In a letter to the European Telecommunications Standards Institute, Apple said the telecommunications industry lacks consistent licensing schemes for the many patents necessary to make mobile devices, and offered suggestions for setting appropriate royalty rates that all members would follow.

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As part of Thursday’s earnings report, Nokia noted it received $250 million from Redmond in the first of many quarterly “platform support payments.” It’s part of what the company says will ultimately be billions of dollars in support of its shift to Windows Phone.

Nokia also notes that it pays Microsoft royalties on each phone and has guaranteed minimum commitments, an amount it also expects to ultimately be measured in the billions of dollars.

Last quarter, though, the money flow was clearly toward Nokia, with the company saying it shipped somewhere north of 1 million Windows Phones.

Those payments are going to be needed by Nokia, which noted on Thursday that its Symbian sales are slowing considerably faster than it had predicted.

Nokia had hoped to sell 150 million more Symbian devices even after announcing its Windows Phone transition. It said on Thursday that it no longer expects to reach that level. It didn’t provide a new estimate but said it took charges in the fourth quarter related to both excess inventory and future purchase commitments.

The acquisition gives video-sharing service YouTube access to technology to help it manage its relationship with one of the most fragmented and unwieldy parts of the music industry: music publishing. Music publishing concerns the copyrights on songs’ lyrics and melodies, as distinct from a particular recording of a given song.

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Imax will pay Kodak an upfront fee of tens of millions of dollars — but less than $50 million — and will pay recurring royalties and other payments as it uses the Kodak patents to make products, said a person familiar with the matter.

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Pandora says revenue, users, and usage are all way, way up, driven primarily by the streaming music service’s popularity on mobile devices. Losses are up too, but the company has already warned investors that it will be losing money through 2012.

A quick snapshot for Q1, via Pandora’s most recent SEC filing:

• Revenue: $51 million, up 131 percent from $21.6 million
• Losses: $6.8 million, up 126 percent from $3 million
• Registered users: 94 million, up 77 percent from 53 million
• Active users: 34 million, up 88 percent from 18 million
• Listener hours (total time users spent playing music): 1.6 billion, up 128 percent from 0.7 billion.

In short, pretty much what you want to see if you’re a Pandora bull. Revenue and usage are booming, and expenses are up because the company is spending a bunch of money to keep pace with its growth–it’s doubling headcount for engineers, sales guys, etc.

The key sticking point for Pandora is that as use grows, its music costs grow, too–right now the company is spending about 58 percent of its revenue on royalties. (Which is much less bad than it used to be). So at some point Pandora needs to prove that it can grow ad sales faster than its music costs.

One good sign in that regard is that the company is growing less dependent on Google to sell its ad inventory. This quarter Google accounted for 2.3 percent of Pandora’s revenue, down from 6.3 percent for all of last year, and 11.4 percent the year before that.

And again, it’s worth pointing out that Pandora’s success has been driven in large part by Apple’s iOS and more recently Google’s Android platforms. The company says users access the service via mobile devices 60.3 percent of the time, up from 50.5 percent last year and 23.5 percent the year before.

The San Diego-based company said it benefited not only from growing demand for its chips–used in various classes of cellphones–but also a rise in their average selling prices as users gravitated toward more-sophisticated models. Qualcomm gets much of its profit from patent royalties charged to hardware companies, based on a percentage of the price of each handset.

The company’s results, which exceeded analyst projections and its own estimates, caused its stock to jump in after-hours trading.

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They shouldn’t be.

Pandora has always been up front about the fact that royalties are its biggest expense. And that those fees increase in lockstep with the music service’s popularity.

But while spending half of every dollar it brings in on royalties is a burden, it could be worse. A lot worse.

Prior to the summer of 2009, when Pandora and other Web services negotiated a new royalty deal, Pandora’s music bill was more than 100 percent of its revenues.

Check out this table from Pandora’s S-1, which breaks out each line item in its P&L as a percent of revenue. Notice how brutal the first two quarters of 2009 were. And see how much more tolerable (or at least less awful) they became after July 2009, when Pandora got its new rates (click image to enlarge):

See? Now 50 percent doesn’t look that bad.

And while Pandora’s music fees are hefty, the system that generates those bills is really one of the company’s strengths.

That’s because unlike other music services, from Apple’s iTunes to Spotify, Pandora doesn’t have to negotiate with individual labels and publishers to use their stuff.

Instead, it takes advantage of a U.S. law that created a “compulsory license” for Internet radio. That allows anyone to stream any recorded music they want, as long as they’re willing to pay for it. And as long as they’re functioning as a “Webcaster” and not an on-demand “interactive service.”

The advantages of using the compulsory license are huge. It means Pandora never had to ask the big labels for permission to use their stuff, or pay out giant advances or equity stakes to get a deal done.

While the licenses do come with restrictions–that’s why Pandora doesn’t let listeners request individual songs, and limits the number of times users can skip a song per hour, etc.- they haven’t dissuaded some 80 million people from using the service.

