Trade Review: Week Five (2/2)

Universal Music Completes $1.9 Billion EMI Recorded Music Acquisition

http://www.hollywoodreporter.com/news/universal-music-completes-19-billion-374965

One of the largest mergers in the music industry, EMI and Universal (now Universal EMI) were approved by the United States government for Universal's 1.9 billion dollar acquisition of EMI. With speculations that the merger would discourage competition amongst music companies, Universal EMI now holds the largest market share in the music industry of just under 40%. From buying out one of its major competitors, Universal eliminates one of its three competitors of majority market share in the music industry. Now down to three music giants, the music industry will take an interesting turn within the next year as Universal EMI works together under one company.

A pressing topic over the merger is will Universal EMI have a cohesive working environment that will work together to cross promote each other's clients to drive overall revenue? Will Universal EMI exploit their majority ownership of the music industry and change the way the industry runs, sets prices, releases content, contracts, live performances etc. The power Universal EMI will have to single handedly shift the industry and make future acquisitions come effortlessly and difficulties that were once road bumps now just pebbles under their tires as they drive full speed ahead in leading the music industry on its future path.  Although, I am more nervous than excited to see what will result with the merger and how this new mega conglomerate has the potential to control the music industry to a similar extend that the Clear Channel and Live Nation merger now controls ticketing and live concerts. Universal EMI claims they will "[remain] true to its vision" leaves me on edge as to whether or not this "vision" includes improving the music industry as a whole, the consumer market and consumer satisfaction, or is this vision only applicable to the Universal EMI brand (Szalai)

1. Szalai, Georg. "Universal Music Completes $1.9 Billion EMI Recorded Music Acquisition." The Hollywood Reporter. N.p., 28 Sept. 2012. Web. 30 Sept. 2012. <http://www.hollywoodreporter.com/news/universal-music-completes-19-billion-374965>.

   
   

Trade Review: Week Five (1/2)

Samsung shopping for software to challenge Apple, Google, Amazon in music market

http://business.financialpost.com/2012/09/27/samsung-shopping-for-software-to-challenge-apple-google-amazon-in-music-market/

In an effort to contest media and tech giants alike (Apple, Amazon, Google), Samsung is breaking borders in their traditional business model of only manufacturing technology goods and is now looking to expand their business endeavors into mobile device programs. Not just any mobile program, Samsung wants to develop a music distribution app for its mobile products in hopes of continuing to drive sales. Samsung claims that their over the air music store, Music Hub, will be revolutionary in that it will combine their mobile products like Samsung Galaxy models with one of the largest portfolios of music: 19 million songs. However, Samsung’s Music Hub will still be 8 million songs short of Apple’s iTunes Store and Music Hub will not be the first in-house, built in music store on a mobile device other than Apple’s iPhone (Android has already done so).

Samsung’s highly regarded and expensive products will help boost customer’s support behind the Music Hub app. Interestingly enough, Samsung is actually not making the app themselves, where instead they are researching for programmers, developers and innovative minds alike to create and expand Music Hub into many integrated platforms and products that Samsung offers. This threat of integration into all Samsung products alike will surely increase the value in Samsung products, drive sales and increase the utility in Samsung products alike. An executive at Samsung, Kang Tae-jin explains that “[Samsung] wants to grow the Music Hub to rank in the world’s top four services within three years in both revenue and subscriber numbers” (Miyoung Kim). Despite being a dominant force in tech products, Samsung is setting the bar very high for Music Hub and it will be interesting to see how they plan to integrate all Samsung products to push the development and appeal of Music Hub to all Samsung customers. Although the article does not delve into the specifications of Music Hub in terms of its perks, pricing of content (if not free), will there be advertisements, will Samsung buyout the publishing rights royalties to avoid their customers from paying for content like Nokia did, or will Music Hub take a completely original approach to the app? I am very interested to see how this app unfolds and tracking its development in how it is going to affect the marketplace for digital music and the media giants of the industry.  

1. Miyoung Kim, Reuters. "Samsung Shopping for Software to Challenge Apple, Google, Amazon in Music market." Financial Post. N.p., 27 Sept. 2012. Web. 30 Sept. 2012. <http://business.financialpost.com/2012/09/27/samsung-shopping-for-software-to-challenge-apple-google-amazon-in-music-market/>.

