At a media event in New York today, Yahoo CEO Marissa Mayer announced a new office in Times Square for the Silicon Valley Internet giant.

“From one Mayor to another,” said Mayor Michael Bloomberg to Mayer (get it?) about locating in Manhattan’s iconic location, which will house 500 Yahoo employees.

But not Tumblr, which will remain blissfully downtown, even after its $1.1 billion all-cash acquisition by Yahoo announced today.

“We’re very happy that Tumblr is a home-grown company,” said Bloomberg,

Irony alert: Yahoo’s new digs in the Big Apple is actually the old HQ of the New York Times.

“Twenty years ago there were a lot of Yahoos in New York,” said the Bloomberg, channeling Jackie Mason and then touting the local tech industry and reeling off the stats.

Boiled down: Geeks rule.

Mayer also talked briefly about the acquisition of Tumblr and repeated the trying-really-hard-to-be-wacky, “we’re going to try not to screw it up” promise.

Mayer then introduced another promise — a commitment to fix Yahoo’s last major acquisition screw-up, Flickr.

Yahoo exec Adam Cahan, who is in charge of the photo-sharing service and who uses the term “awesome” quite a lot, came on next to show the changes.

He introduced a new design, which looks kinda like Instagram and kinda like Flipboard and kinda like Apple and kinda like Facebook’s homepage. It does bring Yahoo up to speed with others in the key photo-sharing space, which is good.

(Sorry, I cannot be more detailed, since I could only see it via Internet, because AllThingsD.com was not invited to the event by Yahoo.)

From what I can tell, it’s very image-centric with big photos and little text.

Cahan also introed a new Google Android mobile version and said that Flickr will offer a terabyte of space for free to users, which is about 537,731 photos.

Then he talked about a terabyte a lot, claiming that “no other Internet company has offered you a terabyte” of space. (Well, I would imagine Google and Facebook will now do so in a New York minute.)

Some very nice man with a German accent demoed it. (Again, I am not there and did not see a name going by on screen, and I can’t ask Yahoo PR his name.)

It’s purty, for sure, and nice to be able to upload photos in their full fidelity without worrying about space constraints.

Mayer called it “spectacular,” “bigger” and, of course, “awesome.”

It is certainly much more striking than how the antiquated Flickr homepage used to look like — which was circa 1969. But, like I said, kinda like what others have already done, although these updates are certainly a welcome change for Flickr.

Mayer then ran a very cute video for the changes, which, well, was kinda like an Apple video.

“Flickr was awesome once and then it languished,” said Mayer, declaring victory already. “And now it’s awesome again.”

In a Q&A after, Mayer, Cahan and the nice German guy answered questions about integration of Tumblr and Flickr (not yet!); how it was like or not like Instagram (no cropping apparently — which is exactly what is fantastic about Instagram); the terabyte (it’s awesome!); and more Tumblr deets (you know them already); monetization; and a bizarre one about redundancy so you don’t lose photos.

Mayer also said that Yahoo had bought 11 billboards in Times Square to show off Flickr and noted there was a party after for the media. (Except the unchosen, so I am enjoying a nice glass of Cabernet all by my lonesome. Frankly, it’s awesome!)

(Photo credit: Kevin Tachman for Times Square Alliance.)

Flickr user Gaku

Here are our Top 10 stories from the week of Feb. 25:

1.) “Physically Together”: Here’s the Internal Yahoo No-Work-From-Home Memo for Remote Workers and Maybe More [Previously: Yahoo CEO Mayer Now Requiring Remote Employees to Not Be (Remote)]

2.) Groupon CEO: “I Was Fired Today.”

3.) Exclusive: PayPal Co-Founder Levchin Launches New Payments Startup, Affirm

4.) Survey Says: Despite Yahoo Ban, Most Tech Companies Support Work-From-Home for Employees

5.) Why Silicon Valley Is the Next Detroit

6.) A Wristwatch Tells When Phone Calls, Emails Arrive

7.) Why Carriers Just Love Firefox OS

8.) Cook: Forget About Our Share Price, Apple Has Some Great Stuff Coming

9.) Yahoo Work-From-Home Controversy Already a Silicon Valley Billboard Meme

10.) Old Media Doesn’t Get New Media, Chapter 203: The Sheryl Sandberg Attack

For more of the week in review, you should follow us on Facebook and Twitter.

Video conferencing company Blue Jeans Network, which is obviously a big supporter of working from home for employees, is putting its money where its telecommuting mouth is to speak out on the debate that was spurred by Yahoo CEO Marissa’s Mayer new rule to ban the practice at her company.

Thus, the startup is putting up a billboard on Highway 101, just north of San Francisco Airport on the tech-commuting path, which you can see above. Calling itself the “The unofficial sponsor of WFH,” it urges Mayer to call the company — “We can help.”

(Cheeky! I like it.)

