Google Inc. (NASDAQ:GOOG) is challenging Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) by selling music. Google spent the last several weeks preparing deals with the four major music labels: Sony Music Entertainment, Warner Music, EMI, and Universal Music Group. The new Google service is expected to be called Google Audio.
When Google Audio launches, I wouldn’t be surprised if YouTube changes their default music purchase promotion to their own service. Currently when watching music videos on YouTube, there is a link to buy the song on iTunes or Amazon.com.
I don’t expect Google to do very well in this service because iTunes has already monopolized the music download market. iTunes is the number one music retailer in the world, even beating Wal-Mart. Google attempted to challenge iTunes by selling videos through Google Video, but it did not have much of a business impact.
Vodafone and Warner Music Group has signed a deal that will allow the telecommunications company to sell music published by the major label. By signing Warner Music Group, Vodafone has gained the rights to sell music published by the four major music labels in the world. The four major companies include Universal Music Group, Sony Music, EMI Group, and Warner Music.
Warner Music Group artists include James Blunt, Seal, Fleetwood Mac, Shinedown, and Eric Clapton. The music provided by Warner Music Group will be DRM-free too. This means that the music bought between the Vodafone-Warner Music partnership can be copied to iPods too.
Vevo is a music video website that is a joint venture between Universal Music, Sony Music and YouTube. According to sources with paidContent, the company is out seeking funding based on a $300 milion valuation. Vevo CEO Rio Caraeff has been travelling across the country to meet with potential investors in order to get the project off the ground.
Vevo will be based on of New York City and Los Angeles. The company has been hiring engineers over the last several months. As of right now, it is unclear whether EMI and Warner will join the venture. As for Warner Music, CEO Edgar Bronfman has spoken against the idea publicly.
I would not be surprised if other labels jump on the opportunity to work with Vevo in the near future. Hulu has proven to the world that web video could replace television just like it could do with music television. Vevo can be followed on Twitter.com/Vevo.
Warner Music Group filed a financial report last week and it stated that they wrote-off $33 million in equity and debt from Imeem and Lala. Imeem is a music social network and Lala is a streaming website. Below is an excerpt from the report:
During the quarter ended March 31, 2009, the Company determined that its cost-method investments in digital venture capital companies were impaired largely due to the current economic environment and changing business conditions from the time of the initial investment. In accordance with FAS 157, the Company used Level 3 inputs to determine the fair value of these investments, which include management’s estimates of assumptions that market participants would use in pricing these assets. As a result, the Company recorded charges of $29 million, including $16 million to write-off its investment in imeem, inc. (“imeem”) and $11 million to write-down its investment in lala media, inc (“lala”) to its estimated fair value.
Imeem recently raised additional funding and is putting together an iPhone application. Imeem’s valuation was north of $200 million at one point but has fallen since. Warner invested $20 million in Lala and $15 million in Imeem.
Google Inc. (NASDAQ:GOOG) subsidiary YouTube and Universal Music Group are planning to launch a music video website together in order to increase both of their revenues. The Universal Music channel on YouTube is already one of the most subscribed to on the video website. The combined website will be called Vevo.
This deal is a major boost for YouTube because the video website is getting pressured to find additional revenue streams and is taking a lot of flack for not being able to pay fees for the rights to use their music and music videos.
Vevo will be wholly owned by Universal and it will feature higher quality videos than what is seen on YouTube itself. “The rationale is to help make Vevo a place that brands feel more comfortable,” stated Rio Caraeff, EVP of Universal’s eLabs division.
Universal hopes that Vevo will be comparable to Hulu. Vevo will syndicate videos through their platform called Vevo Music Network. Universal is planning to partner with EMI and Sony Music Group who have already renewed their contracts with YouTube. Partnering with Warner Music Group will be slightly more challenging because they have not been able to make a deal with YouTube in the past.
As usual Warner Music Group (WMG) sent a DMCA takedown notice to YouTube. The problem with one of their more recent takedowns was that it prevented Death Cab For Cutie from embedding music videos on their own website. The music videos were quickly added back to YouTube again after several Death Cab website visitors complained.
Whoever uploaded Death Cab’s videos was clearly not authorized. When Warner Music had it taken down, it left Death Cab’s website as blank. This was pretty embarrasing for the band and I think that from now on the music label company will investigate the websites of their other band members before sending DMCA takedowns.
This isn’t the first time I have seen labels takedown music videos that negatively impact bands and movie producers. I’ve seen Bollywood music videos taken down by record labels from the movie production companies that feature the songs in their movies. And then there was the time when Jon Stewart mocked the parent company of Comedy Central two years ago for removing clips of The Daily Show from YouTube.
Warner Music Group Corp. (NYSE:WMG) has invested in two Silicon Valley online music companies, Imeem and Lala.com. Imeem is a music, video, and photo sharing social networking website. Lala is a music streaming website.
Within the last year, imeem acquired SNOCAP and Anywhere.FM. imeem has over 24 million uniques per month and their widget reaches over 100 million users per month.
Lala.com has 5 million songs in their catalog that users can play for free. Users can add songs to their collection for 10 cents and buy MP3s for 79 cents.
Warner Music’s subsidiary company, The Alternative Distribution Alliance (ADA) announced yesterday that they have acquired Insound.com, a indie music web site [Source: Billboard]. Insound.com is based in New York City and started in 1998. Insound.com will be used as the back-end for Warner Music’s labels.
Insound.com started out in 1998 by selling customized CDs online and sent them out by mail. In October 2006, Insound started selling MP3s. ADA started in 1993 as a joint venture between WMG and Sub Pop Records. This is the first time ADA or Warner Music acquired a retail operation. Insound will continue to be run by Matt Wishnow, a co-founder.
Currently ADA is the leading indie distribution company in USA. Some labels within the ADA includes Comedy Central, Doghouse Records, Elektra Records, Rhino Records, and Warner Bros. Records.
