MediaFile

TodayInMusic: Sony Music may have no CEO in a few weeks

Sony Corp still hasn’t confirmed to insiders who will replace outgoing Sony Music CEO Rolf Schmidt Holtz, whose contract ends on March 31st. Stories (including ours) have been doing the rounds for at least 3 months now that Schmidt Holtz will be replaced by current Universal Music Group chairman Doug Morris but, perhaps unsurprisingly, that move is proving complicated.

Sources say Morris has to give a year’s notice, which would take him to Jan 1 2012 at the earliest. The problem is Schmidt Holtz has made clear to his Sony Corp he has no intention of extending his contract as he’s ready to retire, move back home to Hamburg and concentrate on his various investments like TeVeo.

If Sony and Universal can hash out some agreement on Morris’ contract, he may be able to start as early as July 1, insiders said.  But that would still mean that the good ship Sony Music might be without a captain for three months, not a great thing in an industry where uncertainty reigns.

One option for Sony might be to put Sony USA CFO Rob Wiesenthal in charge  temporarily until Morris can come on board.

(Photo: Reuters, picture of Sony Music artist Beyonce)

Today In Music: Sony Music boss invests in start-up, fuels exit speculation

Sony Music Entertainment Rolf Schmidt-Holtz’s personal investment in Hamburg-based entertainment technology company TeVeo has sparked off speculation that his departure is imminent — which it almost certainly is, but not necessarily because of his investment.

As is well known by now, Schmidt-Holtz is very likely to leave Sony Music on March 31st when his contract expires after five years on the hotseat. He will be a partner in TeVeo following an investment, which was cleared by Sony, and is believed to be around 10 percent.  We’ve been told by a source that the investment and his likely departure in March are not linked.

So if he does leave what will that mean for Sony Music, still struggling to present a completely united front to the world since the 2004 merger between Sony Music and BMG Entertainment?

The name on everyone’s lips is Doug Morris (pictured, left) , the veteran chairman of Universal Music Group who has held early talks with Sony Corp chief executive Sir Howard Stringer. Other names we’ve heard include Rob Stringer, Sir Howard’s younger brother — which would be an awkward appointment to  make for obvious reasons. Other names in the mix include Sony/ATV Music Publishing chief Marty Bandier and Sony USA CFO Rob Wiesenthal. See all the details here in our story from December.

(Photo: Reuters)

Today In Music: Spotify U.S. not imminent, “not even in Q1″

We hate to hit replay on this one but following New York Post’s story today that European streaming music service Spotify is close to a deal with Sony Music and thereby close to launch we decided to call a few people to confirm.

It appears there’s still some distance between Spotify and the big major labels my sources tell me.

“It’s not happening anytime soon, they may be close to getting deals done, but the labels are still not confident about their business model,” one person said.

Spotify’s model is simply to offer free streaming of music to millions of fans with the view to converting a decent proportion of them to paying customers for the customizable features. You’ve read this elsewhere of course and here that the labels expect Swedish founder Daniel Ek (pictured) and his team to provide a boatload of cash as a way to reduce their risk on doing a deal.

But our sources argue it’s not as simple as a “show me the money” scenario. The conversations have fixated on whether Spotify will ever be able to get its conversion rate above 10 percent since they claim even in its best European markets its around 6 to 7 percent on average.

Then there’s the fact that there are already a fair few streaming subscription services in the U.S. including MOG, Rhapsody, Pandora, Napster and Rdio among others which Spotify would be competing with — unlike back home in Europe where it is by far the market leader.

When you take all that into account the same person says: “It’s unlikely to be this quarter.”

Today In Music: Labels still looking forward to Google Music, Spotify less so

So 2010 was the year that wasn’t as far as a major revolutionary digital music launches were concerned. Label executives have been hoping fervently for some real competition to take on Apple’s iTunes. Not that they don’t want iTunes to do very well but having one company control 70 percent of recorded music sales in your biggest markets like the US and UK is perhaps not best for industry growth.

This has meant that whenever it looks like there could be real competition — remember the hopes for Microsoft’s Zune? There’s always been an overreaction from the labels in the hype department. Remember how Amazon would be a true digital rival? Today it’s market share hovers around the 15 percent mark.

So when Google started talking to labels about a music servicethe labels got very excited. So far we know Google has proposed a download store and a digital music locker which will allow you to access music you own wherever you are. They had hoped to have it up and running by Christmas but dealing with labels takes time. In the meantime Google has been getting its house in order for become more a content middle-man media company by promising to work harder on issues like copyright.This is likely because it would like to have more mainstream content for its Android wireless phones and tablets if it is to be a more complete competitor to Apple’s iTunes/iPhone/iPad/iOS ecosystem.  We’re hearing the labels are still very confident that Google will get something up and running sooner rather than later despite the delays. Google is also still looking for people to run its music service, though negotiations have been led by Android founder and Google VP of engineering Andy Rubin (pictured, above).

