EMI might exit US distribution

According to unconfirmed reports EMI Music is thinking about giving up distribution in the United States. Unidentified label sources have told CNET News that EMI is looking to outsource physical and digital distribution in the U.S. to one of the big three competitors.

Representatives from EMI have reportedly met with Universal Music, Sony BMG and Warner Music as recently as this week, writes Greg Sandoval. While talks appear to be in early stages, a move like this seems quite likely, considering the fact that EMI retreated from the Asian market in September by handing over their catalog to licensing partner Warner. 

Other sources told Fortune that EMI is only looking to get out of the delivery of physical product to traditional retailers. Outsourcing both, marketing and distribution could save EMI as much as $300 million per year, these sources say. But for now, it seems like EMI only wants out of the physical distribbery business. This could also encompass indie distribution arm Caroline. Fortune also heard EMI might be willing to license its jazz and classical catalog to another label, but spokeswoman Jeanne Meyer already denied that rumor. 

In Europe EMI has been outsourcing its logistics to a company called CEVA in countries like Germany, UK, Spain, Portugal, Austria, Switzerland or the Netherlands. 

At this point it remains unclear how much of EMI’s distribution and sales expertise will be given to third-party companies. More action to come, I suppose.

France one big step closer to “three strikes” legislation

The French Senate has voted overwhelmingly in favor of President Nicolas Sarkozy’s plan to introduce legislation that will enable authorities to cut off the internet connection of repeated filesharers. The French call this a measure of graduated response or Riposte Gradueé, around the web it is more commonly known as the “three strikes” rule. 297 Senators gave the law (Création et internet) a thumbs up, only 15 voted against it. Now the National Assembly has to greenlight the bill before it can become French law. In theory the Assembly could still throw the bill out, but given its clear acceptance in the Senate and a Sarkozy-leaning majority in the Assembly this looks rather unlikely. 

Under the new law, people who are caught sharing copyrighted files illegally over the internet will first receive a warning email, followed up by a written letter via snail mail. If users continue their downloading and are caught a third time, their ISP will cut them off for one year. Critics had argued a fine would serve better as a punishment, because a connection to the internet has become an essential commodity to most citizens. 

This, however, also seems to be the reasoning of the French government which likens the plan to suspending someone’s driving license due to a DUI charge. Christine Albanel, Minister of Culture and Communication, defended the cut-off as being “educational”, while a fine would simply be a measure of repression. 

Other European countries are looking into similar legislation, namely Great Britain and Germany. Albanel would like to help EU members and the entertianment industry to expand the “three strikes” concept throughout Europe, while France has the Presidency of the EU Council.

At a meeting attended by European independent label group Impala and EU politicians in Paris, Albanel recently said: “Of course, there is no secret plan to impose the French anti-piracy plan to the rest of Europe. I simply wish that our experience will prove an inspiration for other European states whose cultural businesses are as threatened as the French ones.  This law won’t be the law of the majors, it will be the law of all creators and of all the cultural industries, 90 percent of them being SMEs [small and medium enterprises]; it won’t be the law for well-known artists but one for young talent; it won’t be a law for the CEOs of big corporate companies but a law for hundreds of thousands of people employed in this field, from the technician to the artist, from the author to the producer.”

MySpace Music to hire Holt as CEO?

The search for a CEO to lead MySpace Music has been on for almost one year now. Many a good candidate turned down the offer, including Eric Garland, Dave Goldberg, Ian Rogers and Andy Schuon. In early September it looked like Owen Van Natta, who used to work for Facebook, might get the job – or rather: would want the job. 

Meanwhile, some sources point to the imminent appointment of Courtney Holt, CNet reports. Holt currently holds the position of Executive Vice President Digital Music and Media at MTV Networks and he could be close to signing the contract. Word out of New York is, they’re only finishing the details. 

Holt has his work cut out, should he indeed sign up to serve under Chris DeWolfe and Amit Kapur. Even though streaming numbers at MySpace Music were solid in the week after the launch, there wasn’t a lot of positive noise surrounding the service recently. All you hear is independent labels complaining about being left out.

