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Pandora, Other Webcasters Reach Royalty Deal

After two year of wrangling, "pure-play webcasters" (those who do not also broadcast over the air or are part of large corporations) have reached a settlement...

...for royalty payments to SoundExchange. Online broadcasters like Pandora, AccuRadio, Digitally Imported and Radioio are all included in the agreement.

On his RAIN blog, one of the chief industry negotiators, Kurt Hanson of AccuRadio wrote:

"This agreement has three main benefits for those who choose to elect it:

(1) It cuts the CRB per-performance rates for 2007-10 by approximately a third to a half.

(2) It establishes per-performance rates for 2011-15 " with annual increases, to be sure, but not as huge as the kind of annual increases the CRB was coming up with. (And without the risk and expense of participating in another CRB proceeding for that period.)

(3) And it gives smaller webcasters a chance to grow into these rates " with a percentage of revenues royalty rate for a webcasters early years (about 14% until they hit $1.25 million in annual revenues, and 25% for about a year thereafter)."

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Facebook Advertising to Surpass MySpace by 2011

MySpace has been losing face over the course of the last year. With sliding traffic and attention as well as shifts in management and reductions in staff...

...MySpace is not only a place for friends, but also a place for skeptics.

According to a Compete.com, Facebook received 122,559,672 unique visits in June 2009 twice that of rival MySpace, which realized only 60,973,908 unique visitors. In year-over-year comparisons, Facebook volume skyrocketed with 248.17% while Myspace slightly recoiled, down 5.65%. The good news for both networks is that June represented positive growth over the previous month with Facebook visits growing by 8.45% and MySpace realizing a bump of 7.19%.

Not only has Facebook surpassed MySpace in traffic, according to eMarketer, Facebook appears primed to overtake the once dominant network in ad revenue as well.

Social Media appears to be an unsteady landscape tied directly to the popularity, trendiness, and momentum of any given network at any given moment in time.

eMarketer anticipates US spending at MySpace to fall 15% to $495 million in 2009 from $585 million in 2008. In contrast, Facebook will grow from $210 million in 2008 to $230 million in 2009.

After reviewing the numbers, an interesting observation surfacedAdvertising spending on Facebook and MySpace alone account for 2x the total advertising dollars going to all other networks combined. Also, widgets and applications will continue to grow with funding up 6.1% from 40 million in 2008 to $70 million in 2009.

Even though Facebook 2009 projections are roughly 40% of MySpace revenue, Debra Aho Williamson, eMarketer senior analyst and author of the new report, Social Network Ad Spending: A Brighter Outlook Next Year, expects Facebook to surpass MySpace revenues by 2011, Facebook, once a distant second to MySpace, has outperformed its rival in nearly every measure of usage"and is on track to surpass MySpace in ad spending by 2011."

Williamson also predicted a brighter future for advertising spending on social networking, The expected rebound in spending will come as more companies focus on creating and implementing an overall social marketing strategy. And it is a clear indication that the experimental phase of social network marketing is finally drawing to an end.

Indeed 2009 painted a bleak picture as spending was down an estimated 3%. The good news is that according to eMarketer, budgets will grow by 13.2% in 2010 and 8.2% in 2011.

I imagine that by 2010, well finally see a revenue model introduced by Twitter. Perhaps those numbers will only trend as opposed to fanning out once advertising becomes an option at the highly sought after network.

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ASCAP Wants $'s For Embedded YouTube Videos

ASCAP sent a collection letter to Jason Calacanis seeking payment for YouTube videos embedded on his Mahalo site. Based on what the group told Valleywag...

...many music bloggers should also be concerned:

"ASCAP does not offer licenses to " or require licenses from " those who simply make their personal blogs available on purely noncommercial Web sites. Mahalo.com is a larger venture than simply a personal blog, and therefore ASCAP is engaged in discussions with Mr. Calacanis concerning the use of ASCAP members' music on the site."

It's not the first time that ASCAP has sent such letters. So far YouTube has told recipients to refer the group back to them. But recently a judge ruled Google owed ASCAP $1.6 million and a court battle coninues. But how long will Google continue to defend bloggers who post thousands of videos woith music daily?

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Major Label vs. Startup: EMI Sues Grooveshark

Grooveshark has become the latest music startup to be sued by EMI. Under the motto "Millions Of Songs. Find Yours", Grooveshark combs a database of...

...6 million songs spread across the internet for quick and easy playback.

