And the company that does own EMI, private equity shop Terra Firma, is trying to keep it that way for a little longer. Terra Firma is appealing a November court ruling it lost against Citigroup, which lent it the money for a terribly conceived $7 billion deal to buy EMI, way back  in 2007.

But barring big legal reversal, it’s hard to see how the bank won’t end up with the keys to the company sooner than later. The U.K. Observer thinks it could happen “within weeks.”

If and when it does, I’m not sure it will make that much difference to the label’s employees, its acts or its customers, who have been dealing with a company in a state of confused stasis for several years.

And the label is also unlikely to stay in Citi’s clutches for long–the most obvious move would be to break the company up and sell the pieces, with Warner Music the logical buyer for EMI’s recorded music group.

And while Warner, and the rest of the industry, had been hoping that Google might launch a music service that would give sales a boost this year, that doesn’t look likely. The new hope: Google arrives sometime next year.

That’s the line from Warner CEO Edgar Bronfman Jr. during his company’s earnings call this morning. Bronfman said he’s hoping that Google and other services “will come online in calendar 2011,” and that they’ll create “very significant opportunity both for consumers and the music industry.”

Any more detail than that? Nope.

But Bronfman did have a few nice things to say about Spotify, the much-hyped music service that has yet to launch in the U.S. Warner has renewed its European licensing deal with the service, which offers both free and subscription options, and Bronfman murmured some hopeful things about getting something done in America.

In Europe, the new Spotify deal “was a long time coming, [and] was not easy for us, and not easy for them,” Bronfman said, and says he’s “hopeful” the two companies can reach an agreement.

As I’ve previously reported, music sources say that Spotify and Sony have essentially reached an agreement for a U.S. launch. And the consensus seems to be that the service is close to getting something done with Universal Music Group, the world’s largest label.

So the question for Spotify is whether it needs to get Warner on board before it can launch in the U.S., something it continues to insist it wants to do this year.

Spotify officials have previously said that they’d only go forward with three of the big four labels on board, which makes sense–no point in launching a service that doesn’t have lots of the music people want to hear.

On the other hand, if the Spotify guys wait to get Warner–or EMI Music Group, the other major label–on board before launching, they could get held up for quite some time.

Speaking of EMI Music, what does Bronfman think of the label’s deal with Apple that brought the Beatles to iTunes? He thinks what most of you think: “I don’t know how impactful, after 10 or 12 years of digital business, their coming to iTunes will be,” he said.

But it does give Apple the ability to run a very cool marketing campaign, and that will get more people into iTunes. And that’s good for Warner–and everyone else who sells stuff there.

*You really can’t stress this point enough: We’re a decade past Napster, but the music industry still runs on CD sales. In Warner’s case, digital now accounts for 25 percent of overall revenue.

Beatles songs are finally available in Apple’s iTunes store. But ATD’s Peter Kafka says that iTunes is all about apps these days, while digital music sales have flattened out–and even the Fab Four may have a hard time changing that.

The deal was outlined by Jeff Jones, chief executive of the Beatles’ corporate entity, Apple Corps Ltd., and Roger Faxon, CEO of EMI Group Ltd., which owns and distributes the band’s recordings. The meeting took place at EMI’s London headquarters this past July 14, less than a month after Mr. Faxon took the reins at EMI.

Under the terms, Apple Inc.’s digital media store is the Beatles’ exclusive online retailer at least until January, Mr. Faxon said in an interview Tuesday, after the much-awaited deal was announced. It marks the first time that Beatles songs have been available for digital-download sales.

“Jeff and I sat down shortly after I arrived” as CEO of EMI, Mr. Faxon recalled. “We agreed this really was the moment to do this. After that it was very easy to cut a deal.” They code-named the initiative “Bastille,” as it coincided with Bastille Day.

Read the rest of this post on the original site

Good question, says EMI Music, the label that distributes the band’s music.

Apple has exclusive digital rights for the Beatles “into 2011,” says spokesman Dylan Jones, and he notes that the exclusivity doesn’t expire on the first of January. But he confirms that the exclusivity does indeed have an expiration date.

So when that date comes, we should expect to see the Beatles everywhere else you can get music online, right? Namely Amazon, and the subscription services that rent music by the month, like Spotify, Rhapsody and Microsoft’s Zune? Or Google, if and when it launches its music service?

“That’s a question, isn’t it,” Jones says, and doesn’t offer more.

Couple of theories here:

• The easiest explanation is that the Beatles music will follow the path of other digital exclusives, and become widely available after Apple gets its run.
• It’s also possible that Apple and the Beatles will renew their exclusive before it expires. That hasn’t happened before, but if Steve Jobs really, really wants to make it work, I guess he could.
• The most intriguing possibility: The Beatles leave iTunes once their deal ends–and don’t come back to digital again. Seems silly, but big traditional media loves “windowing” their content, and I suppose someone might convince the band this would be a clever way to go–show up, make a splash, walk away and then try it again down the road, like a band that’s always going on a farewell tour. Hope not!

