BMG eyes snapping up its UK rivals By Gerrit Wiesmann in BerlinPublished: May 2 2010 17:46 | Last updated: May 2 2010 17:46
BMG, the German music publisher is eyeing the purchase of UK rivals – though not, for now, EMI – as it tries to make good on its ambition to become a dominant music rights manager alongside Universal or Sony.
Fresh from an eye-catching deal on the other side of the Atlantic, Hartwig Masuch, BMG chief executive, told the FT: “We’ve positioned ourselves in the US and now we want to do the same kind of thing in the UK.”
Up to this point in this column, I’ve been writing almost strictly about financial vehicles or wading into the economic muck that we as a nation have gotten ourselves into and trying to bring some clarity to the situation. If I may be permitted, I would like this week to go on a little rant about some things that have been going on in my business and also how the business model for music has pretty much been flipped upside down over the last 10 to 15 years.
Back when I was in GN’R, bands like us could pretty much operate at a break-even point on the road because acts were selling more records than is even imaginable these days. The reason for the dramatic downturn in record sales, of course, was the digitizing of music. Putting music on CDs meant it had to be in digital form; eventually this led to the situation where digital files like the MP3 were divorced from any physical product, making the Internet and home computers the prime means of distributing music. A rock tour back then, at the dawn of the digital era, was really just a huge commercial to sell your record. Because a larger portion of people get their music for free via piracy these days, touring, “merch” sales (mostly t-shirts, but also stickers and pins and anything else you can slap your band’s logo onto), and licensing of one’s music for ads and ringtones must support the average music act these days.
The major record labels missed the only real opportunity to get paid from illegal downloading back in 1997 or so. We all remember the Napster conundrum when Metallica sued them, right? Hey, as far as I’m concerned, Metallica had every right to demand payment for their hard-wrought recordings. But there was another deal on the table then from Napster that was never really publicized—and this where the “major labels” fucked up in my opinion.
Napster was making truckloads of dough off banner ads back then. It seemed the site was the most looked-at space on the Web and therefore a hot property. Car companies, cola bottlers, movie companies, and many others were paying top-dollar to get access to those Napster-glued eyeballs back then. Napster offered to share this ad revenue with the major labels so that artists would get paid for the downloading of songs that Napster made available for free. It now seems like the perfect business model for what was then a largely unanticipated future of digitized music. The majors balked and a huge opportunity was missed.
Again, in 2005 or so, the remaining major labels tried a lawsuit against pirate music source Kazaa. And again, the company under attack offered to share its ad revenues but were turned down. Actually one major peeled off from the lawsuit and did a deal with the Kazaa; the rest just simply dug their heels in and are still in the same spot to this day, left in limbo with neither them or their artists getting paid.
Nowadays, if a band wants an even remote shot at getting a deal with a major label, they must yield to the new business paradigm of giving up a portion of their publishing, their merch sales, and even concert receipts to the label in return for the release and marketing of the band’s music. This all seems dirty to me, but it’s the way things are now done—at least in the old corporate music world.
Back in the mid-to-late 1970s, there was a grassroots revolt against the then-bloated music industry (read the book Hit Men to get an idea of just how extreme the business had gotten). Independent record labels like IRS, Slash, SST, and Beggars Banquet began to spring up, giving new and different bands a chance to succeed and reach a national audience. The same thing has happened again in recent years as a result of Internet distribution. But right now, there’s almost too much information out there. A club booker now books bands based on how many views they get on their MySpace page. Bands have to hustle—maybe even more than in the pre-MySpace era—just to get a gig at a shitty bar. What seemed like a revolution fueled by the Web now looks somewhat tenuous.
But maybe the rest of the dominoes are ready to fall—and by that, I mean the ancillary parts of the music industry. I hope there is a true music revolution bubbling right beneath the surface of the underground that will hopefully surprise us all and get us away from, for instance, the vanilla agenda rock radio feels it has to follow these days in order to sell ads. Music blogs, internet radio, mashup sites—there’s a lot of things out there, of course. But with the possible exception of iTunes, the world is still waiting for the next wave of tools and institutions that will allow new acts to ingrain themselves into the popular consciousness the way bands like GNR were able to do—to create generational anthems, to mark moments in time for an entire nation, to unite our culture through music. Here’s hoping their arrival is right around the corner.
I’ve talked quite a lot here about the future of music and of record labels’ role in it. Well last night I saw that future in action, and it was in the shape of an iconic Minneapolis superstar jumping around like a mad man on stage at the dome.
