Sirius XM Sues SoundExchange For Anti-Competitive Activity
Sirius XM on Tuesday (March 27) filed suit against SoundExchange and the American Association of Independent Music for illegally boycotting its efforts to negotiate competitive rates for the commercial-free music it broadcasts to listeners. As reported by the Wall Street Journal, this latest complaint renews an ongoing battle between the two recording industry groups and the satellite radio service, which maintains that the royalty fees it pays to record labels and artists are too high. In its complaint, Sirius XM says it is seeking injunctive relief to stop SoundExchange from setting the price the satellite radio company pays for royalties, since it has been forced to deal exclusively with the performance rights organization to acquire statutory licenses at higher prices than it otherwise pays. Sirius claims it has signed almost 80 direct licenses thus far, but says it could have inked many more deals if it dealt with record companies directly. In response, a SoundExchange spokesperson said, "Based on what we've read in the press, Sirius XM's claims appear to be wholly without merit." A representative of the American Association of Independent Music wasn't immediately available for comment. (Full story: Wall Street Journal)
Reports: 2012 Saw "Least Negative" Record Sales Since 2004
The Recording Industry Association of America (RIAA) this week reported that total U.S. record sales - digital and physical - increased 3.5% last year, to 1.8 billion units, with a retail value of $7 billion. Meanwhile, the International Federation of the Phonographic Industry (IFPI) said global sales revenue in 2011 was down 3% vs. 2010, to $16.6 billion. (In 2010 worldwide sales had dropped 8.4% from the previous year.) In other words, the 2011 total was the "least negative result" since 2004, the IFPI concluded, noting that sales of CDs declined while digital sales improved, with the number of digital outlets expanding quickly. Total global physical sales declined 8.7%, while digital sales grew by 8%, and now represent about 31% of all recorded music revenue. Total U.S. music shipments in 2011 were up for the first time since 2004, and the number of digital MP3s and digital albums sold grew 10.9% and 22.1%, respectively, the RIAA said. "The 2011 music industry shipment data confirms that digital music has truly become mainstream, though there are certainly still challenges presented by massive volumes of digital theft," said RIAA VP Joshua Friedlander. "Half of industry shipments came through digital channels in 2011, and digital downloads - hardly a new format anymore - have continued growing." (Full story: New York Times)
Sony BMG Files To Dismiss Toto's Lawsuit,
Claims Music Was "Leased," Not "Licensed"
Sony BMG, which just agreed to pay $8 million to settle a class action lawsuit, has filed a motion to dismiss a digital music lawsuit brought by music group Toto. As with all such lawsuits filed since the "Eminem ruling" last year, the chief controversy is whether a digital download should be treated as a "license," with high royalty rates for song artists, or a "sale," with a much lower rate. As Billboard points out, musicians claim it's a "license" because there's not much packaging required to simply permit iTunes or other digital vendors the right to distribute music on its service. But Sony Music's contracts with musicians appear to have "lease" provisions instead of "licensing" provisions, which raises the question: What's the difference? "In an attempt to sidestep this ['lease'] obstacle to its claim, plaintiff alleges that 'license' and 'lease' simply mean the same thing," writes Sony. "But plaintiff's allegations cannot alter the plain meaning of the contract. As a matter of both ordinary English and contractual usage, the terms 'license' and 'lease' are not synonymous." Should Sony win this point, it could have a significant impact on industry licensing activity - and, as Billboard suggests, while the argument might seem trivial, it could be worth millions. (Full story: Billboard.biz)
Michael Robertson: Spotify Will Never Be Profitable
Some analysts recently have slapped a pre-IPO valuation of up to $3.5 billion on Spotify, but long-time digital music entrepreneur Michael Robertson thinks that figure is ridiculous. "Spotify is a tremendous service," he told the San Francisco Chronicle in an interview. "Their technology is outstanding, their speed to stream is terrific, and users love it. It's just a math problem. Under the math they're forced to agree to, they will never generate a profit." Robertson points to Apple's iTunes, which earns about $3 billion a year in music sales and, as a percentage of Apple's overall market cap, has a separate cap of about $9 billion. Meanwhile, Spotify has a revenue run rate of only $280 million or so, and functions under a business model that includes performance royalty fees and other expenses that iTunes doesn't incur. Noting that the two companies are like apples and oranges, Robertson says the record labels still feel "irked" by their iTunes deal because Apple generated billions of dollars from the iPod, and they aren't about to make the same mistake twice. "If you're a label, and companies like Spotify are willing to pay whatever crazy number you throw out there, you'd be an idiot if you started discounting the price," he explains. (Full story: San Francisco Chronicle)
Pandora Musicologists "Curate" 10,000 Songs Per Month
Clear Channel Chairman Bob Pittman is on record saying Pandora can't come close to terrestrial radio because the streaming company is nothing more than a music collection, whereas AM/FM radio is "curated" by program directors and music directors. Not so, Pandora senior music analyst Michelle Alexander countered in a recent interview in the San Francisco bay area Peninsula Press. In fact, the company employs several dozen professional musicians and musicologists to assess upwards of 10,000 songs each month, mapping hundreds of specific attributes based on careful analysis of the music and then slipping them into "genome" categories based on listeners' tastes. There are between 200 and 450 attributes for a song, Alexander said, noting that "we basically just work pretty hard at making sure we're all describing these things in a very uniform sort of way." She estimates each song takes between ten minutes to a half-an-hour to process, depending on its complexity. "If I'm analyzing a new age solo piano track, there's really a lot less to think about than if I'm analyzing a Frank Zappa tune," she explains. Bottom line...is this any different from a radio PD or MD listening to a song and then coding it for computerized airplay? (Full story: Peninsula Press)
Edison Research: Internet Radio Usage Jumped 30% In 2011
Weekly usage of Internet radio - which includes both the online streams of terrestrial broadcasters and streams from pure-play streamers such as Pandora - has increased from 22% of Americans 12+ in 2011 to 29% in 2012 - a jump of over 30%. That's the word from Edison Research, which says this is the largest year-over-year increase the company has seen since it began tracking this statistic in 1998. And while it might appear that this kind of "discontinuous jump" is due to the increased usage of Pandora or Slacker or iHeartRadio or other individual brands, there's another dynamic at work, a revelation Edison will reveal in a pre-NAB announcement on April 10. Still, writing in a blogpost, Edison's Tom Webster hints at the fact that skyrocketing usage of smartphones is partly responsible for the jump in listening. "I don't know the hard cap on the number of Americans who would program their own playlists...and then upload that content to their phones and iPods, but...the number of Americans who now own smartphones has blown right by that hard cap." (Full story: Edison Research)
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