Saturday, October 6, 2012

Columbia COO Steve Barnett in Line to Head Up Universal's New Capitol Label Group

Columbia Records co-chairman/COO Steve Barnett is potentially days away from taking the helm of a new Capitol Label Group at Universal Music, a source close to the situation told Friday afternoon (October 5). The source stressed that the talks are ongoing and nothing has been signed yet. The news was first reported in Hits.

The move would be a coup, breaking up Columbia's winning team of Barnett and co-chairman/CEO Rob Stringer, which leads the industry in U.S. album market share with total share of 9.17% current at 10.79%; and album plus TEA share of 8.64%, making it the No. 1 label in each of those categories.

The news gives a glimpse of a new structure for the labels acquired by Universal in its acquisition of EMI's recorded-music division, although which other labels might be part of the Group - presumably Virgin would be one - was unclear at press time.

When asked about his plans for the EMI labels, UMG CEO Lucian Grainge told on September 24 -- the day the acquisition was cleared by the European Union and the Federal Trade Commission -- "To have a healthy, strong Capitol Records and Virgin Music is a good thing for the music industry. We will bring more investments by entrepreneurs and musicians than there have been for a long time. We will be doubling the A&R investment these labels have been making in recent years, and that will work its way through the industry ecosystem.

He added that in "growing the Virgin and Capitol labels ... I don't see this as reducing the number of majors but rather strengthening two of industry's best-known labels with investment. …  We are going to create more choice for artists and more entrepreneurial opportunities with the investment we're going to be making.  I believe in working in with a wide variety of popular music and entrepreneurs as we've done with Cash Money and Scooter Braun's Schoolboy Records, for example."
As for musical-genre focus, he said, "I think in terms of urban and rock music, these are areas that will receive a boost."

What Barnett's departure from Columbia might mean for the label's leadership - and who might replace him -- was unclear at press time.

Boxer Orlando Cruz announces he’s gay

SAN JUAN, Puerto Rico — Describing himself as “a proud gay man,” Puerto Rican featherweight Orlando Cruz on Thursday became what is believed to be the first pro boxer to come out as openly homosexual while still competing.
Cruz told the Associated Press in an interview that he is relieved about his decision but had initial reservations.
“I developed physically and mentally to take such a big step in my life and in my profession, which is boxing, knowing that it would have pros and cons, highs and lows in this sport that is so macho,” he said. “I kept this hidden for many, many years.”
His announcement comes two weeks before the 31-year-old left-hander challenges Mexican boxer Jorge Pazos for the WBO Latino title. Cruz is ranked as the World Boxing Organization’s No. 4 featherweight fighter and is 18-2-1 with nine knockouts.
Cruz said he met with psychologists and others before making the announcement, adding he has the full support of his family, trainer and manager. He praised his mother and sister for their unconditional love and said his father has always backed him.
“Like every father, he wants his son to be a full-blooded man,” Cruz said. “But he is aware of my preference, my taste.”
Few active professional athletes have come out. There has yet to be an openly gay player in Major League Baseball, the NBA or NFL.
Pedro Julio Serrano, spokesman for the U.S.-based National Gay and Lesbian Task Force, praised Cruz for his decision and said it breaks stereotypes that gay people are not involved in sports like boxing.
“It also gives a lot of hope to young gays who can see in him the integrity and bravery to be who you are and face a society that is often intolerant, especially in this type of sport,” he said.
Reaction to Cruz’s announcement was largely positive across social media, with many praising him for taking what they called a brave step given the sport’s violent history. Among those who sent messages of support was Puerto Rican singer Ricky Martin, who announced he was gay in 2010.
Some Twitter messages expressed concern for Cruz’s safety and wondered whether other boxers will be reluctant to fight him. Dommys Delgado, president of the Boxing Commission of Puerto Rico, brushed aside those comments.
“Orlando has proven to be an excellent boxer with very good chances of becoming a world champion,” she said. “We do know that it is a very macho sport. Those who don’t want to fight with him, well, don’t fight.”
The only other professional boxer who was quoted as saying that he had relations with men and women was U.S. Virgin Islander Emile Griffith, who told The New York Times in 2005 that he struggled with his sexuality. His comments came decades after he ended his 18-year career as a pro boxer.
Griffith is best known for his 1962 fight against Cuban Benny Paret, who taunted Griffith with gay slurs before the bout. Griffith knocked him out, and Paret died 10 days later.
Cruz said he is prepared for the fallout from his announcement, saying many boxers had already suspected he was gay but gave him privacy.
“I’ve been fighting for more than 24 years and as I continue my ascendant career, I want to be true to myself,” he said. “I have always been and always will be a proud gay man.”

How Mumford And Sons Scored Highest First Week Sales This Year (So Far)

Glassnote Records' strategy for raising awareness of Babel, Mumford & Sons' sophomore full-length released on Sept. 25, was multipronged, beginning with the band's maiden voyage to Hoboken. The Aug. 1 show was the first date in a 15-city U.S. tour that allowed Mumford & Sons to introduce Babel songs to stateside fans. "I think that the No. 1 focus of the plan was that the band was going to be here for almost two months, setting up their record and playing their record -- which is kind of a ballsy move, playing half of your new album each night," Glassnote founder Daniel Glass says. "No. 2, keeping them connected to radio, particularly noncommercial, triple A and alternative. And keeping them attached to retail, particularly indie retail, and making sure there was good value there for them. And then letting [the album] ride free -- letting the streaming services help expose it."

