Despite the positive sales of the new album, Wal-Mart shares have lost over 5% since Monday, the day the album was released. The apparent non-effect of the album on Wal-Mart shares could be due to its own exclusivity, meaning some shoppers may be entering stores only to purchase the album. It could have nothing to do with the appearance of the album as well, which is a more likely scenario considering trading and the market this week.
Still, the success an exclusive album in the market right now indicates the positive and negative aspects of exclusivity with the music industry to market physical albums in a system focused on digital sales. AC/DC is not aligned with the major digital stores either, meaning that the move could be akin to the band's agreement to offer songs, albums, and other content with Verizon Wireless (NYSE: VZ).
Wal-Mart has taken the lead in selling albums exclusively, although most albums are live recordings or collections. The new album from the Eagles last year was the first time a new album of studio material was released exclusively to massive success. Best Buy Inc. (NYSE: BBY) will follow the trend soon with the exclusive release of the long-awaited new Guns 'n' Roses album, Chinese Democracy. Investors interested in the music industry and retail outlets would be wise to consider these decisions since they are indicators of massive success, even if that success is short-lived and does not make physical formats more viable in the current digitally-focused market.
Helping to fuel this rumor is the band's new management, Irving Azoff's Front Line Management, which has a history of releasing new albums exclusively through single retailers. Front Line released the Eagles return album Long Road Out of Eden through Wal-Mart Stores, Inc. (NYSE: WMT) a year ago with massive success. The "new" Guns n' Roses album would predictably see similar success when and if it is ever released, and Best Buy is smart to be grasping at the exclusivity if it is more than a rumor.
But will the album's release recoup the amount of money spent producing it? This is one of the major reasons the album is continuously unreleased, despite rumors of release dates and its appearances on release schedules. A March 2005 article by the New York Times stated that production costs had reached $13 million, a figure that could only have increased in the following three and a half years. These high figures raise the question of whether the album will truly be worth release financially, even if it is critically or popularly successful.
Opening a store like 7digital, where music fans can purchase high-quality MP3 tracks from all the major labels would be a strong challenge to the dominance of Apple Inc. (NASDAQ: AAPL)'s iTunes Store in the United States. Drury told Billboard as well that consumers are more likely to buy MP3 formatted albums over the DRM albums generally offered in stores like iTunes and that the average "transaction" on 7digital' site is around $8. The CEO also welcomes the pending launch of a MP3 store by Amazon.com Inc. (NASDAQ: AMZN) in the United Kingdom, since it will promote and provide more choice to consumers looking at formats without DRM and stores without subscriptions.
High quality DRM-free MP3 files work on across all platforms and devices, meaning that consumers that do not own Apple's iPod can buy tracks for other devices. Overall a U.S. 7digital store would be a true competitor for iTunes and could boost the music labels if prices drop and more digital tracks are bought as the CD slowly declines.
When it was released, critics and industry "pros" derided the credit card-like download albums as a step backward (you could easily download an album from iTunes without the cards), overpriced (the set price of the cards is $12.99), and a complete misstep in a market and economy obsessed with environment-friendly products (the cards are only available from physical retailers). Nevertheless, and these problems aside, the cards do offer those music listeners who are shopping for groceries or out buying other goods the chance to buy a downloadable album without the hassle of the CD.
Critics overlooked the mass appeal and sale capability of the cards in grocery stores and other stores since the target groups are not listeners who go out to simply buy an album, etc. Additionally, the platform only offers music from Sony's artists, which limits its catalog capabilities, but it does offer the highest quality MP3 tracks at 320 kbps MP3. By comparison iTunes's music files are generally 128 kbps in the regular store and 256 kbps in the iTunes Plus store.
Nevertheless if Metallica and AC/DC are returning with new material, the music industry is simple not a safe place for anyone involved with it: artists, managers, investors, and vital customers. In fact, both Warner Music Group Corp. (NYSE: WMG) and Sony Corporation (NYSE: SNE), which owns Sony Music Entertainment Inc., have seen declining prices throughout the summer. None of this is any different from the declines the industry has been seeing in recent years, but digital sales and excitement over new albums in the summer might have pointed in the opposite direction.