The prognosis for a Spotify US launch is far less positive despite plenty of promise from the European darling of digital music, the labels and Spotify are still far apart on reaching a deal. At issue is the usual old thing: money. Basically, Spotify wants to launch with its free to air service with adverts and hope to make money for itself and the labels by converting users to paying for its slick intuitive service. We’re hearing that the labels, who have done similar streaming deals with a whole range of players like Rhapsody, Napster, MoG and Slacker are not keen to bear the brunt of the risk. In other words offer to pay us more upfront and we can talk.

The labels other concern of course is that if they cut Spotify too favorable a deal they run the risk the likes of Apple and Amazon could turn around and demand similar terms since arguably a free to air service undermines the value of downloads.

Privately some executives are critical of Spotify CEO Daniel Ek’s (pictured, at right) cocksure public promises  it would launch in the US in 2010 even while negotiations were still going on — and not really getting anywhere significant.

Whichever side of the debate you sit one things clear it  might take even longer than thought for Spotify to get its show on the road here in the US.

Warner’s music comes to Hulu, still not on Vevo

Warner Music has just announced that it has signed up to offer music videos, live shows and interviews of its artists on the popular online video site Hulu.

This is interesting as Warner Music is the only one of the so-called big four major music companies that hasn’t signed up to put its music on Vevo, the premium music video site jointly owned by Universal Music Group, Sony Music Entertainment and Abu Dhabi Media Company. Vevo is built on the technology platform of YouTube. Warner and YouTube have recently fallen out then settled over licensing terms.

Ultimately, this is about business for Warner. As the only publicly traded music company, Warner Music Group seems keen to occasionally go a different route from its other major label rivals as its executives will argue they have shareholders to answer to.

But are people going to go to Hulu for music videos? That remains to be seen. Warner exec Michael Nash said in the press release that Hulu offers its artists a “customized and flexible approach to marketing and monetizing their music”.

Warner artists like Muse, Jason Mraz and Paramore will be among those to feature in the deal. The news comes after EMI signed up with Hulu in Nov. EMI also signed up put its artists videos on Vevo, though it is not an equity partner.

(Photo: Reuters)

eMusic is in talks with other majors after Sony deal

Long time independent digital music retailer eMusic has finally got its mittens on some major label music after signing a deal with Sony Music Entertainment — and the company says it is still in talks with other majors like Universal Music, Warner Music and EMI to see if it can get more.

From the third quarter eMusic will have catalog from names like Bruce Springsteen, The Clash, Johnny Cash and Outkast. Catalog music here means songs older than two years.

eMusic, which is an independent retailer owned by JDS Capital Management, competes in a tough market led by Apple’s iTunes and Amazon.com MP3. But it has has held its own and even claimed to be the No.2 digital music retailer on some measures in the recent past.

It has managed to gain market share by being the digital retailer of choice for music on independent labels focusing on the grown-up end of the market.

Some see this deal as the latest sign that the major labels are finally getting round to the idea of becoming more flexible and prepared to work with a wider range of retailers on less onerous terms licensing terms.

eMusic, for instance, sells its service as a subscription offering the ability to download 24 tracks for prices starting at $12 a month or 50 cents a song. This compares with the 99 cents a track that iTunes typically charges customers, though it does not tie customers into a monthly commitment.

Global music sales keep falling, pretty much everywhere

The global recorded music sales tanked in 2008, according to figures from the music trade body IFPI, which finally confirmed what we all expected. The worldwide decline was led by a sharp 31 percent drop-off in physical format sales (mainly CDs) in the US. Even though US digital sales grew 16.5 percent it couldn’t make up the shortfall, and overall US sales were down 19 percent.

The trends were similar in the Europe where sales fell by 6.3 percent.

It’s not all gloom and doom though. Sales were up 1 percent in Asia, because it was the one region where the growth in digital sales managed to make up for the fall in CD sales. That will likely be due to the fact that CD sales in some Asian countries has never been properly developed due to piracy. Many labels are further along in using digital-only formats in Asia.

Phil Hardy, analyst at The View, said while physical recorded music sales are in terminal decline, a new business is emerging for recorded music companies in which the digital and ancillary exploitation of their rights are growing. Many in the music business are hoping that licensing music rights to social media sites like Imeem and Pandora or mobile music services beyond just ringtones will be a major growth area in years ahead.

Hardy: It is unlikely that the value of these rights will ever reach that of recorded music sales at its height, but for a slimmed down record industry the higher margins that the digital, performing rights and the 360 degree artist deal sectors represent could bring a return to profitability.