Billboard reported Thursday that MasterCard Inc. (NYSE: MA) has launched a new campaign titled "Roots of Rock" that offers free downloads for cardholders from Universal Music Group. Apparently the free aspect of the campaign is limited and after 100,000 songs have been downloaded, MasterCard will begin to charge $0.80 per track. Even after the credit card company begins charging for downloads, pricing for tracks is still lower than Amazon.com Inc. (NASDAQ: AMZN)'s MP3 Store ($0.89) or Apple Inc. (NASDAQ: AAPL)'s iTunes Store ($0.99).

Cardholders who also make a purchase by August 31 will be "entered into a sweepstakes with a grand prize of having a meet and greet with Jon Bon Jovi, Eric Clapton or Kenny Chesney." MasterCard executive Amy Fuller told Billboard with the new campaign, the company has "created unparalleled music experiences with three of the world's most popular artists, providing consumers with an intimate perspective on these icons that few fans will ever have." But those fans will have to win the sweepstakes.

MasterCard's campaign to offer free downloads is like numerous other programs that are linked with music companies, but it offers to take the digital market to a larger consumer base. Lowered prices (eventually) for the campaign mean that Universal Music Group will continue to hold on to the lead in music sales, if only because the music company is the only one on board with MasterCard. Consumers that might not have ever downloaded a track may be enticed to try out the campaign and the sweepstakes. This type of growth is what the music industry will need if digital sales are ever going to replace physical sales successfully and completely.

Billboard reported Monday that MTV Games, a division of Viacom Inc. (NYSE: VIA), will release the second installment of the popular Rock Band game this September. Rock Band first came out late last year in direct competition with Activision Inc.'s (NASDAQ: ATVI) Guitar Hero franchise, but where Guitar Hero only offers guitar simulated play, Rock Band offers a wide range of instruments and vocal game play. Rock Band also features an online store where users can download additional tracks for the game.

Rock Band 2 will be released at a time when a number of other music-related games, and according to MTV Games the game will feature "new and 'improved' drum and guitar controllers, a larger soundtrack, and new online modes and customization options." Additionally, all previous controllers and downloaded songs will also be compatible with the new game, so players will not lose those features or be required to buy new input devices. The game will initially only be available on Microsoft Corporation's (NASDAQ: MSFT) Xbox 360 platform but will expand to other systems by the end of the year.

Rock Band and Guitar Hero alike have revolutionized many listeners' interface with the music they love, simply because it expands the "play-ability" of many users who may not have ever picked up or tried to play actual instruments. Those listeners aren't lazy by any means, but these two game franchises expand the experience of playing music in a way that has never been possible before.

Billboard revealed Friday that American indie rock band The Shins is likely to leave long-time label Sub Pop and release their next album via frontman James Mercer's Aural Apothecary label. The band's manager Ian Montone told the trade magazine that the record deal the band is currently seeking "will be more of a [pressing and distribution] deal than a traditional record deal" and that the band could remain with Sub Pop is some capacity. Sub Pop's management revealed as well that the label would "love to continue working with them."

Unlike other major bands that leave record labels because of displeasure with the industry or the management of the company, The Shins are not unhappy with how Sub Pop has marketed the band's records. The band's last album, Wincing the Night Away, debuted at number two on the Billboard 200 and has sold more than 538,000 copies to date. The band's hopes for the new deal include ownership of the album masters and an infrastructure to successfully market the new record and cover costs.

A separate digital deal is also reportedly being considered, but what this change for The Shins indicates is that while they are a successful band and have sold a lot of records, they are not so established that they cannot mandate what they expect from the industry. So many of the bands and artists to leave labels in the past year have done so because they were solidly established in numerous markets and with many fans, but also because they were displeased with the industry. There's nothing wrong with The Shins or this tactic, it's just nice to know that huge bands and longtime artists aren't the only sources looking for the best alternatives to the problems in the music industry.

The International Federation of the Phonographic Industry reported Wednesday that despite the growth of digital sales in 2007, the format is still not "making up for the decline in CD sales or the effects of piracy." Sales figures for music were also the lowest in ten years, as the IFPI did not start publishing sales figures until 1997. Total global sales for 2007 were $19.4 billion, with CDs and DVDs pulling in $15.9 billion (down 13%), and digital downloads $2.9 billion (up 34%).

