Kings of A&R

Live Nation moves forward: The expansion of Live Nation is talked about today in the Wall Street Journal. Mr. Rapino said Live Nation needs to do more than simply run its concert operations better.

Terra Firma raising equity: Terra Firma is close to completing a £250 million equity fundraising, after telling would-be investors that it can lift profits in recorded music from £61 million in 2007 to £528 million in 2012. Read the details here. Terra Firma claims it can increase EMI profits by cutting costs - how original…..

Facebook draws privacy concerns: More than 50,000 Facebook members have signed a petition objecting to the controversial new advertising program, which sends messages to users’ friends about what they are buying on Web sites like Travelocity.com, TheKnot.com and Fandango. These sneaky models track where people are going online and send them ads based on the sites they have visited and the searches they have conducted. “Just because I belong to Facebook, do I now have to be careful about everything else I do on the Internet?” says a former college student. Two privacy groups said this week that they were preparing to file privacy complaints about the system with the Federal Trade Commission.

The best-selling album of 2007: “High School Musical 2″ will become the year’s top-seller with 2.3 million copies sold, SoundScan reported. For the third year in a row the final sales total will likely be down more than a million units. At least the kids are no longer embracing Britney Spears.

The De-Evolution Since 1991:
‘Come On Over’ - Shania Twain - 15.4 Million
‘Metallica’ - Metallica - 14.8 Million
‘Millennium’ - Backstreet Boys - 12.1 Million
‘High School Musical 06′ - 3.7 Million
‘High School Musical 07′ - 2.5 Million

In 2006, AIB (Attack in Black) signed to Dine Alone Records (home to City and Colour, Bedouin Soundclash). AIB have shared the stage with the Cancer Bats, Death By Stereo, and embarked on a major national tour with Alexisonfire and Every Time I Die. AIB recently won at the annual ‘Casby Music Awards’ in Canada for ‘Best New Artist’, as well as ‘Best new indie release’ for their record “Marriage”, beating out the likes of Arcade Fire and Tokyo Police Club. In November of 2007, AIB released their new record exclusively on Vinyl/Digital Download. Check out the track Hunger Of The Young.

EMI’s blame deflection: Chairman Guy Hands has told potential investors that the company’s former management, led by Eric Nicoli, wasted millions of dollars on corporate excesses that included use of a Mayfair property worth £5.6 million, the retention of highly paid consultants and extravagant spending on candles and flowers. Leadership should avoid the blame game. Critics also say that Hands is eager to blame previous management for the problems in the company because he overpaid for a business fighting against a market in freefall.

Dooms Day for American Idol? It seems many critics want to see the American Idol franchise fail. Headlines include ‘American Idol’ Champ Jordin Sparks Fails To Ignite The Charts and ‘FRANCHISE FADE: ‘AMERICAN IDOL’ FIGHTS TO MAKE TOP 10; WEAKEST WINNER DEBUT’. Jordin Sparks entered the charts with 119k sold.

Warner stock hits all time low of $6.82: Warner CEO Edgar Bronfman wants record companies to become ‘music based content companies’. He also talks about the recent cliches of wanting to participate in revenue streams beyond music business and ‘windowing music releases - a series of products sold digitally rather than selling one album per artist every couple years.

Its a HIT ladies and gentlemen: One Republic enters at #17 on the top 200 charts with 75,000 scans. KOAR posted the track ‘Apologize’ three years ago and was one of the most downloaded tracks in the history of KOAR. We knew that song had teeth and we are glad to see One Republic rise to the top.

Where are they now? Some previous artists that KOAR has featured have up and coming TV performances. Val Emmich will be appearing on the hit NBC tv show, 30 ROCK tommorrow night at 8:30 pm. Val will be playing a love interest of Tina Fey. He also recently filmed two episodes of the upcoming Lucy Lui show.

Singer Songwriter Kate Voegele will play Mia on CW Network’s hit TV series One Tree Hill. Her album will be released on January 22nd through Myspace Records.

Yahoo! and Time Warner AOL may shut down their web radio services after being hit with a 38 percent increase in royalties to air music.

‘We’re not going to stay in the business if cost is more than we make long term,’ Ian Rogers, general manager at Yahoo’s music unit.

SoundExchange who represents artists and record labels began collecting higher fees and Yahoo and AOL stopped directing users to their radio sites. The spike in royalties may stifle the growth of internet radio, which increased listeners 39 percent in the past year.

The Copyright Royalty Board ordered that royalties be raised to 0.11 cent for each song listened to from 0.08 cent last year. The rate is scheduled to reach 0.19 cent in 2010. According to AOL it would be near impossible to sustain a business that is profitable because radio sites generate revenue by selling advertising. (Meg Tirell, Bloomberg)

The bottom line: One side claims the royalty rate was to low and needed to be raised. Also, many sites have made millions like YouTube and Myspace that have built up value by using a content for a relatively cheap price. Artists and labels build up value for these sites and don’t participate in the BIG PAY DAY, so soundexchange who reps artists and labels want a royalty rate that reflects reality. This is a simple case of ‘we don’t benefit when you benefit’. I do not believe that AOL and Yahoo! will shut down internet radio.

A interview with Universal CEO Doug Morris that comes out in the December issue of Wired Magazine is a hot topic and has stirred up a storm of opinions. Doug Morris touches on several topics effecting the record industry including the iPod, iTunes, technology allowing new configuration, and file sharing. He says Universal Records will eventually transition from running a product-based business to running a service-based one.