Instead of cannibalizing album sales, streaming services helped Mumford & Sons score even more fans in Babel's debut sales week. The album smashed Spotify's records for streams from an album in a single week, with around 8 million streams. According to Spotify chief content officer Ken Parks, one out of every 10 U.S. Spotify users played a song fromBabel in its first seven days of release. "Opening up the faucet and letting people hear it and stream is definitely very healthy," Glass adds, "and I think people inherently want to purchase an artifact, a memento, so they have a piece of it now that they streamed it."


Mumford & Sons have courted crowds in the major U.S. markets and at festivals like Coachella, Bonnaroo and Lollapalooza in the past three years, but they have also paid attention to building a base in smaller markets like Bloomington; Marfa, Texas; Telluride, Colo.; and Council Bluffs, Iowa. Adam Voith, the band's booking agent, says that, from the very beginning, Mumford & Sons were impressed with the way the Avett Brothers had developed their fan bases in secondary markets, and wanted to duplicate that success. The band hasn't just made touring in North America a priority, but touring in the corners of North America that many artists neglect, and coming back to those same corners year after year.

"These are loyal music fans," Voith says of the secondary-market crowds. And Mumford is loyal to them. After spending time in tiny Bristol, Va., on its way to New York earlier this year, the band promised the crowd that it would be back soon. A few months later, in August, back it was.

As the group's audience has grown, so has its reputation as a live act. "Every show is a different experience," Glass says, pointing to the touring partners, like Old Crow Medicine Show, Dawes and the Very Best, that have joined the act onstage for special collaborative encores at select performances. At the Hoboken show, Mumford & Sons performed a brass cover of Frank Sinatra's "New York, New York" against the Manhattan skyline, and following an Aug. 4 performance at the Eastern Promenade in Portland, Maine, Lovett opted to DJ an after-party at the city's Space Gallery.
The Portland date was the first of Mumford & Sons' four Gentlemen of the Road shows, a series of stopovers in small U.S. cities that ran for four consecutive weekends in August (the others took place in Bristol, Va.; Dixon, Ill.; and Monterey, Calif.). In between the 11 summer U.S. tour dates used to preview the band's Babel songs, Mumford & Sons headlined day-long events that included multiple stages, local food vendors, unique opening acts for each extravaganza and the band members strolling around with super-fans on tours of the local areas.

Mumford & Sons have offered U.S. fans a unique tour format in 2011, when the band joined Edward Sharpe & the Magnetic Zeros and Old Crow Medicine Show to travel across the country in vintage railcars on the six-city Railroad Revival tour. But the Gentlemen shows, which began with two stopovers in the United Kingdom last June and will occur once more in Dungog, Australia, on Oct. 20, have been the band's most ambitious live undertakings yet, combining its focus on small towns with experiences that cannot be duplicated. Manager Adam Tudhope describes the stopover format as "a desire to go to places off the beaten track, where there's a genuine benefit in a band coming into town and bringing 16,000 people with them."

The group's transition from club shows to theaters to all-day stopovers has yielded impressive monetary results: Mumford & Sons grossed $716,000 from the 19 shows reported to Billboard Boxscore in 2010; in 2011, the band earned $3.0 million from 14 shows. And there's no stoppage in sight: An Australian run that begins Oct. 12 leads up to a Nov. 10 show at Los Angeles' Hollywood Bowl, and another U.K. tour before the end of the year will precede many more U.S. shows and summer festivals in 2013.

Mumford & Sons performed "I Will Wait" and "Below My Feet" on the Sept. 22 episode of "Saturday Night Live," a gig that was fortuitously slated for the weekend before Babel's release. The "SNL" appearance was a major TV look for the band, but the cardinal rule of Glassnote's rollout strategy has been to avoid oversaturation: Mumford & Sons have nothing lined up in licensing deals, and have foregone the stateside late-night rounds in favor of select appearances. The band performed an hour-long set on "Live on Letterman" on Sept. 26, joined Emmylou Harris on a special episode of "CMT Crossroads" on Sept. 27 and sat down with and performed for NPR's "World Cafe" on Sept. 28. Meanwhile, "I Will Wait" isn't receiving a concerted top 40 push, despite dominating at rock radio.

"The core of the band is NPR, alternative and triple A radio, so we're going to be loyal and superserve these formats," Glass says. In addition, Babel sold 600,000 copies in its first week without any huge discounts at the major retailers -- iTunes carries the album for $11.99, while Amazon and Target offered temporary price cuts ($9.99) during its first week of release. "We played the music for all the key retailers, and . . . they believed in us, and I think that they heard the record," Glass adds. "Retail is so happy with us because we didn't show favoritism. We just gave them a great album with great artwork and a great deluxe package, and we didn't get into the games of the crazy deep discounts. We held our ground. I'm not being arrogant. I'm just saying, that's confidence in a great band."