Those licenses don’t exist outside of the U.S., which is one reason Web radio services are such a rarity everywhere else, and why Pandora may struggle with international expansion.

And the fees that Pandora does pay will escalate each year until 2015, when it has to negotiate a new royalty agreement with the music industry.

It’s always possible that the rates will get significantly worse for Webcasters then, and that Pandora ends up in the shape it was in prior to the summer of 2009.

But for the next four years, at least, Pandora thinks it can work with the music bills its users are generating. Now we’ll see if investors agree.

And an expected one too. MPEG LA CEO Larry Horn warned that this was coming. Here’s an excerpt from my conversation with him last May–the day after Google announced its WebM video format and release of the VP8 video codec as an open standard:

JP: Let me ask you this: Are you creating a patent pool license for VP8 and WebM? Have you been approached about creating one?

Larry Horn: Yes, in view of the marketplace uncertainties regarding patent licensing needs for such technologies, there have been expressions of interest from the market urging us to facilitate formation of licenses that would address the market’s need for a convenient one-stop marketplace alternative to negotiating separate licenses with individual patent holders in accessing essential patent rights for VP8 as well as other codecs, and we are looking into the prospects of doing so.

Evidently, the prospects were pretty good, because the group is moving forward with the patent pool, and if it’s able to pull one together, Google’s royalty-free video standard may not be royalty-free for much longer. Which raises a few questions: If VP8 isn’t royalty-free, who’s going to foot the bill? And is Google willing to indemnify partners who opt to use it?

As I noted yesterday, there are lots of reasons for Qualcomm to want Atheros, not the least of which is its extensive customer list.

Qualcomm’s specialty has always been in CDMA technology, the flavor of mobile phone technology favored by Verizon Wireless and Sprint, and it collects considerable royalties around its patent portfolio there. It has struggled to penetrate other markets, and last year shuttered its FloTV operation amid minimal demand. The good news was that it sold its FloTV spectrum to AT&T for $1.93 billion, which is no doubt offsetting the cost of this deal. Add that to the $10.3 billion in cash and short-term investments on its balance sheet as of Sept. 26 and this is an easy deal to do.

It’s also the biggest deal in Qualcomm’s history and the first significant one under CEO Paul Jacobs, who is the son of founder Irwin Jacobs.

Atheros shareholders have plenty of reasons to smile today as well. The company’s stock price surged by 19 percent yesterday. At $45 a share, Qualcomm is paying more than Atheros has ever been worth in its entire history as a publicly held company. As Shira Ovide over at Deal Journal notes, its highest price before yesterday was $43.90. Happy New Year, indeed.

I caught up with Qualcomm Executive Vice President Steve Mollenkopf and Atheros CEO Craig Barratt to talk about the deal.

NewEnterprise: Steve, let’s start with you. What got Qualcomm interested in Atheros?

Mollenkopf: Historically Qualcomm has been focused on the cellular phone, though recently we’ve done much more than that. We had some integration relationships with some companies that allow us to deliver a platform to our customers. They’re essentially technical relationships, and one of those companies was Atheros. So we were familiar with them. But the real reason, the why Atheros and why now question comes down to this. We think the industry is moving to a place where a lot of the technology and use cases that are being created as part of the shift to smartphones will be used outside of just phones, and will move into many adjacent spaces. The requirement of technology and different customers overlap a lot with Atheros. They’re a leader in their space, we’re a leader in ours and we want to go into markets that will require the expertise from both of us. It seemed natural, actually.

Craig, the idea for the acquisition seems to have grown out of an existing partnership. When did the talk turn from being Qualcomm’s partner to becoming part of Qualcomm?

Barratt: The partnership has gone on for about five years, where we’ve cooperated on joint reference and designs and software and feature integration. Over the years we’ve broadened out from Wi-Fi, Bluetooth, GPS, powerline and optical networking. We do have a much more horizontal business. Qualcomm has a very strong vertical business. Through our partnership we saw the teams had a good cultural fit, the engineering teams really respect each other. When we looked at our own strategic imperatives over the long term, we saw that cellular technologies are going to be applied in a much broader markets over time, beyond just smartphones and tablets. There’s an intersection between the Qualcomm technology and our technology, and that’s only going to increase. You’ve probably heard that set-top boxes and things like that are going to start to run Android. So a lot of these mobile technologies are going to start showing up in things like the connected home. Strategically it all started to make sense.

And what will your new job be at Qualcomm?

Barratt: After the acquisition closes, which should be in the first half of 2011, my role will be president of Qualcomm Networking and Connectivity, reporting to Steve.

Steve, if I’m not mistaken, this is the biggest deal that Qualcomm has ever done.

Mollenkopf: You’re correct. For us on the Qualcomm side this is a big step toward expanding our business beyond our traditional platform business and we’re doing it in a way that is in line with how the industry is changing. A lot of the things we’ve been doing with Atheros are things we’ve already been doing as part of our relationship, so this is a natural next step.