In a blog post about the controversy, Blue Jeans noted:

“What’s right for Yahoo, however, is against almost every workforce trend. Telecommuting is here to stay. In competitive hiring environments, working from home is undoubtedly an enticing perk that employers can extend to tip the scales.”

Ironically, a Blue Jeans spokesperson pointed out to me that next week is Telework Week.

Well-known digital media exec Zander Lurie has been hired by former Yahoo exec Ross Levinsohn to become one of his key lieutenants at Guggenheim Digital Media.

Lurie will be an EVP there, where he will help manage and grow the new heavily funded digital unit of Guggenheim Partners, whose current media assets include Billboard, the Hollywood Reporter, Adweek, the Clio Awards, Film Expo Group and the digital extensions for Dick Clark Productions.

Lurie was most recently an exec at CBS, including as SVP of strategic development, where he worked on a number of key digital initiatives. He was CFO and head of business development for CBS Interactive and also worked on M&A at its CNET tech news unit. Lurie left the media giant in May.

“The opportunity to join Guggenheim Digital Media and work alongside Ross was a no-brainer,” wrote Lurie to me in an email. “We have high-quality, trusted brands in the portfolio and an appetite to grow our position in the premium content/video landscape.”

Expect more acquisitions now that the deal-making Lurie is joining the deal-making Levinsohn and there’s a pile of dough to spend.

Lurie is the first significant hire by Levinsohn, who became CEO of GDM last month. He had been interim CEO of Yahoo, but lost that job when the Silicon Valley Internet giant hired former Google exec Marissa Mayer.

Michel Protti, who worked with Levinsohn at Yahoo as his chief of staff, is also joining GDM as SVP. Before Yahoo, Protti worked at McKinsey & Company.

Guggenheim already controlled several media trade titles, including Billboard, Adweek and the Hollywood Reporter, so Guggenheim Digital Media will start out running those.

But Levinsohn, who first made his reputation as an M&A guy at News Corp. (which owns this website), will be writing checks for new stuff soon.

Guggenheim says it will be giving him “significant capital to acquire and invest in new media companies.” Fair to assume that he has a target list drafted.

Levinsohn was last seen at Yahoo, where he started out running the company’s U.S. operations, and ended up moving into the interim CEO job in the spring of 2012. He campaigned for the permanent job, but lost out to Marissa Mayer; in between, he tried positioning Yahoo as an entertainment hub.

Guggenheim Partners started out as a management firm for the Guggenheim (the same folks behind the iconic museums in New York and Spain) family fortune; it now says it manages more than $160 billion in assets.

This isn’t Levinsohn’s first interaction with the company; in the summer of 2011, it represented Hulu’s owners as they mulled a sale, and Levinsohn was keen on having Yahoo buy the video site.

Along with Levinsohn’s new appointment, Guggenheim says it has bought out the remaining stake in the Hollywood Reporter and its other trades, which had been owned by Jimmy Finkelstein’s Pluribus Capital.

He’s an a–hole. That guy has $2 billion that he made from figuring out ways to steal royalties from artists, and that’s the bottom line. You can’t really trust anybody like that.

– Black Keys drummer Patrick Carney on why he’s not a fan of Sean Parker

Specifically, the billboard is on 101 southbound in South San Francisco, just north of SFO. It heralds, “Bits: Everything you need to know on the business of technology.”

A spokeswoman for the Times said she didn’t know when the billboard went up, but said it was part of a broader promotion effort after the relaunch of Bits late last year.

Other Web companies who’ve recently bought billboards on Highway 101 in the San Francisco Bay Area include Zynga, Groupon, Box.net and even the young travel search site Hipmunk.

Campaigns on 101 (warning: Locals frown at people who call it “the 101”!) cost an average of $10,000 to $20,000 per month, with some prominent spots costing more than $30,000 per month, said John Laramie, CEO of ADstruc, a DSP for outdoor advertising.

It should be noted that AllThingsD competes with Bits, obvi.

Also, please excuse the cellphone photo through my dirty windshield; I drove to L.A. this weekend and should really take the car in for a wash.

For our first-ever media conference, we’re trying to cast a wide net, so you’ll hear from movers and shakers from a range of companies. The common theme: All of them are making and distributing content during a time of unprecedented technological change. How do they adapt?

So far, we’ve announced that Viacom CEO Philippe Dauman, New York editor David Remnick, Warner Music chairman Edgar Bronfman Jr. and News Corp. chief operating officer Chase Carey will be joining us on Jan. 30 and 31 at the Ritz-Carlton in Laguna Nigel, just south of Los Angeles.

Let’s add three more to that list:

Bob Pittman helped build MTV, then AOL. And after spending several years as a full-time investor in everything from Zynga to a high-end tequila, he’s running a media company once again — this time overseeing radio and billboard giant Clear Channel. Why would you want to run a radio company when everyone’s consumed with the likes of iTunes, Pandora and Spotify? Because it’s still a growth industry, Pittman argues. And the fact that it’s the industry that gave him his start, at age 15, makes the story even more interesting.