The list of 2013 inductees for the Rock and Roll Hall of Fame continues to surprise.
According to Yahoo! News, among the first-time honorees will include Rush, Deep Purple, Public Enemy and N.W.A. They join returning rock star honorees Heart, Joan Jett and the Blackhearts, Randy Newman, Donna Summer and Kraftwerk. With a clear distinction in sound and a wide range of taste, Rock and Roll Hall of Fame Foundation's President and CEO Joel Peresman says, "The definition of 'rock and roll' means different things to different people, but as broad as the classifications may be, they all share a common love of the music."
"This year we again proudly put forth a fantastic array of groups and artists that span the entire genre that is 'rock and roll," he added.
600 artists are expected to be honored at next year's ceremony in Los Angeles April 18. For more info, visit

Jeff Price, SOCAN CEO Discuss Price's New Role at Organization

SOCAN -- the Society of Composers, Authors and Music Publishers of Canada - announced earlier this week that it has hired TuneCore co-founder and former CEO Jeff Price as a consultant, but the performance rights organization has no plans to start a TuneCore-like business. 

"We don't own rights and nothing is changing in our business model," says SOCAN CEO Eric Baptiste. "This is not a land grab." 

But SOCAN would like to offer more services to its members, and Baptiste thinks Price can help. "The digital model is changing every day with new possibilities, and we have to make sure we stay on top of that," Baptiste says. "Jeff is a really smart guy and he will help us explore some opportunities." 

Baptiste points out that not all songwriters will understand the opportunities being presented to them by digital services, and he can offer advice and information on how to navigate them. If SOCAN can help them understand whether a new service is or isn't suitable for them, that would be improving the value the organization provides to its members. 

For his part, Price says he is starting with a blank page on what he will bring to the job, as they haven't even laid out a first task for him. 

"I am intrigued by the opportunity," Price says. "I am curious to see where this goes and see what I can drum up for them." 

Some industry speculators are surprised to see Price partner with a PRO because he has often been critical of them, saying that they are not transparent enough. However, he has endorsed SOCAN in the past. 

Because songwriters can't monitor the use of their music all over the world, they need to hire a PRO to collect their money from supermarkets, television, YouTube and all sorts of live venues, and they should be able to know what they will get paid from each of them, Price says. 

"It's a very simple question and, yes, most of the time you won't get an answer or even a non-answer from most [PROs]. From SOCAN you can get that answer.  Payments to songwriters should be very granular ... and you should know the exact pay rate, and that's what SOCAN does." 

How do they do that? Price points to SOCAN's online calculator, where users can input information about an upcoming performance and estimate how they will be paid, even before the performance happens. 

Moreover, another thing Price said he likes about SOCAN is the fact that it doesn't take a cut of foreign performance royalties - i.e., when music comes from foreign territories, both the PRO in that territory and the PRO in the songwriter's home territory take a cut, but SOCAN does not. 

He also says that SOCAN doesn't maintain a "black box," which in music-industry parlance is money held by an organization when it loses track of a songwriters address: SOCAN actually puts up a public list of songwriters it owes money to and tries to find them. 

"I find that incredibly refreshing," Price says. 

Price left his position as CEO of TuneCore amid controversy in August, and the owners of that organization have not yet publicly stated who is running the organization in his place.