Late Wednesday, its Motorola Mobility subsidiary slapped Microsoft with a lawsuit accusing the company of infringing 16 of its patents in a variety of products– including Windows, Exchange, Messenger, Outlook, Windows Marketplace, Bing Maps and Xbox.

“[We are] bringing this action against Microsoft in order to halt its infringement of key Motorola patents,” Kirk Dailey, corporate VP of intellectual property at Motorola Mobility, said in a statement. “Motorola has invested billions of dollars in R&D to create a deep and broad intellectual property portfolio and we will continue to do what is necessary to protect our proprietary technology.”

Microsoft, for its part, seems largely unfazed by Motorola’s right-back-at-ya maneuver. Indeed, in a statement, Horacio Gutierrez–Microsoft’s deputy general counsel of intellectual property and licensing–essentially said the company was waiting for it. “This move is typical of the litigation process and we are not surprised,” he said. “We remain confident in our position and will continue to move forward with the complaints we initiated against Motorola in the U.S. District Court for the Western District of Washington and with the International Trade Commission (ITC).”

Redmond argues that Motorola is contractually bound by agreements with the Institute of Electrical and Electronics Engineers (IEEE) and the International Telecommunications Union (ITU) to license the IP at issue here under “reasonable and non-discriminatory terms and conditions,” but hasn’t done so, opting instead to squeeze it for allegedly inflated sums. Said a Microsoft spokesperson, “[These] commitments are designed to benefit all parties that rely upon these standards, and Microsoft has been harmed by Motorola’s failure to honor them in recent demand letters seeking royalties from Microsoft.”

Here’s an interesting video interview BoomTown did last week with Tim Westergren, Chief Strategy Officer and founder of Pandora Media, where I interviewed him at “The Future of Music” forum in Washington, D.C.

The former musician has ridden all the various bumps the Internet radio station has endured since its founding in 2000–from a $9 million funding in 2004 that saved Pandora to continued struggles to stay afloat after record labels came after it over royalties.

Now, with a stable and growing revenue stream–based on a traditional advertising business model–turbocharged by a popular mobile app for the Apple (AAPL) iPhone and about 65 million users, Westergren talks about what’s next for the Oakland, Calif.-based company:

]]> http://allthingsd.com/20101011/pandoras-tim-westergren-speaks/feed/ 1 http://allthingsd.com/20100611/motorola-and-rim-hug-it-out/ http://allthingsd.com/20100611/motorola-and-rim-hug-it-out/#comments Fri, 11 Jun 2010 14:26:40 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=42360 In February 2008, Motorola and Research In Motion filed a pair of call-and-response lawsuits, each accusing the other of violating an assortment of patents and/or demanding exorbitant royalties on others essential to their respective businesses. Today, they announced a new cross-licensing agreement that resolves those suits.

In a joint press release issued this morning, the two companies said RIM (RIMM) had agreed to pay Motorola (MOT) an undisclosed sum as well as continuing royalties as part of a deal that will end patent litigation between them.

Financial terms weren’t disclosed, but given the concessions made by RIM–an upfront payment and ongoing payment of royalites–it would seem Motorola had the upper hand in this spat.

]]> http://allthingsd.com/20100611/motorola-and-rim-hug-it-out/feed/ 0 http://allthingsd.com/20100309/dark-side-of-the-download-pink-floyd-sues-emi-over-online-sales/ http://allthingsd.com/20100309/dark-side-of-the-download-pink-floyd-sues-emi-over-online-sales/#comments Tue, 09 Mar 2010 21:45:58 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=17195 It’s standard operating practice for the music industry: Musicians sue labels, claiming they got screwed out of royalties.

But from a writer’s perspective, it’s always nice when the plaintiff is a well-known act whose catalog includes a hit called “Money.”

Pink Floyd’s suit against EMI is technically about online royalties and the fact that EMI has been selling the group’s work as singles instead of albums at Apple’s (AAPL) iTunes store.* This detracts from the fact that much of the band’s output consists of “seamless pieces,” in which “many of the songs blend into each other,” the group’s lawyer told Bloomberg.

The band isn’t always opposed to people picking and choosing its songs, though. Tune into “Cold Case” on CBS (CBS) on March 21, and you’ll be treated to the following: “Hey You,” “Comfortably Numb,” “Mother,” “Marooned,” “Time,” “The Thin Ice” and “Wish You Were Here.”

In any case, EMI has much bigger problems to worry about. Like staying out of the clutches of rival Warner Music Group (WMG).

“We’re huge fans of Pink Floyd who we have been working with for 40 years and whose great catalog we continue to represent and work for internationally,” says a shy EMI spokesperson.

*We should note that much of “Animals,” which has a great cover but crummy songs, is only available if you buy the entire album.

