Archive for May, 2007

10
May

Digital Music Group, Inc. Reports First Quarter 2007 Results

   Posted by: mwatkins    in Publishing News

Digital Music Group, Inc., a content owner and global leader in the digital distribution of independently owned music and video catalogs, reported results for its first quarter ended March 31, 2007.

Revenue for the first quarter of 2007 totaled $3,392,547, compared to $720,648 in the first quarter of 2006. The Company’s net loss for the first quarter of 2007 was $736,348, or $0.08 per share, compared to a net loss of $413,943, or $0.07 per share, in the first quarter of 2006.

During the first quarter of 2006, Digital Music Group completed its initial public offering and the concurrent acquisitions of Digital Musicworks International, Inc. (DMI) and certain assets of Rio Bravo Entertainment LLC, doing business as Psychobaby. DMI was deemed to be the “accounting acquiror” in these transactions. On September 8, 2006, the Company completed the acquisition of Digital Rights Agency, LLC (DRA), a leading worldwide digital music distributor focused on independent record labels. Therefore, the Company’s GAAP-basis results reported herein for 2006 are the historical results of DMI for the entire period plus the results of the acquired companies for the period after their respective acquisition dates, while the GAAP-basis results for 2007 are the results of all of the companies for the entire quarter. The Company believes that presenting the 2006 results on a pro forma combined basis, which reflects the results of all the acquired companies as if they had been combined throughout all periods presented, is helpful in understanding the Company’s overall results.

First Quarter 2007 Compared to First Quarter 2006

* Revenue for the first quarter of 2007 of $3,392,547 represents an increase of 34% from the first quarter of 2006, when pro forma combined revenue totaled $2,526,085.

* The Company’s net loss for the first quarter of 2007 was $736,348 or $0.08 per share, compared to a pro forma combined net loss of $442,855, or $0.06 per share, in the first quarter of 2006.

* Total paid downloads (with albums presented as single track equivalents) for the first quarter of 2007 were 4,782,200, or 33% greater than the first quarter of 2006 when paid downloads on a pro forma combined basis totaled 3,594,400.

* On average, there were approximately 232,300 music tracks available for sale during the first quarter of 2007, compared to approximately 80,700 music tracks available for sale during the first quarter of 2006. Total music tracks available for sale were approximately 243,000 at March 31, 2007, compared to approximately 99,700 and 219,800 at March 31, 2006 and December 31, 2006, respectively.

* The average monthly download rate for the first quarter of 2007 was 6.9 times, compared to pro forma combined download rates of 14.8, 9.5, 7.5 and 6.4 times for the first quarter through fourth quarters of 2006, respectively.

* Apple iTunes Store accounted for approximately 70% of the Company’s revenue for the first quarter of 2007.

Commenting on the quarter, DMGI’s Chief Executive Officer, Mitchell Koulouris, noted, “Our year-over-year revenue growth is attributable to the steady increase in the number of tracks we have made available for sale and our emphasis on broadening our distribution channels to include more subscription and mobile distribution partners. In last year’s first quarter, approximately 89% of our revenue came from Apple iTunes, less than 5% was from subscription services, and we had no mobile distribution. With our acquisition of DRA in September 2006, we gained immediate access to mobile channels, and revenue from mobile distribution represented approximately 10% of our total first quarter 2007 revenue. In addition, distribution through subscription services grew to approximately 7% of our total first quarter 2007 revenue. Making more music available at more places will continue to be a key objective for DMGI throughout 2007 and beyond.”

Mr. Koulouris continued, “Our first quarter 2007 results also demonstrated steady sequential growth over the fourth quarter of 2006. We increased the number of tracks available for sale during the quarter by 18% from the previous quarter, and our total revenue advanced 21% to $3.4 million, due primarily to the increase in the number of music tracks available and an increase in the average monthly download rate per track from 6.4 times to 6.9 times. Revenue from mobile distribution and subscription services also contributed to the revenue growth, increasing by approximately 19% and 31%, respectively, over the fourth quarter of 2006.

“We also made good progress in content acquisition and channel expansion during the first quarter,” stated Mr. Koulouris. “We expanded our music catalog with new digital distribution agreements with well- known artists such as Olivia Newton John, Wayne Newton, and Richard Clayderman, as well as independent records labels such as EsNtion, Adelphi, and Thick Records, among others. We also purchased the digital rights and master rights to recordings from Todd Rundgren and Dwight Twilley. We added YouTube, Amazon Unbox, In2Tv, BitTorrent, Helio and Movielink to our list of digital video distribution partners, and we entered into new video distribution agreements with illusionist Criss Angel, comedian Andrew Dice Clay, and obtained the digital rights to video catalogs including BKN New Media, Rehearsals.com, and children’s classics Bozo the Clown and Howdy Doody, along with other interesting video content.”