Thomas Tull is a relative newcomer to Hollywood, but he’s moving fast. After founding Legendary Pictures in 2004, he’s produced a string of hits, including “The Hangover,” “The Dark Knight” and “300.” And if you accuse him of making dude-centric movies that appeal to “fanboys,” he won’t flinch — they’re the ones who still come out to the theaters, if you know how to get them there. Last spring, his track record helped him secure an investment from Silicon Valley heavyweight Accel Partners, which gives you a hint about where Tull thinks all of this is going.

Joint ventures formed by big media companies are a tricky proposition, but Rio Caraeff seems to be making his work. Vevo, the “Hulu for music videos,” is co-owned by Universal Music Group and Sony Music, and helped in large part by Google’s YouTube. And as of last month it was the second-biggest video site on the Web — a title that used to be held by Hulu.

Just like our flagship D: All Things Digital conference, D: Dive into Media will give you rare access to deep, smart talks with the people who matter. And we’ll be announcing more of them in the weeks to come. For now: You can find registration information here.

Why not? No mystery at all: The band has decided that it wants to sell albums and tracks, not streams.

Billboard’s Glenn Peoples walks through this one quite effectively. It’s not that Coldplay doesn’t want to promote its new music on the Internet. It’s offering plenty of free samples through outlets like iTunes and YouTube, including a free concert that Google streamed this week.

It’s just that the band thinks that offering unlimited listens via Spotify and other streamers will cut into sales.

Spotify and the other services do pay the music labels and publishers to use their music, and eventually that money is supposed to make its way down to the musicians.

But for the few big acts like Coldplay that can still move millions of albums — their last one, which got a big push from Apple, sold 2.8 million copies — there’s no way that Spotify royalties will ever come close to the money they’ll make selling downloads and CDs (yes, CDs — the music industry still sells more discs than digital copies).

The list of Coldplay-size artists gets smaller and smaller every year, which is one big reason that the music labels finally acquiesced and let Spotify offer free music. Some money > none. But if they believe Spotify-style streaming ends up accelerating the decline of their remaining music sales, you might see more pullbacks down the line.

Meanwhile, speaking of absences: Note that the Beatles still aren’t legally available on any other outlet beyond iTunes.

Today there’s a lot of hope that Spotify’s buzz/marketing will help make subscriptions mainstream. But if these things are ever really going to work, subscription services are probably going to need help, by attaching themselves to services that consumers are already using/paying for.

That’s what Rhapsody is trying today, by bundling itself along with wireless carrier MetroPCS via a $60 package that gives you all-you-can eat data and music. As Billboard notes, Rhapsody also has deals with Verizon and AT&T, but this is a deep integration that puts the service offering front and center for MetroPCS’s 9 million customers.

That said, I’m still not sure how compelling the offer will be, since it doesn’t appear to offer any discount to Rhapsody’s standalone $10 a month service: Beyond the music service, the differences between a $50 a month MetroPCS plan and a $60 a month MetroPCS plan seem to be limited at best.

And if you pay for Rhapsody on your own, you won’t be limited to Android phones, as you are with the MetroPCS deal.

[UPDATE: Rhapsody takes issue with my assertion that the MetroPCS bundle doesn't amount to a discount on Rhapsody's $10 a month a la carte price. I spent some time going back and forth with a Rhapsody PR executive over the issue this afternoon, and in the end, we're going to end up agreeing to disagree.

They point out that MetroPCS 4G users who pay $60 for a bundle that includes Rhapsody also get goodies like unlimited multimedia streaming, while $50 4G users who don't get Rhapsody are capped at 1 gig per month. The distinctions between the $50 and $60 3G plans are slighter, as I noted above. Again, you can try to decipher it for yourself via MetroPCS' pricing grid. But in the end, as I argue below, I don't think the bundle represents a serious discount, and certainly not one that will register with most consumers.]

[UPDATE TWO: As CNET points out, Warner Music Group, one of the four major music labels, has not signed on for this version of Rhapsody, which means any notion of a discount is officially silly, since MetroPCS bundle-buyers will be getting a service with major holes.]

If you really want to move the needle, I think that carriers or cable companies or someone will have to be willing to absorb some of the costs and offer subscription music at a substantial discount to the now-standard $10 a month price point. Any takers?

And why did talks between Google and the music labels really break down, resulting in the locker service that debuted instead?

I don’t know!

Here’s what I do know: Music Beta isn’t the service Google has been trying to build for the last year. And it’s not the service that Google thinks it’s going to eventually have.

Google has been clear that while it launched yesterday without approval from the big labels and publishers, it intends to re-engage with them sooner rather than later.

Which makes sense. Because while the storage-plus-playback system Google introduced yesterday isn’t a bad thing–particularly for Android users, who haven’t had great options when it comes to music players for their gadgets–it’s not a big leap forward. Just like the similar system that Amazon introduced in March.