The chairman and CEO of the IFPI, John Kennedy, also revealed that "digital sales are growing healthily but, crucially, not fast enough to arrest the overall decline of the market." The report also noted "physical and digital piracy cost the U.S." arm of the music industry $5.3 billion, with digital piracy counting for 70 percent. Kennedy indicated that 39% of U.S. teenagers used file-sharing networks to illegally download music, with over 30 billion illegal downloads taking place around the globe. The IFPI has been at the front of a movement to "engage the support of Internet service providers" in order to curb users from illegally downloading via threats from ISPs.

Despite digital sales slow growth as physical sales continue to plummet, the advances made in accessibility and quality of music in 2007 should prove beneficial for the industry. With labels and music companies dropping anti-piracy technology in the face of continued illegal downloads, there remains apparent trust and hope in consumers. A 34% increase in one year may seem small, but if digital marketing can continue to improve in that fashion then the music industry may not have too much to lament.

The world's third largest music company, Warner Music Group Corp. (NYSE: WMG), reported this morning a wider second quarter loss and suspended a quarterly dividend to strengthen its balance sheet.

Warner Music posted a quarterly loss of $37 million, dragged down by higher costs and lower compact disc sales. Analysts had expected a loss of 12 cents per share, and were disappointed to see the company report a loss of 25 cents per share.

Warner's quarterly revenue rose only 2% to $800 million compared with $784 million a year ago. The company attributed the revenue decline to its recorded-music segment whose sales climbed only 0.6% due to consumers' preferences for digital music. However, the drop in revenue could have been even worse if the recording company hadn't benefited from the weak dollar, Warner stated. Analysts expected revenue of $780 million, according to Thomson Reuters.

The days of music distribution have changed. They're not changing, they've already changed. Nothing indicates this more easily than a leaked report from research brain trust NPD Group that indicates Apple, Inc. (NASDAQ: AAPL) has surpassed longtime #1 music retailer Wal-Mart Stores, Inc. (NYSE: WMT) as the world's largest music seller.

Here's the kicker -- Apple does not sell a single physical piece of music. It's all digital. The company's iTunes digital music store sells music, videos, television shows and movies to all those bazillions of iPod users around the world. Now, it just took out the world's largest retailer in terms of selling the most music. This even though Wal-Mart sells more CDs than anyone in addition to its very sizable music download service as well.

Apple passed Best Buy Inc. (NYSE: BBY) as the second-largest music retailer just recently, and now it's on top. All by using the mighty download as its vehicle of choice to get content to its customers. Is the music industry a different world than it was just five years ago? I'd say more like a different universe. Movies and television shows -- you could be next. In fact, the transition may already be far, far underway.

I normally don't watch the Grammy Awards because they never feel very representative to me of creativity and innovation in the record industry. That's a very narrow view, which is part of what made this year different. I did watch part of the ceremony, but I also enjoyed it and was happy with a number of the winners. Herbie Hancock's win was the most satisfying for me. Even though I don't listen to jazz, I can still appreciate his sentiment during his acceptance speech that the academy had finally broken the mold and awarded a jazz album the highest honors for the first time in 43 years is very telling.

It's breaking the mold that has me thinking about the record industry because it is on the verge of a major shift and reorganization. Searching for some insight into the awards, I came across this piece about the awards and the "revolution" that is occurring now in comparison to the "revolution" that was just starting in the music industry 50 years ago. What this piece illustrates expertly is how quickly the record industry has declined. It is hard to believe that once there was optimism in the industry for technology and technological growth. It's also hard to believe that album sales only peaked 8 years ago.

Technology seems to have become quite the problem for the record industry, as they find themselves fighting against the internet community and consumers that illegally download music. But, illegal downloaders are not the only consumers that have caused the decline of the record industry; it is also those listeners that legally download music from digital store's like Apple, Inc. (NASDAQ: AAPL)'s iTunes, or Amazon.com, Inc. (NASDAQ: AMZN)'s new MP3 store. In addition, the technology that was highly regarded in 1958, the LP (or its counterpart, the CD) has also contributed to the decline.

The Associated Press last week reported that the record industry is fighting a major losing battle against illegal downloading, which outpaces legal downloading alternatives 20-to-1, causing losses in the billions of dollars. Meanwhile, revenue from digital music sales has not made any inroads toward recovering money lost by the dying CD, rising just 40% to $2.9 billion during 2007 after doubling in 2005 and tripling in 2006. The International Federation of the Phonographic Industry also told the AP, "CD sales fell 11 percent between 2005 and 2006 and were likely to drop further in 2007," and digital revenue "is also showing signs of slowing."