Pop stars from Elvis Presley to N.W.A to Marilyn Manson have flirted with and even flaunted controversy—but never with the uniform gusto of Eminem. On his 1999 major-label debut, The Slim Shady LP (Number Two pop, Number One R&B), the Detroit-based white rapper was willing to put anybody in his verbal crosshairs, including not only his detractors but himself, Kim, his wife and the mother of his daughter, and his own mother (who later ended up filing a defamation of character lawsuit against him). The following year's doubly venomous The Marshall Mathers LP (Number One pop, Number One R&B) raised/lowered the bar even more, drawing intense protest from gay, lesbian, religious, and women's groups, even as it became the fastest-selling rap album of all time and topped many critics' year-end best-of lists.
Eminem was born Marshall Bruce Mathers III just outside of Kansas City, Missouri. He never knew his father and was raised along with a younger half-brother by his mother, Debbie Mathers-Briggs, who moved the family to a predominately black neighborhood on the East side of Detroit when Mathers was 11. Although he was bullied and harassed by other kids on a regular basis, Mathers found a handful of friends who recognized his rhyming skills, and after failing ninth grade three years in a row, he dropped out of school and began competing in local freestyle throw-downs with his crew, the Dirty Dozen.
He released his first solo album, Infinite, on the local Web Entertainment label in 1996. It failed to garner much attention, but the followup, 1998's The Slim Shady EP, so impressed super-producer Dr. Dre that he signed Eminem to his Interscope imprint, Aftermath. The EP was expanded into the Dre-coproduced The Slim Shady LP, which debuted on the pop chart at Number Three in February 1999 and went on to sell three million copies and win Eminem a Grammy for Best Rap Album. Like the EP before it, the album showcased Eminem's maniacal alter ego Slim Shady — a homicidal comedian through whom Mathers enacted his most outrageous and perverse revenge fantasies. The catchy lead single "My Name Is" was a huge crossover success, climbing to Number 36 on the Hot 100 and eventually winning a Grammy for Best Rap Solo Performance. Meanwhile, moral watchdogs loudly protested darker fare on the album like "'97 Bonnie and Clyde," in which Eminem sings lovingly to his baby daughter while en route to dump her murdered mother in a body of water.
The combination of Eminem's unique, nasal delivery (many critics and artists, both black and white, hailed him as one of the best MCs in the world), crossover appeal, and willingness to attack and offend anything in his way without prejudice quickly established the young rapper as a seemingly unstoppable phenomenon—a fact further proven when The Marshall Mathers LP debuted at the top of the chart in 2000 with close to 1.7 million copies sold its first week in stores. It would eventually become one of only a handful of albums to achieve diamond certification, for sales of over 10 million copies.
The monster crossover hit came with "The Real Slim Shady" (Number Four pop, Number 11 R&B, 2000), while the Gay and Lesbian Alliance Against Defamation (GLAAD) led the protest charge, extremely alarmed over a recurring theme of hateful homophobia throughout the album. The debate peaked when openly gay rocker - and outspoken Eminem fan - Elton John performed with the rapper at the 2001 Grammy Awards ceremony (where Eminem won his second Best Rap Album trophy but lost Album of the Year to Steely Dan). Together, Eminem and John performed the song "Stan," a cautionary tale about a disturbed fan taking Eminem's violent Slim Shady fantasies too seriously. The album version of "Stan" drew its disarmingly pretty chorus from the song "Thank You" by English singer/songwriter Dido, whose own career subsequently took off due to the exposure.
In 2001, Eminem also made good on a promise to sign his Detroit crew, D12, to his new record label, Shady Records and the group—six members, including Eminem—released Devil's Night, which debuted at Number One and has sold over two million copies.
In the midst of all his critical and commercial success and the controversy stirred up over his lyrics, Eminem was besieged by lawsuits and run-ins with the law. In addition to his mother's defamation suit, Mathers was also sued by his estranged wife (the girlfriend he "killed" in "'97 Bonnie & Clyde" and again in "Kim" from The Marshall Mathers LP). The couple later reconciled and his wife dropped the suit, but the pair eventually divorced in 2001. Meanwhile, Mathers pleaded guilty to charges of carrying a concealed weapon in a criminal case stemming from a June 2000 incident in which he allegedly assaulted a man outside of a nightclub for kissing his wife. He received two years' probation.
In the summer of 2002, the MC returned with his third album, The Eminem Show, which sold over a million in its first week of release and went on to sell over 10 million copies—making Eminem the only artist in history with two diamond certified albums. On the first single, "Without Me," Em mocked the media storm that followed him wherever he went: "Everybody, just follow me/Cause we need a little controversy/Cause it feels so empty, without me." The single peaked at Number Two on Billboard's Hot 100—Em's highest placement to date—and was nominated for two Grammy in 2003: Record of the Year and Best Male Rap Solo Performance. "Cleanin' Out My Closet," also from The Eminem Show, peaked at Number Four on the Hot 100.
In November, 2002, Eminem starred as himself (renamed "Rabbit") in 8 Mile, a dramatization of his coming of age as an aspiring MC in Detroit, co-starring Kim Basinger, Brittany Murphy, and Mekhi Phifer. The rapper earned critical acclaim for his acting in the film and even more for its soundtrack and standout track "Lose Yourself," which was Eminem's first song to hit Number One on the Hot 100 and also earned the rapper an Academy Award for Best Original Song in 2003.
Eminem returned in November 2004 with Encore, which sold 700,000 copies in its first three days of release and 2.8 million in the first two weeks. On this, Eminem's fourth studio album, on which alter ego Slim Shady takes a final bow, the lyrics are noticeably more restrained, less antagonistic. It did strike notes of controversy, however, notably for anti-war track "Mosh" (which references "this weapon of mass destruction that we call our president") and "Just Lose It," which poked fun at Michael Jackson over allegations of child molestation, plastic surgery, and the incident when his hair caught fire during a Pepsi commercial shoot. The attack angered some prominent African-Americans, notably Stevie Wonder and Steve Harvey, who said on his radio show, "Eminem has lost his ghetto pass. We want the pass back."
A year later, Eminem released a greatest hits album called Curtain Call: The Hits, leading some to think the rapper was retiring, a possibility he bolstered when he told a Detroit radio show "This is the reason that we called it 'Curtain Call', because this could be the final thing. We don't know." In August, 2005, the rapper entered a rehab facility to treat a dependency on sleeping pills. Eminem later credited his former duet partner Elton John for helping him overcome his addiction.
After a long hiatus from recording, Eminem returned in 2009, releasing Relapse in May and Relapse 2 in August. Neither album sold as well as the rapper's career-defining earlier efforts, but both went platinum and re-established him as a force with the pop universe.


When Jay-Z speaks, the world listens—probably because he's always spitting nothing but the truth.
Fresh out of Pharrell's upcoming conversation-piece book, Pharrell: The Places and Spaces I've Been, Hov gives his "humble" opinion on iconic grunge band Nirvana, specifically their song "Smells Like Teen Spirit" and the movement they created.
See a narration of the opening chapter below, via SPIN:
"So, where were you mentally and physically when grunge music hit?" Pharrell asks Jay-Z. "Like where were you when you first heard, 'Smells Like Teen Spirit?'"
"First we got to go back to before grunge and why grunge happened," reasons Jay. "'Hair bands' dominated the airwaves and rock became more about looks than about actual substance and what it stood for—the rebellious spirit of youth....That's why 'Teen Spirit' rang so loud because it was right on point with how everyone felt, you know what I'm saying?"
Jay-Z then goes on to say that grunge actually stalled the rise of hip-hop in popular culture. "It was weird because hip-hop was becoming this force, then grunge music stopped it for one second, ya know?" he says."Those 'hair bands' were too easy for us to take out; when Kurt Cobain came with that statement it was like, 'We got to wait awhile.'"
"I have always been a person who was curious about the music and when those forces come on the scene, they are inescapable,Jay says. "Can't take your eyes off them, can't stop listening to them. [Cobain] was one of those figures. I knew we had to wait for a second before we became that dominant force in music."
We got to say, Hov has a good point here. You'd be lying if you said you weren't feeling the "teen angst" when Nirvana dropped "Smells Like Teen Spirit."
You can read the full version of Pharrell: The Places and Spaces I've Been when it hit stores October 16.