Media-Saturn shows a so-so balance sheet

Germany’s number one music retailer, Media-Saturn-Holding (aka Media-Satan in indie retail world), isn’t growing like it is used to. The company reported that sales for the fiscal third quarter were up only 0.3 percent to €1.9 billion, like-for-like sales in MadiaMarkt and Saturn stores open a year ago were even down 1.3 percent. Revenues after nine months are up 4.9 percent to €5.7 billion. EBIT in Q3 was down 6.4 percent to €117 million. 

Sales throughout Europe, where Media-Saturn expanded the number of its outlets by 35 to a total of 737 by the end of Q3, grew 10 percent in the first nine months to €12.7 billion. Like-for-like sales, however, were down 1.7 percent in Europe. The company expects to open another 30 stores in Q4.

Datz, like, a whole lotta music

British music fans will get to chose between two rather different all-you-can-eat-and-keep offerings this holiday season. Today, digital white-label shop 24-7 Entertainment and Datz announced their Datz Music Lounge. This seems to be particularily aimed towards Nokia’s Comes With Music, with some of the differentiators being mobile vs. online and available catalog. 

Datz Music Lounge will initially offer customers 2.5 million tracks from EMI, Warner Music, The Orchard and the Beggars Group. In order to access the store, users will have to buy a USB dongle and a CD for £99.99 ($164/€127) at either high street retail (Sainsbury’s) or at the Datz website. After that they can suck away at the Datz Music Lounge and download all the MP3s they want. And they can keep them, too, since there is no DRM involved. 

However, there is one caveat: the service comes with a fair usage policy, meaning that if a person were to download more music than they could “reasonably listen to in a lifetime”, their Datz membership would be suspended. No details, though, as to what qualifies as overuse. If that reminds you of the restrictions on Comes With Music, that’s because they seem to be very much the same. 

But Nokia can boast a catalog of all majors and all the latest hits. Datz will be focused more on catalog, from what the involved parties are saying. EMI UK & Ireland SVP sales & commercial development, Matthew Crosswaite, offered: “The Datz Music Lounge offering is a new and innovative way for consumers to gift digital music via high street retailers – just in time for the peak season. The product is subscription based and will be a valuable and insightful tool for understanding how consumers explore and react to EMI’s deep and rich back catalogue.”

100 quid for a year of almost unlimited music sounds like a good deal. So what’s in it for the labels? Anybody’s guess, just like with CWM. ”The commercial aspects of the relationships between the various parties remain confidential,” said Datz managing director Michael Richardson.

MTV and Harmonix bring Beatles to “Rock Band” platform – next year

“Apple Corps Ltd. and MTV to announce an exclusive agreement to develop a global music project,” was all the invitation to today’s press event said. Enough, to make everybody curious. How could a has-been in the music world (MTV, that is) reinvigorate the business?

Well, by going into game mode with “Rock Band”. Everybody is on board: EMI Music, Sony/ATV Music Publishing, Harrisongs, Apple Corps, Harmonix, MTV Games. 

Van Toffler, President of MTV, gave special thanks to Jeff Jones, the new CEO of Apple Corps, who seems to be the one who finally got the Fab Four to go digital. 

But here is the downer: The new product will NOT be available for this holiday season. The press conference gave only little detail about the specifics of the deal. Apparently this Beatles “Rock Band” will be ready for next year’s holiday season. As of now, MTV and Apple Corps won’t even say, if there will be downloadable Beatles content for existing “Rock Band” versions. Jeff Jones said, they are still negotiating the details for digital distribution of Beatles songs. 

The game will include songs recorded between 1962 and 1969 and it seems possible the entire catalog will be used. The game itself is still in development and will most likely be a stand-alone product. Not even clear, if it will be a “Rock Band” item. But compatibility should not be a problem. 

This is what the press release says:

The game will be an unprecedented, experiential progression through and celebration of the music and artistry of The Beatles. The game was creatively conceived with input from Sir Paul McCartney and Ringo Starr, along with Yoko Ono Lennon and Olivia Harrison, and enjoys their full blessing. In addition, Giles Martin, co-producer of The Beatles innovative LOVE project, will provide his expertise and serve as Music Producer for this groundbreaking Beatles project. 