]]> http://allthingsd.com/20100309/dark-side-of-the-download-pink-floyd-sues-emi-over-online-sales/feed/ 0 http://allthingsd.com/20091201/a-cautionary-tale-from-the-digital-music-wars-or-how-to-make-63-in-five-years-on-the-web/ http://allthingsd.com/20091201/a-cautionary-tale-from-the-digital-music-wars-or-how-to-make-63-in-five-years-on-the-web/#comments Tue, 01 Dec 2009 21:49:02 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=13410 Required reading for anyone interested in the economics of digital music and the pitfalls of digital media in general: This post from Tim Quirk, who is currently an executive at RealNetworks’s (RNWK) Rhapsody but who used to sing in a band called Too Much Joy.

Quirk’s tale revolves around his quest to find out how much his band earned from three albums’ worth of digital music over a five-year stretch. Warner Music Group (WMG) initially tells him that his band, which enjoyed very modest success through the 80s and 90s, has earned a grand total of…$62.47.

After some prodding, Quirk eventually gets Warner to concede that the band generated more than that paltry sum. But it’s still not likely to be that much.

Again, you’ll want to read it yourself, but there are two points here:

• It is much more difficult than it ought to be for digital content creators and owners to figure out how much money they’ve made online. Quirk, who works for a digital music distributor himself, lays much of the blame on the labels. But in their defense, I’ve heard many label types complain that they’re at the mercy of the likes of Rhapsody and Apple (AAPL). Remember that iTunes has been selling music since 2003. If digital music is still this knotty to navigate, think of how difficult, say, figuring out an actor’s residual for a video download is going to be.
• At least under conventional contracts, digital really isn’t going to amount to much for most performers. Maybe Lady Gaga really did make more than $167 after generating more than one million plays on Spotify, but she’s not going to make a ton, because streaming music royalties are really, really tiny. And given that streaming music start-ups are struggling to pay even that much, this is not going to change for quite some time.

(Thanks to Professor Derek Nystrom for flagging this one for me.)

]]> http://allthingsd.com/20091201/a-cautionary-tale-from-the-digital-music-wars-or-how-to-make-63-in-five-years-on-the-web/feed/ 0 http://allthingsd.com/20090908/goog-books/ http://allthingsd.com/20090908/goog-books/#comments Tue, 08 Sep 2009 11:30:16 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=24176 Google claims that its Book Search settlement will “bring back to life millions of lost books in a way that serves the interest of all.” And if that truly is its goal, the company is going to have to put its own Brobdingnagian self interests second to those of others–if only for a little while.

To wit, Google’s announcement Monday of a number of concessions to the European Union, which seems a bit dubious of the whole thing. In a letter to several publisher associations in Europe, the company invited two non-U.S. representatives to join the board that will oversee the book rights registry that is to distribute royalties from digital book sales under terms proposed by the settlement. The company also promised to seek their permission before digitally publishing European works still protected by copyrights.

“Books that are commercially available in Europe will be treated as commercially available under the Settlement,” Google (GOOG) explained. “Such books can only be displayed to US users if expressly authorised by rights holders.”

Quite a concession, given Google’s plans to create a so-called “last library,” but clearly necessary with opposition to the deal abroad so pronounced. Already, Germany has filed an objection to it, saying the agreement would “irrevocably alter the landscape of international copyright law.” And now France is about to do the same.

“Google will have a monopoly digitalising European orphan works without permission,” Nicolas Georges, director for books and libraries at the French Culture Ministry, told Reuters. “Google has the power to determine which work will be in its database or not. For example, some works that are not commercial may be removed by Google.”

Seems Google’s effort to establish a de facto worldwide copyright regime isn’t going to be quite as easy as the company had hoped.

]]> http://allthingsd.com/20090908/goog-books/feed/ 0 http://allthingsd.com/20090713/would-you-pay-1-a-month-for-pandora/ http://allthingsd.com/20090713/would-you-pay-1-a-month-for-pandora/#comments Mon, 13 Jul 2009 17:44:28 +0000 Marisa Taylor http://voices.allthingsd.com/?p=13431 Pandora has finally emerged from a two-year battle with the Copyright Royalty Board over royalty payments for the artists of songs streamed online. And for the first time in its history, the popular streaming-music service will charge its heaviest listeners a fee for using it.

Webcasters reached an agreement last week with Sound Exchange, the nonprofit organization designated by the U.S. Copyright Office to negotiate on behalf of performing artists, which says that large webcasters like Pandora earning more than $125 million a year will pay a quarter of gross revenues in royalties, or about 0.09 cents per song, whichever is higher.

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]]> http://allthingsd.com/20090713/would-you-pay-1-a-month-for-pandora/feed/ 0 http://allthingsd.com/20090618/an-indie-label-sounds-off-why-we-dont-love-grooveshark/ http://allthingsd.com/20090618/an-indie-label-sounds-off-why-we-dont-love-grooveshark/#comments Thu, 18 Jun 2009 11:39:41 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=8325 When a big music label sues a scrappy Web music start-up, most people tend to sympathize reflexively with the little guy. But not everyone.

