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		<title>Is Apple Finally Worried About Amazon's Music Store?</title>
		<link>http://allthingsd.com/20100302/is-apple-finally-worried-about-amazons-music-store/</link>
		<comments>http://allthingsd.com/20100302/is-apple-finally-worried-about-amazons-music-store/#comments</comments>
		<pubDate>Tue, 02 Mar 2010 23:14:10 +0000</pubDate>
		<dc:creator>Peter Kafka</dc:creator>
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		<guid isPermaLink="false">http://mediamemo.allthingsd.com/?p=16893</guid>
		<description><![CDATA[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. Translation: Good luck buying big new albums at a discount via Amazon's "Daily Deal."]]></description>
			<content:encoded><![CDATA[<p><a href="http://mediamemo.allthingsd.com/files/2010/03/raheem-devaughn.jpg"><img src="http://mediamemo.allthingsd.com/files/2010/03/raheem-devaughn-275x275.jpg" alt="" title="raheem devaughn" width="250" height="250" class="alignright size-medium wp-image-16897" /></a>Amazon&#8217;s MP3 store hasn&#8217;t done much to weaken Apple&#8217;s grip on the digital music business. But that doesn&#8217;t mean Apple isn&#8217;t paying attention.</p>
<p>Big music label folks say Apple (AAPL) has long complained about their involvement with Amazon (AMZN). But recently, <a href="http://www.billboard.biz/bbbiz/content_display/magazine/upfront/e3i5207f9d259b81f62d46a894f7a55e1bd">Billboard</a> reports, those complaints have become more specific. The trade magazine says Apple is asking the labels not to push new releases via Amazon&#8217;s <a href="http://www.amazon.com/MP3-Deals/b?ie=UTF8&amp;node=678551011">&#8220;Daily Deal&#8221;</a> promotion, which offers new records at cut-rate prices.</p>
<p>Warning! There&#8217;s some salty music-label-executive language in this excerpt:</p>
<blockquote class="memo"><p>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&#8217;s MySpace page and messages on label and artist Web sites and social network feeds.</p>
<p>&#8220;When that happened,&#8221; [a major-label head of sales] says, &#8220;iTunes said, &#8216;Enough of that shit.&#8217;&#8221;</p>
<p>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.</p>
<p>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&#8217;s &#8220;The Sea,&#8221; Lady Antebellum&#8217;s &#8220;Need You Now&#8221; and Ke$ha&#8217;s &#8220;Animal,&#8221; sources say.</p></blockquote>
<p>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&#8217;t likely to shower with promotional support.</p>
<p>Today&#8217;s Deal: $3.99 for Sony artist <a href="http://www.amazon.com/Love-War-MasterPeace-digital-booklet/dp/B00390UU58/ref=amb_link_174169822_3?pf_rd_m=ATVPDKIKX0DER&amp;pf_rd_s=browse&amp;pf_rd_r=08FDCNV3RSTR51WFCTYM&amp;pf_rd_t=101&amp;pf_rd_p=1038551062&amp;pf_rd_i=678551011">Raheem Devaughn&#8217;s new album</a>, which doesn&#8217;t appear in iTunes &#8220;New and Noteworthy&#8221; section.</p>
<p>I&#8217;ve asked Amazon, Apple and all four of the big labels&#8211;Universal, Sony (SNE), EMI and Warner (WMG)&#8211;for comment, but I&#8217;m not holding my breath.</p>
<p>But assuming that Billboard is right here&#8211;and reporter Ed Christman has been covering music retail forever&#8211;it&#8217;s interesting to note that Apple is pushing back a bit more forcefully at Amazon. (Industry trade Hits DailyDouble <a href="http://www.hitsdailydouble.com/news/newsPage.cgi?news07903m01">reported something very similar</a> in January).</p>
<p>If I&#8217;m Jeff Bezos, I&#8217;d take that as a compliment. And then I&#8217;d go back to worrying about <a href="http://mediamemo.allthingsd.com/20100131/amazon-gives-in-to-macmillan-and-apple-and-e-book-prices-will-go-up/">Steve Jobs&#8217;s entry into the e-book market</a>.</p>
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		<title>Lala's Fire Sale That Wasn't: What Apple Really Paid</title>
		<link>http://allthingsd.com/20091207/lalas-fire-sale-that-wasnt-what-apple-really-paid/</link>
		<comments>http://allthingsd.com/20091207/lalas-fire-sale-that-wasnt-what-apple-really-paid/#comments</comments>
		<pubDate>Mon, 07 Dec 2009 18:49:35 +0000</pubDate>
		<dc:creator>Peter Kafka</dc:creator>
				<category><![CDATA[Media]]></category>
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		<guid isPermaLink="false">http://mediamemo.allthingsd.com/?p=13630</guid>
		<description><![CDATA[On Friday, I reported that Apple was buying Lala at a fire-sale price, which meant that investors in the music service wouldn't get their money. I was wrong.

