in August of last year. Other concepts include bundled, "Ticketmaster+iTunes" download cards, part of a growing relationship between the pair. Elsewhere, Ticketmaster has also invested in digital startups echomusic, an online fan club and brand management company, and iLike, a music-focused social networking play. Just recently, the company integrated its event alert functionality into iLike, a system that serves one million registered users and processes more than 200 million monthly track plays.
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May 7, 2007

Clear Channel Delays (Again) Shareholder Meeting for Private Vote

Clear Channel Communications today announced that its board of directors is in discussions with Bain Capital Partners, LLC and Thomas H. Lee Partners, the two private equity groups that have a pending bid to take over the company, regarding a possible change in the terms and structure of the proposed deal.

Specifically, the sides are hashing out a proposal that would increase the per share price to be paid Clear Channel shareholders from $39.00 to $39.20 per share, and which would give each unaffiliated shareholder a choice between cash and stock in the surviving corporation in the merger, up to an aggregate cap equivalent to 30% of the outstanding shares immediately following the merger (approximately 6% before the merger).

Clear Channel's board of directors has rescheduled the special meeting of shareholders it had scheduled for a vote on the merger from May 8 to May 22, 2007.

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May 1, 2007

Sirius Satellite announces Q1 Results

Now that both Sirus and XM have announced their first quarter performance results we know that combined the two added 836,490 new subscribers (XM: 280,000 - Sirius 556,490). This brings the totals to date to 7.9 million for XM and 6.6 million for Sirius.

Sirius which plans to acquire rival XM Satellite Radio, on Tuesday reported a smaller first-quarter loss as revenue increased from new subscribers.

The New York-based company, No. 2 in the nascent pay-radio market to XM Satellite , said its net loss narrowed to $144.7 million, or 10 cents a share, from $458.5 million, or 33 cents a share, a year earlier.

Revenue at Sirius, the satellite radio home of shock jock Howard Stern and the National Football League, climbed 61 percent to $204 million from $126.7 million.

Analysts on average expected a loss of 11 cents a share on revenue of $213.4 million, according to Reuters Estimates.

During the quarter, Sirius added 556,490 net subscribers to end at 6.6 million in total. Its average monthly subscriber churn -- a measure of users who quit the service -- was 2.3, which Sirius said was consistent with a previously provided 2007 churn outlook.

Sanford Bernstein analyst Craig Moffett said the results were solid, particular with Sirius' gross additions -- the raw number of new subscribers -- at 988,000, compared with his forecast of 889,000.

"By handily beating expectations in arguably the most important metric -- subscriber growth -- Sirius continues to show solid growth as a stand-alone business," he said in a note to clients.

Subscriber acquisition cost, or SAC, per gross subscriber addition was $104 for the first quarter of 2007. Sirius said that was 8 percent better than the year ago quarter, and keeps it on track for its full-year target of $95.

Sirius plans to buy XM in an all-stock deal worth about $4 billion when it was first announced, but some U.S. lawmakers and consumer groups have criticized the merger as anti-competitive.

Sirius said it was confident that it would complete the transaction by the end of 2007.

The deal requires the approval of the U.S. Justice Department's antitrust division, as well as the Federal Communications Commission.

Sirius said it still expected full-year 2007 total revenue "approaching $1 billion" and anticipated more than 8 million subscribers at year-end.

Sirius shares were nearly unchanged in morning Nasdaq trade, after closing on Monday at $2.96. The stock is off about 20 percent since the merger was announced in late February.

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April 26, 2007

Bill Introduced to Set Aside New Webcast Royalty Rates

Eleventh-hour legislation proposed to save Internet radio from almost certain demise came into being today.

The Internet Radio Equality Act, sponsored by Rep. Jay Inslee (D-WA), and currently with eight cosponsors, was introduced on the House floor.

Among other provisions, the bill vacates the CRB, removes the 'willing buyer/willing seller' standard, and establishes a satellite radio-like royalty of 7.5% of revenues or .33 cents per listener hour.The rates are "interim" for the 2006-2010 period -- after that, they will need to be decided again, this time based on the same standard used for satellite radio.

The "Internet Radio Equality Act," would vacate the Copyright Royalty Board's recent hike in webcast performance royalties and set a transitional flat royalty rate of 7.5% of revenues for 2006-2010. The bill would also let webcasters choose an alternative rate of .33 cents per hour of programming streamed to a single listener.

The bill would change the rate-setting standard used by the CRB for Internet-radio royalties to a standard similar to that applied to satellite radio and reset the royalty rules for noncommercial radio stations that stream music online.

The Copyright Royalty Board on March 2 raised the statutory royalty to be paid by Internet radio operators from .07 cents per performance to .08 cents in 2006, .11 cents in 2007, .14 cents in 2008, .18 cents in 2009 and .19 cents in 2010, with a minimum annual fee of $500 per streamed channel. On April 17 the CRB rejected requests by National Public Radio and the Digital Media Association for a rehearing on the rates, and the increased rates are set to go into effect on May 15, retroactive to Jan. 1, 2006.

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April 26, 2007

XM Q1 Loss Narrows, Subscriber Count at 7.9 Million

WASHINGTON (AP) -- XM Satellite Radio Holdings Inc. said Thursday its first-quarter loss narrowed as subscription revenue rose sharply.

XM, which agreed to be bought by rival Sirius Satellite Radio Inc., reported a loss of $122.4 million, or 40 cents per share, down from $151.4 million, or 60 cents per share, in the year-ago period.

The loss was a penny larger than Wall Street expected, according to Thomson Financial.

Revenue rose 27 percent to $264.1 million from $208 million last year.

The company ended the quarter with 7.9 million subscribers, up from 6.5 million a year ago. Last year, XM forecast subscribers would exceed 8 million by the end of 2006, but scaled back that target significantly as retail sales of its radios waned.

XM gets the lion's share of its subscribers from partnerships with carmakers, including the two largest, Toyota and General Motors.

The company expects to have between 9 million and 9.2 million subscribers by the end of 2007, with subscription revenue for the year around $1 billion.

In the first quarter, net subscriber additions, which subtract cancelations from gross new customers, slowed to 285,000 in the period from 569,000 a year ago. The rate of customer defection held steady at 1.8 percent. The cost to add a new customer increased to $65 from $59.

XM anticipates reporting an adjusted operating loss of $170 million to $180 million in 2007.

In electronic premarket trading, XM shares added 19 cents to $11.20 after closing Wednesday at $11.01 on the Nasdaq Stock Market.

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April 23, 2007

Best Buy Joins the HD Party

BEST BUY has joined forces with the HD DIGITAL RADIO ALLIANCE to now offer iBIQUITY's HD digital radio technology at all of its 832 stores nationally. The HD Radio launch is supported by a marketing communications program that includes the latest phase of the ALLIANCE's previously announced $250 million radio campaign.

"The HD DIGITAL RADIO ALLIANCE and iBIQUITY have created momentum with customers that now make HD Digital Radio one of the hottest electronics choices around," BEST BUY VP/Merchandising CHRIS HOMEISTER said. "Product is now available in all of our stores, so no matter where our customers live, they can discover HD Radio and experience the crystal clear sound and new programming choices."

ALLIANCE Pres./CEO PETER FERRARA said, "Consumers turn to BEST BUY as a trusted resource for the ultimate in electronics entertainment and we’re fortunate to have this retailer lead the way with a strong vision for HD Radio."

iBIQUITY Pres./CEO ROBERT STRUBLE said, "This is another major step forward for HD Radio technology. Following rapid adoption by the broadcast community and an increasing range of products for the mass market, BEST BUY's efforts will dramatically accelerate consumer adoption of this great new technology."

-All Access.com

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April 12, 2007

Top 5 Wireless cities

1. Los Angeles     2071
2. New York        1917
3. Chicago, IL      1392
4. San Francisco  1367
5. Houston          1058

Source: USA Today

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April 10, 2007

Early Adopting Regions Show Slowest Digital Gains

Digital downloads continue to increase year-over-year, though the rate of increase is starting to slow in the United States.  That has heightened concerns of an upcoming plateau, though the larger picture could take several quarters - and even years - to materialize.  But digging into regional data reveals an interesting disparity, one that shows major growth rate differences between early and later adopters.  Armed with Nielsen Soundscan regional breakdowns, music blogger Glenn Coolfer noted that growth rates within the early-adopting western states are slowing, while rates among later-adopters in the middle and southern states remained more robust.  "A slowdown already exists in the regions of the country that first got into digital music," Coolfer noted in the analysis.  "The early adopters, the technologically adept consumers who congregate in west coast cities, are slowing in their digital purchases. The rest of the country has been catching up."

During the first quarter, the Western states (California, Washington) showed gains of between 0 and 30 percent, while gains in the Northeast states (New York, Massachusetts, Connecticut) fell between 31 and 40 percent.  The South Central and Central regions showed healthier gains of 49 and 55 percent, respectively, according to the data.  Meanwhile, urban areas showed gains of 28 percent, while rural areas show a far stronger increase of 55 percent.  "The slower pace at which west coast city dwellers are purchasing foreshadows a slowdown in other regions," Coolfer asserted.  "They've already passed the iTunes binging phase that people in rural areas and the middle of the country are currently experiencing."  Meanwhile, Apple has not disclosed regional data on iPod sales, though early adopters are largely from urban and coastal regions. 

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April 4, 2007

Web advertising’s predicted to overtake radio next year.

That’s a year earlier than ZenithOptimedia predicted just five months ago. It says Internet ad spending will sprout 28% this year — far faster than the 3.9% average
for the rest of media. ZenithOptimedia says radio’s share will be 8.2% of spending. But will fall to 7.9% next year. That’s when Internet’s share will rise to 8% and surpass radio.

There’s an upside to all this. While radio’s share of overall bucks will fall slightly it’s expected to bring in more total dollars each year. In fact the researchers are boosting their forecast of how much radio advertisers will spend over each of the next three years. They say the big losers will be newspapers and magazines — which are looking even worse than they did a few months ago.

Source: Inside Radio

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April 3, 2007

Ryvicker On CBS: We Are Initiating Coverage With An Outperform Rating

Marci Ryvicker, Wachovia VP/Equity Research, is “initiating coverage of CBS with an Outperform rating.” She explains that “while CBS faces tough comparisons in 2007, we still believe there is room for growth and expect acceleration in 2008.
“CBS Television's tough political and syndication comps should be mitigated by a strong upfront season, retransmission consent revenue, Nielsen's new measurement system and persistent No. 1 ratings.

Radio has cycled through its Howard Stern comps and should generate above-average sector revenue and OIBDA growth as a result of the monetization of format changes and a lack of low margin sports contracts. CBS is actively converting its outdoor products to digital, which should contribute 200bps to outdoor revenue and 400bps to outdoor OIBDA in 2007.

“CBS is making investments and generating partnerships to spur long-term growth. The company recently lured top-level executives away from Yahoo and Google, which should help with its expansion into interactive and other nontraditional media. While the revenue and cash flow generation of these initiatives are still small, there is significant long-term upside beginning in 2008, in our view.”

Ryvicker concludes, saying that CBS’ “valuation is compelling. CBS trades at 9.3x 2007E EBITDA and 16.3x tax-adjusted 2007E FCF, discounts of 18% and 14% to the broadcast sector averages, respectively.”

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March 30, 2007

CC Shareholders Advised to Reject Buyout

The chances of Clear Channel shareholders accepting the $37.60-a-share buyout offer from Thomas H. Lee Partners and Bain Capital Partners may have grown even dimmer Thursday (March 29) after Institutional Shareholder Services, a proxy advisory firm, recommended against shareholder acceptance of the $19 billion deal. Shareholders are set to vote on the offer at a special meeting in San Antonio on April 19.

"The offer price represents a very modest premium," ISS said in its report. "It appears that the primary strategic rationale for the proposed transaction is to take advantage of the hot financing markets driving the current private equity boom. We find that while this rationale may be reasonable, it's not necessarily compelling for longer-term shareholders."

The Clear Channel board of directors and the Mays family, which founded what has evolved into the world's largest radio-broadcast empire, have lobbied shareholders hard to embrace the only offer made since the board and the Mays family announced in mid-October that they wanted to take the company private. Several large institutional shareholders have turned their backs on the offer, saying the per-share amount is too puny.

Several Wall Street analysts have told their investors that CCU shares should be valued at $39 to $42 each. Those recommendations have sparked a small and mostly under-the-radar buying spree by some former broadcasters who are not only taking great delight in the mayhem but also expecting to pick up some easy-earned jack at their former competitor's expense.

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March 23, 2007

HD Radio to bill $14.5M by 2008

From Inside Radio:

Kagan forecasts HD Radio will bring in $1.2 million in revenues this year. That’s pretty small — but Kagan predicts that figure will grow to $14.5 million in 2008 then balloon to $112 million in 2009. The biggest piece of revenues will come from traditional spot radio sales through multicasting. It’ll be worth $620,000 in revenues this year. But by 2011 Kagan says those additional revenues will swell to $1 billion.

Kagan also sees big growth in datacasting revenues and HD-2 sponsored channels — from a $200,000 business this year to nearly $4 million next year. What’s likely to be a very minor business for HD stations will be the subscription-only services.
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March 22, 2007

HD Radio Grows Up - FCC Approves HD Rules

With a 5-0 vote, FCC commissioners approved regulations that allow broadcasters to begin HD multicasting without prior approval from the commission. In addition, AM stations, which are currently limited to daytime-only HD operation, will be allowed to go digital at night. The vote occurred at the commission's regularly scheduled monthly meeting on March 22.