Trade Review: Week Four (2/2)

Lawmakers Introduce Pandora-backed Music Royalty Legislation

http://thehill.com/blogs/hillicon-valley/technology/251037-lawmakers-introduce-pandora-backed-music-royalty-legislation

In the past few years, people’s preference in how they consume music has reached a new level of listening sophistication that is unique to each user. With the iPod and handheld music device craze, radio saw a sharp decline in listeners that is now limited to in-car listening to and from work or school. The notion of being able to select your own songs within an album instead of purchasing an entire album, and then carrying that music with you in your pocket instead of a car or stationary radio forever changed the music industry. However, the iPod is no longer enough to satisfy music lovers, where recently people seem to be migrating towards the personal radio characteristics of Pandora or Rhapsody. These subscription-based services allow unlimited streaming at minimal costs of monthly payments. A deal that supersedes the costs of buying songs on iTunes, these Internet radio stations are catering to the classic style listening style of music being on a radio while also modernizing the taste buds of the technological generation.

Even more so, personal radio listening is changing from only online streaming to now offline streaming availability of content through services like Nokia Music. Yet, the personalized Internet radio is at a disadvantage to the classic radio due to high tax legislations on personalized radio station companies. Recently, lobbyist want to bring Internet radio under the same Copyright Act as regular radio stations. The reason being is that personalized, Internet radio stations face a 55% tax rate, while regular radio is between 7 -16% (Martinez). This drastic gap in taxes for Internet radio is preventing the growth of the music industry’s revenue and that “this bill puts Internet radio on an even plane with its competitors, and allows the music marketplace to evolve and to expand” (Martinez). However some musicians are against reforming this legislation because it will mean less royalty payments for them, as well as less performance rights for terrestrial radio (Martinez).

Personally, I understand the notion why personalized Internet radio wants to be on the same playing field as the classic radio stations, but Internet radio is far more different fundamentally. Internet radio allows unlimited streaming of content over and over with a small fee and a few banner advertisements. Users can ignore these ads and simply listen to their music, or they can even subscribe to remove the ads on their interface. Radio, however, has commercials, hosts, interviews, and so much more that make it entertainment. With Internet radio you bypass all aspects of radio and it is simply just listening to music and also being able to select your own music instead of a disc jockey broadcasting a playlist for you. Yet, I do see the large differential in taxation between the two styles of radio and that although I do not feel that Internet radio is the same as classic radio, I do think the taxation on Internet radio should be lowered to allow for music industry expansion, but to not that same tax percentages as regular radio. 

1. Martinez, Jennifer. "Lawmakers Introduce Pandora-backed Music Royalty Legislation."The Hill. N.p., 21 Sept. 2012. Web. 21 Sept. 2012. <www.thehill.com>.

Trade Review: Week Four (1/2)

Google to Shut Down China Music Service

http://online.wsj.com/article/SB10000872396390444620104578009941960495424.html

As the largest and single most coveted market on the planet, China is filled with immense opportunities for the entertainment industry if the content can break through the strict Chinese regulations. So many forms of media and entertainment vie for the Chinese marketplace (Film, TV, Books etc), but music’s incredibly unique characteristics place a greater challenge in entering foreign markets alike. Film and TV have visuals, gestures, dubbing and subtitles that allow any market to adapt to the content due to foreign markets understanding “universal language.” Books also have the option to be translated into different languages for each respective language. Music does not have this flexibility or ability to modify itself for individual markets – the content is consumed only in its original form. The beat and melody can only drive foreign listeners towards the music, but the lyrics are what give songs meaning and how listeners can relate to the emotions or message of the artist.

Chinese Internet users are also notorious for downloading illegal entertainment and media. In an attempt to minimize piracy, Google developed a music search engine for China called Google Music. With Google Music, users can unlimitedly stream any song they want for free with higher sound quality than a pirated song. Record labels teamed up with Google to license their music to develop the Google Music software as a way to try and cut their revenue losses from pirating, cater to the new style of music listening through streaming and cater to the Chinese market. Google Music and the record labels would split banner advertisement revenues on Google Music in exchange for their licensed music. However, Google Music recently shut down after three years of service because of a lack of traffic to not just Google Music, but Google itself.

Baidu is search engine giant of China with 80% of the market share. Already the minority search engine with 15% of the Chinese market, Google faced an uphill battle from the get-go of getting users to even know about Google Music let alone use Google over Baidu. In addition, Google Music’s only attractive service was the sound quality being better than a pirated song. Yet, piracy triumphed over Google Music because pirated songs allow for offline listening and Google Music only had a narrow selection of music available because not every record label agreed to license their music for this project. Using an underdog search engine and battling a heavily pirating Chinese population, music industry executives should be more hesitant on endeavoring in foreign markets because of preexisting, cultural practices and music’s unique characteristics cannot bend towards other languages or cultures like other entertainment forms can.  

1. Tejada, Carlos. "Google to Shut Down China Music Service." Wall Street Journal. N.p., 21 Sept. 2012. Web. 21 Sept. 2012. <www.online.wsj.com>.