My story about EMI’s lawsuit against Web music start-up Grooveshark elicited this email from Ben Patterson, who runs indie Web music distributor DashGo, about his experience with the service.

I think Patterson’s remarks are useful because they spell out Grooveshark’s business plan, or at least part of it: Charge labels to promote their acts on the service’s search engine. And I think it’s also helpful to hear an obvious but little-voiced argument about the “free Web music = valuable promotion” thesis: It works best when the act or label is playing along. With Ben’s permission, I’m publishing his entire email.

I’ll caveat this by saying they are nice guys and big music fans and I’m always rooting for new music services that work for bands and music fans alike.

Back in 2007 DashGo signed a deal with Grooveshark that basically amounted to a digital download service delivered via P2P. Users who used Grooveshark’s P2P service to search for songs would be presented with a download / buy link and the revenue would be split between fan hosting the file, Grooveshark and the band.

A couple months later we got a nice packet–a t-shirt, letter and wax-sealed, yes, wax-sealed, envelope with a check for $0.59 in royalties. (Coconut Records “West Coast” I think)

Then I didn’t hear much for 6 months. No checks, no real action. At the end of 2008, they reached out and told me about their new music search engine at listen.grooveshark.com–basically Seeqpod / Songza / all other stream song aggregators…not what we licensed for, but not egregious enough to get huffy.

Of course, that was before they offered to sell me advertising for my bands as the default search keyword. For $0.05 per search, I could make the default phrase “DashGo Band Name” instead of “Search here.” I had to ask–am I getting paid per play? No of course not. Because “[they] are not profitable and can’t afford to share that advertising revenue.” So I’m paying, not even for a play, but for a search term on a service where they have users and can sell ads ONLY because people can listen to music, and because it’s free, what incentive is there EVER to buy the song?

So we don’t deliver there anymore.

I’ll tell you why all these free streaming music services are broken–because they rely on music advertising to pay the rent but give away the advertisers product. If I got free McDonald’s and Budweiser by watching the Super Bowl, why would I buy the food? As an advertiser, why would I pay a CPC to advertise streaming music and promote listens when the per stream rate a existing subscription services is AT BEST $0.02 per play?

It sucks to get sued. I’m sorry Grooveshark, but really..what did you expect? You’re soliciting labels and bands to pay your bandwidth, rent and operating costs and giving away the product.

While I’ve got this soapbox out, let me preach one more gospel; offering free music accessible via a search engine is NOT promotional if the band hasn’t opted in.

If a user SEARCHES for the music and listens to it for free in an environment where someone ELSE has posted the music and the band doesn’t have the option to ask for an email address or even pitch a tour or merch or actual album; then the service is just ripping off the band by giving free content to someone who asked for it–not promoting it to a new fan or adding a filter that helps expose and distinguish music.

[Image credit: Mrs. Logic]

]]> http://allthingsd.com/20090618/an-indie-label-sounds-off-why-we-dont-love-grooveshark/feed/ 0 http://allthingsd.com/20090527/irving-azoff/ http://allthingsd.com/20090527/irving-azoff/#comments Wed, 27 May 2009 16:31:16 +0000 Peter Kafka http://d7.allthingsd.com/?p=178

As a longtime music executive and talent manager, Irving Azoff has had to find a way to work with everyone from inebriated rock stars to David Geffen. But he’s never had to placate Washington, D.C., before. But that’s what Azoff needs to do in order to pull off the deal of a lifetime: A merger between his Ticketmaster (TKTM) Entertainment, which dominates the ticketing business, and Live Nation, (LYV), which dominates the live concert business.

When Azoff isn’t busy trying to convince people that the merger doesn’t violate antitrust regulations, or running his ticketing company, he manages the careers of everyone from the Eagles to Christina Aguilera. Note the one thing in the music business he doesn’t spend time on: selling recorded music.

Session Highlights

Live Blog

• Introduction: Legendary Eagles survivor Joe Walsh, looking very much worse for wear, shows up via video to talk about his longtime manager. “Irving is the only manager that I ever knew that said to David Geffen ‘pffft,’ and he’s still here.” Also: “He’s a friend of mine….All the guys in the Eagles love him. He has a beautiful house that we bought him.”
• Irving notes that Joe is now sober.
• Irving rattles off his management empire: 16 management companies, handling everyone from Miley Cyrus to Willie Nelson. Country, classic rock “where the tour money is.”
• Kara: Where’s the music business going? Irving: Obviously, with the “demonetization of recorded music,” everyone got into a woe-is-me attitude, but I’m enthusiastic. “Narrowcasting” of the industry has created new stars, and live business is good.