The decision has been delayed since last summer, when commissioners debated whether to impose some of the same public interest obligations that apply to regular over-the-air stations to HD stations. No new public interest obligations were adopted as part of this vote.  

Meanwhile, the NAB issued a statement from president and CEO David K. Rehr applauding FCC chairman Kevin Martin and the commission for "taking a significant step in advancing the already budding HD Radio technology."  

"As HD Radio expands across America, we are hopeful the commission recognizes the unique role played by local radio and the considerable public service contributions voluntarily made by stations within their communities," Rehr added, addressing the previously stated public interest concerns.

iBiquity Digital's president and CEO Bob Struble also weighed in on the FCC's decision.
 
"iBiquity Digital commends the FCC for its decision today to authorize the use of two additional HD Radio services – multicasting and datacasting – and allow AM HD Radio stations to begin nighttime broadcasting.  Today’s decision reinforces the Commission's support for the HD Radio system and provides automakers, broadcasters, receiver manufacturers and retailers with the certainty of formal adoption of critical HD Radio services.  We anticipate this action will also prompt a surge of activity from companies in each of these industries as they look to capitalize on the continuing momentum of the HD Radio rollout."
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Monday March 22, 2007

FCC Approves Disney-Citadel Radio Deal

The FCC has approved Citadel Broadcasting’s acquisition of 24 Disney/ABC Radio stations. However, as part of the deal, Citadel has agreed to spin-off 11 of the stations it currently owns in order to not exceed the FCC’s local ownership cap rules. Those 11 stations will be transferred into a trust while Citadel begins the process of finding buyers for them.

When the acquisition was announced in February 2006, the deal was valued at $2.7 billion.

In a statement, FCC commissioner Jonathan Adelstein said that he approved of the deal in part, “Because of Citadel’s commitment to comply with our media ownership rules and to make special efforts to increase diversity of ownership.  One of the positive results of this merger is that Citadel is losing its grandfathering rights with respect to eleven stations in seven markets in which its attributable [sic] radio interests exceed our local radio ownership limits.  I am pleased that Citadel decided to resolve this issue by creating a non-attributable trust for the purpose of divesting the merged entity of these non-compliant stations.”  

Commissioner Michael Copps added, “While I am always troubled by the effects on our media environment of allowing a large media conglomerate to acquire even more stations, I believe this transaction is narrowly—quite narrowly—in the public interest because ABC’s and Citadel’s holdings do not overlap in any local market and, most important, because Citadel must divest the 11 stations that it owns in excess of our local ownership limits.”
 
Copps tagged his comments with this: “I will be watching the trust’s efforts closely to ensure the results envisioned in this item.”

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March 20, 2007

Satellite Radio Merger News Update

From Inside Radio:

Willing to pay $18 to $20 a month for a “best of” Sirius+XM lineup? The same day Sirius boss Mel Karmazin was wriggling around the pricing question at the House Anti-Trust Task Force two weeks ago — XM COO Nate Davis was giving the Bear Stearns conference at the Breakers in sunny Florida a much better fix. He was ballparking the “best of both worlds” XM+Sirius lineup at perhaps $18 to $20 a month.
The closest any of the House interrogators got with Mel was that the “significant discount” from the combined $25.90 sub price would be “closer to $10 than $2.” But for argument’s sake — a $10 discount would make the price about $16 ($25.90 minus $10 equaling $15.90). While the Nate Davis estimate was more in the middle
($18 to $20). Does price matter? It might to the regulators. It certainly will to the consumer advocates who in some cases are opposing this deal (lining up alongside the NAB on this particular fight).

The latest NAB’s attack on the Sirius-XM merger? It’s bad engineering. An NAB-commissioned study into the proposed merger aims to show that Mel Karmazin and Gary Parsons are promising more than what’s technologically possible. In congressional hearings the pair said the combined satellite service would allow subscribers to pick-and-choose among their channels. But the consulting engineering firm of Meintel, Sgrignoli & Wallace (MSW) says that would be nearly impossible. That’s because bandwidths, bit rates, data structures, and digital audio coding algorithms of these two systems are completely different. Those differences (for example) allow XM to get 148 channels into its spectrum while Sirius gets just 123. Engineers say tinkering with audio codecs and bit rates may only serve to hurt their audio quality. As for Karmazin’s promise to bring listeners more programming choice — MSW points out that both the XM and Sirius systems are chock-full of programming and significant spare capacity is not available. That’s proven by the occasional announcement that a channel is being dropped to make room for something new. The two satcasters didn’t respond to our request for comment on the NAB’s study.
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March 14, 2007

MySpace Gaining on iTunes, Napster

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March 14, 2007

A new study from consumer and retail information company THE NPD GROUP shows that the recording industry registered solid growth of digital music sales in 2006 from services like iTUNES, but it continues to fight against serious challenges from music piracy in the form of peer-to-peer (P2P) file sharing.

"Legal a la carte downloads were the fastest growing digital music category in 2006, and it is likely that the annual number of legal users will surpass P2P users in 2007," said NPD GROUP VP and entertainment industry analyst RUSS CRUPNICK. "Unfortunately for music labels, the volume of music files purchased legally is swamped by the sheer volume of files being traded illegally, whether on P2P or burned CDs sourced from borrowed files."

By the end of 2006, there were 47 million "digital music households" in the U.S. -- i.e., households with a member who downloaded, ripped, burned, played, or uploaded digital music. Among those households, 15 million actively downloaded at least one music file from a P2P site in 2006 -- an 8% increase over 2005, but still a slower growth rate than was noted in prior years. While P2P user growth rates slowed, the average P2P user downloaded many more files in 2006 (5 billion files) than the previous year, which represents a 47% increase in P2P downloading compared to 2005 (3.4 billion files).

"The slowdown in the growth rate in the number P2P users is somewhat remarkable given the growth in digital music users overall, the emergence of digital video, and the expanded consumer exposure to broadband," CRUPNICK noted. "Even so, 5 billion files downloaded illegally clearly affect prospects for both CD sales and sales of digital song tracks online."

While in 2005 NPD noted a two-to-one difference between the P2P and pay-to-download populations, in 2006 there were nearly 13 million households using a paid digital music download services -- almost three times more than NPD reported in 2004. Overall, the number of music files purchased in 2006 exceeded 500 million, which is a 56% increase from the previous year. "Paid usage is gaining on P2P; however P2P users tend to download many more files per user than do those consumers who pay for music downloads," said CRUPNICK.

He added, "More anti-piracy initiatives need to be crafted if there's any hope of reducing the amount of P2P file sharing and other piracy. Most of all, the recording industry should continue to nurture and support those who pay to download music in order to reinforce repeat usage and continue to build on take rates."

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March 9, 2007

Internet Radio Scorecard: January 2007

JP Morgan's Internet Radio Scorecard for January says overall, unique visitors to all of internet radio grew 22% y/y in Jan 2007 to about 53.3 mil confirming Bridge Ratings' recently released study of Internet radio listening. Sequentially, unique visitors declined 9% (from Dec '06), driven by a 15% decline in unique visitors for the pure play internet operators, partially offset by a 2% sequential gain for the terrestrial operators sites.

Since Jan 2006, the internet radio audience has grown at a 1.6% monthly compounded rate. The 22% YOY growth in unique visitors was driven by the terrestrial radio operators, whose unique visitors grew about 71% year over year and about 2% sequentially. Unique visitors for the internet operators grew about 4% year over year, although they experienced a 15% sequential decline.

Growth is much stronger for the terrestrial operators YOY than it is for the pure play internet players, reflecting both the terrestrial operators' recent investments into their digital/online operations as well as the smaller base they are growing from. As a result, terrestrial's share of total unique visitors hit a new high. Driven by terrestrial's sequential growth in January (and the internet operators sequential decline), the terrestrial operators' share of unique visitors to internet radio grew to 37% (vs. 26% a year ago), while the internet operators' share fell to 63% (down from 74% a year ago). CBS Radio's unique visitors increased 4% sequentially to 3.1 million, while CCU's unique visitors declined about 5% sequentially to 9.2 million. Collectively, unique visitors to CCU's and CBS Radio's sites now represent more than 23% of the total internet radio audience.

 

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March 6, 2007

NAB Increasing its Opposition to Satcaster Merger

The NAB, which has been relentless in its efforts to convince all who'll listen that the proposed merger of Sirius Satellite Radio and XM Satellite Radio is a bad idea, is buying full-page advertisements in newspapers and ad space on a new political news Web site aimed at a Capitol Hill readership in hopes of convincing legislators that a merger would hurt consumers.

An ad set to appear Wednesday (March 7) in Congress Daily, Communications Daily, Roll Call and The Hill and at political Web site The Politico is headlined "No one wins in their monopoly." The ad shows a Monopoly board game remade with XM and Sirius as the only operators, and the only winning property is labeled: "FCC rules prohibit satellite radio merger CONSUMER WINS." The advertising copy notes that FCC rules prohibit a merger and says, "This attempt at a government-sanctioned monopoly would be a government bailout for two satellite radio giants that have repeatedly thumbed their nose at FCC regulations. Nobody wants to play games with companies that don't follow the rules."

Twice last week the NAB took out similar anti-merger advertisements in Capitol Hill-oriented newspapers to send the message that "Congress should oppose this attempt at a government bailout." Attorney general John Ashcroft has also written a three-page letter on behalf of the NAB to current attorney general Alberto Gonzales criticizing the merger and speculating on the damage it could cause consumers. Ashcroft's services became available to the NAB after he pitched his lobbying resources to decisionmakers at XM, who declined the offer.

 

February 23, 2007

Jacoby Offers Opinion On XM/Sirius House Hearing

Bank of America securities analyst Jonathan Jacoby writes about the new antitrust trust task force within the House Judiciary Committee that will hold a hearing next week on the impact of the proposed XM/Sirius merger on the consumer. The hearing was announced by House Judiciary Committee Chairman John Conyers (D-Michigan). According to Conyers, the hearing is being held to “allow members to probe whether this merger will enhance or diminish competition in the digital music distribution industry.” Sirius CEO Mel Karmazin will testify at the hearing on February 28.

Jacoby’s reaction: “A congressional hearing doesn’t doom the deal (we believe the merger does pass muster on competitive grounds), but it shows that the high profile nature of the transaction could attract plenty of opposition & slow the process. We don’t believe that the merger should be blocked on competitive grounds – the plethora of audio entertainment options suggests that the newly merged company still would face plenty of competition. But a review by Congress seems to open the door further to politically motivated opposition. In addition to potential procedural hurdles at the FCC, we previously have highlighted the risk that the NAB makes an effort to push new legislation to block the merger on the grounds that it would harm the FCC’s goals of promoting localism and diversity of content. A current bill, HR 983, only addresses localized programming by XM and Sirius, but we wonder if the NAB will seek to have more restrictive amendments added.”

Jacoby continues, offering these investment thoughts: “We remain cautious on both XM and Sirius; the regulatory hurdles make completion of the deal far from certain. We continue to believe that the probability of deal passing is below 50%. Assuming $5 billion of synergy value, we estimate that Sirius and XM stock would be worth ~$4.25 and ~$19, respectively – BUT only if FCC approval is obtained. And if the deal is not approved by the FCC, we estimate that Sirius and XM would be worth only $2.50 and $13.50, respectively – implying significant downside risk for investors.”
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February 13, 2007

Veoh to target YouTube viewers

February 13, 2007

Zune Marketplace Installation Levels Remain Low, Report

Early reports suggest that sales of the Microsoft Zune player have been weak, though the software giant has yet to release official numbers. That makes it difficult to accurately draw comparisons to other players, though a recent application installation report offers more clues. The Digital Media Desktop report, published monthly by the Digital Music News Research Group, monitors installation levels across dozens of leading digital music applications. During November and December, Zune Marketplace installation levels were quite low, landing at 0.05% and 0.22%, respectively. The Marketplace download is designed to work hand-in-glove with the Zune player, much like the iPod+iTunes connection. Application levels on iTunes were comparatively strong, landing at 25.83% and 26.59%, respectively.

In the P2P space, LimeWire continued to exert its dominance over rival file-sharing applications. The popular app pulled an 18.92% installation level in December, part of a continued growth curve. Other applications, including BearShare, Kazaa, and Morpheus, showed installation levels of under 2%. The strong showing for LimeWire has not gone unnoticed by the RIAA, which recently initiated legal action against parent company Lime Wire LLC. A victory – in court or through settlement – would bury the last heavy-hitting P2P application, though fresh upstarts are emerging in the BitTorrent camp. That includes Azureus, which pulled a 3.13% installation level in December, just one of several in that range. Among swapping protocols, BitTorrent and Gnutella were by far the favorites.

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February 12, 2007

Convert any car radio to HD with Crutchfield’s new add-on.

The new HD Car Connect Radio from Directed Electronics hits the market today at a price point of $199. It connects to a vehicle’s audio system and literally
transforms it into an HD receiver. This one’s from Crutchfield but similar devices are on the way from other manufacturers. HD Digital Radio Alliance president Peter Ferrara says HD is “continuing to accelerate at a rapid pace” and says these devices give consumers the ability to get digital in their car “easily and inexpensively, no
matter what car they drive.” More info at www.HDRadio.com.

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February 9, 2007

Radio Enhances Internet Message

The recall of advertising is “dramatically enhanced” -- 27% versus 6% -- when a mix of radio and Internet ads is used compared to Web site ads alone, finds a new study on radio and the Internet conducted by the Radio Advertising Effectiveness Lab.