The AP's projections for other top albums this fall include material from rapper T.I., still reeling from a weapons charge and punishment, and High School Musical 3 from Disney (NYSE: DIS). It is just too hard to suggest if these projections are reliable in an industry currently in flux and continuously declining. However, they are sure to be successful, in particular the next installment of High School Musical, but they will probably all be paled by an unexpected success. If the summer excitement could continue from the festivals and tours into the fall, then these albums could do well, but whether that will improve the industry or improve investors is just too risky to speculate.
Part of the update comes as users have made less and less drastic changes to their profiles, instead adding single images or changing their statuses. Facebook is also aiming to reduce the size of profiles loaded with various applications that also appear on users "Mini-Feeds" and "Walls". Users will also be able to delete items from those functions, but no new information about online behavior previously unavailable will suddenly appear, according to Facebook developers and executives.
The internal memo acquired by Billboard would seem to indicate otherwise however, instead pointing to earnings in the first quarter of 2008 compared a loss of nearly $90 million in the same quarter of 2007. Revenue in the first quarter rose 61%, while the Coldplay album was released only a month ago, in the second quarter. Hands had gone on record pushing for a "reshaped organizational structure" looking for greater profits and less loss, and with the new memo he appears to have achieved the "accountability" for EMI that he sought when Terra Firma bought the music company last year. The report also comes in the wake of EMI losing a few seasoned hands at the end of June and hiring a new CEO for the music division, Elio Leoni-Sceti, known for his past in household marketing and products.
The development of an online music store from the makers of Guitar Hero and World of Warcraft would be a profitable development for music publishers and investors, since downloadable content rakes in more money than simply offering music on game discs, according to a follow-up by Billboard on Friday. Part of this is due to continued spin-off games, especially the Guitar Hero franchise which saw Guitar Hero: Aerosmith and Guitar Hero: On Tour released in June. The fourth game in the main series is also due this fall and a Metallica-based game for next year.
Unfortunately, while any new music based digital store might offer a viable and intriguing challenge to Apple's iTunes Store, to date it still remains the industry leader despite previous attempts to dethrone it. No matter how much the music industry and other retailers dislike iTunes and Apple's hold on music and other downloadable media, the company still manages to maintain positive consumer relationships. This was made obvious today by the commotion over the new iPhone, which saw another price drop and technological advance.
According to Billboard, the new phones resemble transistor radios but are not equipped "to allow users to download tracks from the radio but do have a feature that identifies the song and artist played." Sony Ericsson's marketing VP for South America, Stephan Croix, told the trade paper the devices are part of "a very simple and straightforward concept that will make music more relevant in the mass market," as opposed to more sophisticated technology like Apple Inc. (NASDAQ: AAPL)'s iPhone that merges music capabilities with phone and Internet functions.
Sony Ericsson recently issued a second profit warning for 2008, hoping to recover in the second quarter after falling behind rival South Korea-based LG Electronics in the first quarter. The warning points to declining European sales, which could indicate why the new radio/phone devices are being pushed in South American markets, in addition to the obvious reasons outlined above. The company is also hoping for a massive resurgence in quarter three with the launch of the new Xperia X1 handset in September. The release of the iPhone and how it performs after this week will only add to complications and competition Sony Ericsson may have before the radio/phones are released regionally and later globally.
Reuters further reports that the band has two albums and a greatest hits album left with Road Runner Records, with the band's last album selling 10 million copies. The news source speculates that the deal could be expensive if the band's new albums in the future fail to deliver the success that the band has enjoyed to date. The deal also throws into question the value of Road Runner Records after Warner Music Group bought the label in December 2006 for $73.5 million. Despite other high profile artists, Nickelback is the label's most successful act.