But like Seeqpod and others who have tried to offer music online without first cutting difficult and xpensive deals with the major labels, it inveitably has come under fire. Grooveshark says that it had been trying to make deals for a 50/50 as revenue splt, but to date no majors had signed on. The full text of a statement on the lawsuit from Grooveshark via Media Memo is after the jump.

hypebot briefing: Playable search engines like Grooveshark host no music, but rather grab it for play Google-like from across the web. Downloading is not enabled and unlike after a Google search, the location of the song files are never revealed. So why can't the industry offer blanket licenses that monetize these sites instead of enriching lawyers? The alternative is an endless game of global whack-a-mole.

From Grooveshark:

For the past year, Grooveshark has been in talks with EMI Records and other copyright holders to negotiate licensing agreements for the use of their content. We are pleased to announce that over the past few months Grooveshark successfully concluded mutually benecial agreements with many artists, labels, and publishers that we hope to be a template for other such agreements with additional copyright holders.

Recently, EMI Records chose to abandon the template weve built with the help of other major copyright holders and opted for their traditional intimidation tactic of ling a lawsuit as a negotiating tool. We nd the use of this negotiating strategy counterproductive, as Grooveshark has been willing to conclude an agreement with EMI Records that is economically sustainable for both EMI Records and a start-up company the size of Grooveshark.

Grooveshark is run by a group of young and passionate musicians. We love music, we make music, and we believe that the use of all music should be paid for. We adopted this core philosophy at our inception and to date have concluded agreements with hundreds of record labels, major US performance rights organizations, and thousands of independent artists who support Groovesharks business model. (See: Grooveshark Artists)

As musicians, we support the rights of copyright holders and strive to sign sustainable agreements with all content owners, ensuring that all artists get paid" or we agree to remove content from our system in accordance with our DMCA Takedown Policy. We hope that EMI Records eventually follows the lead of the many forward-thinking labels we are already working with, who would rather get their artists exposure and a fair share of our revenue than block content access and force customers to illegal networks.

We understand that the economy of the digital music business is in a state of ux, and we hope to help ease this transition by providing the required new tools and services that lead to the next generation of the music industry. We respect the ownership rights of the major labels and publishers, and our core mission has always been to compete with piracy by offering a service that is genuinely better than what illegal networks offer, while also ensuring fair payment to copyright holders. Our next important step on our road to success is to conclude a mutually benecial agreement with EMI Records that is sustainable for both EMI and Grooveshark.

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For Sale: The "Firedog" Brand

Imagine my surprise when I saw the following graphic in the middle of my evening update from TWICE, the consumer electronics industry publication:

It's not a terrible ad for industry insiders, but still, a bit of a surprise. Check out where it leads:

streambankllc.com/engagements/firedog.html

As the site explains:

• Brand Strength

o Number 2 market position
o Multi-service offering under one brand
o National footprint with coverage of over 80% of the US population
o Market-leading customer satisfaction scores
o Generated over $272 million of sales in F2008
o Achieved 28% revenue growth and more than doubled EBT in F2008 vs. F2007

• Current Offerings

o PC Services - PC repair services, new computer set-up, remote service plans, and networking support
o Repair In Home/Depot - In-home TV repair, warranty/OEM repair services, and service depot
o Home Theater & Audio Services - Flat Panel installation, surround sound/ home audio, TV Projector mounting, custom A/V solutions

• Future Potential

o Significant opportunity for growth within the $26 billion consumer electronics services market
o Unlimited brand potential to go beyond consumer electronics

Really, rather interesting. If they're doing so well, though, with $272 million in sales in 2008, why are they in bankruptcy in the first place?

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Facebook Turns a Design Flaw into a PR Coup

I've been commenting over on Scott Hoffman's Cliqology about Facebook's username registration.Scott wonders aloud if Facebook left $3 million in revenue...

... on the table by not charging for the names.

I responded:

Facebook here is giving people something they expect on any other service - MySpace, Google, LinkedIn, etc. Creating a barrier to entry would have stood in the face of the democratization of social media. That customized names were needed at all was a design flaw. That they made it a PR coup was brilliant. That they left revenue on the table was a smart business decision.

As an aside, it wouldn't have been anywhere near $3 million. I'm sure a large number who did it enjoy the bragging rights and badge of honor, but it's not something they'd pay for.

There's more discussion on Scott's blog, so check it out.
You can also connect with me on Facebook via my new vanity URL, www.facebook.com/dberkowitz. (Send me a note if you know me through the blog - I often ignore people when I have no clue why they're connecting.)