The study, “How Radio Ads Can Complement Internet Campaigns,” is part of a new series of research projects billed “Radio and the Consumer’s Mind: How Radio Works.” The aim is to determine on an on-going basis how radio advertising affects consumers differently than other forms of marketing.

The latest study finds that radio ads can also improve Web site traffic and a brand’s emotional bond with consumers when added to Internet exposures. The study purposely asked a study group of more than 800 people between the ages of 18-54 questions that did not give either medium unfair advantage over the other but sought to determine how the two work together. The outcome told researchers that radio and the Internet have unique reach patterns and that they can work powerfully in combination.

“When you put those two media together, we found that the daily reach of radio and the Internet is similar to that of television,” RAEL noted.

The study used a variety of effectiveness measures and found that the ones that best reflect the effects of media are the ones that measure brand recall. Unaided recall for the mix of one Internet and one radio exposure for these selected advertisers was four-and-a-half times as high as the unaided recall for two Internet ads alone.

Complete study findings can be found at Info@RadioAdLab.org or http://RadioAdLab.org.

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February 9, 2007

Digital Gains, Profits Slide at Warner Music Group

Digital assets continued to climb at Warner Music Group during the recent quarter, though larger revenues and profits dipped significantly. For the fiscal first quarter ending December 31st, digital sales climbed 45 percent and surpassed $100 million, a new milestone. But drops in physical assets dragged the larger revenue total, which slid 14 percent to land at $928 million. And net income tanked, sliding 74 percent to $18 million, or $0.12 per share, down from $69 million or, $0.49 per share during the year-ago quarter. "Declines in our physical recorded music and, to a much lesser extent, our music publishing business, contributed to the revenue declines on a constant-currency basis," the company indicated.

Josh Groban, My Chemical Romance, Eric Clapton, Diddy and Luis Miguel were the biggest revenue-generators during the quarter. In terms of percentages, digital assets now account for 11 percent of the total, a rising mark amidst a sinking revenue pool. Recorded music was mostly soft within North America and Europe, though Japanese gains helped to propel the Asian market. Overall, recorded music dropped 16 percent, landing at $800 million, while digital assets specifically tied to recorded music reached $93 million. Music publishing revenues slid 3 percent to $133 million.

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February 8, 2007

Ticketmaster Announces iTunes Collaboration

Ticketmaster will sell iTunes downloads alongside concert tickets, according to an announcement by company chief Sean Moriarty. "By providing direct links to iTunes, the world's most popular online music and video store, we are giving iTunes and Ticketmaster customers the opportunity to buy concert tickets, and explore and purchase great music," Moriarty said. The move represents a nice diversification for Ticketmaster, and follows earlier bundling tests involving concerts and downloads. "Our exclusive digital album pre-orders have been extremely popular with iTunes customers," said iTunes vice president Eddy Cue. One of those tie-ups involved Bob Dylan, who offered exclusive concert buying opportunities to iTunes customers. Specifically, the August promotion was positioned as an exclusive for pre-release purchasers of the digital album, Modern Times.

The collaboration is just getting started, though a number of concepts are already being spun. Ahead of the critical summer concert season, Ticketmaster is planning to offer free iTunes Store downloads to live event purchasers. Fans can grab any download of their choice, as well as a sampler of touring musicians. Additionally, the team is positioning $50 "Ticketmaster + iTunes" gift cards, redeemable on the Ticketmaster website of the iTunes Store. Other creative concepts will be announced later, following an initial run this summer. Moriarty disclosed the deal during a keynote at Concert Industry Consortium 2007, held this week in Los Angeles.

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February 7, 2007

Sharper Image Adds HD Radio

Sharper Image Corporation and the HD Digital Radio Alliance issued a joint statement today (Feb. 7) to announce the launch of HD Radio digital products in over 188 Sharper Image stores, online and in the company’s catalog.     

The Sharper Image, a specialty retailer with stores across the country, will offer consumers two table-top HD digital radio models: The Sangean receiver and the Boston Acoustics Recepter Radio HD will be available for $249.95 and $299.95, respectively. The Sangean receiver will be available at Sharper Image stores starting in April 2007.    

“The decision by the Sharper Image to carry HD digital radio highlights the incredible momentum behind HD Radio,” says HD Digital Radio Alliance president and CEO Peter Ferrara. “The Sharper Image is synonymous with cutting-edge products, and they’ve recognized HD Radio as fitting right in with their strategy. Clearly, this technology is quickly coming to represent a key lifestyle trend as the pace of the rollout accelerates.”  

The HD Digital Radio Alliance, an organization of leading radio broadcasters who promote the adoption of HD digital radio, adds the Sharper Image to a growing list of national and regional retailers who sell HD digital radio products, including RadioShack, Circuit City and Amazon.com.

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January 29, 2007

Verizon Reportedly Rejected iPhone, Onerous Terms

Verizon Wireless, the number two carrier in the United States, reportedly balked at Apple demands related to the carriage of its upcoming iPhone. According to a report issued by USA Today, the rejection came two years ago based largely on a number of irreconcilable points. Those included stipulations that Apple would retain complete control over where the phone was distributed, as well as discretion over customer service issues. "We said no," remarked Verizon Wireless vice president Jim Gerace in the article. "We have nothing bad to say about the Apple iPhone. We just couldn't reach a deal that was mutually beneficial." The rejection enabled a subsequent tie-up with Cingular Wireless, which is readying the phone for a launch in June.

The wisdom of the Verizon decision will be tested during the second half of this year, though the company steered clear of a potentially high maintenance device and partner. Even though the phone carries blockbuster potential, Verizon appeared uncomfortable with the proposed deal on a number of levels, including its compromised relationships with both customers and retail outlets. Both Apple and Cingular Wireless have been tight-lipped about their contract, though the Verizon report may offer some insight into the deal structure. The USA Today report also claims that the Cingular contract carries a five-year term, sourcing "two people with direct knowledge of the deal". The Cingular pact is also US-based, and Apple will shop separate deals in Europe, Asia, Australia, and other regions. Already, O2, Vodafone, Orange and T-Mobile are reportedly in a derby for the phone, though 3UK may be excluded based on 3G incompatibility concerns.
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January 23, 2007

From INSIDE RADIO:

Internet radio did about $500 million in revenue last year. That's 2.5% of the $20 billion realized by local/terrestrial radio. J.P. Morgan analyst John Blackledge says about $100-150 million of that $500 million is from traditional audio ads heard on Internet streams. As for audience - Blackledge says the weekly audience to Internet radio is up from 20 million in January 2005 to 30 million just one year later.
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January 17, 2007

FCC Commissioner: Satellite Merger Not Happening

Message to Wall Street warriors excited about the prospects of a Sirius and XM satellite radio merger: Stuff a sock in it. It ain’t gonna happen.

FCC chairman Kevin Martin didn’t use those exact words Wednesday morning (Jan. 17) when he chatted with reporters after the commission’s monthly open meeting, but he made it clear that FCC regulations created when satellite radio service was conceived more than a decade ago clearly state that “two satellite radio operators [must] remain in place,” Martin paraphrased.

While no merger plan has been filed with the commission, Martin said the FCC would "look at anything that comes before us." But he noted that there is "a prohibition on one entity owning both of those licenses" and he reminded reporters of how the commission rejected the proposal by the two satellite television dish companies to merge in the summer of 2004. In fact, that proposal was rejected by a pro-consolidation-oriented panel of commissioners in less than 60 days, a world speed record in Washington regulatory terms.

Dreams of a Sirius-XM merger are currently fantasy, created by the vivid and overworked imaginations of a slew of Wall Street analysts who have been bouncing merger theory after merger theory off each other, both firm-to-firm and in weekly -- sometimes daily -- notes to investors, for months, without much regard to regulatory Washington.

On the topic of payola, Martin echoed others in calling for a “clear and transparent method of radio promotion” and said “the commissioners are trying to decide what is the most appropriate thing for us to do” in reaching a consent decree with radio operators that have been the subject of the payola investigation carried out by the state of New York’s attorney general’s office.

Martin said he hopes the commission will hold its next public hearing on media ownership sometime in February or March, depending on the commissioners' schedules, but no location has been decided upon. He noted that there are four more meetings around the country proposed, but no schedule has been drafted.

On Nov. 22, 2006, the agency announced that it had commissioned 10 different studies on media ownership to be conducted, and Martin on Wednesday said the results of those studies are expected to begin arriving at the FCC "sometime this spring."

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Digital Music Piracy: No Room for Complacency

While the global trade value of the emerging digital music market roughly doubled to about $2 billion in 2006, the recorded music industry has reiterated there must be "no room for complacency" in its mission to quash online music piracy.

Digital music now generates about 10% of worldwide recorded music sales, according to the International Federation of the Phonographic Industry (IFPI), a figure which it expects to rise above 25% by 2010.

The IFPI Wednesday morning (Jan. 17) published its findings in the 2007 "Digital Music Report," and revealed its contents during a gathering for media and industry executives at its London secretariat .

Of the overall digital sum accumulated in 2006, mobile music was responsible for approximately half of revenue in 2006. "I would expect mobile to surge ahead," commented Barney Wragg, head of digital for EMI worldwide, at the breakfast briefing.

Among the key developments outlined in the annual document, the number of titles available across legitimate digital music sources last year was shown to have doubled to four million, while digital formats have also given a shot in the arm to the classical music genre and helped revive physically deleted works.

Speaking at the gathering, IFPI chairman/CEO John Kennedy admitted that the digital market "remains a challenge," and said co-operation with Internet service providers was increasingly vital in the fight against online piracy. "If the ISPs would step up, it would have a huge impact," he said.

One of the industry's chief goals for 2007, added Kennedy, was to make inroads toward achieving the "holy grail" -- a state in which digital music sales compensate for the decline in CD sales.

Kennedy also revealed the IFPI would take further legal actions in 2007, having led successful litigation against individual uploaders, and companies such as Kazaa in Australia, Bearshare in the United States, ZoekMP3 in Netherlands and Kuro in Taiwan, in recent months.

About 10,000 international legal actions were launched by labels against large-scale peer-to-peer uploaders in 2006, according to IFPI. "We always prefer co-operation to litigation," Kennedy said. "But sometimes, you need to litigate to get co-operation.”

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Radio's Good News: Commute Times Up

January 12, 2007

Commuting times are getting longer and no one is happier about that than the out-of-home industry. According to a release from the Outdoor Advertising Association of America -- quoting a new report from the Transportation Research Board -- the average national commute grew from 21.7 minutes to 22.4 minutes in 2000. Commute times are longest in the Northeast where they are an average of 27 minutes.

The study, “Commuting in America: The Third National Report on Commuting Patterns and Trends,” was based on U.S. Census data from 1990 to 2000.

“This study points to several demographic trends which validate the value of the ability to reach consumers outside the home,” said Nancy Fletcher, president and CEO of the OAAA.

Georgia and West Virginia led the states with the largest gains in commute time, more than five minutes per commuter trip.

Other highlights: More than 34 million Americans travel to work in another county, 3.5 times the number in 1960.

Driving alone, rather than carpooling, is on the rise, with Michigan leading the nation. Carpooling shares dropped from 20 percent in 1980 to about 12 percent in 2000.

Transit commute is biggest in Washington, D.C. and New York, where more than 2 million households do not even own a vehicle.

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Pew Study: Teens Favor MySpace

Source: MediaWeek

JANUARY 08, 2007 -

Not every teenager hangs out on social networking Web sites, but the vast majority of those who do spend their time on MySpace.

That’s according to a new report issued by the Pew Internet & American Life Project, which found that 55 percent of American kids aged 12-17 claim to visit social networking sites. Despite recent reports that point to the apparent aging of the MySpace audience, of the teens surveyed by Pew that have created a profile on a social networking site, 85 percent of them did so on MySpace, versus just 7 percent on Facebook, which still pulls most of its audience from the college crowd.

The percentage of teens who claim to socialize regularly on the Web increases at the older end of the demo, as just 37 percent of 12- and 13-year-olds report having created a profile, versus 63 percent of 14- to 17-year olds. Those who do maintain profiles visit and update them quite regularly, according to the report, making these sites all the more attractive to advertisers.

Among the 935 teens surveyed, a larger percentage of girls (58 percent) than boys (51 percent) say they have created online profiles.

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Sirius Hits 6 million at Year-End - XM at 7.6M

Based on preliminary results, XM Satellite Radio reported on (Jan. 5) that it added 1.7 million new subscribers for calendar year 2006 -- 442,000 coming in Q4 -- giving them a total subscriber base of 7.6 million. Earlier that week, competitor Sirius Satellite Radio said it ended 2006 by meeting its latest Q4 guidance with about 6,024,000 subscribers, which is an 82% increase over its 2005 year-end finish of 3,300,000 subscribers.
 
XM also reported in its preliminary results that it achieved positive cash flow from operations during Q4 `06.

Sirius Satellite Radio on Tuesday (Jan. 2) said it ended 2006 by meeting its latest Q4 guidance with about 6,024,000 subscribers, which is an 82% increase over its 2005 year-end finish of 3,300,000 subscribers. The whopping finish also helped propel the struggling satcaster into its first-ever free-cash-flow quarter, achieving what looked like a long shot just four weeks ago, when the company issued new guidance with lowered expectations.

Sirius, which issued a brief statement late in the business day on Tuesday, said the information was "based on preliminary financial data" and offered no additional claims or quotes from company management.

Sirius said it plans to release full-year 2006 financial results in February.

While addressing a Credit Suisse Media Week luncheon in New York on Dec. 13, Sirius CEO Mel Karmazin told analysts that he believed the company would hits its new target of between 5.9 million and 6.1 million total subscribers by year's end and that the final 10 days of the year would determine whether the number of new subscribers was enough to push Sirius into the black for the quarter.

