Industry information that you can actually use
January 2006
Big Wig Rock Managers Talk About Their Clients' Drug Use at LA Conference
iPod Mania May Not Save Apple From Chapter 11 Bankruptcy
The Stern Burn: Will It Bust Sirius' Booty?
It's Sex, Drugs, Rock & Roll and More Drugs, So Say the Veterans
The first 2006 meeting of the California Copyright Commerce (CCC) was held on 1/10 in Los Angeles' Sportsman's Lodge.
I have been going to these meetings for about two years now, but this one was special. On the panel were star managers and music business veterans: Peter Asher, President of Sanctuary Management, Andy Gould of Vision Entertainment, Doc McGhee of McGhee Entertainment and Harold Owens of MusiCares.
They told heart-warming stories about their tenure. The topic of the night: Drug Abuse. Can you imagine listening to these industry staples testify about the likes of James Taylor and Eddie Van Halen? And testify they did. Along with their anecdotes was great advice for future managers and how the business is changing.
Now, you could pay hundreds of dollars to go to a big music conference and never get to rub elbows with connected cats like this. This was small, intimate and guess what it cost? Thirty-five bucks. Yes. The CCC is the best deal in the biz and if you're living in LA, you're crazy to not be a member or at least attend a few of their monthly sojourns.
For more info: http://www.theccc.org/index.php
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Will iPod Conquer the World Before Chapter 11 Conquers Apple?
(With apologies to Steve Jobs)
Computer maker Steve Jobs has a simple dream: to conquer the world by creating the premier platform for delivering music to the masses. Is he really on his way?
Steve is offering an FM tuner with the new iPods and, thanks to a doo-hicky that several large auto manufacturers are installing, you will also have easy integration of the iPod into your car. So you won't need commercial radio or pesky Satellite with its monthly fees. Plus iPods will get the jump on everyone by receiving video content, so soon you will be able to watch TV while you drive.
True there will be many new competitors in the pipeline: Internet radio, broadband, HD radio, but Steve also has an ace in the hole— iTunes , the most successful on-line music store EVER! Steve says downloads on the iTunes Music Store over the past four years have crossed the 850 million singles mark! That's the equivalent to 56.5 million CD albums!
I'm impressed! It took major labels almost ONE MONTH to achieve that in 2005. (BTW-- Nielson SoundScan reported that total album sales for 2005--minus download sales--were about 618 million units. Down only 3% from last year, not 10% as some groups have reported.)
Now there is this rumor of the iTunes mini store "spying" on your listening and buying habits. [http://www.boingboing.net/2006/01/11/itunes_update_spies_.html]
I know that most Apple fans fancy themselves quasi-libertarians, so this will probably come as a shock to them, but Steve is simply doing what everyone else does on the web; trying to make a better mouse-trap by finding out how you like your mice... trapped. Regardless, this bit of news will do no good for the service that Apple's annual report implies is a barley profitable support function for the iPod.
But what about proliferation, you cry. iPod sales now total 42 million units since the product was unveiled in 2001. That's about 20 iPods sold every minute since its release. To conquer the world Steve has only to sell somewhere around 4,958,000,000 more. If he increases sales to one iPod every second he can accomplish his goal in only 157 years. (Of course by then the world will be a lot bigger.)
So, am I anti-Apple? No way. I love everything they make. I mean it. I am an Apple fan. But that is not the point. Ferraris are the best cars, Betamax was better than VHS, film looks better than video. Quality is not usually the deciding factor in who wins the retail war. Simple economics is.
The iPod, great device as it is, will be heavily out competed shortly by cell phones carrying the same receivers and more memory. As for Apple computers, indisputably the best box in the biz; they are still less than 8% of the market and dropping.
So, my simple question: if this trend persists, what will Apple be doing in ten years?
Any theories? Let me know. Mosesavalon1@aol.com
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The Stern Burn: Is Satellite the Beginning of Howard's End?
I have to admit it, I miss the guy. My FM palate seems somehow empty with Stern absent. Even though I could only listen for a few minutes a day before I needed a good dose of reality, he was an important part of the matrix. And now he's gone. Will this be the beginning of Howard's End?
First the good news: Howard's show on Sirius is better than ever. If you're a fan of lesbian cat fights, dysfunctional personalities, Robin's weird suitors and their fetishes, then you will not be disappointed. Too bad there just aren't that many fans who can hear him. And the real question I will try to answer in the next 500 words is-- will there be enough fans in the future to keep him on the air? Two points are worth considering:
1- the numbers and 2 - the censors.
THE NUMBERS
Back in the end of 2004 I wrote in a Moses Supposes, "Sirius, with its fast-rising debt is taking a risk that will not likely pay off. I know the conventional wisdom: get Stern and get his millions of listeners. But will that pan out when most Stern listeners are not driving the $35,000 cars, where you would generally find satellite radio devices?"