Morris seems to be grappling with his emotions in the interview especially when it comes to downloading free music.

Morris Says:

An album that someone worked on for two years — is that worth only $9, $10, when people pay two bucks for coffee in Starbucks?” Morris sighs. “People never really understand what’s happening to the artists. All the sharing of the music, right? Is it correct that people share their music, fill up these devices with music they haven’t paid for? If you had Coca-Cola coming through the faucet in your kitchen, how much would you be willing to pay for Coca-Cola? There you go,” he says. “That’s what happened to the record business.”

“This business had been the same for 25 years,” he says. “The hardest thing was to get something that somebody wanted to buy — to make a product that anybody liked.”

This quote from Morris is spreading through the internet and is getting hammered by critics.

“There’s no one in the record industry that’s a technologist,” Morris explains. “That’s a misconception writers make all the time, that the record industry missed this. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do?”  “We didn’t know who to hire,” he says, becoming more agitated. “I wouldn’t be able to recognize a good technology person — anyone with a good bullshit story would have gotten past me.”

Morris attempts to answer his critics by claiming that the record industry is a business of nurturing and breaking artists, not keeping up with the technological movement. Instead, Morris opened himself to more criticism. The record industry was well aware that the internet opened the flood gates and file sharing was becoming rampant. Rather than jumping head first into the digital age, the record industry is living  between two worlds (physical and digital) and trying to capitalize on both. Most industries like the record industry are grappling with the same problem.  I believe this quote  sums it up, “Today, we are living in a chaotic transition period to a new age defined by global competition, rampant change, faster flow of information and communication, increasing business complexity, and pervasive globalization”.

The Drama Club who hails from Scranton, PA will be performing at Don Hills (NYC) on November 29th at 7:30pm. Several labels will be attending. The EP was produced by Rob Caggiano (Jesse Malin/Anthrax) and mixed by Jay Baumgardner (Evanescence/Papa Roach/Godsmack) and also features Ben Burnley (Breaking Benjamin) on their song “Brand New Day”. The track “Brand New Day” was added to XM’s “Squizz” & AOL Radio “New Rock First” channel (POWER rotation) and the band has shared the stage numerous times with Breaking Benjamin, as well as with Flyleaf, Velvet Revolver, Sound The Alarm, Silvertide, Warped Tour (PA date) and headline shows around the N.E. region. For more information contact Robert Dippold  or legal David Chidekel 

Passings: Casey Calvert, guitarist for emo band Hawthorne Heights was discovered “unconscious on the band’s tour bus” outside Washington’s 9:30 Club and “pronounced dead at the scene” by police. The band is in the midst with legal troubles with former label Victory Records. Quiet Riot frontman Kevin Dubrow has also passed away at the age of 52.

Yahoo! To Compete with YouTube: Yahoo struck a deal with Sony BMG that will allow users to incorporate music from Sony’s artists into their own video creations as well as embedding them in blogs and other personal pages. AOL is about to do the same. Yahoo! and AOL are trying to compete with YouTube and Myspace that allow viral clips and user made content.

A Bum Deal: Word is out that Terra Firma Chief Guy Hands is in a wild panic about his impulsive acquisition of EMI and how he’ll manage to make a return on the record company he bought on the back. Read why here. One doesn’t need to be a prophet to see that Terra Firma/EMI is sitting on a fault line. Just look at the recent press release where Guy Hands said he would fire artists who weren’t working hard enough.  This approach is reactive no proactive.

As CD sales continue to slide, the record industry is hoping that Christmas Season (biggest sales period of the year) will reverse the trend.

Insiders and analysts believe that if the trend gets any worse major retailers will reduce floorspace dedicated to CD’s in 2008. Greenfield forecasts that retail floor space devoted to CD’s will be cut by at least 20% and possibly 30% in the next year. Retailers will scale back on profitable catalog albums and focus on high profile new releases that will be sold at a discount price.

The record industry core physical goods business (CD’s) is down more than 18% year to date. Tower Records and Musicland collapsed and Trans World (FYE and Wherehouse), the largest music focused retailer said music sales are declined 21% and comprised just 40% of its total business, down from 48% in 2006.

According the NY Post, the record industry needs to sell 150 million albums in 6 weeks to keep pace with 2006’s full year total of 588.2 million albums. Upcoming big releases include Mary J. Blige and Nelly but not enough new releases to reach the goal.

Internet users in France who download music and films illegally could have their web access shut down by a government body, under a ground-breaking industry agreement backed by Nicolas Sarkozy, the president and reported by The Financial Times.

In a landmark speech Nicolas Sarkozy said: “The rights of authors, the preservation of creativity, the recognition of the rights of each artist, of each performer… was an important commitment of my presidential campaign.

Sarkozy said he feared the internet was becoming a “lawless zone where outlaws can pillage works with abandon or, worse, trade in them in total impunity. And on whose backs? On artists’ backs.”

Three-strikes-and-you-are-out policy means repeat offenders will get a warning threatening to cut off or suspend internet access if they do not stop illegal file-sharing.

This is a step forward in creating a formalized business. It’s about time someone is playing hard ball by removing access to the Internet for the ones being discovered as illegal downloaders. Hopefully China and Russia will follow Sarkozy’s lead and create similar laws that holds their citizens to the highest morals and ethics. According to a report released by IPI, rampant global piracy of recorded music has cost the U.S. $12.5 billion in economic output and 71,060 jobs annually.