Prince has sold out 21 nights at the O2’s 20,000 capacity venue, managing to get a half a million Londoners to see this frankly knock-out show, without needing to resort to the ridiculous prices of the Madonna tours. As you go into the concert, you also get a free copy of his latest album. Before the uber-cool one comes on stage, we see promo videos for all the merchandise which is on sale outside, and then there’s the after show (where he played another 12 songs last night), for those that want to keep on going (and keep on spending).
In Prince’s case, after the huge row over the use of his name in the early 90s, I’m sure he’d like nothing more than the demise of the majors. And, of course, most artists can’t sell out 140,000 seats in 20 minutes (as Prince did with the initial run). But it does go to show: if the music can be almost freely distributed (remember the actual album launch was a cover-mount on The Mail on Sunday), then the artists can make their money by playing great concerts, flogging the hell out of ancillary sales and the odd private appearance at billionaire’s birthday parties.
We met Jim when we needed to put some vocal tracks over an existing backing track. He is very welcoming and helpful. Our first time in his studio and we were hooked. Next time we needed to do the same thing, we went back to Rooster Studios in Homewood Illinois.
Not only does Jim operate the studio with his staff helpers, he also organizes small house concerts in the studio. That’s where we got to see Matthew Bailey perform. That’s where Jim also hosts food drives and other charitable events. You can also throw a party for your kid over at the studio and he will videotape and arrange all sorts of goodies for your special birthday person.
We highly recommend Jim and Rooster Studios. He even plays guitar and also writes songs. He’s on MySpace - so just Google Rooster Studios and if you’re in the neighborhood, give him a visit. Tell him Songs2Share sent ya’!!! That’s Roberta, Matthew and Jim in the photo taken at the studio.
Apple is believed to be wrapping up a new feature in iTunes 8 that will allow
users to stream their iTunes video purchases directly from the company’s servers
for playback anywhere, anytime without eating up local storage.
Dubbed iTunes Replay, the service would allow iTunes shoppers to build out
their digital video collection without worrying about the space needed to store
the often hefty media files. It’s unclear whether Apple plans to charge for the
service, which is said to support both iTunes Movie and TV show purchases.
One of the main complaints users have with video purchases on iTunes is that
they are forced to either throw away their files after watching them, or find a
place to store the large files either on their hard drive or by burning them to
DVDs. By storing their video content for them and allowing users to stream it
for viewing as often as they want, Apple would essentially be offering a media
center alternative.
iTunes Reply on other devices
The iTunes Replay service could also improve the experience of the company’s
Apple TV set top box, allowing users to stream purchased media directly from
Apple’s servers without ever syncing or copying files between Apple TV and a
computer running iTunes, and without filling up the devices’ limited hard drive
space, which currently tops out at 160 GB.
The ability to stream purchased content directly would also benefit users of
mobile devices such as the iPhone and iPod touch, which have an even greater
limit on local storage capacity but already have the ability to stream QuickTime
content directly over the air.
Amazon’s Video on Demand (formerly known as UnBox) and the Instant Watch
service from Netflix already provide video streaming, but both involve DRM
hurdles erected by the studios that complicate the experience, as they are
typically viewed through a web browser (although Amazon has an appliance
partner deal with Tivo, and Netflix has partnered with Roku and the Xbox 360).
Apple’s mobile devices, iTunes and Apple TV already accommodate the DRM
protection the studios demand for playback of their content, meaning that no
new layers of complication are necessary. Additionally, Apple has a wider selection
of video content to choose from in iTunes.
The disadvantage to streaming video content rather than playing it from a
downloaded file is that users will need to maintain high quality Internet bandwidth
throughout playback, or face interruption as the stream is buffered. Streaming
playback of HD content also typically requires better than DSL (1.5 Mbps) service.
If Apple continues to offer both downloads as well as streaming video on demand,
it will remain differentiated from streaming-only services like Netflix Watch Instantly
in that users on a slower Internet connection will be able to download HD titles in
advance and watch them via local playback, or even unplug their Apple TV and bring
it and their downloaded content to a location without Internet service for viewing.
Apple gearing up for new streaming traffic
iTunes Replay would arrive on the heels of last month’s report that Apple has
shifted its online content delivery strategy to include a provider in Limelight
Networks, joining longtime Apple partner Akamai Technologies. Having two
different providers could help greatly optimize the delivery of streaming
content to the millions of customers who use iTunes.
Frost & Sullivan analyst Dan Rayburn connected the change to Apple’s
booming digital download business, which he said is growing at a “crazy” rate.
“We already know that no CDN [content delivery network] has unlimited
capacity and can only handle so much traffic at any given time,” Rayburn
said. “If you are Apple, using more than one CDN is just smart business.”
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Video is here to stay. Shoot your band or yourself performing at
as many venues as you can. These videos have marketing potential.
We are signing videos into our new video catalog so contact us if
you have some. We’d love to view your work.