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Album Sales Drop Accelerated To 18% In May

On the eve of the annual NARM music sales convention, Nielsen Soundscan delivered the sobering news that the decline in album sales accelerated to 17.8%...

...in May compared to the same month in 2008. Last month's sales were 37.7% lower than in May 2007.

The drop compares to declines in recent month of 11-13.5% and suggested a even sharper sales fall off then most had predicted. However, the figures do not reflect most direct to fan sales from indie and d.i.y. artists via their own sites and at shows. While not nearly enough to counter the overall decline, this direct artist to fan relationship is one of the bright spots in an often bleak music sales landscape.

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EMC Trying to Outbid Netapp on Data Domain

More to follow, but EMC just bid $30/share - or $1.8B for Data Domain. I see absolutely nothing logical in the move, and if I were NetApp, I would look at this...

...as the world's best Mulligan.

EMC has 19 dedupe solutions already, owns Quantum practically, and ALREADY sells more target based backup systems than DD. Why on earth would they want to pay that much for another version of a feature - that won't support the only place they should be trying to play: the HIGH END?

Had they announced that they bought Sepaton for $400M or so, I would have said OK, good move. But this? This was nuts when NetApp was doing it at $1.5b. It seems super-nuts now.

The only possible play I can make semi-sense of is that they really didn't want NetApp to have it, because NetApp's only hope of making the deal make sense was to run very fast and very hard to dominate the global landscape with the DD stuff. That, in my opinion, was a long shot. This, in my opinion, is irrational.

Is there ANYONE that thinks the DD stuff is so far superior to the other 800 ways to do dedupe these days that it's a fait acompli that the world is going to demand DD branded dedupe? I know it's good, but that good? The market already had DD overvalued from a pure earnings multiple perspective, and customer growth rates weren't all that impressive. So you double the cap??

I'm scratching my head at this point - but, maybe EMC is trying to get NetApp to spend even more than they wanted - their cash position is no where near EMC's, so maybe they are super-smart and trying to get NetApp to spend $2B - which will be a huge blow to their cash position. I doubt it, but that would be cool.

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mSpot Signs Up 6M For Paid Mobile Entertainment

Mobile music and entertainment company mSpot announced this morning that it has surpassed the 6 million mark in total paid users - a 150% increase since...

... July 2008. mSpot offers mobile access to music, custom ringtones, live radio, videos and movies. Juniper Research estimates that mobile application revenues will reach $25 billion by 2014.

mSPOT'S SUCCESS FORMULA: NO ADS + CONSTANT INNOVATION

Founded in 2004 and profitable since 2006, mSpot continues to grow despite the recession and a business model which currently does not rely on advertising. Rather, mSpot has built its reputation and customer base by innovation and offering mobile products like mSpot Radio, mSpot Movies, Music Sync and Make-UR-Tones. In fact, the company says they are on track to reach a new high in revenue and profitability on 2009.

Recent landmarks for the mobile company include:

• Mobile radio deals with AT&T, Verizon (Alltel) and Bell Mobility, adding to preexisting radio partnerships with Sprint Nextel, Telus and US Cellular
• Mobile Make-UR-Tones deals with Verizon and US Cellular, adding to preexisting Make-UR-Tones partnerships with AT&T and Sprint Nextel
• Over 1 million mobile app downloads for mSpot Make-UR-Tones; 70% month-over-month growth in sales over the past year
• Launch of mSpot.com, the direct-to-consumer web application featuring custom ringtone editor with lyrics and bios
• 3.5 million users on the Movies on Demand service

We are very proud of the achievements weve made executing a profitable business strategy with steady growth, said mSpot CEO Daren Tsui. Our product roadmap is filled with innovations for the next 12 months and we expect our growth to continue even as the economy remains weak.

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Pandora Claims Profits Close, Adds Lyrics

Pandora-logo new Pandora will reach profitability in 2010 according to founder Tim Westergren. Revenue is expected to double this year to $40 million thanks to...

...targeted ads delivered to 27 million registered users which are growing at the rate of 50,000 to 60,000.

About a third of the growth is coming via its popular iPhone app. Its a whole new world for us, thanks to their mobile apps Westergren told Bloomberg News. Its changed the perception people have of what Internet radio is, from computer-radio to radio, because you can take the iPhone and just plug it into your car, or take it to the gym.

Pandora announced that it will be adding access to lyrics using the Gracenote platform.

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