The IFPI also said that "digital downloads have grown in five years to account for 15 % of the world's music sales, with more than 500 legally licensed music sites selling around 6 million tracks of music." The industry's fight against piracy has received massive support in France, where the government of President Nicholas Sarkozy has proposed to have Internet service providers there "automatically disconnect customers involved in piracy." Japan leads digital downloads, both illegal and legal, with sales and piracy mostly working through consumers' phones.

Although this devastating report indicates that the record industry is still in a dire situation, the developments in legal downloading throughout the last few months in 2007 and the first month of 2008 seem to set a more optimistic tone. Whether the disabling of anti-piracy technology from all music labels will allow growth this year, is obviously yet to be seen, but the benefits of the music available now would seem to outpace the availability of media available illegally. The problem of paying for products still remains for those consumers, but the quality of new MP3 tracks is finally at an acceptable level for those that look for the difference.

Sony-Ericsson, the fourth-largest handset company, has announced it will open its own music store for consumers who buy its handsets. According to MarketWatch, the service "will be available in 30 countries worldwide by the end of 2008, starting from May. It will offer more than 5 million music tracks."

With Nokia (NYSE: NOK) and Apple (NYSE: AAPL) already in the same business, it is hard to see how the new Sony-Ericsson initiative will find customers. A number of cellular carriers have services of their own, which means that they compete with their own handset suppliers. Companies outside of the cellular business have also created music download stores for portable devices. The most notable new player in that market is Amazon (NASDAQ: AMZN).

The multitude of download services is not likely to make those getting in late much money. And having so many services in the market will confuse the consumer.

Douglas A. McIntyre is an editor at 247wallst.com.

Amazon.com (NASDAQ: AMZN) and Sony BMG, a joint venture of Sony Corp. (NYSE: SNE) and Germany's Bertelsmann Media Group, announced yesterday that Amazon's new MP3 store will soon carry the label's entire catalog. This move makes Amazon.com's MP3 store the only digital store to offer consumer's Digital Rights Management-free MP3 tracks from all four major labels, with Sony BMG joining privately-held EMI Group, Warner Music Group (NYSE: WMG), and Vivendi (OTC: VIVEF)'s Universal Music Group.

Previously, Sony had announced a new promotion of album cards, which would allow listeners to download DRM-free MP3s, but it was limited to only about three dozen albums. The new agreement brings the entire catalog to Amazon.

The major point here is that Amazon's store now offers tracks that are playable on virtually any platform or device, from Microsoft (NASDAQ: MSFT)'s Zune and Apple (NASDAQ: AAPL)'s iPod to various off-brand players. In a press release given to Ellen Livshin of OutCast Communications, Amazon.com Vice President for Digital Music Bill Carr revealed this very fact: "Our Amazon MP3 customers will be able to choose from a full selection of DRM-free music downloads from all four major labels and over 33,000 independents that they can play on virtually any music-capable device." U.S. Sales head for Sony Thomas Hesse echoed these sentiments and added that the label is "excited to be working with Amazon as they continue to build new markets for digital music."

I've remarked before that the Amazon.com MP3 store would increase competition and drive the digital market forward, and with this announcement it seems that many predictions about the online music realm are being realized, albeit much earlier than expected. Many had pointed to mid-year as the time when DRM technology would disappear completely, but as we can now see, that timeline will be January, at least for one store.

The move is also a potentially devastating blow to Apple's iTunes Store, which had headed up the move away from DRM but has not great success, managing to score only the EMI catalog early last summer. Whatever the case may be, the Amazon.com move will increase the competition and hopefully begin the revitalization process the music industry needs. All they have to do is promote it and get consumers interested.

Napster (NASDAQ: NAPS) -- the mother of all file-sharing services that in 10 years' time has found itself one among many digital-music services struggling for its very survival -- is hoping its new move will attract more users. Today, Napster CEO Chris Gorog said the company is shifting to MP3 downloads free of digital-rights-management software [subscription required], or DRM.

The move is expected to occur sometime in the second quarter, but Napster has yet to finalize the arrangements with some of the four major music companies - Sony Corp. (NYSE: SNE), Warner Music Group, EMI Group and Vivendi SA's Universal Music Group. The final three on this list recently began selling MP3s on the download service available through Amazon.com (NASDAQ: AMZN). Sony has yet to report plans to sell its tracks as MP3s, but is reportedly expected to come forward soon.

Welcome to the 43rd installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.