Apple ended up paying around $80 million for the company, according to multiple sources. That's less than half what investors valued the company at in 2008, but it's more than the $35 million the company raised throughout its life. Which means that some investors could get their money back and more.]]></description>
			<content:encoded><![CDATA[<p><a href="http://mediamemo.allthingsd.com/files/2009/12/lala-logo.jpg"><img class="alignright size-full wp-image-13644" title="lala logo" src="http://mediamemo.allthingsd.com/files/2009/12/lala-logo.jpg" alt="lala logo" width="167" height="169" /></a>On Friday, I reported that <a href="http://mediamemo.allthingsd.com/20091204/confirmed-apple-in-talks-to-buy-music-service-lala-com/">Apple was buying Lala at a fire-sale price</a>, which meant that investors in the music service wouldn&#8217;t get their money back. I was wrong.</p>
<p>Apple ended up paying around $80 million for the company, according to multiple sources. That&#8217;s less than half what investors valued the company at in 2008, but it&#8217;s more than the $35 million the company raised throughout its life. Which means that some investors could get their money back and more.</p>
<p>But not all of Lala&#8217;s investors. Warner Music Group (WMG), for one, ended up getting back about half the $20 million it put into Lala, I&#8217;ve confirmed with people familiar the company.</p>
<p>That&#8217;s consistent with the<a href="http://mediamemo.allthingsd.com/20091204/confirmed-apple-in-talks-to-buy-music-service-lala-com/"> $11 million write-down Warner took on its stake back in March</a>. But it&#8217;s also confusing. Most venture deals include a clause that gives investors the right to get their money back&#8211;often with a premium&#8211;before anyone else gets paid following a sale. So any price of $35 million or more should have paid back the music label in full.</p>
<p>I&#8217;ve asked Warner for comment, but haven&#8217;t heard back. I&#8217;ve also reached out to co-investors <a href="http://www.baincapitalventures.com/">Bain Capital Ventures</a> and <a href="http://igncap.com/">Ignition Capital</a>. Apple (AAPL) spokesman Steve Dowling offered up his now-standard line on the deal: &#8220;Apple buys smaller technology companies from time to time, and we generally do not comment on our purpose or plans.&#8221;</p>
<p>Warner executives can at least say that they did better on Lala than they did with Imeem, a rival digital music service. Warner lost all of the $15 million it put into that one, which is being <a href="http://mediamemo.allthingsd.com/20091118/done-deal-myspace-buys-imeem-for-up-to-10-million/">acquired by News Corp.&#8217;s (NWS) MySpace</a>.</p>
<p>And the Warner guys can also tell themselves that employees from a company they once backed are now working at Apple, which can&#8217;t hurt.</p>
<p>Meanwhile, the Lala team, which should begin reporting to Apple today, gets credit for selling the company at any kind of premium at all. It&#8217;s not a home run, but it&#8217;s much better than it could have been.</p>
<p>The start-up  has gone through multiple iterations, and its most recent was a streaming music service that sold access to songs for 10 cents apiece. But despite a recent <a href="http://mediamemo.allthingsd.com/20091021/google-steps-gingerly-into-music-with-one-box/">promotional deal with Google</a> (GOOG), the company appeared unlikely to succeed on its own.</p>
<p>Silicon Valley chatter is that founder Bill Nguyen, who spent six months in Hawaii this year trying to launch another start-up, and CEO Geoff Ralston had become weary of the same problems that have bedeviled other music start-ups. So they were looking to land Lala at a larger entity.</p>
<p>One thing that helped the company extract a decent price is that it had $10 million cash on hand, say sources who&#8217;ve seen the company&#8217;s books. That  meant it didn&#8217;t have to sell immediately.</p>
<p>But Lala&#8217;s real asset was its technology team: In the end, Apple bought the company to get its hands on its engineers, who had built a slick streaming service as well as an iPhone app, which Apple has yet to approve.</p>
<p>If you&#8217;re feeling glass-half-empty, you can note that Lala&#8217;s $80 million price tag is a big comedown from the $200 million investors thought the company was worth a couple of years ago. But if you&#8217;re feeling more generous, you can conclude that any kind of return is worth noting.</p>
<p>The last big exit for a digital music company happened way back in the spring of 2007, when CBS (CBS) paid $280 million for Last.fm. But no one has gotten anything close to that for digital music since then. Imeem is being sold for spare parts, and News Corp. also bought iLike at a steep discount. <a href="http://mediamemo.allthingsd.com/20090320/spiralfrog-either-dead-or-pining-for-the-fjords/?mod=ATD_search">Spiralfrog filed for Chapter 11</a> after burning through its cash.</p>
