Wednesday, July 8, 2009

MUSIC bizness, as we know it, slowly disappearing....

Music Business Can't Shake Slump

Album sales for the first half of 2009 are down 15% from the same period in 2008.

By Phil Gallo

The music industry's turbulent ride in the digital age continues to get bumpier with mostly cloudy skies ahead.

Overall album sales continue to dip in the double digits while the number of singles being sold -- generally at less than a dollar apiece --

are not sufficient to replace the lost revenue brought in by albums.

Not only is the industry failing to create new stars, the hottest commodities in music right now are the songs of Michael Jackson.

And with a summer largely devoid of superstar releases --

Daughtry's second album and Whitney Houston's comeback are the only likely million-unit sellers being released prior to Labor Day --

retailers will be putting their efforts into selling the holy grail of all catalogs come Sept. 9, the music of the Beatles.

Album sales for the first half of 2009 are down 15% from the same period in 2008 as the music business continues to look for help from the downloads of individual tracks.

Certainly the recession is contributing to fewer sales, but the top 10 of the first half of 2009 features only one new artist, Lady GaGa.

Counting compact discs, vinyl LPs and downloaded albums, the tally for the first 26 weeks of the year is at 174.5 million units, down from 204.6 million in the first half of '08.

Last year's figures were down 11% from 2007.

Four years ago, the first 26 weeks saw sales of 298.4 million albums; this year's tally is down a staggering 42% from 2005.

While the appetite for individual albums continues to decline, the sales of individual downloads continues to rise.

In the first half of the year, 613 million tracks have been sold, a 13% spike from 2008's 514.7 million tracks.

Over the last four years, nearly every week has seen an increase in digital downloads from the same week in the previous year.

The last week of the current session, which ended Sunday, would have actually seen a 1% dip fro 2008 were it not for the sale of 2.66 million tracks by Michael Jackson and the Jackson 5.

Unlike last year, when Lil Wayne's "Tha Carter III" topped 1 million in sales in its first week, there is no breakout hit.

Half of this year's top 10 are holdovers from 2008, led by Taylor Swift's "Fearless," which has sold 1.3 million copies this year.

The soundtrack to "Hannah Montana: The Movie" is the top seller of albums released in 2008, having just edged Eminem's "Relapse."

The rest of the top 10 is Lady GaGa "The Fame" (976,000); soundtrack to "Twilight" (971,000);

U2's "No Line on the Horizon" (939,000); Nickelback "Dark Horse" (912,000); Rascal Flatts "Unstoppable" (825,000); Beyonce's "Sasha Fierce" (809,000); and Dave Matthews Band "Big Whiskey and the Groo Grux King" (689,000).

For a full analysis, though, one has to look at how well each artist's music is performing across all platforms.

Lady GaGa, for example, has sold less than 50,000 more copies of her album than U2.

But on the digital tracks side, she is at 9.3 million vs. U2's 311,000.

Eminem has a low percentage of digital album sales (16%), but his digital tracks sales are quite strong at 3.1 million.

More than 28% of the Dave Matthews Band title has been sold digitally, but the album's track have only sold 355,000 copies.

Last year, Universal Music Group had the top three seller; this year three of the top six titles are on UMG labels.

Considered the largest of the Big Four, Universal has a market share of 31.5% followed by Sony Music Entertainment (25.5%), WEA (20.9%) and EMI (8.6%).

Independents not owned by the majors make up 13.5% of the marketplace.

The sale of vinyl -- a good 70% of it from rock and alternative rock titles -- continues to grow, hitting 1.2 million units in 2009, up from 803,000 the year before.

Last year's number was double that of the first half of 2007

Media players plot survival in Sun Valley

By Robert MacMillan NEW YORK (Reuters)

The global recession, shrinking advertising sales and fears that the Internet could render big media empires obsolete provide an ominous backdrop for executives at this week's Sun Valley conference.

