MUSIC INDUSTRY NEWS

Spotify Now Valued At $1.1 Billion Following U.S. Launch, Capital Infusion   Despite being sued for copyright infringement by PacketVideo, Spotify's first month in the U.S. has been a good one. The on-demand music streaming service signed up an estimated 1.4 million users over just a four-week span, and now is valued at over $1.1 billion, following two closings that resulted in roughly $78 million and $20 million from existing and new investors, respectively. The American debut of Spotify and its initial success came at a price, however, as PaidContent reports the company spent approximately $98.15 million for its long-awaited and much-hyped U.S. launch. Additionally, the free version of Spotify is still only accessible on a somewhat strict invitation-only basis, so it will take some time for the service to build up a solid revenue model. While meeting with considerable initial enthusiasm, Spotify has yet to prove it can offer a service that is markedly more valuable than its competitors, including Pandora, Qriocity, and Grooveshark. [Full story:ZDNet] Record Label Sues Amazon For Selling Counterfeit CDs   Record label TufAmerica has filed suit against Amazon and its subsidiary On-Demand Publishing for manufacturing and selling hundreds of counterfeit CDs containing thousands of TufAmerica's tracks, without a license. TufAmerica operates five music labels - Tuff City Music Group, Old Skool Flava, Night Train, Soul-Tay-Shus, and Swing Time - and says it agreed in September 2006 to license "thousands" of songs to Digital Music Group, the predecessor of a third defendant, Orchard Enterprises. According to a federal complaint, the agreement limited Digital Music's use of the songs to digital downloads as songs and ringtones only. However, TufAmerica claims the three defendants conspired to manufacture and sell "hundreds of different 'manufacture on demand' counterfeit compact discs that incorporate thousands of TufAmerica musical recordings for which defendants have no license." TufAmerica seeks an injunction, destruction of the infringing CDs, and punitive damages for conspiracy, unfair competition, and trademark and copyright violations. [Full story: Courthouse News] Wal-Mart To Close Its Online MP3 Store This Month   After more than seven years of selling digital music, Wal-Mart announced it will close its MP3 store at the end the month. Wal-Mart started selling digital music in late 2003 to compete with Apple's iTunes store, which had opened earlier that year, and priced its single tracks at $0.88, a full 11 cents less than Apple's $0.99 price tag. Wal-Mart has since raised its prices for most popular new songs, but still offers them at a cut rate: $1.24 per track, 5 cents cheaper than iTunes. Like iTunes, Wal-Mart originally sold music files that included digital rights management [DRM] restrictions to prevent duplication and to limit the number of devices on which a song could be played. Most stores have eliminated those restrictions, but in its announcement Wal-Mart said it would continue to offer support to customers who bought restricted files through its store, in the WMA format. "We recently notified our music partners that we've made a business decision to no longer offer MP3 digital tracks as of Aug. 29, 2011," the company said in a statement. [Full story: New York Times] Steep Royalty Payments Still Could Doom Online Streaming   According to eMarketer, approximately $800 million will be spent this year on advertising within audio streams, sliced and diced primarily between Pandora, Spotify, Slacker, Turntable.fm, Rdio, Grooveshark, Radical.fm, and CBS-owned Last.fm. Before any of these companies can mature into ad-ready businesses, of course, each of them needs permission to license and distribute music - something AdWeek magazine speculates could be holding back some of the most innovative music streaming ideas. With Pandora already paying more than half of its revenues for performance royalties, it has yet to turn a profit despite its reported 100 million-plus users. The question, asks writer Erin Griffith, is what Pandora and its smaller competitors can actually afford. Slacker CEO Jim Cady says it's really a question of scale, noting that his company can't survive on advertising dollars alone - which is why the company also offers a premium download service. Spotify and beta-mode Radical.fm also supplement their ad revenue with subscription dollars. "In a fully mature market, licensing fees won't be so high because [streaming services] will be able to send twice as many commercials as they are now," Radical.fm CEO Thomas McAlevey said. But as Griffith asks, will that happen soon enough to allow Pandora and its competitive brethren to become profitable? [Full story: AdWeek] Departing RIAA CEO: "Chaos Of Distrust Has Given Way To Mutual Respect And Commitment"   The Recording Industry Association of America [RIAA] this week announced that CEO Mitch Bainwol [right] is leaving the organization to become CEO of the Alliance of Automobile Manufacturers, and will be replaced by current president Cary Sherman. In a farewell "open letter" to RIAA members, Bainwol observed that "the chaos of distrust and paranoia that once characterized industry relations has given way to a new and healthier season of mutual respect and commitment to common purpose." Noting that "this summit is 'ground zero' of a healthier music family," he predicted 2011 would be the year music historians will pinpoint as the industry's turnaround. "We are regaining our mojo and are on a bit of a roll, even if some of us - understandably - are tentative and reluctant to celebrate the apparent pivot in our fortunes. Consider [that] LimeWire is shut down and, while some users are migrating to Frostwire and other illegal options, more are not. [And] the number of Americans engaged in illegal music consumption fell from roughly 30 million in May of 2010 to about 24 million in May of this year, a noteworthy 20% reduction. The battle isn't over, but finally, we have momentum and we are winning." [Full story: Billboard.biz] Al Bell Presents American Soul Music  ... And American Soul TV If you're into classic and contemporary Soul, R&B, Blues, Gospel, Jazz, Hip-Hop Soul, Rap Soul, and Neo-Soul, we invite you to listen to Al Bell Presents American Soul Music. Former Stax Records owner and Motown President Al Bell personally has programmed this awesome radio station online, presenting your favorites from the 1960s and '70s [and some '80s], a lot of the best new music that's being released today, and some real gems you haven't heard in a long, long time. Come to www.AlBellPresents.Com and hear it for yourself! And now...join us for Al Bell Presents American Soul TV here.