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.

Doherty sounds off: Sony BMG and Universal too strong

This seems a little odd: One day before his headquarters report a sevenfold increase in net loss, Sony BMG UK Chairman & CEO Ged Doherty told an audience at MusExpo Europe conference that his company is too strong. 

According to Music Week, Doherty ”raised eyebrows by his very frank assessment of current recorded music business, saying, ‘Having two very big companies in Sony BMG and Universal is not healthy. EMI and Warner are nowhere and it is not good. They are not breaking new artists. My hope is that they get their acts together.’ He also quoted market share figures, which showed that Sony BMG and Universal between them had an 83% share of the artist albums market last week.”

Billboard was there, too: “Among [Doherty's] observations was the claim that Sony BMG had broken nine artists in the last 20 months, a feat he says is unmatched by any of his competitors. For this reason, he said he was looking at a profitable 2009.”

Regardless of how far off Doherty was with his strength assessment considering Sony BMG’s poor financial performance in Q2, he did get it right when he blamed the old guard in the industry for screwing things up. “This generation is paying the price of our previous generations’ mistakes. We now need to re-establish trust with consumers.”

Sony BMG ends JV with increased net losses in fiscal Q2

The final numbers for joint venture major Sony BMG aren’t exactly thrilling. Sony Corp. today reported results (PDF) for its fiscal second quarter (ended September 30). Not only did Sony’s net income collapse 71.8 percent to ¥20.8 billion ($213 million / €165 million) on sales of ¥2,072.3 billion ($21.2 billion / €16.4 billion). Its recording operation Sony BMG (which is in the process of becoming a fully Sony-owned business called Sony Music) rang up sales of $762 million (€589.8m) in Q2. That is 10.5 percent less than in Q2/2007. Net loss at Sony BMG added up to $57 million (€44.1m), more than seven times as much as the year before and also 36 percent more than in Q1 of this fiscal year. 

Tpo sellers for the reporting period were Kings of Leon (“Only by the Night”), cell phone salesman-gone-opera star Paul Potts (“One Chance”) and AC/DC (no, not with “Black Ice”, but with the re-release of the live DVD “No Bull”). 

What went wrong? Sony says it recorded an equity loss of ¥3.1 billion ($31.8 million / €24.6 million) in Sony BMG because of a declining music market. Other reasons: restructuring costs of $4 million.