Accounting Explains How Spotify's Business Model Can Succeed

A website that posts the financials of privately held companies has revived the debate about the sustainability about Spotify's business model. This is a debate worth having, but a tweak to Spotify's income statement may lead to a more informed discussion.

Look at PrivCo's financials for Spotify and two things should stand out.

First, Spotify's cost of sales looks too high. Spotify pays out about 70% of its revenue to rights holders, which should be well known by now. PrivCo has Spotify's cost of sales at 97.7% in 2011.

Yes, Spotify could have paid out more for content costs in 2011. But at SXSW in March chief content officer Ken Parks said the company pays out "in the neighborhood of 65% to 70% back to rights holders." That's a lot lower than what PrivCo thinks Spotify is paying rights holders. And it's hard to believe Spotify would sign deals that give away every dollar it earns.

Cost of sales is the heart of the debate about Spotify's business model: PrivCo interprets this 97.7% gross margin to mean Spotify will always hand over nearly every incremental dollar to content owners. This is wrong. I'll explain why below.

The second thing that stands out is a single deduction -- personnel costs -- under gross profit. This is related to the first problem: PrivCo has included in cost of sales many expenses that do not belong there. Costs of sales are items that are directly attributable to the revenue being generated.

A good example of proper accounting is Pandora's income statement. Pandora, a publicly traded company with audited financial statements that adhere to Generally Accepted Accounting Principles, breaks out content acquisition costs, product development costs, general and administrative costs, marketing and sales costs and cost of revenue (which is probably a catchall for items such as leases and equipment that help the company generate sales).

Like Spotify, Pandora's content acquisition costs increase linearly. As people listen to more music, its royalties increase. Similarly, as Spotify generates more revenue, it pays more to content owners.

But the Spotify numbers we see are not broken out in such detail. All we see are two large buckets: cost of sales and personnel. This is ridiculous. A company incurs many types of expenses, and not all expenses are directly related to the product or service it sells. We don't know how PrivCo has accounted for different expenses.

A better way to assess Spotify's business model is to put the right numbers in the right places on the income statement.

First, Spotify's gross margin should be around 75% based mostly on its content acquisition costs. Spotify pays, or will pay in the future, around 70% of revenues to rights holders (I made it 72% to be conservative and to throw in a couple percentage points for performance royalties just in case they were being left out). Then I added 5% of revenue (it may need to be more) for the costs of the business directly related to running the service.

Next, the costs directly related to revenues should be separated from salaries, administrative and other items. PrivCo doesn't break out these numbers, but we know from Spotify's business model the company has significant sales and marketing expenses as well as administrative functions in over a dozen countries. Since we know these costs exist but don't know the details, I have condensed them into "G&A and Other Costs."

The bottom line is the same under both accounting methods, but under the new accounting the business model doesn't look nearly as bad. Most importantly, we see that Spotify doesn't hand over to rights owners anything close to $1 for every additional $1 in revenue it generates. As a result, its gross profit increased from $5.6 million to $31.8 million.
And see how changing the accounting impacts changes in revenue growth. If Spotify's revenue increases 75% the following year, with only 50% increases in personnel and other costs, it will have a $9.7 million operating profit on revenue of $428 million. The PrivCo method of accounting predicted Spotify would have lost over $35 million on that same $428 million.
These are just assumptions. Spotify could very well grow expenses at a higher rate than revenue and incur another big loss in 2012. Continual expansion into new markets will not come cheap.

Nevertheless, the point should be clear: Spotify has about a 25% gross margin to play with after it pays rights holders. As the company gets bigger, that 25% gets bigger. If Spotify can grow to, say, $2 billion in revenue per year, it will have $500 million in gross revenue from which to pay its expenses.

That would be a lofty goal, but there's nothing about this company that indicates it is aiming for mediocrity.

Update: PrivCo CEO Sam Hamadeh tells me Spotify's financials - he says he has financial statements audited by Ernst & Young in his hands - define cost of sales as content acquisition costs plus credit card processing fees. That's it. So the cost of paying rights holders and processing payments took 98 cents of every dollar Spotify earned in 2011, Hamadeh says my assumptions were wrong about the way PrivCo calculated cost of sales.

The pieces don't fitting together too well. Parks says Spotify pays rights holders 65% to 70% of revenue. Anecdotal evidence suggests subscription services typically pay around 70% of revenue to rights holders. Case in point: Napster had a cost of revenue of 71.5% in 2008, according to its 2008 10-K Yet PrivCo claims to have audited financial statements that say content acquisition costs are roughly 96% of revenue (with about 3% of revenue for credit card processing, says Hamadeh).