Herb Allen's boutique investment bank Allen & Co has organized this retreat in the affluent mountain resort town in south-central Idaho every summer for 27 years, inviting guests such as Rupert Murdoch, Sumner Redstone and Barry Diller.

But never before have the media elite been harder pressed to find ways to survive and grow, whether through acquisitions or alliances that they forge over hikes, horseback rides and after-dinner drinks at this historical meeting ground for media and technology deal makers.

"People in the traditional media world are terrified," said Ken Auletta, a New Yorker magazine media writer and author of several books about the media industry, who will chair a panel on new media at this week's conference.

"They're in the analog world, and the world is becoming digital," he said.

"They're insecure about what's going to happen to their businesses."

This year's conference from July 7-12 will feature panel discussions, including likely themes from globalization to President Barack Obama's handling of the financial crisis.

But the real action will be deal action.

Last year, Sun Valley was about Microsoft Corp's failed bid to buy Yahoo Inc.

This year, the drama may lie with Time Warner Inc, Viacom Inc and CBS Corp as their executives stroll with a passel of rich money managers like Time Warner investor Vivi Nevo and Yahoo shareholder Gordon Crawford.

Time Warner Chief Executive Jeffrey Bewkes plans to spin off AOL before the end of the year, and speculation is growing on whether he will also ditch the struggling Time Inc magazine unit --

the kinds of decisions that guests are known to make as they linger by the duck pond or knock back a beer.

Chatter also is surfacing over whether Bewkes is in a buying mood.

Variety's Peter Bart last month named the DreamWorks Animation movie studio as a target, and Viacom, which distributes DreamWorks movies through its Paramount division, as a rival suitor.

Paramount is already in talks to combine its DVD manufacturing and distribution operations with a rival studio such as News Corp's Fox or Sony Corp's Sony Pictures to cut costs, a source told Reuters last week.


Bankers expect dealmaking in Hollywood to heat up this summer, as media companies look for new growth opportunities and ways to cut costs as they grapple with slowing DVD sales and tight corporate advertising budgets.

"I would not be surprised if there was a big CBS story.

They're a traditional company that is in one of the most challenged sectors in traditional media today," said Mike Vorhaus, president of Magid Advisors, part of media consulting and research firm Frank N. Magid Associates.

Media watchers will make hay with whomever Murdoch lunches, particularly as the News Corp chief stakes his new-media credentials on rehabilitating MySpace, which has lost the title of world's biggest online social network to Facebook.

MySpace's new management team is expected to show up, although it is unclear if Mark Zuckerberg, the 25-year-old chief of Facebook, will.

Twitter Chairman Evan Williams is on the guest list, as are Google CEO Eric Schmidt and Dell Inc chief Michael Dell.

"Some Internet companies are feeling pretty good about themselves ... and have some currency they can use to buy some companies," Vorhaus said.

They will have to act soon. Media stocks like News Corp, Time Warner, Walt Disney Co and Viacom, have rallied 50 percent to 80 percent since hitting big lows in March.

But just after Sun Valley comes quarterly earnings season, and analysts are expecting big profit drops for many media companies as advertising budgets keep shrinking.

U.S. ad spending likely will fall an average of 1.7 percent a year to $174 billion in 2013 from $189 billion in 2008, with revenue declines likely to hit TV ads, the music business and publishers, according to a study from PricewaterhouseCoopers.

At the same time, U.S. digital ad spending will be a quarter of total industry revenue by 2013, the report said.

Against that backdrop, content companies are likely to discuss partnerships with distributors such as Time Warner and Comcast Corp's TV Everywhere online video project.

Those companies hope these projects will let them adapt to the Internet age without sacrificing the billions of dollars that their traditional businesses bring them.

"There's been a lot of deep cost-cutting at all of these companies.

The question is going to be how do they repair their business model after the cuts," said Miller Tabak analyst David Joyce.

(Reporting by Robert MacMillan; Additional reporting by Yinka Adegoke and Anupreeta Das in New York and Alexei Oreskovic in San Francisco; Editing by Maureen Bavdek)

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