Both those services were launched without new licenses–or in Google’s case, any license at all–from the big music labels. Apple, meanwhile, is working on its own cloud service, with the labels’ approval.

Okay. So what does label approval mean for a cloud service?

In Google’s case, label sign-on would give the company the ability to sell music, which it doesn’t do right now.  And it could let Google use a “scan and match” system, which would mean users wouldn’t have to upload every one of their songs to the cloud–instead, Google could use a single file to serve multiple users.

That would be helpful, because uploading every one of your songs to the cloud can take a very long time, unless you have industrial-strength broadband.*

But those are all smallish tweaks, too. Nice to have, but not have-to-haves. So what was Google really trying to get done?

I don’t know, and one of the frequent complaints I heard from music executives over the past nine months or so was that Google didn’t seem to know, either–they said the search giant’s goals kept shifting.

Still, we can get a decent sense of what Google wanted based on a proposal that leaked out last fall. Among other features, Google wanted a system that would let users sample any song they wanted, at least once. And the ability to share songs they owned with their friends.

Combine that with the ability to access your own music, whenever you want, wherever you are, and you could end up with something very compelling.

And industry sources claim Google may be looking to add even more features: One music executive, for instance, tells me Google has been talking about an “interactive radio” service–which would mean something with more features than Pandora offers, but less than a full-blown all-you-can eat subscription service like Rdio, Mog or Spotify.

Even more interesting, right? So why isn’t it here?

Google has made a point of telling reporters it blames two labels in particular for the collapse of negotiations last month, but wouldn’t identify them. Billboard, though, believes that Sony and Universal Music Group are the roadblocks Google is complaining about; reps at both labels declined to comment on the trade pub’s report.

Google also won’t be specific about what caused it to walk away from the table. So it’s possible the dispute was about something other than money. Perhaps the labels were insistent that Google crack down on piracy in a way the search engine can’t or won’t do.

But my hunch is that it’s about money.

Whatever the cause, Google and the labels are now in a very interesting spot. The music industry has been pining for real competition to Apple’s iTunes for a very long time, and many hoped that Google would be the one to do it.

Now it looks as if Apple will be the one introducing a full-featured cloud service, perhaps as early as next month. If it does, it means that Apple’s influence on the digital music industry will increase, and that the service Google rolled out yesterday will look even less impressive.

Which would give both Google and the labels plenty of incentive to get something done, quickly. Let’s see if they respond.

*A few months ago, I discovered that Columbia University has just such a connection. Free, too. Just sayin.

In a letter sent to the big labels, Amazon says it has been selling more MP3s since it launched the service. In other words: Stop whining about licensing deals and start thanking us for making you more money.

It’s easy enough to imagine sales jumping in the last two weeks, as lots of people dropped by to try the service out. And Amazon gave users a real incentive to buy more songs while they were there by offering increased storage to anyone who bought an album at the online store.

But Billboard’s Ed Christman, who’s seen the letter, says Amazon doesn’t have anything else to say about its recent sales spike–like, say, numbers.

Instead, the letter is dedicated to:

• Reminding the labels that Amazon has no interest in seeking licenses for the service it has already launched “as no licenses are required.”
• Letting the labels know that, actually, it does plan to come to them for other licensing deals soon, as it contemplates “potential enhancements” to the service.

Why does Amazon feel that it didn’t need licenses for its initial launch but will need them down the road?

Part of the answer is a technical one that deals with the way the cloud service works, and whether users are actually uploading a copy of their own property to the service or if Amazon is keeping a single master file for multiple user’s songs.

But the real world answer is that this is a clever/ballsy strategy on Amazon’s part: It’s signaling to the labels that they’re going to get at least some of what they want–eventually. It’s just that Amazon is in a hurry and didn’t want to start negotiations from scratch–not when Google and Apple are looking at similar ideas.

So far it seems to have worked. Not only have the labels stayed mum, more or less, about their displeasure with the service, they haven’t done anything more forceful either–like taking their songs out of Amazon’s store or suing the company.

And if Amazon’s right, the labels may have no real choice but to keep their mouths shut and cash some checks.

The sky-high billboard is part of a contest that the four-year-old Mountain View, Calif.-based start-up conducted along side American Eagle, the teenage clothing retailer.

The contest challenged participants to come up with the best American Eagle spring break outfit. The grand prize winner received $1,000, and first and second place received gift cards.

Polyvore, which touts its ability to track brand engagement, said users created 13,732 entries, which generated 47,653 “likes,” and 3,552 comments.

Overall, the contest generated 735,808 impressions, and helped American Eagle skyrocket to become the fourth-most popular brand on the site during the campaign.

The first-place prize went to Lauren.y.b, who paired a racerback navy tank, a pair of white-washed skinny jeans, a stripped string bikini with accessories such as ballet flats and a studded wood bangle.