The wild card here would have to be free listening. Spotify's freemium business model means it incurs royalties for free listening and must generate advertising revenue to pay rights owners. A pure subscription model leads to more predictable expenses.

Whether or not Spotify's business model is sustainable depends on its ability to achieve typical gross margins of a subscription service - about 30% give or take. It does not need to hit 30% immediately, but it should aim for that target in the near future.

But will Spotify die a fiery death? It's hard to imagine right now. Labels and publishers need it to succeed and will have to accommodate its needs. Put simply, Spotify could be too big to fail.


Meek Mill knows all eyes will be on his debut album, Dreams & Nightmares, come Oct. 30.
Earlier this week, the Maybach Music Empire confirmed the project's release date and tracklisting. Meek latest single "Young and Gettin' It," features Houston's Kirko Bangz, and will be given the music video treatment shortly.
"I put my heart into it and everything I had into it. Oct 30th, just get ready," Meek tells VIBE. "If it don't come out on Oct. 30th I don't know what to say. It's coming out 100%."
With guest features from the likes of Rick Ross, Wale, Nas, John Legend, Mary J. Blige and more, Philly's young gun promises his album will have some of the "greatest music of the year."

Friday, October 5, 2012

Brian Epstein Bought Thousands Of Copies Of 'Love Me Do' To Boost Beatles Sales, Says BBC Film

A new BBC documentary about the Beatles, set to air here on Sunday, features people claiming that the band's manager Brian Epstein bought thousands of copies of "Love Me Do" to boost record sales to ensure the single hit the charts. 

The group's first hit single was released 50 years ago this week. 

Epstein's friend and associate Joe Flannery talks about the long-rumored record purchases by Epstein in the BBC Four documentary entitled Love Me Do: The Beatles '62


"He went and he bought 10,000 copies of "Love Me Do," and that was in his store room in Whitechapel, because I'd seen them, they were there, 10,000 copies," the network quoted Flannery as saying in the documentary in a Thursday announcement. Rumors that Epstein tried to bolster sales of the single, which became the band's first top 20 hit, have circulated for years, it added. 

Billy Kinsley, who was in The Merseybeats, another band managed by Epstein, also appears in the documentary. The BBC said he told the film team that Epstein would look at that band's tour schedule and encouraged them to buy copies of "Love Me Do." "I like to think that we did help the Beatles get to number 17," it quoted him as saying in the documentary. 

Other contributors of the documentary include original Beatles drummer Pete Best, who was replaced by Ringo Starr. 

The film also includes an interview with drummer Andy White who says that after Best was replaced by Ringo Starr, he was asked to replace Ringo as drummer on one of the many recorded versions of "Love Me Do." Ringo's version was released in Britain, the version with White was released abroad and went to No. 1 in the U.S. 

The BBC said White also played on the B-side number "PS I Love You," "and he now claims he is actually the drummer on one of The Beatles' biggest hits -- 'Please Please Me'."


Jeff Castelaz Named President of Elektra Records

Jeff Castelaz was today named President of Elektra Records, which operates under the Atlantic Records Group where he will oversee all areas of Elektra's activities, both working with existing signings and developing new talent.

Castelaz will report directly to Atlantic Records chairman and CEO Craig Kallman and Atlantic chairman & COO Julie Greenwald.

Castelaz, who co-founded Dangerbird Records and Music Publishing in 2003, has played a key role in the careers of such artists as  Silversun Pickups, Fitz and The Tantrums, Sea Wolf, Dropkick Murphys, Eagles of Death Metal and Phoenix among others.

"Now into its seventh decade, Elektra Records has a unique spirit, cultivated by the elite group of creative mavericks who've run the label and the eclectic artists they've signed," Kallman and Greenwald said in a joint statement: "Building on the remarkable success since the label's re-launch in 2009, Jeff is the perfect choice to forge the next extraordinary chapter of Elektra's story.

"I'm honored to step into the pilot's seat of this incredible label," Castelaz stated. "I couldn't be more excited to uphold Elektra's legacy of long term development of vital artists-a principle that has been the touchstone of my entire career. I look forward to suiting up as the newest member of the crack Artist Development squad known as Atlantic Records Group."

Elektra founder, Jac Holzman added that: "Craig and Julie have given a kid from Milwaukee the opportunity of a lifetime-to shine the Elektra spotlight forward to another generation of music fans. Jeff's broad experience with indie recording and indie management has given him the perfect combination of energy, taste and a commitment to scout the edges and find those seminal artists, a bit ahead of their time, who are capable of making a significant contribution to those who embrace the best of new music."

While at Dangerbird Records and Music Publishing in 2003, Castelaz signed and guided the careers of a wide range of artists including Silversun Pickups, Fitz and The Tantrums, Sea Wolf, Beady Eye and Richie Sambora, among others. In 1992 he founded Cast Management, where he manages Dropkick Murphys and record producers and songwriters such as Justin Meldal-Johnsen, Tony Hoffer and Jacquire King.

Castelaz also sits on three boards: the President's Circle of The Lance Armstrong Foundation/LIVESTRONG; Radio Milwaukee, a non-commercial AAA station to which he was recruited by the philanthropist Peter Buffett; and The Pablove Foundation, a pediatric cancer charity Castelaz and his wife Jo Ann Thrailkill founded, which funds innovative pediatric cancer research and programs that improve the lives of kids and families living with childhood cancer.

