EUK drama continues, Asda could emerge as buyer

Cash is still tight at British wholeseller EUK. And supermarket chain Asda, a Wal-Mart subsidiary and one of the biggest media retailers in the UK, is weighing its options. A report by MCV suggests that Asda is considering to buy EUK from Whoolworths Group in order to keep up trading and secure product supply for the coming months. Last week news had surfaced that EUK, which has one more year to go on a two-year deal with Asda, was declined credit by its suppliers.

Now Asda is apparently looking to establish direct accounts with around 15 of its top entertainment partners. While this would effectively mean cutting out the middleman EUK, Fergal Gara, who is General Manager for music, video and games at Asda, stressed it was only a “contingency plan that we do not want to execute”. Woolworths of course try to display confidence that they are “trading as normal”, but no-one seems to be sure about EUK’s future. 

Setting up direct accounts with suppliers would likely create additional headaches for Asda staff during the busy holiday season. “Having 20-40 different boxes showing up at every store every day is not manageable,” Gara said. “If I am a colleague in an Asda store and I look at my chart wall on a Tuesday morning and I’ve got three holes, the next thing I need to do to resolve that problem is to know who supplied it — I need a simple corrective action, not a greater level of complexity.”

EMI clinches worldwide deal with Depeche Mode

First you announce the tour, then the label/record. That’s the order in today’s music world. And in the case of Depeche Mode it is big news for Guy Hand’s EMI Music and another blow to star-loosing Warner Music. The UK band with its über-faithful fan base is leaving Sire/Warner Bros. in the U.S. after 28 years. New worldwide home for Depeche Mode is EMI, and Hands now really is “Behind the Wheel”. 

Dave Gahan, Andy Fletcher and Martin Gore are currently finishing their 12th studio album in New York. The yet untitled record is scheduled to hit retail in late April 2009. Snippets of the new work could be heard during yesterday’s tour announcement in Berlin.

German download market on growth path, but at which speed?

German IT trade association Bitkom is confident the market with digital music products will continue to grow. By the end of 2008 Bitkom expects download revenues to climb to €78m ($106.8m). That would represent an increase of 30 percent. Year-over-year revenue growth in 2007 was only 25 percent, according to the organisation. Unit sales of both, single track and digital albums/bundle sales will rise to 38m units this year, compared to 34.4m in 2007 (plus 10.5 percent). That unit growth is significantly less than last year’s which stood at 32.8 percent. 

The average price for a single track purchase currently is €1.11 ($1.52), including bundle sales the average price is €1.84. Bitkom’s projection relies on half-year figures by research firm GfK that claims €39m download sales after six months.

However, charts company media control registered only 22.3m digital units at halftime. Single track purchases clocked in at a rate of 20.3m in six months. Who is right? Hard to tell. Looks like GfK/Bitkom and media control use different stats and measuring approaches. Still, looking at revenue estimates, both appear to be on the same track. media control reported digital music sales of €40.1m ($54.9m) in HY1. 

 

Dada’s model looks a little like eMusic with major content

Please send me an email if you know anbody who has ever used Dada.net. I vaguely remember hearing about this joint venture last year and instantly forgot about it. But never count out Sony BMG (or rather: Sony Music). If they start something they stick with it, be it smart or not (rootkit, anybody?). 

Now they signed on Universal Music Group and all of a sudden Dada boasts some 54 percent of current releases in the U.S. on its site. What’s important to note about Dada is the fact that it sells DRM-free files at a discount. You have to sign up for a monthly plan that costs $9.99 and provides you with 15 so-called “tokens”. Each of these tokens buys a song, a ringtone, a wallpaper, a mobile game, etc. 

Used properly Dada gets you 15 downloads per month at a price of 66.6 cents per song. That’s remarkable, considering that mechanical royalty rates are going to stay at 9.1 cents per song. The money in this model is obviously not in the sale of music. Seems like the margins on all the mobile content Dada offers cover for the losses they make in music downloads.

Dada’s CEO Massimiliano Pellegrini expects more labels (including indies) to embrace his model in the near future. To me this model looks a little bit like eMusic: For a monthly amount users get a predefined allotment of files for comparatively small money. One has to wonder why neither Sony Music nor Universal license at least parts of their catalogs to eMusic. The payouts won’t be much different.