Music Industry Analysis

Spring 2013 Record Label Share Breakdown

(Numbers from Billboard)

'Coronation day for Samsung's S4 in the 'Game of Phones' (Reuters)

Music + Mobile = Future of music delivery. For most music analysts this has been the mantra we have espoused since the introduction of the smart phone. Accurate for sure -> the future is now and getting hotter and more competitive by the day. Samsung is #1 in smart phone global penetration, Apple #2. Often times first to market with a new device/technology does not mean a sustained market share advantage. In Apples case it lasted only a few years as Samsung has been in the pole position since 2012. Fundamentally, it is also a battle between Android vs. iOS. In any case, watching the developments in mobile device/technology needs to be analyzed within the context of its impact on music sales/streaming when charting a course for the future of music. Certainly, they are tethered together for the foreseeable future.

The equation can be modified; Music + Mobile + Spotify(or similar service) = Ubiquity & Social engagement -> The future of music consumption.

 

Reuters

Music Power Players - Labels, Managers, and Publishers

The new list of music industry power players is out. No surprise as to the                                         number 1 slot: "Lucian Grainge, chairman of Universal Music Group, beat out "X Factor" host Simon Cowell and the manager for teen pop sensation Justin Bieber as the most powerful person in the music industry, according to a list released by  Billboard magazine on Friday." (Reuters). In year's past, a number of artists have made the list, but this year produced a derth of performers as the top power players are mostly music industry executives, music producers and artist / talent managers. Universal Music chairman tops Billboard industry power list .

And the winners are;

1. Lucian Grainge, Chairman, Universal Music Group

2. Coran Capshaw, Founder/Owner, Red Light Management and Starr Hill Presents

3. Martin Bandier, CEO, Sony/ATV Music Publishing

4. Michael Rapino, CEO, Live Nation Entertainment

5. Doug Morris, Chairman/CEO, Sony Music Entertainment

6. Len Blavatnik, Founder/Chairman, Access Industries

7. Rob Light, music head, Creative Artists Agency

8. Tim Leiweke, President/CEO, Anschutz Entertainment Group

9. Marc Geiger, music head, William Morris Endeavor

10. Jimmy Iovine, Chairman, Interscope Geffen A&M

WMG / Parlaphone Deal

The bidding war is over and WMG won the contest. For a mere $762 million dollars! Assets include: Catalogs of such artist as "Coldplay, Radiohead, Kate Bush, David Guetta, Daft Punk, Sinead O'Connor, Tina Turner, Tinie Tempah and Jethro Tull, among many others. The Parlophone Group includes Chrysalis and Ensign Labels as well as EMI's recorded music operations in Belgium, the Czech Republic, Denmark, France, Norway, Portugal, Spain, Slovakia and Sweden – which will bring a significant boost to Warner’s international operations". (Billboard)

Here is a new estimated market share breakdown.

2012 Sound Exchange Payout Chart

Over a year ago I discussed Sound Exchange and the incredible increase in digital radio royalty payouts from streaming. I have added the recently released figures for 2012 to the original chart. As it stands, the current explosive rate of growth has continued unabated -> great news for the industry as a whole. Digital payouts for 2012 was $462 million, up from $290 million in 2011, and just $8 million back in 2003. The 2012 figure represents a 63% increase over 2011 figures! Now we are talking real money, and though not the direct panacea the industry needs yet, it is one solution that is building a solid growth pattern year over year. At current growth rates, streaming royalties may defray a substantial amount of income lost from physical sales over time.

If you are new to Sound Exchange I encourage you to go to their website and learn more about what they can do for artists -> indies in particular.

Music Funding: A Quick Slide Show

Here is a fast slide show about some music funding ideas I put together -> Just a primer!

Music Funding; A Quick Slide Presentation from mianalyst

 

Apple Closer to Announcing Streaming Music Service for Early 2013

                          

Apple in the streaming music business could be a game changer for companies such as Pandora, Rhapsody and Spotify. Apple's market power, financial resources and vertical integration pose serious competitive disadvantages to all streaming/download companies. Word is Apple's service will be ad-supported, but more important questions arise. Including, what amount per stream will the content creators be paid? And the record company?

"Discussions are centered in part around how to share ad revenue and a deal could be reached by mid-November, with Apple starting a service within the first three months of 2013, said the people, who asked not to be named because talks are still in progress. Shares of Internet-radio leader Pandora Media Inc. (P) plunged the most since Sept. 7" (Bloomberg Business Week).

When the labels approved license agreements with Spotify, one of the concessions was a financial stake in the company to offset the paultry payout per stream ->  $0.00966947678815. The labels will not get a stake in Apple which is obvious, but what will they receive for licensing?

"In addition to an upfront fee, record companies are seeking a percentage of ad sales and the ability to insert their own commercials for artists" (Bloomberg Business Week).

We will know the full measure very soon.

Full article: Apple’s Online Radio Service to Challenge Pandora in 2013

UMG/EMI Merger Timeline

With a market share close to 40%, the new UMG/EMI is a powerhouse that will wield industry clout at radio, press, retail -online and brick and mortar-, touring...the list goes on. Truly we will not know the full measure of this merger for several years, but one can only guest the outcome. A sample of their new label force includes: " Blue Note, Capitol Records, Decca, Def Jam Recordings, Deutsche Grammophon, EMI Records, Geffen Records, Interscope Records, Island Records, Capitol Records Nashville, Mercury Records, Motown Records, Polydor Records, Universal Music Latino, Universal Music Nashville, Virgin Records and Verve Music Group" - Billboard. To illustrate the complicated process of the merger proceedings check out this link: UMG/EMI Timeline

UMG/EMI Market Share Chart

The UMG/EMI merger deal has been approved by the U.S. as well as the European commission. One concession UMG must make per the approval is to divest 25% of EMI including Parlophone. The following chart reflects the new ownership percentage (less 2.5% = EMI's 25% divested market share required per regulators). Thus the chart adds up to 97.5% since we do not know where EMI's 25% market share will end up - most likely in the indie market thus improving the indie number from 9.57% to 12.07%.

Apple Event 9-12-12 -> More than just about the iPhone 5

 It was good to see Apple CEO Tim Cook include developments within iTunes during the Apple event of Sept 12th. Because of the news swirling around the iPhone 5, it could have been easy to bury iTunes news to a quarterly conference call vs. this weeks Apple event. It proves there is still a commitment to the music industry by the new CEO and that is very good news. Some stats:

• iTunes had sales of over $1.8 billion
• iTunes Store launched in over 12 countries including Hong Kong, Singapore and Taiwan last month
• New iTunes 11 (Oct 12')
• Improved layout
• iCloud integration - this is key!

Here is a link to the full conference: For the discussion on iTunes and iPod forward to 1:02 into the video:  Apple Event Sept.12 2012