During the first quarter of 2007, DMGI acquired digital rights to approximately 16,000 additional music recordings and adjusted downward by 10,000 the total number of music recordings under management as a result of one content owner’s inability to deliver all tracks under contract and certain other adjustments. As a result, at March 31, 2007, DMGI owned or had rights under digital distribution agreements to approximately 341,000 individual music recordings that it expects to be able to make available for sale. Of these recordings, approximately 243,000 were available for sale at that date, approximately 49,000 had been processed and transmitted to one or more digital entertainment services where they were awaiting review and processing by the services before being posted for sale, approximately 14,000 were in various stages of the Company’s digitization process, and approximately 35,000 had not yet been delivered by the content owners. In addition, at March 31, 2007, DMGI had more than 4,000 hours of video content under long-term distribution agreements.

Commenting on the Company’s video operations, Mr. Koulouris said, “Digital distribution of video content is still in its infancy. Our operations team is working diligently to digitize the substantial volume of video content that we have acquired digital rights to, and we are working collaboratively with our many video distribution partners to get our content to market as soon as possible. During the first quarter, we processed and delivered portions of our video content to various digital service partners, where it will be available to consumers. Because most of our distribution partners are still in the process of launching and establishing their digital entertainment services for video or are in the testing phase for advertising-supported business models, the revenue we received in the first quarter from video sales was negligible. As previously communicated, we do not expect to achieve any meaningful revenue from video distribution until the second half of 2007, but we remain enthusiastic about the long-term business prospects for this exciting, emerging market space.”

Karen Davis, Chief Financial Officer, provided an update on the Company’s balance sheet, “Our financial position remains strong with DMGI’s March 31, 2007 balance sheet showing $17.5 million in cash, no debt (except for minor equipment leases), and stockholders’ equity of $34.8 million. As of that date, we were contractually obligated to pay up to approximately $5 million for future deliveries of digital content.”

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10
May

Musicrypt Continues To Transform Digital Delivery In U.S.

   Posted by: mwatkins    in Publishing News

Musicrypt Inc., the leader in secure digital media distribution is helping both major and independent record labels drive down costs and increase efficiencies, while delivering the hits to radio stations across the US via its Digital Media Distribution System (DMDS). In an historic move, Musicrypt and Warner Bros. Records exclusively delivered Linkin Park’s “What I’ve Done” and Green Day’s “Working Class Hero” in a digital only format to radio stations beginning in April. In the first week of its release, Linkin Park charted at #1 on the BDS and Mediabase Alternative music charts http://www.musicrypt.com/enote.

With increasing pressure on the corporate bottom line, labels are partnering with DMDS to redefine the industry and radio stations are becoming huge supporters of this transformation.  In a recent 2006 Digital Music Poll survey commissioned by Billboard Magazine, over 80% of radio stations would prefer to receive music digitally if digital music distribution services were available to them. In key US radio formats such as Mainstream Rock, Alternative Rock and Active Rock over 95% of the chart-monitored radio stations use DMDS.

DMDS is the preferred choice by U.S. labels and in the last 30 days has delivered top tier artists such as: Kelly Clarkson, My Chemical Romance, Rascal Flatts, LeAnne Rimes, Michael Buble, Ne-Yo, T.I., Fantasia, Chris Brown, Snow Patrol, R Kelly with Usher, Killswitch Engage, The Afghan Whigs, Clara, T-Pain, Nickleback, Taylor Hicks, Gretchen Wilson, The White Stripes, Terri Clark, The Actual, and Ozzy Osbourne. Even artists that people don’t associate with wide spread radio airplay are distributed via DMDS including Andrea Bocelli and Yo-Yo Ma.

“After years of success establishing DMDS as the leading digital distributor in North America, we are helping the U.S. music business completely switch over to digital delivery,” says Chris Montgomery, Executive Vice President for Musicrypt Inc. “By switching to digital delivery, labels will be saving millions of dollars by cutting costs from manufacturing physical CD product and from their associated shipping costs. DMDS allows them to deliver music more efficiently, faster and more securely than any other system. With the industry in digital transition, Musicrypt is helping bridge the gap.”