• Irving: Music labels have always been slow to react to technology, and a lot of people in this room profited from that. Basically the record industry sat around and tried to protect an old model.
• Kara: Could the business have reacted differently? Irving: Yeah, suing your customer is a bad idea.
• Kara: Will there be record companies in the future? Irving: Yes. They have 100 years of content. They’ll be more like publishing companies, where they are a repository of rights.
• Kara: How do you feel the technology business has treated the music business? [Apologies for gap, technical issues]. Eagles have generated about $400,000 in Apple (AAPL) iTunes royalties. Which is about what they get for a couple live shows.
• Irving: Overall, the state of music industry is promising. Was fallow for a bit, but there’s a whole new generation of singers, songwriters, performers. “You never know where it comes from.” In terms of the business, there will be more companies than the four big labels that dominate today. “It will be a great time for entrepreneurs….It’s not over, but it’s warping into 2.0, 3.0.”
• Kara: What does a music executive have to do to survive? Irving: You have to take chances. They can’t complain about the iTunes deal. They have to embrace new technology, and I think they are, and it’s easier to get deals done now.
• Kara: What about these little digital companies like Playlist and iLike, which Ticketmaster owns  a piece of? They can survive, and they’re excellent marketing opportunities. But they’ll have to find other ways of making money. Can they? “I don’t know.” Advertising? “I don’t know.”

• Onto the merger. Irving lays out the case. Everything revolves around live music, and they’re the biggest player in live music. It’s really the promotion piece, and the marketing piece, added to Ticketmaster. Without that, Ticketmaster wouldn’t survive. “Any of you guys can write a program that does what Ticketmaster does….I’ve been there a couple of months and I have gripes myself.”
• People’s gripe with Ticketmaster isn’t with what we do, it’s demand issues: People want tickets to attend sold-out shows, so we have unhappy customers. Plus we’ve been the “collection agency” for a whole bunch of fees. “But the decision is ultimately made by the act.”
• What about criticism to the merger from the likes of Bruce Springsteen? “Everything we do revolves around what’s good for the artist and what’s good for the fan. That’s our new model.”
• Not really an answer, Kara points out. Irving: “I would say that Bruce is uninformed about the potential of what this could be.” [Maybe someone could tell Jon Landau.] For instance, we could be bundling new songs along with tickets. “The business traditionally resists change,” so complaints about the merger are nothing news. And there’s plenty of competition: Phil Anschutz competes with us and he’s worth more than the combined market cap of both of these companies. Warner Music Group’s (WMG) Edgar Bronfman Jr. says he’s in the ticketing business, etc.
• Discussion of TicketsNow, a StubHub-like  “secondary market”/scalping business owned by Ticketmaster. Irving has said that in the past that he wouldn’t have bought it. Would he sell it now? Maybe.
• What are the prospects for the merger? “Very optimistic” that it will get done between now and end of the year.
• Back to griping about prices and availability: “People in the music industry, we’ve had a horrible record of shooting ourselves in the head.” We haven’t done enough dynamic pricing for tickets, and we should, and that will help make people happy. But these issues are fundamentally the artists’ responsibility. They decide what tickets we sell, and at what price.

• Where is the music business going, overall? Who’s your favorite? “It’s like asking what’s your favorite kid.” Internet makes things very exciting, distribution is opening up. What about the industry suing customers? I think that’s a “very small issue.” We do need to protect intellectual property, and the people who make it.
• Q&A: Esther Dyson wants to know what Ticketmaster/Live Nation will  do with all the data they collect about customers, etc. “Any artist that calls up and says I’d like the email list of the people who came to my show, we’ll make that available.” But with regard to pricing, etc., artists and their management are not being sophisticated about how they use data. And we have to keep the press from chastising artists that use dynamic pricing.”
• Q: Not clear what the question is. But seems to be about using an auction model from the get-go. “Auctions are falling into real disfavor at the moment….We’re finding that people don’t want to spend the time to participate in them.” They just want to know that this VIP package costs this much.
• Q: What do you think about subscription services? “I’ve always thought subscription was an incredible model.” But tricky to pull off with labels, publishers, unions, mobile guys all trying to figure out how to split the money.
• Q: Do you have specific advice for classical music artists? The great thing about the Internet is that you no longer have to be popular with everybody to have a career. Classical should flourish in this era. Build a base, get in front of people, have people like you live. “That’s been true in 1966, and that will be true as long as there is music.”
• Do your artists like Twitter? Some do. “Very useful” but other artists “refuse to get a mobile phone.”

A note about our coverage: This liveblog is not an official transcript of the conversation that occurred onstage. Rather, it is a compilation of quotes, paraphrased statements and ad-lib observations written and posted to the Web as quickly as we were able. It was not intended as a transcript and should not be interpreted as one.

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]]> http://allthingsd.com/20090527/irving-azoff/feed/ 4 http://allthingsd.com/20090521/warner-music-videos-back-on-youtube-if-you-know-where-to-look/ http://allthingsd.com/20090521/warner-music-videos-back-on-youtube-if-you-know-where-to-look/#comments Thu, 21 May 2009 12:44:37 +0000 Peter Kafka http://mediamemo.allthingsd.com/?p=7585 In a post I wrote yesterday about Warner Music Group’s debt offering, I noted that the music label was still sparring with Google’s (GOOG) YouTube, which meant that its videos aren’t available on the world’s biggest video site.