Live Nation has raised the stakes for music companies since beginning to sign major artists last year. By offering services for nearly every aspect of those acts' careers, Live Nation means managing careers are simplified in theory. In addition, the growth of the digital music market has made it easier for the company and the acts it signs to distance the services from the tendencies associated with music companies and traditional recordings deals. Unfortunately, since the deals have yet to commence for any artist, the success of deals such as this have yet to be seen.
HD radio has picked up significantly since 2002, when only 11 stations (AM and FM) offered a digital signal in addition to traditional analog signals. Now, more than 1,700 stations offer HD radio as well as second and third signals of specialized shows because digital signals use less bandwidth than analog signals. USA Today reports that carmakers moving in this direction is a major positive move for HD radio since the car is a major venue for radio. The newspaper also speculates that HD radio might prove a major threat for XM Satellite Radio Holdings (NASDAQ: XMSR) and Sirius Satellite Radio Inc. (NASDAQ: SIRI) subscriptions as well as any merger those companies make.
Unfortunately, many insiders point to many consumers unfamiliarity with and not knowing about HD radio as a problem for the product's success. It seems likely that with carmakers picking it up as a standard feature, more consumers will become aware and adopt HD radio as a venue, if at most because it will be a standard feature. Regardless, HD radio much like HD television is another development that gives consumers better quality and offers technology that audiophiles can enjoy and embraces new developments that are occurring concurrently with music industry and digital tracks.
Last month, leaders for EMI's North American branches, including Capitol Records president Lee Trink, left the company due to Terra Firma's preference for no presidents over the label branches in EMI. In the meantime, representatives and leaders for the music company's Artists and Repertoire divisions were given greater leverage and more power over the running of the labels, even though the plan left artists without the traditional representation that label presidents had provided. This news came on the edge of Coldplay releasing Viva la Vida or Death and All His Friends, with many rumors pointing to that album as a savior of sorts for EMI in 2008.
Since then, Coldplay's album has scored huge around the globe but EMI has fallen to only holding 9% of the music market in the first half of 2008. Guy Hands told the AP that Leoni-Sceti "joins [EMI] at the right time to shape, drive and lead EMI to become the world's most artist-focused and consumer-friendly music company." The new executive may fulfill Hands hopes with his background in brand managing and household products, marketing music in new ways and attracting a larger consumer base.
A new report by Gigwise reveals the band's position and reasons for it, with Oasis calling the Radiohead method nothing more than a marketing tool. Noel Gallagher, Oasis' lead songwriter and guitarist, did call Radiohead "rebels and outsiders" when commending Radiohead's method as a unique marketing tool.
Oasis signed a new deal with Sony BMG Music Entertainment, a joint venture between Sony Corporation (NYSE: SNE) and Germany's Bertelsmann Music Group, last month that will see the band's own label, Big Brother Recordings, release the new album while Sony BMG oversees the band's back catalog and previous releases. The deal is a more traditional arrangement in today's market and environment that makes the new comments against Radiohead unsurprising.
Ben Drury, 7digital.com's CEO, commented on the place of the newer, higher quality, DRM-free tracks in the digital market, calling them "the future for digital music" and a sign that all online music sales will be handled in the format. In the meantime, 7digital.com has become the number two digital music retailer in the United Kingdom, entertaining nearly two million consumers every month. Although it is a UK-based company, American consumers can use the site and enjoy high-quality DRM-free MP3 tracks via a credit card and a currency conversion charge.
I've utilized 7digital.com in the past for the very reasons that the company is now reporting increased sales, even though the conversion charge and prices are not easy to determine due to the lower value of the dollar compared to the pound. The digital market deserves to be less about borders than it is and 7digital.com proves that DRM-free and internationalization can co-exist even with extra fees and charges for American users. Apple Inc. (NASDAQ: AAPL)'s iTunes Store is another digital retailer that could benefit from these types of sales, but the company maintains different stores for national markets.