Live Your Life: American Eagle Spring Break! by Lauren.y.b? featuring wood jewelry

The four winning sets will be featured on the billboard from March 11th to March 18th, and will run twice an hour each day.

But there’s no star big enough to permanently stop gravity. Now that Jackson sales have come back to earth, Sony reports that last quarter’s sales dropped another 10.8 percent, or a mere 6 percent if you strip out the effect of currency fluctuations. Operating income dropped 6.1 percent.

Reminder: Digital music sales, which were eventually supposed to overtake physical sales and push revenue back up once again, aren’t doing the trick. In the U.S., sales via Apple’s iTunes and other outlets are either flat or shrinking, depending on the sales data you’re looking at. (Which should make the labels either less likely or more likely to get deals done with the likes of Spotify. Take your pick!)

Meanwhile: Did you buy, or hear of, any of the following? Sony says they were bestsellers, at least comparatively: Yui’s “Holidays in the Sun,” Miliyah Kato’s “Heaven,” Kana Nishino’s “To Love,” Yannick Noah’s “Frontières,” Santana’s “Guitar Heaven: The Greatest Guitar Classics of All Time” and Kenny Chesney’s “Hemingway’s Whiskey.”

UPDATE: Billboard editor Bill Werde notes that Sony plans to release more Jackson this year, so perhaps it can wring out another bump. He also notes that he’s heard of Kenny Chesney. Me too! But I was surprised to learn that Yannick Noah has a post-tennis career as a musician.

So says Billboard’s Ed Christman, who has been talking to label executives familiar with Google’s (GOOG) proposals for its yet-to-be-launched service. The music industry hasn’t agreed to any of this yet, so the gap between “like to” and “will be” could be significant. But it’s worth reading Christman’s piece to get a sense of what the Google guys are looking for.

In short:

• Google would like to sell music a track at a time, just as Apple’s iTunes does.
• Google would like to give users the ability to listen to any track all the way through, at least once, as MySpace Music does, and Lala did before Apple (AAPL) acquired it and shut it down. Google’s music search service provides free full plays for some songs but not others.
• Google would like to offer a $25 a year “locker service,” where any music you own, no matter where you procured it, would be stored on an Internet server. You could then listen to a stream of the song no matter where you where, via a Web player or a mobile phone.
• Google would like to let subscribers share their music with their friends, allowing them to listen to a song a single time.

All of which sounds pretty good. And all of which sounds like concepts that the labels would be fine with, in theory–even the part about letting you access songs you “shared” via P2P services.

The sticking point, of course, will be money: How much will the labels demand up front, how much will they charge per user or per use, and how will the money be split up between different rights holders?

The last part is a question that often gets ignored when people start spitballing ideas for music services, but it’s crucial, because music rights are a complicated web that tangles up even the best intentions. Even if the “labels” agree to Google’s terms, that likely won’t be enough, because the “labels” don’t usually own songs outright–any given song or catalog may have multiple owners.

That’s not a problem if you simply want to open up another download store, or even a streaming subscription service, because there’s a broad consensus about how to split up the pennies that those generate. But with something new, like the locker/sharing proposal, there are a lot of cats to herd. Which makes this stuff interesting but far from definitive.

Billboard also cites sources suggesting that Spotify still hopes for a U.S. launch this year. But Spotify has been hoping for/promising a U.S. launch for so long that there’s a Tumblr site dedicated to cataloging those unfulfilled aspirations. It’s called Not-ify.

What gives? Ask around and you’ll hear two different theories about the holdup. They’re not mutually exclusive:

• Spotify wants to replicate the model it has in Europe, where users can listen for free, then pay for upgrades like mobile and/or ad-free access. But the labels are no longer interested in supporting free streaming sites: Now that Lala and Imeem have gone away, the only free on-demand service in the U.S. is News Corp.’s MySpace Music, and they don’t seem that enthusiastic about that one.
• Spotify has raised a big pile of money from VCs, and the labels are demanding a big chunk of that for themselves.

I’m also not clear whether the holdup is with all the labels, or just some of them. Sources close to Spotify have hinted to me in the past that the company has had deals in place with some of the big four music labels for some time but was waiting to lock up at least three of them before launching.

Then again, those same sources suggest that Spotify is willing to avoid the U.S. altogether if it can’t get the deal it wants. Choose the story you like, I guess.

Meanwhile, if you’re itching to subscribe to a music service that lets you listen to all the music you want, without ads and on your PC and on mobile devices like Google’s (GOOG) Android handsets and Apple’s (AAPL) iPhone, you’re in luck! There are plenty of options.

Go ahead and try any of the following, which offer more or less the same stuff, at the same $10 a month price point:

• Rhapsody
• MOG
• Rdio (still in beta)
• Thumbplay

$10 a month too much? Okay. Best Buy’s (BBY) Napster offers an ad-free, all-you-can-eat service, without mobile access for $5 a month. Meanwhile, MySpace Music, which is co-owned by News Corp. (NWS) and the labels themselves, remains free and ad-supported. And the company’s line is that will remain so (though it doesn’t rule out a paid option).