An R&R spot check of satellite radio receiver sales in Maryland on Dec. 23 indicated that interest in Sirius was strong. The company's phone bank for receiver activation after Christmas was also busy, with as many as 300 callers waiting on hold for assistance on Dec. 28.

Shares of Sirius, which trades on the Nasdaq as SIRI, were not traded on Tuesday since the stock markets were closed in observance of the state funeral for former President Gerald R. Ford.

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Digital Download Sales Jump 67% in 2006

Despite reports that iTunes music downloads had fallen precipitously, Nielsen Soundscan reports that sales of downloaded music track were up 67% for the year compared with the same period in 2005. More than 525 million digital downloads were sold in 2006, some 175 million more than in 2005. Fifty-four individual tracks each sold more than 500,000 downloads this year vs. 22 in '05, while 11 albums sold more than 100,000 units vs. 3 last year. Close to 30 million albums were downloaded in '06, more than double the 14.5 million sold in 2005.

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Internet Unique Use Hits All-Time High

Terrestrial broadcasters’ heavy investment into their digital/online operations has sparked stunning growth. The number of unique visitors to terrestrial operators’ Web sites is “up more than 110% year over year, while internet operators’ sites are up about 25% year over year,” according to a comphrensive report issued Thursday (Dec. 21) by J.P. Morgan media analyst John Blackledge.

“Overall, unique visitors to all of internet radio grew 3% sequentially in November 2006,” writes Blackledge in his “Internet Radio Scorecard.” He notes that “total unique visitors to internet radio are now up 44% year over year to 55 million. Since November 2005, the internet radio audience has grown at a 3.1% monthly compounded rate.”

Blackledge says the growth, which has reached an all-time high, was driven by both the terrestrial and internet operators’ sites, “though terrestrial had the slight edge. The terrestrial operators broke a string of two consecutive declines to grow their unique visitors about 5% sequentially, while the internet operators rebounded after three straight months of declines to grow close to 2%.”

He says because of sequential growth in November, “the terrestrial operators’ share of unique visitors to internet radio grew 60 basis points to 33.1%, while the internet operators’ share fell to 66.9% (down from 77.3% a year ago). “

Blackledge, who covers most of the publicly traded radio companies for J.P. Morgan, found that Clear Channel’s unique visitors grew 14% sequentially to 8.2 million. “As Clear Channel now represents close to 45% of all unique visitors to the terrestrial operators sites, its success has become critical in driving overall growth in the terrestrial operators’ sites,” Blackledge wrote. “While CBS Radio’s unique visitors fell 10% sequentially to 2.9 million, collectively, unique visitors to Clear Channel’s and CBS Radio’s sites now represent more than 20% of the total internet radio audience.”

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XM Satellite Radio Spins Welcome Back Discount

The satellite radio sector is suffering from weakening subscriber gains and tepid interest among holiday buyers. That has led both Sirius and XM to lower their year-end subscriber forecasts, and investors are eyeing a possible merger attempt. Both providers are being challenged to attract new subscribers, though levels are actually strong when compared to last year. During the most recent quarter, XM posted a subscriber tally of 7.2 million, up 42.7 percent from the same period in 2005. And Sirius more than doubled its subscriber tally, landing most recently at 5.1 million.

Those appear to be healthy gains, though net subscriber additions are waning. Sirius added 441,101 new subscribers during the recent quarter, a figure that has been dwindling since a holiday surge of 1,142,640 recorded last year. Part of that is seasonal, and the recent quarterly rate actually surpasses the comparable, year-ago quarterly figure of 359,294. But the snowball effect seems to be working in the opposite direction this year, as each quarterly gain has been smaller than the last. Meanwhile, XM reported a net subscriber level of 286,002 during the latest period, a major drop from 617,152 during the same quarter last year.

The sector is in its early stages, so a massive amount of effort has been focused on new subscribers. But what about former subscribers? Undoubtedly, some are truly dissatisfied, though others switch credit cards and forget to re-subscribe, or simply deactivate to save money. Now, that crowd is becoming substantial enough to merit a campaign from XM. The company is currently spinning a three-month, $4.99 monthly promotion to re-attract cancelled subscribers. "The recipients of the email probably still have their XM receivers (or a car equipped with XM), so the subscription cost is a good thing to go after," commented Ryan Saghir of satellite radio blog Orbitcast. The move is just one attempt to reinvigorate interest, and spark the type of momentum that is currently absent in the space.

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Zune Sales Slip After Thanksgiving Weekend Burst

Sales of the Zune player slipped following a solid Thanksgiving weekend, according to a retail finding from NPD Group. The researcher ranked the Zune at number five for the latest period, down from an encouraging number two spot earlier. SanDisk reclaimed its previous second-place position after cutting prices by a whopping 50 percent, part of an aggressive holiday blitz. And ruling the roost once again is Apple, whose iPod is comfortably floating at number one. The iPod commanded a 75 percent market share during the first nine months of this year, according to NPD.

NPD tracks major retail outlets, though its Thanksgiving finding seemed incongruous with Amazon rankings. After Black Friday, the high-energy shopping day that follows Thanksgiving in the United States, iPods dominated Amazon sales. Within the consumer electronics category, several iPod models crowded the top ten, while Zune barely made the list. The Amazon figures may have been a bellwether, especially if Zune buyers are not generating strong word-of-mouth. The NPD data also excludes Apple stores, where a large percentage of iPods are sold. Meanwhile, Microsoft is continuing to heavily advertise, though breakouts like the refreshed iPod shuffle could be stealing attention.
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Internet Ad-Spending to Hit $17B this Year

NEW YORK (AP) - Internet advertising reached a new high of $4.2 billion in the third quarter, marking the eighth consecutive quarter of growth, according to a study released Tuesday.

The estimate comes from PricewaterhouseCoopers LLP, which conducted the quarterly online advertising study for the Interactive Advertising Bureau, an industry trade group.

U.S. revenues in the third quarter grew 2 percent from the $4.1 billion in the second quarter and 33 percent from $3.1 billion a year ago.

`The consistent growth of online advertising is a clear indication that marketers continue to embrace the true power of interactive advertising,'' said Sheryl Draizen, the trade group's general manager.

PricewaterhouseCoopers breaks down revenues by ad format only for its midyear and year-end reports. Keyword ads displayed alongside search results generally are the most lucrative.

Despite continued growth, Internet advertising accounts for only about 5 percent of all U.S. advertising revenues.

See trends and more

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Peak Web Spending Moves Closers to Christmas

LOS ANGELES (Reuters) - Shoppers head to the Web on the Monday after Thanksgiving, a day that has become known as "Cyber Monday," but retailers say peak online shopping is coming later and later in the season as shipping improves.

Web retailers anticipate another surge on Cyber Monday this year, the day people return to work after the Thanksgiving wekend and take advantage of fast Internet connections at the office to shop and browse online.

"Cyber Monday," on November 27 this year, follows "Black Friday" -- the day after Thanksgiving -- which is the traditional start of the holiday shopping season, when stores launch major promotions to attract shoppers. "Black Friday" is the day retailers are said to finally start making a profit, or go into the black, for the year.

Market research firm comScore says December 12 or 13 tends to be when most online dollars are spent. Last year, online shoppers spent $556 million on December 12, compared with $485 million spent on Cyber Monday, which was the ninth-heaviest shopping day. Shoppers spent $305 million online on the Friday after Thanksgiving, comScore said.
This holiday season marks the first year the catalog-based company expects online orders will outpace retail and catalog orders, said spokesman Rich Donaldson. Overall, Forrester Research expects a 23 percent rise in online sales, to $27 billion, this holiday season.

Last year, eBay Inc. was the Cyber Monday winner in terms of site visitors, according to the research firm. EBay saw 11.7 million unique visitors, compared with Amazon.com at less than a half that and Wal-Mart's Web site at about a fourth of eBay's traffic.

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YouTube to Be More Mobile

YouTube has big plans to help consumers create and share video with their cell phones.

(Business 2.0 Magazine) -- YouTube reports that it will add its popular video-sharing features to mobile phones. Here's the reason: Consumers want to share content more than they want to watch TV shows on their cell phones. At least that's what they told In-Stat, a technology research firm, this summer.

YouTube CEO Chad Hurley told attendees at an advertising conference that the video-sharing site will allow users to send clips to other YouTube members within a year, according to a Reuters report. Hurley told the advertising execs that video-sharing via mobile phones is an obvious next step for the company. "[I]t's going to be a huge market," he said.

'Moblogging' - the industry term for the nascent mobile user-generated market - is expected to reap $13 billion a year in advertising and subscription revenues come 2011, according to Informa Telecoms & Media, a research firm.

The biggest risk of all? Mobile video will never live up to expectations. That's the prediction from Ken Hyers, an ABI Research senior analyst. Hyers estimates there will be a scant 655,000 mobloggers worldwide at year-end. He expects that number to quadruple to 2.7 million by 2011. That's just a fraction of the estimated 3 billion mobile phone users around the world.

"For most people there's simply not enough going on in their lives that they're going to be uploading pictures on a regular basis," Hyers says in a statement.

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Internet Radio Radios

Internet radio – a great idea, but a pain to use, right? Step forward Magicbox’s latest creation, which lets you listen to radio stations worldwide without any technical know-how. Providing you’ve got a broadband connection and Wi-Fi network, you can be up and running in minutes – without even needing to find the web address a station uses to broadcast – it taps into an online directory at www.reciva.com.Searching by country or genre is simple; you just click through the list to find a station you fancy, from Xfm in London to Shyam Radio in India. You can store up to ten presets, too.

Sound quality is reasonable if you’re using it in the kitchen – it’s only got a mono speaker on the front, but it can go pretty loud. It’s also compatible with the BBC Listen Again service, so you’ll never miss your daily dose of Jo Whiley or Terry Wogan.

Altogether, it’s one of the most user-friendly ways we’ve seen of entering the world of digital radio.

Read more.

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Holiday Season Spending to Average $800

For upcoming planning and anticipations, the NRF continues to forecast that holiday sales will increase 5.0 percent this year to $457.4 billion, and the 2006 Holiday Consumer Intentions and Actions Survey, conducted by BIGresearch, found that the average consumer plans to spend $791.10 this holiday season, up from $738.11 last year. Furthermore, shoppers will take advantage of sales and discounts during the holiday season to spend an additional $99.22 on themselves. NRF President and CEO, Tracy Mullin, said "With gas prices coming down and consumer sentiment on the rise, shoppers want to celebrate the holidays in style."

• 70.3% of consumers this year will shop at discount stores
• 48.4% at specialty stores
• 49.3% grocery stores
• 21.0% drug stores
• 20.5% crafts or fabrics stores
• Additionally, 47.1% of consumers said they plan to shop online this year, up from 36.0 percent three years ago. December 12 will be the biggest on-line shopping day.

Most holiday budgets will be allocated to gifts, with the average person spending:

• $451.34 on family
• $85.60 on friends
• $22.40 on coworkers
• $44.52 on other people like clergy, teachers, and babysitters.

On the tech side, portable music devices like Apple's iPod Nano, flat-screen TV'sand Microsoft's Xbox 360 are expected to top this year's holiday wish lists.

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MySpace Projects Breakeven in 2007

MySpace will achieve breakeven status next year, according to a recent financial summary by parent company News Corp. The next fiscal year, which begins this quarter, will feature a balanced scorecard for FIM, or Fox Interactive Media, the umbrella group that includes the social networking juggernaut. "Just to clarify, we will be breakeven on FIM in fiscal 2007. This is after all amortization," said News Corp. chief financial officer Dave DeVoe during an analyst question-and-answer session on Wednesday. Peter Chernin, chief operating officer at the media conglomerate, projected current fiscal year revenues at MySpace to top $500 million.

Chernin also pointed to a ramp-up in user-generated video, and noted that MySpace ranks second only to YouTube in the area. "So our focus on MySpace is certainly to continue to rapidly ramp up the traffic on user-generated video," Chernin said. "We have made a lot of progress in the short-term and that traffic should largely be monetized in terms of search and display advertising." Overall, News Corp. experienced a quarterly profit of $843 million, or 27 cents per share, during its fiscal fourth quarter. That compares favorably to a net loss of $433 million, or 13 cents a share recorded a year earlier. Increased television advertising and various one-time gains from asset sales buoyed the turnaround.

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Microsoft Zune: Study Shows Open-Minded Consumer

Microsoft faces an uphill battle against the iPod, though a recent survey points to a rather open-minded consumer. An ABI Research poll found that a majority of iPod and non-iPod owners would be "somewhat likely" or "extremely likely" to pick Zune for their next device. Specifically, 58 percent of iPod owners and 59 percent of non-iPod owners would actively consider the Microsoft device. The percentages were taken from those that planned to purchase another device within twelve months. The survey canvassed a total of 1,725 teenagers and adults.

iPod buyers may be willing to make the switch, but they may not be aware of the resulting interoperability issues. The Zune, and its companion Zune Marketplace, are designed to be an insular system, one that is already creating some hairy interoperability problems. Just recently, the MSN Music Store indicated that it would be redirecting part of its download traffic to the Zune Marketplace. But already-purchased MSN Music downloads, part of the PlaysForSure ecosystem of stores and players, could encounter compatibility issues with the Zune player. Earlier, a Microsoft executive pointed Digital Music News to a different Zune Marketplace DRM system, and a focus on a closed player and store architecture. That highlights the complexities involved, and a potential problem for would-be buyers.