<p>But people are still trying. <a href="http://gigaom.com/2009/07/10/pandora-raises-35m/">Pandora Media raised another $35 million</a> this summer after a <a href="http://mediamemo.allthingsd.com/20090707/web-radio-darling-pandora-slips-the-noose-but-at-a-cost-heavy-users-now-have-to-pay-to-play-next-up-a-big-funding-round/">royalty deal</a> helped breathe life into the Internet radio company.</p>
<p>Meanwhile, venture-backed <a href="http://mog.com/">MOG</a>, whose investors also include some music labels, has just launched a streaming music service of its own. And <a href="http://kara.allthingsd.com/20090922/is-spotify-spot-on-co-founder-daniel-ek-talks-about-the-hot-online-music-start-up/">Spotify, the European music service</a>, has raised a pile of money and <a href="http://mediamemo.allthingsd.com/20090827/apple-signs-off-on-spotify-when-will-big-music-play-along/">generated much more hype</a>, though it has yet to land in the U.S.</p>
<p>Maybe one of them will get it right.</p>
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		<title>Warner Music Group Walks Away From Digital Start-Ups Lala and Imeem, Loses $33 Million</title>
		<link>http://allthingsd.com/20090507/warner-music-group-walks-away-from-digital-startups-lala-imeem-and-loses-33-million/</link>
		<comments>http://allthingsd.com/20090507/warner-music-group-walks-away-from-digital-startups-lala-imeem-and-loses-33-million/#comments</comments>
		<pubDate>Thu, 07 May 2009 11:44:06 +0000</pubDate>
		<dc:creator>Peter Kafka</dc:creator>
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		<guid isPermaLink="false">http://mediamemo.allthingsd.com/?p=7139</guid>
		<description><![CDATA[Last year, Warner Music Group boasted about its investments in two digital music start-ups. Today the label says those dollars were wasted. Bummer for imeem, which is trying to raise more money.]]></description>
			<content:encoded><![CDATA[<p><img class="alignright size-full wp-image-69" title="victrola" src="http://mediamemo.allthingsd.com/wp-content/blogs.dir/20/files//2008/10/victrola.jpg" alt="victrola" width="180" height="240" />It&#8217;s par for the course for big music labels to boast about their digital music sales as their CD sales tank. And that&#8217;s just what Warner Music Group (WMG) did that this morning, pointing out that its digital revenue was up six percent this quarter.</p>
<p>Less boast-worthy: <a href="http://finance.yahoo.com/news/Warner-Music-Group-Corp-iw-15162612.html">Warner has written off almost all its investments in lala and imeem</a>, two digital music start-ups it once thought would help save it from the slump in CDs.</p>
<p>In 2008, Warner<a href="http://www.sec.gov/Archives/edgar/data/1319161/000119312508169224/d10q.htm"> invested $20 million in lala.com and $15 million in imeem.com</a>. Now the label is taking a $33 million charge on the two start-ups.</p>
<p>The company&#8217;s <a href="http://www.sec.gov/Archives/edgar/data/1319161/000119312509102563/d10q.htm">10-Q</a>, filed this morning, spells it out: It wrote off $16 million in imeem&#8211;its entire investment&#8211;and half of its investment in lala. It also threw away $4 million via a &#8220;receivable write-off&#8221; related to imeem&#8211;that is, the start-up owes Warner money the label doesn&#8217;t expect to see again.</p>
<p>This appears to explain why <a href="http://mediamemo.allthingsd.com/20090327/imeem-asks-big-music-for-help-gets-some-needs-more/">Warner wasn&#8217;t bothering to renegotiate its streaming rights deal with imeem earlier this year</a> even though it owned an equity stake in the company: It looks like the label had already concluded the company wasn&#8217;t worth saving. UPDATE: A person familiar with the situation says Warner may yet hammer out a new agreement with imeem.</p>
<p>Asset write-downs&#8211;acknowledgements that the stuff you bought back in the boom is worth a lot less now&#8211;have been par for the course for big media companies following last fall&#8217;s crash. If anything, Warner is a little late to the game here&#8211;many of its peers took their lumps last quarter.</p>
<p>But it is unfortunate for imeem, which has <a href="http://news.cnet.com/8301-1023_3-10234357-93.html">just raised an emergency funding round</a>&#8211;something in the single-digit millions, I&#8217;m told&#8211;and is still out trying to land more cash.</p>
<p>For the record, Warner said music sales were down 17.6 percent in the last quarter and that the company lost 45 cents a share on revenue of  $668 million. Analysts had been looking for revenue of $730 million. Warner attributed a loss of 22 cents a share to the write-downs.</p>
<p>And as far as Warner&#8217;s digital revenue goes, that six percent increase is worrisome since it shows continued deceleration: A year ago, <a href="http://www.businessinsider.com/2008/5/warner-music-2q">digital revenue had increased 48 percent over the previous year</a>. And Warner&#8217;s digital total was up just one percent over the previous quarter.</p>
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