Nielsen SoundScan says the drop was either one percent or .09 percent, depending on how you count, so this isn’t the bottom falling out. But it does look like a peak, and it has been in the works for some time.

Earlier this year, Warner Music Group (WMG) pointed out that it was seeing its digital sales slow and argued that one reason was because the industry had raised prices on most of its songs at Apple’s (AAPL) iTunes store in 2009.

That thinking is now pervasive across the industry, Billboard notes: “While consumers will still buy hit songs for $1.29, it seems that catalog tracks priced at that level are not selling as well as they were at 99 cents.”

But you could also make the case that digital tracks were going to decline anyway and that the industry is better off squeezing every penny it can.

And if you want to try to find a silver lining here, you could argue that since song sales are slipping, there’s no reason for the industry not to support rental/subscription models like Spotify, Rhapsody and MOG by cutting their licensing fees. But I wouldn’t bet on that happening soon.

Hard to believe, but advisory firm BIA/Kelsey says the battered industry will see revenue bump up slightly this year following years of decline–and will keep growing after that. Kelsey projects that U.S. revenue will grow 1.5 percent this year and another two to four percent each following year (click chart below to enlarge).

Kelsey is vague about what’s driving that growth. But the firm seems to peg a lot of growth on the Web’s ability to generate ad revenue.

I’m skeptical, because I’ve been hearing about online radio’s advertising opportunities for a long time, but it’s still a tiny business. A more conventional assumption is that the Web, which offers listeners unlimited choice without offering broadcasters a lot of revenue, will continue to undermine the radio business.

But let’s be fair and balanced here. Two anecdotal data points in favor of Kelsey’s online-is-on-the-move argument:

• An attendee from Allen & Co.’s recent off-the-record digital media confab in Arizona tells me that the talk of the conference wasn’t Zynga, Demand Media or any of the other obvious suspects. It was Pandora, the online radio service that was supposed to be near death just a year ago. Now the company may be on track for $100 million in revenue this year, and a possible IPO.
• At a Billboard conference panel this month, David Goodman, who runs the digital group for CBS’s (CBS) radio unit, boasted about booming ad sales and said that digital now makes up five percent of the company’s revenue. However, when I asked him repeatedly if his group is turning a profit, he demurred.

That’s what Universal Music Group is hoping. The world’s biggest music label is pushing a plan to sell all its CDs at a retail price of $10 or less, Billboard reports. Given that all the big labels are currently selling discs at wholesale prices of $10 to $12, that’s a big price chop.

(An update from UMG, which says it hasn’t committed to the new pricing: “This test comes after extensive consumer research and conversations with our retail partners, and we will be looking at such variables as greater selection at sharper pricing on front-line releases. We expect to begin the test in Q2.”)

And it has been a long time coming, since on the Web, the price of an album ranges from nothing (via legal streaming sites and pirate services) to $9.99 or so on Apple’s (AAPL) iTunes.

You could argue that people still buying physical discs are unlikely to be comparing prices with digital alternatives. But there is indeed evidence that consumers respond to cheaper discs. Billboard relays the example of Trans World Entertainment (TWMC), which runs the F.Y.E. and Coconuts chains:

In the last few months, Trans World Entertainment began testing the $9.99 price point in over 100 stores, while Wal-Mart has been telling the majors to release shorter albums at lower prices more frequently.

The Trans World test–in which most independents and every major except for the Warner Music Group participated–produced units sales increase of more than 100%, according to label executives who participated in the tests. The Trans World test helped sell the new pricing model to the Universal labels, sources say.

On the reluctance by other majors to so far address the $10 retail price point issue, one source says, “The definition of idiocy is doing the same thing over and over and expecting a different result. Things are not going to get better for CD sales unless the price point is addressed. One thing that the Trans World test shows for sure, $10 will drive sales and traffic.”

The biggest hit so far: An ambitious novelty called “I Am T-Pain,” which allows users to record songs using the rapper’s sort-of-trademark “autotune” voice processor. If you don’t know what that means, best to check it out here. (Or check out the demo clips of T-Pain and other Smule apps at the bottom of this post.)

All this success has translated into real money–more than four million paid downloads, at something like $2.50 a pop. And this has allowed Smule to quickly raise $13.5 million in venture money from the likes of Shasta Ventures and Bessemer Venture Partners.

I assumed that some of that money would be earmarked for moving apps to other mobile operating systems, particularly Google’s (GOOG) Android OS. Nope, says Smith–he’s working exclusively through Apple (AAPL).

Smith is part of a small but vocal chorus of app developers who say they don’t want to move to Android, even though it is growing quickly. His complaints: He doesn’t like the way the store merchandises its wares, and he doesn’t want to have to create different apps for each handset Android supports.