Musicrypt is powering the changes occurring in the digital music industry with its patented DMDS technology. Musicrypt’s DMDS has delivered over 7,500 different songs from more than 150 record labels to destinations which include radio stations representing over 35 U.S. broadcast chains. Musicrypt is partnered in the U.S. with Billboard, R&R and Nielsen BDS; in the UK, Europe and Australia with Adstream Ltd; and is marketed to the U.S. advertising industry by AWE, a division of Omnicom, and The Gary Group. DMDS is the only digital delivery system that can deliver music throughout the U.S., Canada and the UK.

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10
May

High Growth Reported In The Worldwide Digital Music Industry

   Posted by: mwatkins    in Publishing News

Reportlinker.com announces that a new market research report related to the worldwide music industry is now available to its catalogue.

Digital Music and Mobile Handsets

Currently the music industry is undergoing a rapid industry transformation. Over the last twenty years technical advancements have significantly altered the way in which consumers interact with music worldwide. The distribution shifts from specialty shops to mass-market online retailers are transforming both the consumers and producers behaviour throughout the music experience. The behavioural shift is causing a devaluation of the music industry or more specifically the value of music content. The digital music industry introduces new revenue margins which are having an impact on all players within this industry especially the distributing companies. The music industry is now faced with advanced and complex distribution systems which also have begun to dissolve the traditional music revenue streams within the industry.

According to the music trade body International Federation of the Phonographic Industry (IFPI) global digital music sales doubled in 2006 to EUR 1.5 billion in trade revenues and therefore represents 10 percent of world music sales. In 2006 the recorded music sales on the European market was approximately EUR 5.4 billion. The European digital sales correspond to approximately EUR 308 million in trade revenues and EUR 444 million in retail value. The customer segment thus far has been made up by early adopters and the consumer behaviour centres around trials and impulse purchasing behaviour. The two main distributing channels have been characterized as online and mobile and the homogenous European markets have adopted to the digital music distribution channels very differently.

The mobile music value chain consists of a wide range of companies and the industry trend shows that industry players are trying to converge with other companies in order to grab a larger share of the value chain. Nevertheless the music distribution chain is far from transparent due to the constant development of new digital distribution partnerships and business models. Music is already identified as a key enabler within the mobile entertainment portfolio and all of the major operators on the European have strategically embraced the new digital music distribution channel. The business model that currently has gained most momentum is subscription based services, which is the fastest growing business model in the industry. Some companies argue that in order for the digital music distribution to reach a mature state consumers must have adapted to the subscription models.

Content owners are also pressured by industry substitutes like illegal file sharing and IFPI estimates that over 20 billion songs where illegally downloaded in 2005. In return the music industry has introduced several closed DRM systems, non-interoperable by design. This environment has created a complex landscape for consumers and content distributors and also other stakeholders. As much as this technology serves a purpose for the music industry there are great risks of restricting the customer usage.

In order to reach consumers within the new digital distribution channel, large investments must be made in support and management systems. This has opened up the industry to new digital distributing actors that are entering the market and are beginning to take a central role in the supply side of this industry causing the value chain to expand. As the value chain keeps expanding the competitive environment is increasing. More companies are demanding a share of the revenue which place pressure on the traditional music industry revenue sharing model. In the end without long-term sufficient ROI any entity will have difficulty in sustaining profitability. It is in our belief that the music industry will continue to evolve in the next decade and the traditional business landscape we see today will become something of the past.

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10
May

Australia To Join Internet Copyright Treaties

   Posted by: mwatkins    in Publishing News

Australia would mark World Intellectual Property Day by joining two international treaties aimed at boosting copyright protection for material on the Internet, Attorney- General Philip Ruddock said today.

The move will complement the world’s best practice copyright regime that Australia now has, after the Government’s reforms of last year.

The Attorney-General said the World Intellectual Property Organisation Copyright Treaty and the World Intellectual Property Organisation Performances and Phonograms Treaty, otherwise known as the WIPO Internet Treaties, would be acceded to in Geneva.

The main feature of the treaties is the protection of copyright works, sound recordings and performances fixed in sound recordings within the online environment.

They were adopted at a WIPO diplomatic conference in 1996, at which Australia played an active role. Australia was one of the first countries to implement the treaties with the Digital Agenda reforms to the Copyright Act in 2000.