No way, says reader Joy Sherman, who insists that they’re “all over” YouTube, and pointed me to a clip from WMG’s new Green Day album.

And sure enough, there’s the video for “Know Your Enemy,” the new single from one of the label’s biggest acts.

But I’m not sure about the “all over” part. I can find one live version that’s pretty good. But the other clips I’ve found with the same label are either bait and switches or appear to be disabled in some way.

So. You can find some Warner’s stuff on YouTube, some of the time. But aren’t all of  Warner’s videos–and songs–supposed to be off of YouTube altogether, the result of a licensing dispute that flared up in December?

No official comment from either the label or the video site. But the unofficial story seems to be this: YouTube has variety of methods to take down content that’s not supposed to be on the site, including its ContentID system, which can automate the process for copyright owners that use it–that’s why YouTube wasn’t completely overrun with clips from NBC’s Olympics coverage last summer and why very little footage from ABC’s Oscars coverage made it onto the site earlier this year.

And Warner Music Group (WMG) is a ContentID user. But the system isn’t foolproof, and it’s bound to work much better when YouTube and the content owner are working together instead of fighting over royalties and revenue splits.

So here’s the Green Day video that’s not supposed to be on YouTube, and may not be for much longer once I post it. So enjoy while you can:

And, per MTV VP’s John Loscalzo’s request, I’ll note that Viacom’s video site has a perfectly legally version of the song that won’t get taken down. You can see it here.

]]> http://allthingsd.com/20090521/warner-music-videos-back-on-youtube-if-you-know-where-to-look/feed/ 0 http://allthingsd.com/20090324/good-thing-the-iphone-doesnt-have-a-brain-wave-analyzer/ http://allthingsd.com/20090324/good-thing-the-iphone-doesnt-have-a-brain-wave-analyzer/#comments Tue, 24 Mar 2009 23:05:58 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=15335 With its speech synthesizers, brain current-operated controls and solar power source, the device described in Monec Holdings’ patent–“electronic device, preferably an electronic book,”–would seem to have little in common with Apple’s (AAPL) iPhone. Certainly, the iPhone doesn’t yet support brain wave sensors, nor can it display Braille. Still, it is a “light-weight” electronic device with a “touch-screen” and “a power source.” It does have “a flat, frame-like housing.” And it is capable of displaying e-books. Which in Monec’s opinion make it similar enough to an “electronic device, preferably an electronic book” to file suit over. And that’s exactly what the company has done. In a lawsuit (PDF) filed against Apple Monday, Monec accuses the iPhone maker of infringing upon its astonishingly broad patent, claiming Apple’s distribution of e-book applications like Stanza and Amazon’s (AMZN) Kindle through its App Store has done it harm. It’s demanding damages, including lost profits and reasonable royalties, as well as attorneys’ fees. Hard to see Monec collecting them though given the breadth and general sci-fi silliness of the patent at issue.

]]> http://allthingsd.com/20090324/good-thing-the-iphone-doesnt-have-a-brain-wave-analyzer/feed/ 0 http://allthingsd.com/20090324/good-thing-the-iphone-doesnt-have-a-brain-wave-analyzer-2/ http://allthingsd.com/20090324/good-thing-the-iphone-doesnt-have-a-brain-wave-analyzer-2/#comments Tue, 24 Mar 2009 23:05:58 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=15335 With its speech synthesizers, brain current-operated controls and solar power source, the device described in Monec Holdings’ patent–“electronic device, preferably an electronic book,”–would seem to have little in common with Apple’s (AAPL) iPhone. Certainly, the iPhone doesn’t yet support brain wave sensors, nor can it display Braille. Still, it is a “light-weight” electronic device with a “touch-screen” and “a power source.” It does have “a flat, frame-like housing.” And it is capable of displaying e-books. Which in Monec’s opinion make it similar enough to an “electronic device, preferably an electronic book” to file suit over. And that’s exactly what the company has done. In a lawsuit (PDF) filed against Apple Monday, Monec accuses the iPhone maker of infringing upon its astonishingly broad patent, claiming Apple’s distribution of e-book applications like Stanza and Amazon’s (AMZN) Kindle through its App Store has done it harm. It’s demanding damages, including lost profits and reasonable royalties, as well as attorneys’ fees. Hard to see Monec collecting them though given the breadth and general sci-fi silliness of the patent at issue.

]]> http://allthingsd.com/20090324/good-thing-the-iphone-doesnt-have-a-brain-wave-analyzer-2/feed/ 0 http://allthingsd.com/20090309/that-tiny-sum-its-your-digital-download-royalties-after-packaging-costs-and-breakage/ http://allthingsd.com/20090309/that-tiny-sum-its-your-digital-download-royalties-after-packaging-costs-and-breakage/#comments Mon, 09 Mar 2009 13:10:51 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=14424 A song purchased from Apple’s (AAPL) iTunes or Amazon (AMZN) is no different from one bought from a brick-and-mortar retail outlet, despite the vast differences in the economies of distribution between the two. That, in a nutshell, was the jury verdict handed down in a case brought by rapper Eminem’s former production company, FBT Productions, against Universal Music Group.