Standard answer during the conference call: “We don’t give information on this, yet.”

All the excitement about this? Considering the age of most Beatles fans, it will have to be quite some game to lure the older demographic into the gaming world.

eMusic – still without Pakman replacement – is downsizing

Download retailer eMusic is cutting its staff. According to Peter Kafka over at his new job at AllThingsD, eMusic is letting go “about 10 percent” of the workforce. The company currently employs 100 people. No details yet on which jobs are affected. Reasons for the lay-offs are unclear, but eMusic says the situation isn’t terrible, they are simply bracing for a slowdown and cutting jobs now will let them avoid doing it later. Well … that explains it.

eMusic still expects to end 2008 with some 40 percent revenue growth. Meanwhile, there is still no replacement for outgoing CEO David Pakman who will leave his post at the end of the year to join venture capital firm Venrock. eMusic spokeswoman Cathy Halgas Nevins said the company is in the process of chosing a new CEO from a “handful of very qualified candidates”.

RealNetworks reports Q3 results, stays in the red zone

RealNetworks today reported a net loss of $4.5 million for its fiscal third quarter (ended September 30). A year ago Real postet a net profit of $4.34 million in Q3. Total revenues climbed 4.7 percent to $151.96 million. After nine months RN’s sales stand at $452.17 million – an increase of 10.1 percent year-over-year. Accordingly, Q1-Q3 results are in the red zone, too, at a net loss of $3.38 million. A year ago RN’s balance sheet still showed a net profit of $45.63 million. 

Said CEO Rob Glaser: ”In spite of a difficult and turbulent macro-economic environment, RealNetworks delivered results in line with our guidance. In particular, we are pleased with the initial results of our Music Without Limits initiative.”

The best performing department at the company was the games business which increased revenues by 19 percent to $34.2 million. The music segment was up 10 percent to $41.6 million. Subscriber numbers are down slightly with consumer music subscribers at 1,900 (-1.3%) and total music subscribers at 2,725 (-0.9%).

AC/DC sales lift U.S. market, but not enough

U.S. retailers sold 7.07 million albums last week. 876,000 of these albums were AC/DC records sold exclusively at Wal-Mart. “Black Ice” accounted for 784,000 units and enters the charts at #1. The rest are catalog sales, which climbed to 92,000 units. The number of total albums sold is up 8.3 percent compared to last week, but also down 15.2 percent compared to the corresponding week of 2007. Since the start of the year, retailers in the U.S. have moved approximately 325.6 million albums. That’s roughly 12 percent less than a year ago.

Viacom’s Comedy Central deals with Lime Wire

Remember the time when all the labels agreed to hate P2P? Wasn’t that a jolly good time for the folks at the RIAA. Feels like a long time ago, too. Having killed Napster, KaZaA, eDonkey and many other P2Ps over the years, RIAA lawyers are still trying to bring Lime Wire to their knees. No luck so far, though. And now, Lime Wire seems to be making inroads into legal territory. 

Comedy Central Records, a subsidiary of Viacom, will be working with Lime Wire to sell downloads at the Lime Wire Store. According to a story by Fortune’s Devin Leonard, the comedy label has agreed to market its library of 60 albums by acts like Dane Cook, Lewis Black or Denis Leary via the Lime Wire download shop. 

I agree with Leonard, who calls this deal “a coup for Lime Wire”. While the major labels still try to fight the company, Lime Wire is working hard to present itself as a legitimate business partner for content owners. Mind you, we’re talking about the very same Viacom that sued YouTube for copyright infringement. 

“We find file-sharing and free downloading as objectionable as anybody,” says Jack Vaughn, head of Comedy Central Records. But Vaughn said his label also wants to do as many deals as it can with online music services to increase its digital sales: “We looked at the Lime Wire Store, and we said, ‘Are they going to pay? Are they going to pay on time, and are they going to expose our artists to a new audience?’ The answer was yes.” 

Thinking along similar lines is distributor The Orchard who signed a deal with Lime Wire in late August. Before that IRIS, Nettwerk Music and Redeye Distribution had signed up.