Still true today?
Stern was once heard by over 20,000,000 people through his ClearChanel syndication and cable show. According to Bridge Ratings, which tracks radio listeners, sixty percent of the 1.1 million people who subscribed to Sirius over the holiday season said they did it for Stern. But at about 660,000 subscribers (60% of 1.1 Million) they still only have a small fraction of Stern's old fan base. How can the people at Sirius be serious about cutting his listeners down to 3% of what it was only a year ago?
They argue: well, each of our BMW driving subscribers will spend fifty times more than the old chicken-wing-eating Stern listener. We'll see. Then they argue that eventually they will get enough of the other 19,340,000 fans to make a difference. Maybe. They're hoping that market watchers forget a common axiom of sales: if you build it, the majority of people who are coming-- come right away. The rest go on to other things.
Sirius is gambling that Stern will be an exception, but even if they are right, will Sirius be in business by then?
Consider that it took almost 15 years before cable TV (a very similar business model as satellite radio) became thought of as a "utility" in the American home. During that time cable teetered on profitability and they had NO DIRECT COMPETITORS until Dish in the mid-1990s.
Sirius has a far bigger uphill battle, facing STRONG competitors like XM Radio, internet broadband radio, iPods, and coming soon, HD Radio. During this decade-long war to gain market share, Sirius will be paying Stern about $100,000,000 a year-- regardless of his success. Howard is smiling. Shareholders are not.
THE CENSORS
A big misconception is that Stern will escape censors on Satellite. Maybe for a little while, and only to a degree. People seem to think that because he can curse, that he now has carte blanche. He doesn't. And comparing it to getting porn in your hotel room is a perfect example. You CAN NOT get XXX porn in every hotel room or cable box around the country because decency laws allow every State to set their own standards. If a particular State thinks Stern is "obscene" they CAN and will censor him and they wilt run to the FCC to help enforce the law.
As soon as they get around to it, FCC "influence" will likely go into effect on Satellite radio as it has already on Cable TV today and ironically, Stern will once again be entering the realm of his nemesis-- decency standards, regulations and fines. This time there will be nowhere to run, except starting his own network. (For my lawyer readers who want precedent, see the bottom of this piece.) In fact, because of Stern's reputation the agency might even move Satellite regulation higher on their priority list. Meaning that Stern might actually quicken the death bell for free speech on all of Satellite.
Now, I could be wrong. My argument is not a popular one, mostly because many in the music business are pathologically optimistic about satellite radio's future. Also, few in the know completely understand why ClearChannel dropped Stern. His show earned the conglomerate 100s of millions in ad revenue. Well worth the $1.5 million in FCC fines they had to pay due to his show's content. So what does ClearChannel know about Stern that Sirius is desperately ignoring to impress its Board? Try this:
Stern listeners are generally between the ages of 17 and 35. For the past decade or so this has represented a significant amount of Americans. But here are a few stats from the US Census Bureau to chew on: Over 40 million Americans are already over 60. "Roughly half of the nation's population will be 40 by the year 2010. Right now about 4 million people per year are turning 50." (That's over 10,000 people a day).
So while competition creeps up on Sirius, the audience factor diminishes on Stern. But Howard gets his pay check anyway.
WHAT TO LOOK FOR
Stern's show rocks now that he can cut loose. But I predict that he will start to tone down his act over the next two years. He will likely blame this on pressure and censorship by encroaching FCC influence over Satellite radio. But the truth is in the census, NOT the censors; it's about market share, not altruism or freedom of speech.
Let me close with a quote from Bob Lefsetz, a record industry critic whose views evidence an anti-major label slant.
"Stern didn't think of his fans who weren't about to plunk down in excess of $100 a year to hear him. He abandoned these people. He DISSED them. Do you think they're still believers? Howard's now like a summer camp girlfriend, fading in the rearview mirror."
--From, The Lefsetz Letter, http://www.lefsetz.com.
BACKGROUND:
The Supreme Court affirmed the FCC's jurisdiction over cable in United States v. Southwestern Cable Co., 392 U.S. 157 (1968). Each state regulates cable TV and sets "decency standards" in their own way. When the FCC applies this legal standard to Satellite in a few years, expect more of the same. For more on this: http://www.fcc.gov/mb/facts/csgen.html and http://www.uweb.ucsb.edu/~colleen-oconnor/
More on cable regulations: http://www.cityofbellevue.org/page.asp?view=17022
More on satellite regulations: http://www.fcc.gov/connectglobe/sec8.html
This 2002 article from Forbes disagrees with me: http://www.forbes.com/home/services/2004/10/06/cx_sw_1006stern.html
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