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XM Lowers End-of-Year Estimates

XM Satellite Radio experienced softer losses during the recent third quarter, though financial bleeding remains an issue. As usual, the company posted sizeable revenue gains, though the earnings picture remained red.
Specifically, revenues jumped 57 percent year-over-year to approximately $240 million, though earnings moved to $83.8 million, a 36.4 percent reduction from year-ago figures of $131.3 million. Viewed year-to-date, earnings are still slipping, moving to $463.4 million, 16 percent wider than a year-ago cumulative figure of $398.4 million.

The losses are still a source of concern, though the quarterly reduction has calmed investors somewhat. Revenues were also higher than consensus expectations, and both factors helped to push XMSR shares upward nearly 16 percent during Monday trading. Meanwhile, confirming Bridge Ratings' projections issued in September, XM issued a year-end subscriber range of 7.7 million to 7.9 million, the low end of an earlier prediction. That is a source for concern, especially given recent gains by upstart rival Sirius Satellite Radio. Still, year-over-year subscriber levels increased 43 percent. Discussing the numbers, XM CEO Hugh Panero predicted positive cash flow by year end. "With significant growth in revenue and narrowing losses we are on track for positive cash flow from operations in the fourth quarter of this year," he said.

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Instant Messenger Trumps Email Among Teens

Teenagers greatly prefer instant messaging over email, and that has major implications for the music industry. According to a recent research finding from Dallas-based Parks Associates, less than one-fifth of people aged 13-17 use email as their primary communication method with friends. In contrast, 40 percent of those between the ages of 25 and 34 choose email first for reaching out to close acquaintances. Viewed another way, more than one-third of teenagers rely on instant messaging as their primary conduit of communication with friends, compared to a figure of just 11 percent for the 25-34 set.

For those within the younger demographic, the finding is nothing new. "We are seeing a generational shift in communication patterns, and e-mail is now old-fashioned," said John Barrett, director of research at Parks Associates.
"Teenagers and young adults are increasingly accustomed to an always-on world where friends and family are instantly accessible." Meanwhile, the steady explosion of instant messaging complicates enforcement efforts for major record labels. The RIAA currently pursues individuals that upload copyrighted material on file-sharing networks and applications, though a massive quantity of swapping now happens on IM clients. That offers more security and trust for file-swappers, but makes it incredibly difficult to pursue violators.

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Sound Exchange Proposes Increase to Satellite Royalities

SoundExchange has now proposed an increased royalty rate for satellite radio providers XM and Sirius. SoundExchange collects and administers royalties related to the use of master recordings within non-interactive streams.
Currently, the satellite radio providers pay a royalty rate that equals ten percent of gross revenues, according to information published on the SoundExchange website. That rate structure lasts through December 31st, 2006, and SoundExchange is now aiming to gradually increase those levels over the next six years.

Earlier this week, SoundExchange offered its proposal to the Copyright Royalty Board, or CRB. "Without music, XM and Sirius would not exist,” said Jon Simson, executive director of SoundExchange. “We are asking simply that these companies recognize our substantial contribution to their business by paying a fair price to artists and record labels for their creativity and investment." The SoundExchange submission is the beginning of a 12-18 month review process by the CRB. Meanwhile, Simson was fairly aggressive in the process, and criticized the satellite radio industry for attempting to pay a lower rate. "They clearly want to pay less than the true value of these works, forcing artists and copyright owners to subsidize their acquisition of other content," Simson said.

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XM Coming to a Cellphone Near You

XM Satellite Radio and Cingular Wireless have announced a partnership to stream 25 XM music channels to Cingular cell phones. Beginning Nov. 6, Cingular customers will be able listen to a variety of XM's commercial-free music channels through the XM Radio Mobile service for $8.99 per month.

The 25 audio streamed channels will include XM’s `70s, `80s and `90s decades channels, Top 20 on 20 (top 20 hits), Lucy (classic alternative hits), The City (hip-hop/R&B hits), XMU (indie rock), Bluesville (blues), America (classic country hits), and Viva (Latin pop hits).

In addition to the audio streams, XM will deliver data to make it possible to view the song title, artist and album while listening on a variety of compatible cell phones.

"XM Satellite Radio is pleased to partner with Cingular Wireless to provide its customers with the ability to access a variety of commercial-free programming available, allowing them to take their XM favorites virtually anywhere," XM senior director of product strategy Pierre Elisseeff said in a release.

In other Cingular news, on Wednesday (Nov. 1) the company also announced that beginning Nov. 6 it would become the first U.S. operator to provide mobile access to online digital music services such as Napster, eMusic and Yahoo Music. Unlike rivals Sprint and Verizon Wireless, which operate their own branded a la carte music download stores, Cingular is instead taking a partnership approach with subscription music services as the cornerstone of its mobile music strategy.

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Attention Terrestrial Radio: Internet Radio is On Its Way!

USA Today reports PCs are about to start showing up in vehicles, allowing streaming audio, e-mail, traffic info, etc.. Automotive PCs will connect through regular cellular phone signals. Each auto PC will have its own IP address.

The manufacturers expect the in-car systems to evolve to using to Wi-Max - high-powered Wi-Fi that blankets broadband access across cities - over the next few years. Drivers won't be allowed to view their e-mail and other distracting functions unless the car is stopped. But that problem is being solved as voice-command systems become more widespread, the story said. Putting PCs on wheels right now include: Ford Motor. F-Series pickups can now be equipped with FordLink, which went on sale last month, as a 2,999 option. The PC is aimed at contractors who want to order building materials or send e-mail from the cab. A rugged PC fits into a cradle in front of the dash. The PC, which runs Microsoft's XP software, can play Internet radio and MP3 music files. KVH Industries. The TracNet 100 system displays web pages on a vehicle's navigation and video screens and creates a wireless connection in the car. The cost is about 2,000 for the hardware and $79 monthly for the connection.

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Cingular Planning Music Service

Cingular Wireless is now planning an ambitious music service, one that could include alliances with Napster, Yahoo, and eMusic. Cingular has supported a string of iTunes-enabled phones, though Sprint and Verizon Wireless have both delivered far more comprehensive music offerings. But those ventures have focused heavily on over-the-air (OTA) downloads, a format that has received a rather lukewarm response from US-based consumers. The Cingular strategy will avoid OTA downloads, at least initially, according to a Wall Street Journal report published Tuesday.

Instead, Cingular will prioritize side-loaded content, including a portable subscription component that involves Napster and Yahoo Music Unlimited. eMusic, a specialist in independent content, will also be rolled into the release. Additionally, consumers will be able to transfer PC-based downloads to their phones, a capability that many mobile devices already support. An over-the-air component will be layered sometime next year, according the Journal piece. Meanwhile, Sprint revealed an up-to-date tally of eight million OTA downloads after twelve months, a rather lackluster total.
Earlier, Cingular executive Jim Ryan expressed a cautious outlook towards the format. "There is a tremendous opportunity to enhance [existing models] with OTA, but don’t try to reverse the model," he warned during a Las Vegas conference earlier this year.

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Stern Trial Attracts World-wide Audience

Sirius.com visitors were able to listen to Sirius Internet Radio for free last Wednesday and Thursday (10/25-26). Judging from preliminary Alexa traffic stats, it looks as if Howard Stern and Sirius were successful in creating a good deal of buzz for their newest offering. Alexa, a web-traffic tracking service, showed Sirius as being the 768th most trafficked website in the world on Thursday, compared to their three month average ranking of 2,087th.

Internet radio consumers report that the service was very fast and the sound quality was superior to that of the majority of internet radio streams. Sirius was very well prepared for the traffic surge from a technical standpoint. More interesting though, was the wide geographic differences between listeners dialing in to The Stern Show, with phone calls coming from countries such as Germany, China, and England. These callers demonstrate the global potential for Sirius Internet Radio. The market for Stern is not confined to the United States. Their stable of sports content should also have demand outside of the United States, with growing global interest in the NBA and NFL and the popularity of soccer worldwide.

With the end of the free trial, this looks to have been a positive event for Sirius. The Stern promotion will serve to prove to Sirius management that the company can take advantage of this world-wide potential audience and monetize it. Traffic to the Sirius.com website looks to have returned to pre-Stern trial levels.

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Satcoms Win Exclusive Deals with Luxury Auto Makers

In a world where brand names and high-profile auto nameplates mean everything, satcasters Sirius Satellite Radio and XM Satellite Radio have been duking it out since their beginnings. On Monday morning (Oct. 30) both fledging operations announced that they had snagged exclusive deals with fat-cat car companies: Sirius with Bentley Motors, XM with Porsche Cars of North America.

Bentley said it will include Sirius receivers in its mid-2007 models in the U.S. Sirius will become a standard feature in all Continental GT, Continental GTC and Continental Flying Spur vehicles beginning in the 2008 model year. Bentley owners will get lifetime subscriptions to Sirius in the deal.

Porsche’s new, long-term deal with XM puts XM receivers in the dashboards of popular sports cars beginning with the 2007 models. XM has been available as a factory-installed feature for Cayenne models since 2005 and will be the exclusive satellite radio option in the future. Under the new agreement, XM will also be available for other Porsche models in the future. Consumers who purchase a Porsche vehicle with XM receive a complimentary three-month subscription to the service.

From their inception, Sirius and XM have worked hard to court and land highbrow nameplates in auto manufacturing as exclusive partners. Sirius is offered in such auto lines as Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep(R), Land Rover, Lexus, Lincoln-Mercury, Mazda, Mercedes-Benz, MINI, Nissan, Rolls Royce, Scion, Toyota, Volkswagen and Volvo. Hertz also offers Sirius in its rental cars at major locations around the country. XM has partnerships with General Motors, Honda, Toyota, Hyundai, Nissan, Porsche, Subaru and Suzuki, and is available in more than 140 different vehicle models for 2006.

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Deep Year-End Declines in CD Sales Predicted

CDs have been sliding for years, though fresh chatter now points to a more pronounced year-end drop in the United States. Earlier, the RIAA released half-year figures that included a 15.7 percent drop in physical units shipped, and a 15.0 percent dip in value. Overall, sales slid 6.1 percent during the period, thanks to strong increases in assets like paid downloads, ringtones, and subscriptions. In the current quarter, several sources close to the data noted that the disc is starting to dive, and one projection included a plunge as deep as 20 percent. Meanwhile, cumulative figures from Nielsen Soundscan, counted through the third quarter, reported a combined digital and physical drop of 8.1 percent.

Previous year-end figures have been discouraging, but not disastrous. Overall album sales dropped 7.2 percent last year, and 2004 actually experienced a small, 1.4 percent recovery. Viewed from a multi-year perspective, the picture looks worse. According to RIAA figures, revenues from shipped CDs have slid 25.6 percent between the years 2000 and 2005, a percentage that is likely to widen after the current quarter. Now, the question is whether digital and mobile assets can compensate for the deficit, though fresh questions have emerged on the growth trajectory of both paid downloads and ringtones. Meanwhile, the all-important fourth quarter is just getting started, and labels are hoping for increased traffic and buying activity.

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Portable Music Players to Top 100M by 2011

Apple Computer's iPod digital music player is not expected to lose significant market share in the next 12 to 18 months, despite the challenge from Microsoft's upcoming Zune player, a market research firm said Wednesday.

The popular Apple device, which accounts for more than three quarters of portable music players sold, shows no signs of losing momentum, having conditioned users to expect and buy regular upgrades, JupiterResearch said.

As a result, Apple is expected to hold on to its dominant position in the U.S. market for the next 12 to 18 months, JupiterResearch analyst Michael Gartenberg said. During that time, Apple is expected to remain strong against competition from Microsoft's Zune, set for release in mid-November, and from music phones.

All the players will have to deal with changing market conditions, such as the ongoing shift from early adopters who tend to purchase multiple devices and upgrade regularly to more mainstream consumers. By 2011, the number of people with portable music players is expected to top 100 million from 37 million this year, JupiterResearch said.

In 2009, the number of mobile phones that can play digital music is expected to surpass the number of music devices. Those numbers, however, do not mean that a lot of consumers will actually be using their phones to download and listen to music.

Slow downloads, incompatibility among devices and services, high prices and difficult user interfaces are expected to hold back over-the-air music purchases. In addition, wireless carriers are failing to provide consumers with the means to store their music collections on their phones, a move that would boost usage of the devices. The reason for the lack of enthusiasm is carriers can't charge for the feature.

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National Association of Broadcasters Seeks Level Playing Field

The radio industry's lobbying voice in Washington, D.C., the NAB, on Monday told the FCC it should reform its local ownership rules to reflect the "vast technological and marketplace changes that have already occurred and are only accelerating today." In a 139-page filing with the FCC addressing the 2006 Quadrennial Regulatory Review, the 2002 Biennial Regulatory Review, cross-ownership, multiple ownership of radio stations in local markets, and the definition of radio markets, the NAB seeks to ensure "that local broadcasters are not hampered by outmoded regulation in their efforts to compete and serve their audiences in today's digital, multichannel environment." That freedom, says the group, "would clearly be in the public interest."

The NAB believes the FCC must recognize the continuing proliferation of media outlets accessible to American consumers and the profound impact such proliferation has had on the broadcast industry. The group stresses that the current regulations were established "decades ago in a very different media environment." The group notes that technological advancements, the growth of multichannel video and audio outlets and the Internet and an expansion in the number of broadcast outlets in the past several decades have altered the media marketplace.

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Teens Shift to Social Networking

Nielsen//NetRatings recently announced that over a three-year period, the top sites among teens 12-17 have shifted from those offering a selection of instant messaging buddy icons to those providing assistance with social networking profiles and page layouts.