In fairness, Apple has its share of vocal app developer critics as well, and that group got louder this month during the iPorn imbroglio.

And if you wanted to be overly cynical, you could point out that Smule has been a featured Apple partner for some time. Smule’s products have gotten stage time during Apple product announcements and have been highlighted in the company’s press releases.

But Smith isn’t betting the future on Apple, either. His business plan involves generating revenue from other places besides the iTunes app store. I’ll let him explain in this interview, which we taped during Billboard’s Music & Money event yesterday.

]]> http://allthingsd.com/20100305/an-apple-app-star-explains-why-he-wont-work-with-android/feed/ 0 http://allthingsd.com/20100302/is-apple-finally-worried-about-amazons-music-store/ http://allthingsd.com/20100302/is-apple-finally-worried-about-amazons-music-store/#comments Tue, 02 Mar 2010 23:14:10 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=16893 Amazon’s MP3 store hasn’t done much to weaken Apple’s grip on the digital music business. But that doesn’t mean Apple isn’t paying attention.

Big music label folks say Apple (AAPL) has long complained about their involvement with Amazon (AMZN). But recently, Billboard reports, those complaints have become more specific. The trade magazine says Apple is asking the labels not to push new releases via Amazon’s “Daily Deal” promotion, which offers new records at cut-rate prices.

Warning! There’s some salty music-label-executive language in this excerpt:

In exchange for a Daily Deal promotion on a new album, Amazon has been asking labels to provide it with a one-day exclusive before street date and such digital marketing support as a banner ad on an artist’s MySpace page and messages on label and artist Web sites and social network feeds.

“When that happened,” [a major-label head of sales] says, “iTunes said, ‘Enough of that shit.’”

Sources say that iTunes representatives have been urging labels to rethink their participation in the Amazon promotion and that they have backed up those warnings by withdrawing marketing support for certain releases featured as Daily Deals.

In response, label executives at Capitol, Capitol Nashville and Jive recently opted against participating in Daily Deal promotions they had been considering for Corinne Bailey Rae’s “The Sea,” Lady Antebellum’s “Need You Now” and Ke$ha’s “Animal,” sources say.

Billboard notes that the labels are still working with Amazon on Daily Deal promotions. But it says they are pulling back on prereleases and exclusives for big records and pushing smaller artists that Apple isn’t likely to shower with promotional support.

Today’s Deal: $3.99 for Sony artist Raheem Devaughn’s new album, which doesn’t appear in iTunes “New and Noteworthy” section.

I’ve asked Amazon, Apple and all four of the big labels–Universal, Sony (SNE), EMI and Warner (WMG)–for comment, but I’m not holding my breath.

But assuming that Billboard is right here–and reporter Ed Christman has been covering music retail forever–it’s interesting to note that Apple is pushing back a bit more forcefully at Amazon. (Industry trade Hits DailyDouble reported something very similar in January).

If I’m Jeff Bezos, I’d take that as a compliment. And then I’d go back to worrying about Steve Jobs’s entry into the e-book market.

]]> http://allthingsd.com/20100302/is-apple-finally-worried-about-amazons-music-store/feed/ 0 http://allthingsd.com/20100213/weekend-update-02-13-10-the-hot-mess-edition/ http://allthingsd.com/20100213/weekend-update-02-13-10-the-hot-mess-edition/#comments Sun, 14 Feb 2010 06:14:47 +0000 Beth Callaghan http://digitaldaily.allthingsd.com/?p=34853 Rogue waves aren’t completely unheard of during surfing competitions in Northern California, but a foot of snow in Dallas? About as likely as Yahoo CEO Carol Bartz grilling Kara Swisher in front of a packed auditorium.

All right, it was a cafeteria packed with Yahoo (YHOO) employees, but still. Check out Kara’s write-up and video of the experience, but be warned: no embed of the official Yahoo video so far, so those of us who weren’t there have no idea (yet) about what sort of profanity ensued. We’ll keep you posted. Kara also took a look this week at the serialized drama that is MySpace. The latest episode, of course, is the firing of brand new CEO Owen Van Natta, who may or may not have wanted to leave anyway. An insider described the company to BoomTown as a hot mess, since it’s both “impossible to save and hard to give up on.” BoomTown started off the week with a couple of the more amusing takes on Google’s Super Bowl ad, “Paris Love”–now its own meme–which includes the search history of Tiger Woods and a different kind of Parisian story.