“Australia’s move to join the WIPO Internet Treaties reinforces international cooperation and promotes effective protection of copyright in the online environment,” Mr Ruddock said.

“In the spirit of this year’s theme for World IP Day – Encouraging Creativity – Australia is proud to join the WIPO Internet Treaties. Creativity is encouraged by an effective copyright regime, especially in the online environment.

“Consumers also benefit from online copyright protection because creators will make more material available online if it is protected from pirates.”

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10
May

EMI Music UK Announces Strategic Partnership With TLC Marketing To Enable DRM-Free Music To Be Utilised In Sales Promotion And Loyalty Campaigns

   Posted by: mwatkins    in Publishing News


EMI Music UK announced it has teamed up with TLC Marketing plc, number one in the world of travel, leisure and lifestyle incentive providers, to provide a download loyalty card for use with third-party brand promotions. TLC Marketing has previously formed brand partnerships with household names such as Samsung, First Direct and British Gas. Consumers participating in the promotion will get access to exclusive DRM-free EMI offers, as many times as they like, for a year.

This announcement follows EMI Music’s recent news that it is making its repertoire of music available in a new DRM-free, high quality download format.

EMI’s ability to offer DRM-free product is instrumental in opening up new and previously unavailable revenue streams, such as the strategic partnership agreed with TLC. EMI and TLC’s partnership will allow third party brands to offer EMI product through their on-pack promotions via an EMI owned and branded website. The ability to supply downloads in the DRM-free format ensures that customers can upload these EMI downloads on every available digital music player including mobile phones. Albums available from EMI’s extensive catalogue of artists include Blur, Kate Bush, Depeche Mode, Kelis and the Rolling Stones.

Graeme Rogan, Head of Online Sales, EMI Music UK, comments, “This is a fantastic opportunity for EMI and TLC to work on high profile third party promotions – a move EMI feels is key to our strategy of opening up new and incremental revenue streams in the digital world. TLC is a company with a proven track record and we are confident that our partnership with them will generate mutually beneficial results.”

Sharon Gold, Marketing Director, TLC Marketing, adds “We are delighted to be working in partnership with EMI to give our blue chip clients the opportunity to boost their sales, launch new products and engender loyalty with this high value incentive. Music downloads netted a massive $2 billion worldwide in 2006 so with this burgeoning market we are anticipating that this new incentive will have both our clients – and their customers – dancing in the streets!”

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9
May

CMA Songwriters Series Celebrates The 25th Anniversary Of The Bluebird Cafe May 31st At Joe’s Pub In New York City

   Posted by: mwatkins    in Publishing News

Some of Nashville’s most prominent songwriters will descend upon New York City Thursday, May 31 to participate in the “CMA Songwriters Series Celebrates the 25th Anniversary of the Bluebird Café” at Joe’s Pub. This is the second show this year in the successful series and will draw upon the ‘In The Round’ format that was founded and made famous by participating songwriters Fred Knobloch and Thom Schuyler at Nashville’s famous Bluebird Café. Knobloch and Schuyler will be joined on stage by Jelly Roll Johnson and Tony Arata, who have helped create hits for some of Country Music’s greatest stars like Garth Brooks, Kenny Rogers, Trisha Yearwood, Alan Jackson, among others.


“CMA is thrilled with the success that the ‘Songwriters Series’ has had in New York City over the past two years and it only continues to get better with each show,” said CMA Chief Operating Officer Tammy Genovese. “Country Music has a huge fan base in New York and we want to continue to offer those fans unique opportunities to see truly talented singer/songwriters in shows like the 25th Anniversary Celebration of the iconic Bluebird Café.”

The “CMA Songwriters Series Celebrates the 25th Anniversary of the Bluebird Café” will take place on Thursday, May 31 for two shows at 6:30 and 9:30 PM/ET. Songwriters scheduled to appear include Arata (”The Dance” recorded by Garth Brooks, “I Hear A Call” recorded by Emmylou Harris); Johnson (award winning harmonica player who can be heard on tracks by Trisha Yearwood, Kenny Rogers, Alan Jackson, among others); Knobloch (”If My Heart Had Wings” recorded by Faith Hill, “Meanwhile” recorded by George Strait); and Schuyler (”Old Yellow Car” recorded by Dan Seals, “Long Line of Love” recorded by Michael Martin Murphy).