In September 2003, the No. 1 site among teens was Originalicons.com, with teens composing 77.6 percent of its unique audience. At that time, Buddy4u.com and Badass Buddy also made it into the top 10 sites among teens.

In September of this year, sites offering tools to improve social networking profiles with song lyrics, pictures, quotes and layout designs won out with those ages 12-17. Notably, nine out of the top 10 teen sites either offered content or tools for social networking site profiles, or were social networking sites themselves.

In September 2003, kids ages 2-11 spent average of six hours and 39 minutes online; this September, that average had increased 41 percent to nearly 9 hours and 24 minutes. Teens spend even more time online, increasing 27 percent from an average of 21 hours and 4 minutes in September 2003 to 26 hours and 48 minutes in September of this year.

"The Internet is as much a part of children's lives as TV, school and books," said Cassar. "...we can expect the time kids spend online to increase along with expanded offerings on the Web and the growing network of their friends and family who use the Web frequently."

Read complete article

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Satellite radio has another bad month at retailers.

It looks like the decline in year-over-year sales in August wasn’t an anomaly. Confirming Bridge Ratings' forecasts from weekly satellite radio studies, NPD Group says satellite radio receiver sales fell 12% in September compared to the
number of units sold a year ago. That’s even worse than August. NPD says there was a 3% decline in sales in August. Between the two suppliers XM continued to suffer the bigger drop. NPD spotted a 15% decline in September. That’s on the heels of a 19% decrease in August. At Sirius — the Howard Stern impact isn’t what it was a year ago. Sirius unit sales fell 9% last month — its first-ever decline.

Bank of America analyst Jonathan Jacoby says the retail weakness in September doesn’t come as a surprise. He estimates the number of subscribers picked up from retailers was down 6% in the third quarter. And Jacoby says retail sales decreases could get worse in the fourth quarter. He says the industry “is in a transitionary period” to one where the automotive channel replaces retail as the primary driver of new subscribers.

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More Evidence of Lost Teen Radio Listening

From the New York Times: Radio listening among teenagers has dropped off and two factors are involved. The first is the intense competition for media audience time that has developed in the last dozen years. In addition to Web surfing, cellphones, video games, movies, television and the chime of instant messages, portable music players and downloadable songs are vying for teenage ears.

The second is “radio’s unwillingness to target listeners in the 12- to 24-year-old demographic. The overwhelming majority of stations target the 25- to 54-year-old group, what is known in the industry as the ‘money demo.’ ”

Listening hours have dropped almost 21 percent for 18- to 24-year-olds in the last 10 years, but they still listen for 18 hours in an average week, almost six hours more than their younger siblings. Weekly radio-listening hours have dropped 19 percent in the 12-to-17 demographic.

And listeners under 12 years old? Nobody is targeting them except Radio Disney.

Average teen weekly time spent listening 1986: 15.75 hours
Average teen weekly time spent listening 2006: 12.75 hours

 

Digital Music Sales Now Account for 11% of Sales

Global digital music sales now account for 11 percent of all recorded music revenues, though the larger business continued to slide in the first half. The figures, released by industry trade group IFPI on Thursday, are part of a steadily shifting market, one that continues to include shrinking CD sales. IFPI represents the recording industry worldwide with over 1450 members in 75 countries and affiliated industry associations in 48 countries. During the period, digital revenues moved to $945 million, double the purse from the same period last year. Meanwhile, overall music revenues dropped ten percent to $13.7 billion, an accelerated decline. During the first half of 2005, recorded music revenues dipped 6.7 percent, according to the group.

The IFPI figures confirm an ongoing trend in physical format sales, and fuel a growing sense of doubt in the digital sector. Digital downloads are increasing, though the central question is whether the rate of growth is aggressive enough. Industry executives like David Goldberg of Yahoo Music have pointed to a flattening business, and year-over-year figures are indeed slowing. Upcoming holiday and first quarter sales are likely to offer a boost, part of cyclical jump, though the larger trend remains questionable. The central question is whether a bigger market exists, and more importantly, if digital downloads can help to replace future physical declines. That would require heavy volume increases, especially considering consumer preferences for cherry-picked, single downloads, a tendency that reduces sales gains from bundled albums.

Complete article

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Is Apple's iPod Dominance Sustainable?

As Microsoft and others prepare to enter the portable digital music player (DMP) space, and as Apple turns its attention to other market spaces such as the digital home, a window of opportunity opens for competitors to mount on assault on iPod's dominance. However, iPod users are an extremely loyal lot and gaining market share will depend heavily upon convincing new DMP users to switch brands.

In 2005, The Diffusion Group launched its inaugural iPod research, attempting to better understand the popularity of Apple's music player as well as the reasons that Apple's dominant market share not only continued but actually grew.  Since the initial report " Understanding the Dominance of Apple's iPod" was published, Apple has released the iPod Nano and iPod Video, and consequently changed consumers' expectations in portable media.  Three key findings:

• Apple is by far the most used brand of DMP as 63% of DMP households have an iPod – this means that an iPod can be found in 33% of broadband households; Creative and Sony are second to Apple, each existing in 9% of DMP households.

• The decline in proclivities to switch to Apple among non-iPod DMP owners is certainly good news for Apple competitors as it shows that brand loyalty may exist outside of Apple.

• The easy- and enjoyable-to-use interface was the most common reason for choosing an iPod over a different brand.  The interface has remained the top reason for choosing the iPod, with 26% citing this reason in both 2005 and 2006.

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MySpace Demo is Broad

MySpace has a greater population than rivals Facebook and Bebo, and it also has a broader age demographic. According to a recent report from comScore Networks, over half of MySpacers are now over the age of 35. That challenges the notion that MySpace is a hangout for teenagers and twenty-somethings, though comScore pointed to marked changes over the past year. Users within the age range of 12 to 17 accounted for 11.9 percent of the total MySpace population according to the study, a significant dip from 24.7 percent just twelve months ago.

The finding is the first of its kind, and part of a quickly-changing social networking landscape. According to comScore, the number of teenagers on MySpace continues to grow, though the overall population is also surging.
For artists and labels, the trend is critical, especially given the importance of music on MySpace. Aside from its endless artist profiles, MySpace has been courting its music audience with exclusive shows and paid downloads (slated for release later this year). Meanwhile, upstarts like Facebook - the subject of billion-dollar acquisition rumors - are broadening beyond the college crowd. In terms of methodology, comScore measured visitors, and not registered users, an approach that could have created some skew.

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Study: 79% of Teens Own an iPod

The iPod has long been a favorite among teenagers, and that popularity appears to be increasing. According to a recent Piper Jaffray survey conducted in the United States, 79 percent of teenagers now own a device, up from 77 percent just six months ago. At the same point last year, Piper Jaffray reported a penetration rate of 74 percent. The strong and measured increase has happened without significant product additions, though the iTunes Music Store has been infused with fresh video and movie content.

iTunes took a major jump over the sixth month period, moving to 91 percent penetration, from 71 percent in the spring.

Both statistics indicate a growing iPod+iTunes presence, and other portable players and stores were relegated to single-digit responses. In terms of purchase intent, the survey revealed that 45 percent of teenagers planned to buy an MP3 player within the next twelve months, up from 41 percent six months ago. Of those, 76 percent were aiming to purchase an iPod, which is actually a dip from 88 percent six months ago. Meanwhile, interest in MP3-enabled phones increased to 74 percent, up from 70 percent earlier. That could provide a strong tailwind for entrants like the LG Chocolate, carried by Verizon, as well as the anticipated iPod phone. Zune was not mentioned in the survey, though Microsoft is preparing a massive marketing campaign to chip away at the dominance of iPod+iTunes.

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Update on iPod's Threat to Radio

Confirming a Bridge Ratings study released in early 2006 and with car makers moving to integrate iPod technology into the dash, Lehman Brothers analyst Anthony DiClemente sees a growing threat to in-car radio listening. He theorizes that iPod integration in cars could accelerate a decline in radio TSL, particularly in younger demos. "While traditional listening to CDs and cassettes was always a competitor to radio for listeners' ears, the robust nature of iPod integration amplifies the differentiation," DiClemente said in a note to clients.

At a recent conference in San Francisco, Apple CEO Steve Jobs said 70% of new cars sold in the US by the end of 2007 will offer iPod connectivity as an option. "The concern to broadcasters is that iPod integration into automobile manufacturing could fragment an audience that, until now, has had few alternatives to radio in the car, especially during 'Morning Drive' and 'Afternoon Drive.' An estimated 74% of MP3 owners are between ages 18-54. In conjunction with slowdowns in car listenership among this targeted group for advertisers, the predominant ownership of iPods in this demographic could signal a shift in listening patterns that would translate to the car with this newly introduced iPod functionality," DiClemente said.

The Lehman Brothers analyst, who has a Negative indication for the radio sector, sees further erosion of what had been AM and FM radio's prime venue, the car, as listeners shift to iPods/MP3 players and satellite radio. "If ratings prove to show declines at a more accelerated rate than they are already doing and car listenership begins to show declining trends, terrestrial radio may find itself losing market share in a space where radio has traditionally achieved its highest rates for advertising, and as a result, may find that advertisers are less likely to pay premiums for spots in these time slots, thereby having a negative impact on revenues for radio broadcasters," he concludes.

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419 Million Downloaded Tracks Sold So Far This Year

While sales of physical albums continued to plummet during the first nine months of 2006, big increases in the sale of digital tracks and albums have kept the overall music business in line with last year's totals.

According to Nielsen SoundScan figures for the week ending Oct. 1, marking the end of the third quarter, physical album sales so far this year totaled 370.5 million, down 8.3% from the 404.2 million units racked up in the same time period last year.

However, digital album sales climbed 115%, with 22.6 million sold through September. Downloaded tracks soared 72%, with 418.6 million sold in the first nine months of the year.

Adding digital albums and track equivalent albums (with 10 digital tracks equaling one album) to physical sales, a total of 434.9 million albums have been sold in 2006. The total is short of last year's nine-month tally of 439.2 million units by a slight one-tenth of one percent.

In terms of market share through three quarters, Universal Music Group remains the leader, with 31.3% of the total album market; its total includes sales by its indie arm Fontana Distribution, which are not broken out. Sony BMG Music Entertainment is second, with 26.8%, including 2.3% accounted for by its indie distributorship RED. Warner Music Group places third, with 19.2%, including 2.7% from its indie unit Alternative Distribution Alliance and 0.7% from Ryko Distribution.

The independent sector took fourth position, with 12.7%. EMI Music is fifth, with 10%, including 0.9% from its indie Caroline Distribution.

The rankings remain the same when the market share of current albums (18 months old or less) is considered. UMG is first with 33.8%, Sony BMG is second with 26.9%, WMG is third with 26.9%, the indies are fourth with 11.8%, and EMI is fifth with 9%.

Complete article.

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Slowing Mobile Phone Sales for '07?

Consumers love new phones, and rapid device turnover is often propelled by fresh designs and features. But according to a recent projection by London-based research group Informa Telecoms & Media, mobile phone sales growth in developed nations will begin to slow in 2007. The reason? Mobile manufacturers will continue to pack extras like cameras, MP3 players, GPS tracking and television playback into devices, but at some point, fresh ideas will eventually run dry. The UK-based Informa report, titled "Future Mobile Handsets," called for 15.7 percent growth this year, but gains of only 9 percent in 2007. And by 2011, Informa called for year-on-year gains of just 3 percent.

Informa could be blamed for simply lacking imagination, especially since concepts like the camera phone seemed far-fetched just a few years ago. But Informa compared mobile phone sales growth in both developing and industrialized nations, and pointed to glaring differences. According to the group, developing nations are the biggest purchasers of devices, but usually favor simpler, more functional models. Meanwhile, growth rates in more developed markets are slower, even though manufacturers are aggressively tossing more sophisticated devices at consumers. Informa also pointed to battery life, which could have problems keeping up with more intensive media offerings. Overall, Informa predicted sales of 943 million units in 2006, and more than 1.03 billion in 2007.

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Copyright Modernization Act Tabled In Congress

The Copyright Modernization Act, or Section 115 Reform Act (SIRA), has recently been dropped in Congressional committee. A vote on the US-based legislation was cancelled by Lamar Smith, chairman of the House Subcommittee on Courts, the Internet, and Intellectual Property, who questioned the survival of the bill in the larger chamber. The bill was designed to streamline the process of digital licensing, a major hassle and time-drain for online music services. "The most critical and time-sensitive issue is the current unavailability of an efficient and reliable mechanism whereby legitimate music services are able to clear all of the rights they need," the US Copyright Office noted in June, responding to an early draft of the bill.

The initiative comes alongside reform initiatives in Britain and Australia, which are also attempting to realign copyright law to fit an increasingly digital environment. Meanwhile, Smith pointed to passage in the 2007 timeframe. "My colleagues can be assured that I intend to move forward with this legislation in the next year and that I am confident that we will pass it then," Smith told the subcommittee. That assumes that Smith will command the same position of power next year, following midterm elections. But the bill became complicated, and eventually included limitations of satellite radio recording and royalty provisions related to buffered copies of tracks.