Walt recently fired up Windows 7 on a late-model Apple (AAPL) MacBook Pro, using both Parallels Desktop 5 and VMware Fusion 3. Not at the same time, although both have been updated to get the most out of Snow Leopard and Windows 7 and will run the two operating systems simultaneously on an Intel-powered Mac. The quick version is that Walt thinks Parallels is the better product. The version with all the logic and details is in this week’s Personal Technology. He also took time to answer some readers’ questions in Mossberg’s Mailbox about iPad batteries, zooming on text in Firefox, locating the calendar in the latest version of Windows Live Mail and feeling stuck between a Kindle and a Nook. In this week’s Mossberg Solution, Katie Boehret tested some stylishly small scanners and desktop printers: the Fujitsu’s ScanSnap S1300 and PlanOn System Solution’s PrintStik PS905ME. Not surprisingly, she found that style comes at a price with both gadgets.

In Digital Daily this week, John Paczkowski quoted Bill Gates’s underwhelming response to Apple’s iPad hoopla: “It’s a nice reader, but there’s nothing on the iPad I look at and say, ‘Oh, I wish Microsoft had done it.” Then he quoted Gates on his initial reaction to the iPod in 2004: “There’s nothing that the iPod does that I say, ‘Oh, wow, I don’t think we can do that.’” Apparently, Gates was much more forthcoming–with his own Microsoft (MSFT) execs, anyway–about iTunes in 2003 when he wrote in a memo that “Jobs has us a bit flat footed again….” Maybe admitting you have a problem really is the first step toward overcoming it. But then again, Zune as a second step is pretty much three steps back. John also dissected the buzz around Google Buzz this week, which, admittedly, wasn’t overwhelming, but it could still dovetail nicely with the search giant’s mobile strategies.

Jeff Bronikowski, formerly of Universal Music Group–the world’s biggest label–explained in a Billboard interview this week that the business of Big Music is doomed. But Peter Kafka is reserving judgment, at least until a few more music industry vets leave their jobs and weigh in publicly on the matter. Which is not at all the same thing as being optimistic; it’s just being realistic. It’s important to point out, though, that Google (GOOG) made Peter feel better this week about having Time Warner Cable (TWC) as his ISP, which could signal optimism, realism or something else entirely. Back on the music front, MediaMemo spoke with Veoh CEO Dmitry Shapiro and found that although it’s tempting to blame music behemoth Universal Music Group for the company’s demise, the Web start-up dug its own hole.

Here’s hoping for good sound bites for next weekend’s update and no need for mention of the weather. Stay tuned.

]]> http://allthingsd.com/20100213/weekend-update-02-13-10-the-hot-mess-edition/feed/ 0 http://allthingsd.com/20100209/a-big-music-veteran-explains-why-big-music-is-doomed/ http://allthingsd.com/20100209/a-big-music-veteran-explains-why-big-music-is-doomed/#comments Tue, 09 Feb 2010 11:30:11 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=16084 There are plenty of people who can explain, persuasively, why the big music labels are screwed. And many of them still work for the big music labels. But these people can’t speak candidly, of course, until they’re off the payroll.

Comes now Jeff Bronikowski, who spent 11 years at Universal Music Group, the world’s biggest label, and left last year.

In an interview with Billboard, the former SVP of “global digital initiatives” explains concisely why his former employer and the other big guys are just playing out the string: CD sales are wasting away, and the digital boost they were counting on simply isn’t big enough.

Download growth is slowing down, dominated by one retailer. The ancillary revenue streams like ringtones are in decline, and the new possibilities like Nokia’s Comes With Music haven’t panned out yet either.

To be fair, Bronikowski then offers a qualifying, semihopeful note. Which he needs to do, as he’s still working with the music labels–now as the head of Yahoo’s (YHOO) small music unit.

And I occasionally talk to someone in the recorded music business who still thinks the labels can pull it off–maybe Spotify will really work or maybe Apple’s (AAPL) cloud strategy will help boost sales. Etc.

You never know! They could be right. Sony (SNE) even reported an uptick in sales last quarter. But after a decade-long slump, it is getting awfully difficult to find a bona fide optimist.

Such a glum post, so early in the morning! Time to liven it up, per request. Thanks to Tristan Mahr.

]]> http://allthingsd.com/20100209/a-big-music-veteran-explains-why-big-music-is-doomed/feed/ 0 http://allthingsd.com/20100207/google-to-show-off-search-with-super-bowl-ad/ http://allthingsd.com/20100207/google-to-show-off-search-with-super-bowl-ad/#comments Sun, 07 Feb 2010 22:05:45 +0000 Jessica E. Vascellaro http://voices.allthingsd.com/?p=21028 Google (GOOG) is turning to the big screen–and the big game–to promote its search engine.

The search company has purchased a Super Bowl ad expected to air during the third quarter of today’s game, according to people familiar with the matter.

These people say the ad is one of the online videos it released last year to promote its search engine. The series, which Google dubbed “search stories,” highlights various ways Google can be useful by telling stories through a string of search queries and results. Each ends with the slogan “search on.”

Google has bought a tiny number of TV ads before and has been spending more heavily on print and billboard ads too.

Read the rest of this post on the original site

]]> http://allthingsd.com/20100207/google-to-show-off-search-with-super-bowl-ad/feed/ 0