At issue here was whether the sale of digital music downloads falls under the “distribution” agreements that cover physical releases like CDs. FBT argued they do not, claiming that the label incurs none of the costs typically associated with them–things like CD jewel cases and inserts, breakage fees and in-store displays. Instead, the production company said that downloads should be covered by “licensing” agreements that don’t include such expenses. And the difference between the two is significant: Under distribution deals, artists typically take a 30 percent split of royalties earned. Under licensing deals, they take 50 percent.

But the jury didn’t quite see things FBT’s way and instead bought Universal’s argument that the economics for digital downloads should be viewed as similar to those of the single. A nasty blow to FBT and other artists hoping to see their royalty rates adjusted to account for the new economies of distribution provided by digital music storefronts. Seems that much as technology has changed the relationship between musicians and their fans, it’s done little to change the one between musicians and their labels.

]]> http://allthingsd.com/20090309/that-tiny-sum-its-your-digital-download-royalties-after-packaging-costs-and-breakage/feed/ 4 http://allthingsd.com/20090309/that-tiny-sum-its-your-digital-download-royalties-after-packaging-costs-and-breakage-2/ http://allthingsd.com/20090309/that-tiny-sum-its-your-digital-download-royalties-after-packaging-costs-and-breakage-2/#comments Mon, 09 Mar 2009 13:10:51 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=14424 A song purchased from Apple’s (AAPL) iTunes or Amazon (AMZN) is no different from one bought from a brick-and-mortar retail outlet, despite the vast differences in the economies of distribution between the two. That, in a nutshell, was the jury verdict handed down in a case brought by rapper Eminem’s former production company, FBT Productions, against Universal Music Group.

At issue here was whether the sale of digital music downloads falls under the “distribution” agreements that cover physical releases like CDs. FBT argued they do not, claiming that the label incurs none of the costs typically associated with them–things like CD jewel cases and inserts, breakage fees and in-store displays. Instead, the production company said that downloads should be covered by “licensing” agreements that don’t include such expenses. And the difference between the two is significant: Under distribution deals, artists typically take a 30 percent split of royalties earned. Under licensing deals, they take 50 percent.

But the jury didn’t quite see things FBT’s way and instead bought Universal’s argument that the economics for digital downloads should be viewed as similar to those of the single. A nasty blow to FBT and other artists hoping to see their royalty rates adjusted to account for the new economies of distribution provided by digital music storefronts. Seems that much as technology has changed the relationship between musicians and their fans, it’s done little to change the one between musicians and their labels.

]]> http://allthingsd.com/20090309/that-tiny-sum-its-your-digital-download-royalties-after-packaging-costs-and-breakage-2/feed/ 0 http://allthingsd.com/20090227/eminem-to-universal-music-group-you-be-illin/ http://allthingsd.com/20090227/eminem-to-universal-music-group-you-be-illin/#comments Fri, 27 Feb 2009 15:26:10 +0000 John Paczkowski http://digitaldaily.allthingsd.com/?p=13755 A two-year-old lawsuit against Universal Music Group over digital music royalties finally landed in court this week and its outcome could have a profound effect on the digital music business. Filed by rapper Eminem’s former production company, FBT Productions, the suit accuses Universal of underpaying artists for sales of their work through online services like iTunes, and seeks about $1.3 million in unpaid royalties.

At issue here is whether the sale of digital music downloads falls under the “distribution” agreements that cover physical releases like CDs. FBT says they do not, arguing that the label incurs none of the costs typically associated with them–things like CD jewel cases and inserts and in-store displays. Instead, the production company says that downloads should be covered by “licensing” agreements that do not include such expenses. And the difference between the two is significant: Under distribution deals, artists typically take a 30 percent split of royalties earned. Under licensing deals, they take 50 percent. “If you give the music to a third party without cost to you, like manufacturing or packaging, that’s the same as a licensing agreement,” a source close to the case told The Wrap. “[Universal] are characterising it as something else.”

Universal, of course, disagrees. It claims the sale of a digital download is no different from the sale of a CD. But it seems to be having a tough time supporting that argument in court. To wit, this exchange between FBT attorney Richard S. Busch and Lawrence Kenswil, the former head of UMG’s e-commerce arm, eLabs.

Busch: “Universal provided two digital files to the download companies–a master recording and a metadata guide setting forth a procedure for getting the music on their system. With the digital download agreements–Universal has no manufacturing costs connected with that, correct?”

Kenswil: “Generally, that’s true. But it has costs. You don’t call them manufacturing costs the way that term has been used traditionally. Manufacturing costs are for physical costs, and that has gone away.”

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