And let’s be clear: Getting the band’s stuff on Apple’s store won’t fundamentally change anything.

• The band members will see more money. But they have plenty already.
• It’s possible that the Beatles’ label, EMI Music Group, may get enough short-term cash to keep it out of Citigroup’s hands. But there are very few of you reading this who care about that.
• Apple will see a spike in iTunes music sales. But Apple moved on from iTunes music sales a long time ago: ITunes is all about apps these days, and Steve Jobs would like it to be more about TV and movies, too. Meanwhile digital music sales flattened out this year, and even the Fab Four will have a hard time changing that.
• It does mean that bloggy types can stop making random guesses about when the Beatles will come to iTunes. So that’s pretty great, really.

And look. It’s cool that the band will be on iTunes. It’s embarrassing that it hasn’t been, but now that we’re past this, we can just consider the-better-late-than-never move a “pivot,” right? Fundamentally: More good music, available more places, is a good thing.

The thing I’m most interested to learn this morning (or whenever we do find out) is whether you’ll be able to buy the band’s output on a song-by-song basis. [UPDATE: Answered.]

If the band is trying to maximize revenue, it would try to force Jobs to break from store policy and sell their music in only album format. But that would be hypocritical, since the Beatles, like most other bands of their era, were about singles for a very long time.

And wouldn’t it be cool if you’d never heard “Flying” before, and then someone played you the trippy instrumental track from “Magical Mystery Tour,” and then, $1.29 later, you could be walking around with the tune in your iPod? Right?

What’s that? You’ve never heard “Flying” before? No problem: You can hear it on YouTube, of course:

And if you’re looking for other Beatles songs, Google’s video site is happy to oblige. They’ve even made a 41-song mix for you. No credit card required.

The deal resulted from talks that were taking place as recently as last week among executives of Apple, representatives of the Beatles and their record label, EMI Group Ltd., according to these people, who also warned that there is still a chance that Apple could change plans at the last minute.

Read the rest of this post on the original site

Either that, or the band gets a large enough check to put concerns about artistic integrity aside.

Until that’s all worked out, here’s some just-posted video of Waters performing some Floyd classics with former bandmate David Gilmour this past summer at a Hoping Foundation benefit.

[Image credit: Gerald Scarfe]

Digital music service eMusic has a new CEO: Digital veteran Adam Klein.

Klein, whose resume includes stops at MTV, EMI and Video Egg, replaces Danny Stein. Stein runs eMusic’s owner, JDS Capital Managment/Dimensional Associates, and has been running eMusic since former CEO David Pakman left for a venture capital gig nearly two years ago. Dimensional, meanwhile, just swallowed up digital distributor The Orchard.

So now that we’ve got that cleared up: What’s the plan at eMusic?

The service is in a weird middle ground between the “buy a song for a buck” model that Apple (AAPL) and Amazon (AMZN) push, and the “$10-a-month for all the streaming music you can eat, wherever you want to eat it” model that Rhapsody, MOG, Rdio and, maybe one day, Spotify are pushing.

Instead, eMusic’s core offering is a $12 a month subscription service–it prefers the term “club”–that gives users up to 24 MP3 downloads a month, which they can keep forever.

For a long time, the service targeted niche music lovers, primarily indie aficionados, but in the past couple of years it has added back catalog from two majors: Warner Music Group (WMG) and Sony (SNE). So users can now download Bob Dylan and Led Zeppelin along with MGMT.

That’s an interesting approach, and there is a business there: There are 375,000 subscribers, down from 400,000 a couple years ago, but still enough to generate some $65 million a year.

But Stein and Klein think they can expand the business again with a redesigned site, set to launch in Q4, that will be more appealing to non-subscribers and give them more incentive to stick around and eventually sign up. We’ll check back in later and see how they’re doing.

UPDATE: I must have fallen asleep right before Stein and Klein told me about their plans to launch a cloud-based “locker” service, which would let users stream their music no matter where they are, in the near future. As it turns out, those plans are still bit fuzzy–or, at least, eMusic isn’t willing to talk about them in great detail. But the gist is:

• EMusic says it will let users stream music they’ve bought from the service, and possibly other music they own, to PCs as well as mobile handsets like the iPhone and Google’s (GOOG) Android phones.
• It says it doesn’t believe it will need to pay the labels an additional royalty to be able to do this. I find it hard to believe that the labels will sign off on this, but we’ll see.
• It isn’t sure whether it will charge eMusic subscribers an additional fee for the service. If it doesn’t, it could be a very expensive marketing tool, as bandwidth and storage for this kind of thing could be pricey if a lot of folks use it.