“I’ve heard so many musical rarities at the Bluebird Café that it would easily qualify as an audio museum. If only those walls could sing, and man, what a song that would be,” said Knobloch. “It’s an honor to bring the Bluebird tradition to the fans in New York City with the ‘CMA Songwriters Series.’”

The year marks the 25th Anniversary of the Bluebird Café which introduced the ‘In The Round’ format that is the basis for the CMA Songwriters Series. The format brings together talented writers, sitting in a semi-circle, sharing songs and inspiration and has become an important part of the Bluebird Café tradition. The audience is given a unique opportunity to hear great original material from different points-of-view in a casual, comfortable environment. The Bluebird Café has been both testing ground and launching pad for some of the biggest names in Country Music including Garth Brooks, who was discovered there.

There will be two more shows this year at Joe’s Pub, including Oct. 4, “CMA Songwriters Series Salutes The Women of Country Music,” and Nov. 29, “CMA Songwriters Series Salutes the Groups/Duos of Country Music.”
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9
May

Nashville Songwriters Take Top Prize At Bluegrass Festival

   Posted by: mwatkins    in Publishing News

(Nashville, Tenn) Nashville songwriters Don King, Brant Miller and Dave Woodward walked away from MerleFest with the Top Country Song in its annual Chris Austin Songwriting Contest.

King, Miller and Woodward won this year with the song entitled,“The Road Kill Bill.” The song idea was born when the Tennessee legislature passed a law making it legal to “harvest” road killed game animals without the need of a hunting license. The songwriting trio, which performs under the name 2nd Nature, could not let this legislative nugget escape their pens and guitars.

With clever and earthy lyrics such as “it ain’t like a handout, no it’s more like meals on wheels” and “it’s given brand new meaning to the phrase hot off the grill,” “The Road Kill Bill” captured the imagination of judges and festival goers alike from the first line through the last chorus. In addition to a cash prize and Epiphone guitar, the contest winners were given an evening slot on one of the festival’s main stages to perform their award winning composition in front of an audience of over 20,000.

MerleFest, which was held April 26-29, 2007 in Wilkesboro, NC is named in honor of Merle Watson, late son of legendary guitarist Doc Watson. The contest is conducted to recognize songwriting excellence in the categories of bluegrass, country, gospel, and general. Nearly 1,100 songs were submitted this year with three finalists in each category earning a chance to perform their songs for a panel of judges and audience members during the festival. The competition was chaired by Nashville singer/songwriter extraordinaire, Jim Lauderdale. Former winners include Gillian Welch, Tift Merritt and Adrienne Young.

This year, MerleFest drew over 80,000 participants from around the globe and featured headlining performances from Alison Krauss and Union Station and Elvis Costello, along with a powerful line up of bluegrass, americana and country acts. It has grown to be one of the premiere festivals of its type in the world.

Anyone wishing to learn more about the group 2nd Nature and its members or to order a CD containing “The Road Kill Bill” can do so by logging on to their web site at www.secondnaturesongs.com.

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4
May

ASCAP Blue After Royalty Ruling

   Posted by: mwatkins    in Publishing News

Several sources tell Billboard.biz that a federal court has ruled that there is no performance right for publishers and songwriters in a download. The decision came during a proceeding to determine royalty rates between ASCAP and digital services AOL, RealNetworks and Yahoo!.


Currently, digital services pay a performance royalty for streams and pay a digital phonorecord delivery (DPD) royalty, which is akin to a mechanical royalty, for downloads. The performance license covers the right to “publicly perform” the recorded composition, while the DPD license covers the right to “reproduce” a copy of a recorded song and to “distribute” it digitally.

But there’s a distinct difference between digital performance and DPD licenses. The former are negotiable, so publishers have the right to say “no” to a license request. The latter are often compulsory, so publishers must grant the license if the song has been previously recorded and released in the United States. Requiring both licenses for one type of use could increase the cost to companies that want to offer downloads.

After ASCAP proposed a performance royalty rate that included a fee for downloads, the digital services filed a motion for summary judgment asking Judge William Connor to declare that there is no performance right in a download. That request prompted several groups to file amicus (friend of the court) briefs, including the National Music Publishers’ Assn, the RIAA and the Digital Media Assn.

The decision, if not reversed on appeal, could detrimentally affect future performance fees as more television shows become available for downloading over the Internet (which would not require payment of a royalty) and less available for re-broadcasts (which would require payment of a royalty).


By Susan Butler, Billboard

April 26, 2007

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