Last week, I looked at Wal-Mart Stores, Inc. (NYSE: WMT)'s 2007 in review and summed up all the retailing giant had going for it last year along with all the negatives against the company as well. Wal-Mart did a lot of things right in 2007, but still had to fend off daily attacks from its enemies and just about any other entity who took shots at the largest target in the world.

This week, I'll be looking at something that just happened this past week -- when Wal-Mart decided to end its year-old movie download service after middling to no success since its launch in 2006. Why didn't the retailer have any success in the move to offering entertainment content in digital, downloadable form? Read on.

It was bound to happen eventually. Backlash against English band Radiohead has emerged from the band's former label EMI Group plc (ADR) (OTC: EMIPY) in response to the method used to release the band's new album In Rainbows. You may recall that in October, Radiohead received a great deal of media attention and coverage after declaring that fans could "pay-want-they-want" for the new album. Despite hints that the band may have enjoyed a significant monetary figure from that decision, reports since then have claimed otherwise, stating the band took a loss when only about 40% of consumers paid any amount for the album.

The word slinging against Radiohead from EMI began late last week when an article for London-based The Times newspaper cited an EMI spokesman's claim that the band had demanded £10 million (roughly $20 million) upfront. Apparently, the £3 million offered by EMI and new chief Guy Hands was insufficient beside the fact that the label would not give up control over the band's previous six albums, a major point of contention for the band. According to the band's manager in the article, the band left the table when that point became unavailable. Radiohead front man Thom Yorke has since hit back at these claims in the band's official blog, dispelling the notion that Radiohead wanted a load of cash, while questioning EMI's decision to air its "dirty laundry" and backing the comments made by the band's spokesman.

The record loss in credits markets since August is dampening plans by music companies EMI and Warner Music Group Corp. (NYSE: WMG) to refinance debts and provide dividends to shareholders, while "reinvesting in core operations." The company's plans come at a time when the music industry is dealing with sharp declines in CD sales and the continued problems in the face of widespread digital growth, according to the Financial Times. Unfortunately, neither company is rumored to be pressing ahead with the plans. WMG stock has fallen nearly $20 in the past year according to the same report, a trend that could certainly welcome a boost.

These rumors come at a time when similar rumors have been announced that EMI wants to cut funding to trade groups like the Recording Industry of America, which work against piracy, and issue that the industry has been dealing with for a number of years. This plan hopes to benefit from the back catalogs of major artists and the potential future catalogs those artists will produce. The Financial Times notes "the steady revenues generated by music publishing have become increasingly prized by investors at a time when the future of the more glamorous recorded music business is uncertain." The major reason cited for that uncertainty is the industry's inability to create digital sales to replace missing CD sales.

In the end, the credit problems these companies face only indicate that new business models are needed. Luckily EMI seems to be leading some kind of change in the current model, after dropping the use of anti-piracy software in media files last April. If major retailers start to cut back on space allotted to CDs, which is another prediction the Financial Times quotes, the industry could face even more setbacks. Frankly, an expedited move toward the digital market is needed to offset a number of these problems, but that is going to take a major wake up call and changes in the credit market may serve as a needed rough shake.

With the astounding success of Radiohead's bold gambit earlier this month to market and sell their new album online (at least initially), Billboard is now reporting that the band will embark on a large-scale tour next year. Although this is a typical move in the music industry, and certainly "normal" band news, it has me wondering whether a large-scale tour by Radiohead will be or can be as industry changing as the release of In Rainbows.

Undoubtedly, a new worldwide tour by Radiohead will look very similar to past tours the band has taken around the globe, in particular their 2001 and 2003 global expeditions. Billboard reports that when the band toured last year it was "almost for creative reasons, definitely not for financial reasons." The tour was limited to few European and North American venues. With In Rainbows, the band has followed that trend into the selling of their album, allowing fans to set the price, which apparently averaged around £4 ($8).

A worldwide tour in the scope of past Radiohead tours and other contemporary efforts by other artists is certainly not one for "creative reasons," since the amount of travel would be overwhelming. Financially, such an endeavor would be expensive, but not simply in economic terms. Thom Yorke, the band's front man has been gone on record in the past "over the effects of touring on climate change." For a band as socially conscious as Radiohead have been with their music, such a concern is not surprising, but the report does not indicate the band looks to miss out on engaging the music with fans.

In any case, the answer to my question is that there is no answer, at least not yet. It is unfortunate that preliminary plans are not any more decisive, but albums and tours are the pillars around which the music industry is built. If one can be shaken up so fundamentally, then why can't the other one? The real question is how can a tour be shaken up?