Here’s some more info, via an “internal Q&A” the company has provided. Obviously, we’ll be following up on this one…

What are your thoughts on a potential cloud-based iTunes from Apple? How will this affect eMusic’s position in the marketplace?

- We agree that customers want to be able to access their music collections from any device, wherever they are. eMusic has a locker system in development, which we’ve been working on since early this year.

When will the locker be available?

- A preliminary version will be available to select members in late 2010, and we’ll roll it out to our full membership in 2011.

Have you talked with your labels about the service yet? What was their reaction? Aren’t the major labels requesting that Apple pay additional costs for streaming from the locker?

- The labels we’ve talked to are interested in supporting this feature on eMusic because of the nature of our membership service. We have a regular, repeat billing relationship with our members, which iTunes doesn’t have and the locker is a compelling feature that will keep customers happy…which ultimately benefits the content owners.

- We are aggressive stewards of copyright and believe that a locker with the functionality we plan to roll out is covered by the safe harbor for such devices provided by the Audio Home Recording Act. Therefore, an additional royalty is not necessary.

Will customers have to pay extra for the locker?

- We haven’t yet determined if we will charge for the locker. It will depend on a variety of factors.

How much storage for music will be available to eMusic members?

- The exact amount is a function of several variables, and is still undetermined.

Will they be able to store all of their music collections in their locker, even music purchased from other services?

- Yes, they will be able to store and stream their eMusic purchases and, potentially, other music that they own.

How will the locker work with eMusic? Will eMusic tracks automatically be placed in the locker when someone makes a purchase on eMusic, or will they need to upload them independently?

- Purchased tracks will automatically be placed in the locker. Members can then stream or download those songs on demand from an internet connection.

What other features will the locker offer? Will the locker include a music player?

- Members will be able to upload and download purchases to the locker and stream music on demand. eMusic Save for Later lists and ratings will be handled by the locker as well.

Will members be able to access the locker through their mobile phone? Which phones will work with the locker?

- We will also launch eMusic locker applications for most smartphones, including iPhone and Android.

Release on Klein’s hire:

eMUSIC APPOINTS VETERAN MEDIA INDUSTRY AND STRATEGY EXPERT
ADAM KLEIN AS PRESIDENT AND CEO

NEW YORK, Aug. 3, 2010 – eMusic, the digital music club, today announced that it has appointed veteran media industry and strategy expert Adam Klein as President and Chief Executive Officer.

Klein has more than 20 years experience leading strategic, operational and organizational change with both established and technology-led media companies. His background includes work as a strategy and change management consultant as lead partner with Booz Allen Hamilton’s media practice, with Boston Consulting Group and his own company, Klein & Co. He also has held executive roles at AskJeeves.com, as president and chief operating officer; Hasbro, Inc., as executive vice president and president of global marketing; VideoEgg, Inc., as president; EMI Music, as executive vice president of strategy and business development, including Digital P&L; MTV Networks, as executive advisor to the chairman and CEO; and South African Broadcasting Corporation, as executive advisor to the CEO. Currently Klein runs his own consultancy, Media Leader LLC, and is an adjunct professor at Columbia University Journalism School.

Klein will succeed current President and CEO Daniel Stein on August 23. Stein will retain his role as eMusic Chairman and continue to be substantially involved with the company as part of its management team. He also remains CEO of Dimensional Associates and President, JDS Capital.

Stein said, “As eMusic continues to grow its business and provide the best online service for people who are passionate about music, Adam’s leadership in digital media and his successful track record as a business builder is custom-made to take on the CEO role. His decision to join eMusic speaks to his high regard for the platform we have worked so hard to create, and we are now poised to take the company to the next level together.”

“What a great opportunity eMusic represents! It is a well-established platform ready for its next chapter of value and service to its members. I am excited to be a part of eMusic’s ongoing evolution,” said Klein.

Sony Music thinks it has an answer: It plans to open its own online store dedicated to classical music, and perhaps jazz as well. Sources tell me that Sony (SNE) is prepping a specialty store that features high fidelity, “lossless” downloads, and is on track to bring in the other big labels–Universal Music Group, Warner Music Group (WMG) and EMI–for a launch this fall. No comment from Sony.

I don’t believe Sony has formally signed on the other labels yet, but the industry sources I’ve talked to seem confident that all of the majors will be on board, via non-exclusive deals, sooner than later.

That makes sense: This one doesn’t require any label to rethink a business model, and the stakes are fairly low. The labels don’t sell much classical or jazz online, so if they can get any kind of boost here, it’s all gravy.

Do a genre-specific store and higher-quality audio matter? For most digital music, the answer has been a resounding “no”: People seem quite content to listen to severely compressed files on lousy speakers and headphones.