Elektra records was founded in 1950 by Jac Holzman, Elektra Records with an eclectic musical roster that has included such artists as Carly Simon, Joni Mitchell 10,000 Maniacs, Anita Baker, Bjork, The Cars, Natalie Cole and The Cyre, Its current roster includes CeeLo Green, Charlotte Gainsbourg, Ed Sheeran, Marina and the Diamonds, and Justice.

Oprah & Rihanna Top Forbes' Highest-Paid Women in Hollywood List

Forbes' has released its annual list of Hollywood's Highest-Paid Women and media mogul Oprah Winfrey and singing sensation Rihanna have topped the list. Both women have had a very busy year juggling multiple projects but it seems thier hard work has paid off.
The Oprah Winfrey Show is off the air, but the former talk show queen still landed the number one spot, banking $165 million this past year. Winfrey, who is the CEO and founder of OWN, recently signed a partnership with producer and filmmaker Tyler Perry to create new scripted programming for the network. Although the network was once suffering from low ratings, OWN is steadily growing. The recent premiere of Iyanla: Fix My Life grabbed the network's highest debut ratings yet.
Rihanna landed in the top five of the list with $53 million in total earnings. The Barbados-born entertainer's revenue came from a mix of tours, album sales and endorsement deals including Nivea and Coco. According to Forbes, Rihanna's 85-date tour and her perfume Reb'l Fleur added millions to her net worth.
Other celebs who made the list include Taylor Swift, Jennifer Lopez and Lady Gaga.

Nicki Minaj Slams Mariah Carey On Twitter

A leaked video of Nicki Minaj and Mariah Carey sharing heated words during an American Idolaudition taping hit the Internet yesterday and sparked an instant feud between fans on both sides. There had already been reports about tension between the two judges and Minaj's curse-filled rant proved the controversy. 
According to TMZ, Minaj believes the feud is being fueled by the show's producers to increase ratings. 
"I guess it hurts 2 have the producers tell u to ur face that Nicki is the best judge we've had since Simon," Minaj tweeted. "I thought we resolved it yesterday but I see u want ur pity party to continue."
It seems that Nicki is responding to remarks Mariah Carey made in aninterview with Barbara Walters on the The View today. Carey revealed that she “doesn’t feel comfortable emotionally" and she will hire extra security. 
Carey said the American Idol judges and producers had a meeting Wednesday to discuss the fight, and after Minaj told her, “I love you but we might fight again.” Walters said Carey responded with, “No, we will not."
Despite the altercation, neither Minaj nor Carey has expressed plans to leave the show. 
Carey's husband, Nick Cannon, also weighed in on the fight, saying, "I always say my wife is the strongest, classiest women that I've ever met. In any situation I'm never concerned about her handling herself." 
Minaj's Twitter rant continues; to read more, click here.

Rock & Roll HOF nods for Public Enemy, more

Who knew “Fight the Power” classified as rock and roll?
Rap groups Public Enemy and N.W.A. and disco pioneer Donna Summer are just a few of the diverse names announced as nominees for the Rock and Roll Hall of Fame.
Other contenders include Blues artist Albert King, disco band Chic, New Orleans funk band The Meters, and Motown quartet The Marvelettes. About five to seven acts are inducted each year, with 15 nominated this year.
There are 15 acts up for nomination this year, with about five to seven being inducted a year.
“The definition of ‘rock and roll’ means different things to different people, but as broad as the classifications may be, they all share a common love of the music,” said Joel Peresman, President and CEO of the Rock and Roll Hall of Fame Foundation.
To be considered, artists had to release their first recording no later than 1987.
While it’s a first-time nomination for N.W.A., it’s the seventh time for Chic since 2003. It’s the sixth time being on the ballot for Summer, but the first since her death earlier this year.
A group of 600 artists, music historians and members of the industry will decide the inductees for this year’s ceremony which will take place on April 18 at the Nokia Theatre in Los Angeles. The event will later be broadcast on HBO.
Those inducted will be represented in the legendary Rock and Roll Hall of Fame Museum in Cleveland, Ohio.

Is Bow Wow Really Broke?

Child support trials are fascinating looks into the hidden world of real rapper finances. These trails almost always completely flip the normal hip-hop script: suddenly the same rapper bragging about dropping 50K at a strip club is desperately trying to prove they're dead broke to avoid those child support payments. Looks like we can add Bow Wow to that list. 

During Bow Wow's recent trail, the former teen star claimed that his sole income was $4,000 a month as an employee of Cash Money Records, he only has $1,500 in his checking account, and his only vehicle was a leased Jeep. (Side note: What the fuck does it mean to be an "employee" of Cash Money?) Yep, we're talking the same Bow Wow turning out videos like this: 

Now there are a few options here. Lord knows it's entirely possible to release multiple albums and not see a dime, especially if there's a bad contract involved, but Bow Wow's been releasing albums for a decade now, some of them well before the music industry went essentially bankrupt. Somewhere along the line you'd think he had to accumulate a few royalty/licensing/publishing checks. Not to mention his new hosting gig on "106 & Park". 