"The law implies that licenses from copyright holders are needed for every digital copy made in the transmission of digital media - including cached copies on servers or on your hard drive, and even temporary copies in RAM," the group noted. That debate - and others - are now being tabled until next year, though music attorney Chris Castle pointed to progress. "You may not agree with the solution in SIRA, you may have problems with the amendments or you may have problems with the nuts and bolts, but the fact is that copyright legislation often takes a session or two or five to get passed and no one else has advanced a solution as far as SIRA got," Castle recently blogged.
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Apple Cracks Down on Use of "Pod"

Apple is continuing to chase companies that use "pod" in their names, a clampdown that first began in August of this year. Just recently, Apple issued a cease-and-desist against Houston-based Podcast Ready and its myPodder product, a response to recent trademark filings. In a letter to Podcast Ready lawyers, Apple indicated that both the company name and product could create confusion among consumers. "Apple is concerned that certain uses of Podcast Ready and myPodder by your clients is likely to confuse consumers into mistakenly believing Apple is associated with your clients' products and services," the letter from law firm Townsend and Townsend and Crew LLP said.

The letter is specifically tied to Apple trademarks on both "iPod" and "Pod," though the company is not attempting to cool the usage of "podcasting" itself. The cease-and-desist focuses on "goods and services related to, inter alia, digital media players, software for use with these players, and the distribution of digital content to such players." That strategy makes sense, especially considering the immense branding impact that podcasting has generated for Apple and the iPod. Earlier, Apple issued cease-and-desists against Mach5Products, maker of the arcade accounting tool "Profit Pod," as well as TightPod, a maker of laptop protectors.

With the release of Microsoft's new Zune, interestingly there is no "podcast" download capability. And even if there were, Microsoft would not - could not - use the word "podcasting" to describe the service based on Apple's clampdown.

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MySpace Worth $15B in 3 Years?

SAN FRANCISCO (Reuters) - MySpace, the social networking Web site, could be worth around $15 billion within three years, measured in terms of the value created for shareholders of parent company News Corp. (NYSE:NWSA - news), a Wall Street media analyst forecast on Wednesday.

MySpace was acquired by Rupert Murdoch's News Corp. for $580 million less than a year ago. It now boasts more than 90 million active users.

Rohan said MySpace could demonstrate a value of between $10 billion and $20 billion within a few years. Acknowledging he was making an "audacious claim" he justified the forecast on the basis of MySpace's "raw, unprecedented user/usage growth."

He also said the site's "massive" international appeal, capacity to become "an intellectual property distribution powerhouse" and experienced management team lent credibility to his prediction.

He said MySpace was currently sold out of space for video advertising. The CPM, or price per thousand ad views, on a premium show such as Fox's The Simpsons runs as high as $35-40 on MySpace, he said.

Complete article.

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2006 On-Line Ad-Spending Forecast Lowered

E-commerce tracking firm eMarketer has lowered its ad-spending forecast this year from $16.7 billion to $15.9 billion. It's also predicting that ad growth this year will slow to 26.8%, down from previous growth rates of more 30% in past years. Analysts at eMarketer point to an overall slowing of the U.S. economy.

The revision comes a week after Yahoo gave investors and web publishers a scare with warnings of slower online ad growth. Yahoo CEO Terry Semel, speaking at a Goldman Sachs conference Sept. 19, said shrinking ad budgets in automotive and financial-services categories would hurt third-quarter revenue.

"We are starting to see some advertising weakness in some of the most economically sensitive categories,'' Yahoo said in a regulatory filing released that afternoon. "Growth is still positive, but it is slower in Q3 than it was in the first half of the year."

According to a survey just completed by the Online Publishers Association, its members are reporting average year-over-year online ad revenue growth of 28% for the third quarter. Across the board, its members are also raising the third-quarter revenue estimates first made in the second quarter.

And despite the news from both eMarketer and Yahoo, the sector is far from gloom and doom. EMarketer predicts U.S. online ad spending will swell to more than $21 billion in two years and pass the $25 billion mark by the end of 2010, growing from 5.7% of total ad spend in 2006 to 8.9% of total ad spend in 2010.

In fact, online spending gains are supporting the growth of total ad spending within media as a whole. In 2007, for example, total media ad spending will grow 1.4%. But take the predicted 15.1% internet growth out of the equation, and total media spending drops to a flat 0.6% gain.

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TV Viewership Up Despite iPods

LOS ANGELES (Hollywood Reporter) - Unlike national radio listening trends, American television viewing remains on the rise despite the distractions of alternative media platforms, according to new data from Nielsen Media Research.

Average daily allotments to household and individual viewing increased slightly from the previous year to reach all-time highs during the 2005-06 season, which ended September 17. The increases were actually highest in the younger demographics flocking to iPods, cell phones and video games.

The total average time per household in 2005-06 was eight hours and 14 minutes per day, a three-minute increase from 2004-05. Also resetting the record was total individual time, up three minutes from the previous year to four hours and 35 minutes.

The household average also was nearly one full hour above viewing levels registered 10 years ago during the 1995-96 season. The increase was less dramatic among individuals over the decade, rising 36 minutes.

Viewing averages for primetime were up just one minute for households (one hour and 54 minutes) and individuals (one hour and 11 minutes). The biggest increases came from girls ages 12-17, which were up 6% in total day and 12% in the early morning. Children 2-11 were up 4% in total day.

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According to Telephia, researcher to communications and new media markets, the mobile TV audience grew 45 percent to 3.7 million subscribers in Q2 2006. The third screen allows consumers to get news and information while on the go, with news, weather and sports channels topping the list as the most watched mobile TV content. Total quarterly mobile TV revenues increased to $86 million last quarter, an increase of 67 percent since Q1. Tamara Gaffney, Director of Product Management, Telephia, says "Mobile TV is the fastest growing wireless data service, ... (with) the potential to be the most important new form of media since the advent of the Internet." Among all mobile TV users:

• ABC News was the most watched mobile TV channel in Q2 2006, with 40 percent of the total mobile TV audience
• Thirty-two percent of the total mobile TV audience watched The Weather Channel
• Fox Sports was third at 31 percent
• ESPN next with and 29 percent of the mobile TV audience
• Fox News fifth at 22 percent

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US-based album sales remain soggy ahead of the holidays, though market declines have been mostly measured. According to Nielsen Soundscan year-to-date figures from August 31st, album sales have dipped 6 percent over comparable, 2005 tallies. Sales dropped 8 percent in August, compared to the same month last year, an improvement over a 12 percent drop in July. Meanwhile, year-to-date digital track sales have surged 73 percent, part of a continued growth curve. Releases from Christina Aguilera and Danity Kane topped album sales in August.

Looking ahead, a crop of superstar releases could spark fourth quarter sales. Already, Justin Timberlake is out in front, spurred by the ultra-successful track, "SexyBack". Others are also showing strength, including John Mayer, Bob Dylan, and Beyonce, while future releases from Clay Aiken, Ciara, Incubus, and Barbra Streisand also hold promise. The record industry has always been hit-driven, and a superstar-heavy period could offer a soft landing for year-end figures. That would quiet predictions of an album landslide, though more subdued year-over-year declines could be delaying more urgent market responses from major labels.

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SEATTLE (Reuters) - Microsoft Corp. (Nasdaq:MSFT - news) will start testing on Tuesday an Internet video-sharing service called Soapbox, the software company's answer to Web sensation YouTube.

Soapbox (http://soapbox.msn.com) is one facet of Microsoft's strategy to create attractive Internet content to lure away billions of Web advertising dollars from market leaders Google Inc. (Nasdaq:GOOG - news) and Yahoo Inc. (Nasdaq:YHOO - news).

Offering everything from funny home videos made by users to clips from old TV shows, YouTube sprung out of nowhere late last year as an entertainment break for millions of broadband Web surfers. In August, the site had 34 million visitors, according to Nielsen//NetRatings. Soapbox will be offered to a limited number of users during an invitation-only test phase, but Microsoft said on Monday it will go fully live as a part of MSN Video within six months.

Focused on original programming and clips from broadcast partners, MSN Video once was the most popular Internet video site until fans of user-generated content propelled YouTube, MySpace and Google past Microsoft in recent months. Since March, the number of YouTube monthly visitors has nearly tripled while MSN Video remained mostly unchanged at less than 12 million users.

MySpace video quadrupled to 17.9 million visitors a month and monthly Google Video users rose 70 percent to 13.5 million over the last six months, according to Nielsen//NetRatings. Redmond, Washington-based Microsoft said it will take down any copyrighted material illegally uploaded by users once it is alerted by the rights holder, a similar policy to YouTube.

Microsoft aims to win over users with a Soapbox player that allows people to categorize, share and comment on videos, all while the video continues to play uninterrupted. There will be no advertisements on Soapbox during the testing period, but Microsoft said it is studying how to best capitalize on the video content.

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Heavyweights Motorola, Cingular, and Apple are all dipping their toes into the mobile music market, one phone at a time. The trio just recently revealed their latest creation, the MotoRAZR v3i, while will ride on the Cingular Wireless network and carry iTunes. The phone builds on several successful franchises, including the ultra-successful RAZR device and the well-recognized iTunes application. The device follows earlier iTunes-powered phones, including the MotoROKR E1 and the MotoSLVR L7. The v3i surfaced last week, alongside heavy mobile music and media action at CTIA.

The concept of an iTunes-enabled phone is enticing, though early attempts like the ROKR failed to ignite. But music fans could warm to the combination, and the industry at large is pushing to broaden devices into multimedia machines. "The Motorola RAZR is one of our most popular handsets and, with the addition of iTunes, we are thrilled to offer Cingular customers yet another great device that addresses both their communication and entertainment needs while on-the-go," said David Christopher, vice president of product management at Cingular Wireless. The phone comes pre-installed with a 512 MB MicroSD card, as well as a stereo headset and a 3.5mm headset adapter. The v3i also pauses music for an incoming call, and keeps the music going during activities like text messaging.
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Shares of XM Satellite Radio were boosted 9.4% on Thursday on the back of positive analyst comments that focused on a host of developments, including the impending launch of Oprah Winfrey's channel and renewed talk of a merger with Sirius Satellite Radio.

While laws would need to be tinkered with and anti-competition regulators would need some convincing, Wall Street has kept up speculation that XM is a takeover candidate, not only by Sirius but also by Clear Channel Communications Inc. Credit Suisse upgraded shares of XM from "neutral" to "outperform" Thursday, and the stock rallied $1.18 to $13.69, though beleaguered shares are still off 50% this year.

Credit Suisse analyst Bryan Kraft said the shares could have as little as 30% downside risk, but could rise as much as 200%, though he put a $17 price target on the stock.

The analyst said falling gas prices will help spur sales, and added that the company settling its radio-interference issues with the FCC and lowering subscription guidance to where an upside surprise is possible are positive near-term catalysts.

The company also is riding high on some positive news of late. It said that XM radios will be standard equipment in 2007 Acuras, and Maya Angelou will host a show on Winfrey's new channel. Kraft also reined in his subscriber numbers on Sirius while still remaining bullish on the company. The analyst now sees net additions in the third quarter at 450,000, down from 536,000 because of production cuts at Ford and Chrysler, the two primary auto partners of Sirius.

Read More

 

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SEATTLE (Reuters) - Microsoft Corp. (Nasdaq:MSFT - news) said on Thursday the ability to share music through wireless connectivity is a key element for its new "Zune" portable media player to win over consumers from Apple's market-leading iPod.

The world's largest software maker said it will launch a 30-gigabyte Zune and an iTunes competitor called the Zune Marketplace in the United States this holiday shopping season. Unseating Apple Computer Inc.'s (Nasdaq:AAPL - news) iPod will be no easy task, but Microsoft Vice President J Allard said digital music players are in infancy stages, much like Henry Ford's Model T automobile or early video game "Pong."

Apple's iPod players don't yet have wireless connectivity but analysts expect eventually they will.

Zune, which has a 3-inch liquid crystal display, will allow users to share sample tracks, homemade recordings, playlists or pictures between devices. It also allows users to listen to any shared song three times over a three-day period. Unlike iTunes, the Zune Marketplace will provide users with the option to either buy a flat-fee subscription to download an unlimited number of songs, or purchase songs individually.

The iPod holds more than half of the digital media player market, according to research company NPD, while iTunes accounts for over 70 percent of U.S. digital music sales. In the United States, the iPod has more than 75 percent of the digital music player market, according to NPD.
Read More

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Chicago Radio Station Cuts Spot Load to 6

Previous Bridge Ratings research studies regarding audience attrition showed signficant audience deterioration for stations with too many commerials stacked in one break. The study found - and we continue to confirm this quarterly - that for each commercial aired in a commercial break, after the first one, approximately 20% of the station's audience tunes away. Stations in the study with 5 commercials in a break were left with slightly more than 19% of the audience they began the commercial break with. In further studies, Bridge Ratings has learned that especially for youth-oriented radio formats, commercial unit reduction coupled with creative new programming formats would go a long way to attracting the 15-21 year old back to longer listening sessions with terrestrial radio. Chicago's "Nine FM" has now set an example. This story from today's INSIDE RADIO publication:

Newsweb, owner of suburban Chicago Variety Rock station "Nine FM"cuts their spotload to just six minutes an hour. It may be a way for the Chicago adult hits trimulcast to stand out in an extraordinarily crowded market. Newsweb VP/GM Harvey Wells says he’s “not sure a station has played so few commercials per hour since the birth of FM.” Even more novel is how those minutes will be spread out — in most cases as a one-minute standalone break. That’s a big difference from the five to eight commercials in a row most stations are playing. Wells says that should make buyers happy since “an advertiser who buys a :60 commercial will now own its position on the radio station.” Eventually they hope to get premium pricing — but for now the scheme means lower revenues for “Nine.”

Bridge Ratings has developed alternative commercial presentation techniques for broadcasters that will improve time-spent-listening for stations. Contact Dave Van Dyke at 818.291.6420 for more information.

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Apple's iTunes to Sell Movies - New iPods Unveiled

SAN FRANCISCO (Reuters) - Apple Computer Inc. said on Tuesday its iTunes online music store would begin selling movies from Disney, Pixar, and Touchstone as the company makes its most aggressive move yet into the digital home.