And people–perhaps those very same people!–manage to easily find the newest Kesha single at Apple’s (AAPL) iTunes.

But I’m out of my depth here: My classical collection consists of a couple random Mozarts, some Beethoven and maybe a Handel. I’m not sure, because I never play them. For those of you who do: Is Sony’s upcoming project appealing? Let me know in the comments below.

You may be able to get that via Google (GOOG) and Apple (AAPL) one day, and both companies have talked about the idea with the music industry. But in the meantime, mobile entertainment start-up mSpot says it can offer the same thing.

The basic idea: You can take any music you own, as long as it’s in an unencrypted file format, and move it to mSpot’s servers, then play it back on different devices–your PC, your phone–on demand. The service is free for the first two gigabytes of music you upload, and mSpot charges for more storage: An additional 10 gigabytes (the equivalent of 8,000 songs) costs $2.99, and 100 gigs (80,000 songs) goes for $13.99.

One big caveat: The service, which Google showed off at its developer conference last month, supports only Android handsets. So this won’t get your music to your iPhone, at least for now.

Another big caveat: MSpot doesn’t have licenses with any of the big music labels. CEO Daren Tsui says his company doesn’t need agreements with the labels to let users stream music they own from the cloud, but Big Music disagrees. So unless they can reach an agreement, Tsui and mSpot could find themselves fending off a lawsuit like the one EMI filed against Michael Robertson’s MP3Tunes, which offers a similar service.

However, mSpot’s biggest challenge probably won’t come from the labels, but from competitors. Tsui is basically offering the “iTunes in the cloud” scenario that people would like to see from Apple, but without Apple’s cooperation. If Apple gets around to offering its own version, that would make it awfully difficult.

And Google seems even more interested in launching its own version of the same service, but without mSpot’s help. At the same Google I/O conference where mSpot launched in private beta, Google announced it had acquired Simplify Media, which makes software designed to stream music to mobile phones–news that took the mSpot people by surprise.

But those are future-tense moves, and mSpot is open to the public this morning. Will that be enough of a head start?

Guy Hands’s private equity group has rounded up another $150 million from investors, which will allow it to avoid a looming default on debt held by Citigroup (C), the Wall Street Journal reports:

Mr. Hands’ success in tapping his investors hands him a victory in the latest round of his epic battle with Citi, which lent him the money to fund the leveraged buyout in 2007. With syndication markets closed as a result of the financial crisis, Citigroup was stuck holding more than £3 billion of EMI debt. The two sides have been unable to agree to a restructuring of the business, setting up a high stakes game of chicken.

The cash buys Mr. Hands nearly a year, to the end of next March, to execute on a turnaround plan for EMI, which has been buffeted by a shift in demand for music away from CD sales and the crippling debt the buyout saddled it with. Amid the problems, it has seen a number of big name artists flee the label, including Radiohead and Paul McCartney.

Bigger question: Does it really matter if one of the big music labels is owned by a private equity group instead of a bank? Maybe not. There’s still a good chance that EMI will end up getting broken into parts and sold off to rivals like Sony (SNE) and Warner Music Group (WMG).

My colleagues are lapping the last one up, with good reason: The OK Go are fun to write about, because they make cool videos and because lead singer Damian Kulash is very quotable when he talks about the state of the music business and his band’s relationship with EMI.

For instance, here’s a stinging part of his exit interview with New York Magazine today:

Q: What other problems were you having with EMI?
A: ?The issue is that they just don’t have any money. The reason a band signs with a label is because they can provide start-up capital, and their business model has sort of collapsed. There was lots of little bones of contention, like when there were chances for us to promote things and they just didn’t have the money to do so. It was a lot easier to be generating the budget ourselves or through corporate partners.

EMI has issued a boilerplate quote wishing the band success–it’s going to create its own label–and leaving it at that.

And EMI does have real money problems. In part because everyone who sells music right now has money problems and in part because private equity fund Terra Firma paid too much and took on too much debt when it bought the label three years ago.

But here’s the thing. If EMI’s executives allowed themselves to speak candidly, they would likely point out that while the OK Go made great videos, it didn’t seem to make music that many people wanted to buy.

Soundscan says the band has sold all of 500,000 albums in the U.S., both in physical and digital form, in its three-album tenure at EMI. That’s 488,608, to be exact. Plus another 25,000 single tracks.

That’s not awful. But it’s not the kind of sales that would inspire a big label to spend big money promoting an act. Even when the industry’s business model was still intact.

But the band really does make nice videos that people like watching on Google’s (GOOG) YouTube. If it can figure out how to turn these into dollars, it’s all set.

OK Go–This Too Shall Pass from OK Go on Vimeo.