And then as he alludes to in this video, there are other revenue streams; shows, tours, club appearances, and of course that movie money is about as legit as it's going to get (according to Bow Wow, he's making $9 million a flick): 

In light of the child support case, the irony of that video is almost unbelievable. If his testimony in court is to be believed, Bow Wow himself is one of those guys who have platinum albums but still "can't live". 

The second option, and one that's also pretty plausible, is that Bow Wow consistently exaggerates, perhaps to a nearly insane degree, what his bank account really looks like. That Lambo in the video with Soulja Boy? It's a day rental. That show money? He got in over his head buying real estate and it's gone. 

As always the truth is probably somewhere in the middle. He's pulling in more than $4,000 a month, but not nearly enough to be referring to a $500K Lamborghini as "short money". Regardless, remember this the next time a rapper pulls the "I'm Rich! I'm Rich! Wait, Child Support? I'm Poor! I'm Poor!" routine. And believe me, it will happen again. You never know when it will turn out that Your Favorite Rapper is Poor. 

White Students Hazed Black Arkansas Teen By Placing Noose Around His Neck, School Board Reacts

In the predominately White town of Wynne, Ark., an incident last week involving a 14-year-old African-American boy, who was reportedly hazed by fellow White junior varsity football players by placing a noose around his neck, has reached a fever pitch. With racial tensions high in the northeastern Arkansas town, the school board was dogged by questions from both the parents of the involved and outside media—resulting in the expulsion of two students from Wynne High School for the rest of the semester.
Local ABC news affiliate KATV-7 reported on the school board meeting last night (October 3) where over 150 people gathered outside. Much of the hearing was closed to the public, and when the board members emerged, Superintendent Carl Easley did not offer many details regarding the case although a decision was made. Just this morning, it was reported by several outlets that two students will be suspended for the rest of the semester—a much lesser sentence than Easley originally sought.
The victim's aunt was displeased with the outcome. “It would have satisfied the family if the two young men were expelled for the year. That would have been the right thing,” said Tresha Light. Although students and parents alike say the kids were most likely horsing around with a towel, it appears that there are several sides to the story after police interviewed over 30 students regarding the incident.  The victim's aunt relayed the story on behalf of her nephew that the students built a dummy that was hung in effigy prior to placing a noose around his neck.
With Wynne on the media map, Blacks and Whites are clearly divided on the issue with some thinking the school district may have overreacted.
The victim's mother, fearing racial retaliation, has asked news outlets to not identify her son in the case.

Is Cash Money Records Denying Drake His Cash Money? This New Lawsuit Says So

Let's rewind....way back in 2008 James "Jas" Prince discovered Drake off MySpace (ah, the days when MySpace broke artists) and introduced Drizzy to Lil Wayne, Wayne and Drake's manager Corey Bryant, their company Aspire Music Group and the rest of the Cash Money team. 

In return for making the connection, Prince says that he was guaranteed a percentage of Drake's future profits. Or, if you want to get technical, according to Business Insider, 22 percent of Aspire's share of profits, 22 percent of Aspire's ownership share of Drake's master recordings, and 5 percent of Drake's gross pay. 

Prince's lawsuit, filed April in the Manhattan Supreme Court, alleges that Cash Money has refused to turn over any documentation regarding how much money Drake has actually made, potentially shorting Prince of hundreds of thousands of dollars; maybe more, maybe less. The point is that Prince claims has no idea how much cash Drake is actually raking in, and therefore how much he's owed. 

We could stop right there and this would be just another fascinating example of how many people have their hands on an artist's money, and yet another example of Cash Money's notorious shadiness, but there's an extra wrinkle that makes this just a little juicier. 

The lawsuit also alleges that Drake himself has potentially been shorted millions of dollars, and is exploring leaving Cash Money is he's not properly compensated. 

You can read the entire lawsuit here, but it's really only Exhibit F that we're interested in. (And yeah, I feel all smart and shit using a term like Exhibit F): 


If I'm reading this right, Drake's legal team Meloni & McCaffrey are saying the following: 

1) We're pretty sure you owe Drake a bunch of money. 
2) We've been trying to get that money from you for a long time, but so far no dice. 
3) Cash Money's lawyer Ron Sweeney offered us a settlement. Fuck his settlement. 
4) You know, now that we look at Drake's contract, we realize that he could legally leave Cash Money anytime he wants. Marinate on that shit for a minute. 

Until we hear from Drake himself this is all just allegation and conjecture, so while it's tempting to write a salacious headline like "Drake's leaving Cash Money!" we don't really know if that's true. What we do know is that Drake and Cash Money are fighting over money, and Drake's lawyers have laid down the "he could leave the label" threat. It could be a serious threat, it could be an empty threat, but the threat has been issued. 

To take this one step further, there's no real proof that Drake, Lil Wayne and the rest of the major players are even particularly involved in these negotiations. Often that's why artists hire expensive lawyers, so the legal teams can fight it out behind the scenes while on the surface the artists' personal relationships stay positive.

Still, things are clearly not all good when it comes to Drake's tenure at Cash Money. Could the day come when Drake is no longer running with Lil Wayne? It doesn't seem likely, but when those dollars start getting involved, some unpredictable shit has been known to happen. 

In other words, you know Diddy's writing "come on over to Bad Boy" texts to Drake right now.