Chief Executive Steve Jobs said newly released movies would initially cost $12.99 if pre-ordered or bought during the first week available. Library titles would cost $9.99, Jobs said at an event in San Francisco where the company also introduced new versions of its iPod digital music devices.

He said there are about 75 films now available for purchase on iTunes and that they would take about 30 minutes to download for those using a high-speed Internet connection.

The new iPods include one with the most capacity to date and sport video games such as Pac-Man and Tetris.

Jobs said the new 80 gigabyte iPod would cost $349. The company also introduced a new, thinner iPod Nano available in five colors with 24 hours' battery life.

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Cell phone content provider mSpot and Sprint are strengthening their ties.

mSpot is now providing the content, client application, technology infrastructure and operations for Sprint Radio, a new service just unveiled by the cellular giant. Before joining forces to provide the new service, mSpot offered two streaming radio services to Sprint PCS Vision subscribers.

The service features nearly 100 channels of streaming radio and video with programming that includes a wide range of music as well as news, weather, sports, finance and entertainment from sources such as NPR, ESPN and Radio Disney, among others.

Sprint Radio is available via a subscription for $5.95 a month on the Sprint Media Player or as a downloadable Java application. The service is offered on select handsets across all three of Sprint's networks: Sprint Power Vision, Sprint Vision and Nextel.

mSpot debuted its cell phone streaming technology in April 2005 with mSpot Music, which featured music channels spanning a wide range of genres. The company added mSpot radio in August 2005 and mSpot Sports was launched earlier this year.

Despite this new announcement, mSpot is continuing in its efforts to team up with other cell phone companies as a content provider.

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NEW YORK (Reuters) - SpiralFrog, a new online music service, on Tuesday said it reached an agreement with Universal Music Group to offer free downloads of its songs and is trying to reach similar deals with other record labels.

The service, to be launched in December, experiments with a new business model that is funded entirely by advertising, as opposed to the pay-per-song model of Apple Computer Inc.'s (Nasdaq:AAPL - news) market-leading iTunes music store.

While the idea of free, legal downloads will likely appeal to consumers, record industry executives say it remains to be seen whether SpiralFrog can attract enough advertising revenue to pay record companies for their catalogs. The site also needs to sign on other major labels, such as EMI Group Plc (EMI.L) and Warner Music Group Corp. (NYSE:WMG - news), to offer enough songs to attract strong user traffic. Both record labels said they were in talks with SpiralFrog.

Universal Music, the world's largest record company and a unit of Vivendi (VIV.PA), has agreed to make its catalog available for free downloading from SpiralFrog in the United States and Canada. This means consumers can log on to spiralfrog.com and download songs from Universal's roster, which includes U2, Gwen Stefani and The Roots, in the Windows Media format for their computers and compatible music players.

SpiralFrog is backed by funding "north of $10 million" and will soon be raising more funds.

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AOL Bolsters Digital Music Download, Subscription Service

AOL Music is now broadening its digital music download and subscription service, a move that follows the acquisition of MusicNow in November.
Starting today, a fresh AOL Music Now will layer downloadable videos into a previously audio-intensive application, an addition that makes the service more competitive. Other enhancements include an increase in the number of available tracks to 2.5 million, up from 2 million previously, and various community features. Video downloads will retail for $1.99 each, and audio download will remain at 99 cents.

The positioning of AOL Music Now, and a MusicNet partnership prior to that, has always been precarious. Alongside the Music Now offering, AOL Music visitors also have one-click access to the iTunes Music Store, part of an alliance with Apple. That diminishes the impact of Music Now, especially given the instant recognition that iTunes enjoys. Other challenges also remain, including a Music Now reliance on PlaysForSure, which forms the underpinning of its portable subscription service. That network will probably be deemphasized by Microsoft following the launch of Zune, which will focus on an insular player and store framework.
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New Bridge Study Examines Radio Listeners' MP3 Players

According to a new Bridge Ratings consumer study the number of songs stored on MP3 players varies by amount of weekly radio listening. The study found an inverse relationship among those consumers who spend less than the average amount of time per week listening to radio of any kind (terrestrial, satellite, internet).

According to the study of 2900 persons between 12 and 64 years of age, the average weekly radio listening is 34 hours per week. This includes listening to terrestrial, satellite and internet radio. Listeners who spend less than the average 34 hours a week with radio of any kind tend to have more songs on their digital music players. The average user of a high-capacity digital music device stores only 349 songs the study found. One in four players holds between 100 and 499 songs, while 25 percent have 500 songs stored on them. 59% of those surveyed said their digital music player holds fewer than 100 songs.

Light users of radio average 410 songs while average or heavier consumers of radio average 289 songs.

The Bridge Ratings study was conducted during July and August of this year.

Also in this study 67 percent of radio consumers age 12 and older said they had no interest in using their cell phone to play back audio tracks. 26 percent of radio consumers ages 12 to 17 said they were interested in such a feature.

The study is the first comprehensive look at not only the number of songs stored on MP3 players, but also how various music genres on these devices relate to radio listening preferences.

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Tower To Seek Chapter 11 Protection During Sale

Underscoring the inevitable power of technology and digital availability of popular music, embattled TOWER RECORDS, which had been put on product hold from the four major label groups has renegotiated delivery terms, and is now seeking a buyer while under Chapter 11 bankruptcy protection, (Section 363), and "is looking to complete the sale before the crucial holdiay shopping season," according to REUTERS.

TOWER CEO JOSEPH D'AMICO said, "The trade has always supported TOWER through difficult times and we recognize that their support is imperative to the consummation of a transaction." TOWER operates 89 stores and said it got $85 million in debtor-in-possession financing that will allow it to fund its operations and purchase new products.

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HD Radio Side-by-Side with Satellite

Tech watch — the latest HD Radio receiver puts HD side-by-side with XM. Polk Audio’s new I-Sonic all-digital audio entertainment system is the first to combine HD and satellite radio into the same unit.
It also has two sets of inputs to hook up an iPod. Polk says the biggest number of pre-orders went to broadcasters who plan to use them to monitor their HD signals — and give away to listeners.
I-Sonics are also for sale at Tweeter for $599. That’s a pretty lofty price point. But it isn’t dampening demand. Polk SVP of marketing Dan Hodgson says given the “tremendous response” they have more orders than they can fill in the next two months. But he says production is “going smoothly” and they’re
confident they can meet holiday demand. (Inside Radio)
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Cut-Rate Downloads: A File-Sharing Fix?

Ever since Napster hit the scene several years ago, the music industry has been confronted by a radically new - and uncontrollably free - distribution platform. Most efforts to tame file-sharing volume have been unsuccessful, including direct lawsuits against uploaders. Meanwhile, the 99-cent download has enjoyed phenomenal growth rates, but still remains a small percentage of overall downloading activity. So how can a massive file-swapping revolution be monetized? During a Friday interview at the Bandwidth digital music conference in San Francisco, Nettwerk Music Group chief Terry McBride offered a strategy that involves cut-rate downloads. "Once the price goes down, the P2P market starts to disintegrate," he predicted.

The theory is not far-fetched, and has actually been used successfully by other industries to combat piracy. The underlying strategy focuses on the effort required to obtain pirated copies, and the costs associated with imperfect knock-offs, which in this case often lack proper meta-tagging and associated artwork. The vagaries of some file-sharing applications, and the outside chance of obtaining a virus, offer further annoyances. To take the market back, McBride suggested an open and variable pricing model, determined by consumers. "I think you would see the price of a track drop to between 25 and 49 cents," McBride noted. Meanwhile, Indianapolis-based Digonex has recently patented a backend system that would allow real time variable pricing, though majors may be reluctant to embrace a consumer-controlled pricing system. Regardless, majors have been pushing for a variable-price model for some time, though Apple has remained resolute on a uniform pricing scheme. "Variable pricing means going below and above 99-cents," said Ted Cohen, a partner at digital consultancy Tag Strategic.

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Google Begins Tracking Music Preferences, Trends

Google Labs has just spun another music-oriented product, designed to track preferences and sought-after artists. Dubbed Music Trends, the service works through the Google Talk IM client and tracks global music consumption patterns. Talk users must opt-in to the service and "share" their music preferences from one of several players, including iTunes, Winamp, Windows Media Player, and the Yahoo Music Engine. Google then archives listening habits and presents the ranked results in a searchable database that is updated every night. Browsers can click on particular songs to access a variety of artist information, and can sometimes use links buy the song through one of several online stores.

Google is steadily aiming to organize the world's information, and the latest initiative is another step towards that goal. In his book, The Search, John Battelle identified the phenomenon of a "database of intentions," a description that neatly fits the latest release. Google noted Wednesday on its blog that "it would be fun for you to see the musical tastes of the broader community," and Music Trends will be interesting and valuable to a number of parties. The offering seems innocent enough, though others are more skeptical about the motivations behind the rollout. ZDNet’s Donna Bogatin noted the company is likely looking not only to "organize the world's information," but also to "sell ads against it." She speculates that Google could leverage its Music Trends data to bolster AdWords sales, and to spur an online music business through its recently unveiled PayPal-like service, Google Checkout.

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Teens are Over Email

SAN FRANCISCO (Business 2.0 Magazine) -- E-mail is so, like, 2005. Just ask the kids: A recent ComScore Media Metrix report shows teen usage of Web-based e-mail dropped 8 percent last year.

In search of a faster, more fluid way to communicate with friends, today's so-called "instant generation" is turning to text messaging and IM instead. The growing trend spells good news for mobile operators, who last year raked in $70 billion in text messaging revenues worldwide, according to technology research firm Gartner.

But it could spell big trouble for Web portals, which depend on e-mail for much of their traffic. According to Hitwise, a research company that tracks Web traffic, Yahoo (Charts) and Microsoft (Charts) got more traffic to their e-mail Web sites than their main portal pages.
Big bucks from short messages

With charges of up to 15 cents per outgoing and incoming message, it's no surprise wireless network operators are making lots of money from the billions of emoticon-packed text messages young users churn out on their cell phones each year.

While text messaging is far more popular overseas - users in some European countries send more than 100 messages a month - usage in the United States is picking up fast. In the first quarter of 2006, Verizon Wireless's 54.8 million customers sent and received about two messages a day on average, generating nearly 10 billion text messages over three months.

"It's the folded-up note of this time period," Joel Kades, Virgin Mobile USA's VP of strategic planning and consumer insight, says of the growing popularity of text messaging.

Among parents, text-message charges are controversial, if only for the end-of-the-month shock when they receive their bill. But to their credit, mobile operators have gotten smarter about the way they charge young customers for text messages - many are now pushing affordable monthly plans, instead of the more traditional (and pricey) pay-per-message fees.

The always youth-centric Virgin halved its per-message fee - from 10 to 5 cents - to attract avid young texters with fixed budgets.

Earlier this summer, Virgin also kicked off a "penny texting" campaign, promoting new text-message packages that give users a thousand messages for $9.99 a month. A crowd of young texters showed up for Virgin's penny-texting launch party in New York's Times Square last month, where B-list celebrity K-Fed (also known as Mr. Britney Spears) showed up to help spread the affordable text messaging word.
Texts are for kids

Haven't heard of K-Fed? You're probably not the target audience for Virgin's message.

But it's a demographic Maya Bruhis, a 16-year-old who can text with her eyes closed, fits into well. The Palo Alto, Calif. teen sends 10 to 15 text messages a day on her Motorola Razr phone.

"If I want to send quick messages to my friends, I text," says Bruhis in a rare phone call. "E-mails are more for work and school."

Bruhis isn't alone. According to a recent Pew Internet & American Life Project report on teens and technology, nearly two-thirds of teen owners of cell phones use text messaging.

And when kids aren't on cell phones, they're probably using instant messaging instead of e-mail. The same Pew report found that 46 percent of teens who are online chose IM over e-mail as their preferred method of written communication with friends.

Text messaging and instant messaging sound pretty similar - and in fact, they're converging on cell phones, creating another way for wireless carriers to profit. Many also offer young customers mobile versions of IM services like AIM, MSN and Yahoo Messenger. Often, these are being marketed in the form of monthly plans as well.

"Everybody's got an IM account," says Beverly Wilks, marketing director for Oz Communications, a Montreal-based company that sells mobile IM software and services to network operators such as Sprint Nextel, T-Mobile USA, and Virgin. "What we're doing is extending that presence to the mobile phone, so young users are able to share special moments on the go."

Radicati Group, an analysis company, expects IM use worldwide to reach 46.5 billion messages a day by 2009. There are no estimates on how many of those will be delivered to cell phones instead of computers, but analysts expect mobile IM usage to grow rapidly.

With numbers like those, one can't help but wonder: Are teens, like, really going to stop using e-mail altogether?

Probably not, says Mary Madden, a senior research specialist with Pew Internet who worked on last year's report.

"I really don't think e-mail's going to disappear anytime soon," says Madden. "But for social interactions, it's definitely no longer the bread and butter for teens."

Even if e-mail becomes less popular, that's a troublesome trend for operators of Web portals like Yahoo, Google (Charts), AOL, and Microsoft. All of them offer free, Web-based e-mail to draw users back to their Web sites on a regular basis. If teens log on to check e-mail once daily, rather than several times throughout the day, that will be a major hit to their traffic.

Marketers could switch from Web ads to text-message ads. But carriers and government regulators restrict what kind of ads are allowed. And texts are limited in length, making it hard to craft campaigns. That adds up to a tough message for advertisers hoping to reach teens.