Violy Advisors's Public Library

"Imeem may have connected with an audience, but it never got its happy ending. The once-promising startup was bloodied by lawsuits, lopsided licensing deals, and an underperforming ad-supported model. Now, MySpace Music is plucking the remains at fire-sale valuations, and investors are walking away with mere lint.

But, for much of 2009, Imeem was hanging on and toughing it out, hoping for a sunnier clime. That could have included a reworked model, always a possibility when a sticky audience is involved. But according to executives inside the company, the decision to finally cut the lights was prompted by an unlikely opponent - The Orchard.

Ahead of the decision to fold (or fire-sell), the independent aggregator had filed an expensive lawsuit against Imeem related to the alleged misuse of its recently-acquired TVT Records catalog. “We held an emergency board meeting to shut everything down,” one executive told Digital Music News. “The [Orchard] lawsuit was definitely the final nail.”

Subsequently, other executives close to the situation confirmed the decision. “They just ran out of cash, it was just a cash thing,” one executive shared, also anonymously. “The potential liabilities - $150,000 per stream – could get astronomical. [Imeem] thought they had a case, but they couldn’t afford to fight it.”

Sounds like a typical outcome when big lawsuits are involved, regardless of who’s right or wrong. Still, in reality, the meltdown is impossible to pin on one culprit, and Imeem was struggling with a troublesome, ad-based model that failed to deliver a meaningful revenue stream. On top of that, sources have been continuously pointing to onerous licensing arrangements with major rights holders, though some of those deals may have been softened over time.

Still, the attitudes that guided those major label licensing arrangements created an almost-impossible financial structure. “The deals were really stupid, they were written at a different time,” another insider shared. “And, the people who cut those origi

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structural change Music

"Time Warner Inc. wants more juice out of TMZ, the celebrity website that is the brainchild of former Los Angeles TV newsman Harvey Levin.

The media giant hopes to wring more advertising revenue out of the property and use some of the money to expand the news operation, according to people close to the site who were not authorized to speak publicly.

That's the plan once Time Warner takes full control of TMZ today, when the media giant spins off AOL to shareholders.

Since its launch by former KCBS-TV Channel 2 reporter Levin in December 2005, TMZ has been run as a partnership of AOL and the Telepictures unit of Warner Bros., Time Warner's studio. After the spinoff, TMZ will be solely owned by Time Warner.

AOL will continue to feature TMZ on its home page to drive traffic to the site for the next year. Warner Bros. plans to establish relationships with other portals in an effort to broaden TMZ's reach.

Often dismissed as a bunch of kids going through celebrity garbage cans, TMZ gained new prominence when it was the first outlet to report that pop star Michael Jackson had died. It also has been out front on the Tiger Woods scandal.

According to regulatory filings, TMZ had revenue in 2008 of $25.4 million.

Warner Bros. believes it can boost ad revenues substantially by better capitalizing on the upscale consumers who tune in to TMZ's TV show and its site. TMZ also is increasing its presence on mobile phones, which Warner Bros. expects to exploit better now.

Some major advertisers such as Procter & Gamble have resisted advertising on the TV show because of its dependence, particularly during slow news times, on peekaboo photos of starlets' nudity."

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Media

"The Vevo launch party has been going on for an hour and executives and stars are ready to take the stage. I spoke briefly with Google (NSDQ: GOOG) CEO Eric Schmidt, who told me that Vevo, which is a joint venture between Google’s YouTube and the major record labels, will “revolutionize the music industry by finally allowing it to make money online.” As for how, he told me to wait and see, but he added that advertising, merchandise and ticket sales are part of the mix. As I was being ushered out of the VIP section, I manage to talk with artist Sheryl Crow. Asked what impact Vevo could have on the industry, she said, “Nothing will ‘save’ the music business, but every little thing helps. And anything that puts money in artists’ hands for the work they do is a good thing.”

U2 leader Bono is taking the stage now to start the proceedings: “We are here to launch the great cash cow that was the music business. But we are also here to celebrate a new model for the music business. It’s also a great vehicle that will allow fans to go behind the scenes with their favorite artists.” Still, Vevo is starting off small, it won’t feature HD until sometime next year, he added.

After Bono’s introduction, Doug Morris, chairman and CEO of Universal Music Group, took the podium and offered some back story on the creation of Vevo and the meetings with Google. He then turned to the launch. “Right now, four million YouTube users who click on a music video are, as we speak, being shifted from YouTube to Vevo This group controls over 80 percent of the world’s videos. This is the chance to stop playing defense and shape the next generation.” While UMG has been joined by Sony (NYSE: SNE) and EMI in backing Vevo, Morris hinted that another label is in the process of signing up—a subtle hint to Warner Music Group (NYSE: WMG), the one big holdout?

Finally, it was Schmidt’s turn. Bono had introduced him to Morris, who asked him what Google’s problems were in terms of music. For Google, it was letting YouTube users watch music videos and not

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Music structural change

"Viacom has sold its stake in MTV Brazil, ending its joint venture with Group Abril and saying it wanted to give the channel a chance to "realize its full potential."

Instead of holding a minority stake (30%) in the channel, which is majorit-owned by Group Abril, Viacom has sold that stake to the Latin American communications company, which will continue to carry the MTV name under a licensing agreement.

In fact the licensing agreement will allow Group Abril to expand the brand with exclusive use of the MTV name in Brazil on TV, online, on radio, on mobile devices and via sub-licensing.

In announcing the move, Viacom Network Brazil General Manager Alvaro Paes de Barros said the company would focus on its Nickelodeon and VH1 brands and work on some new introductions. "

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Music

"Condé Nast, Hearst, Meredith (NYSE: MDP), News Corp (NYSE: NWS). and Time Inc. are making it formal: the five publishers are equity partners in a new digital publishing venture with grand designs. They want nothing less than to develop open standards for cross-platform e-reader technology, advertising and digital sales—and they’re going to put their brands behind it. Together, the company says the five represent an unduplicated audience of 144.6 million.

It only seems like we’ve been hearing about a digital magazine consortium for ages, according to John Squires, the interim managing director. “There’s been a lot drum roll for it but it hasn’t been been that long.” After some chatter, the effort came together over the past four months. The Time Inc. vet has been in the mix all along and is now one of the candidates for CEO of the nameless venture being announced this morning. Squires is leaving Time Inc. to serve as interim director while the CEO search is conducted. “Hopefully, I’ll be CEO,” he told paidContent during an interview.

Squires said there are no plans to take on further equity partners but they’re talking to client partners. No numbers from Squires or others involved on how much the five partners are investing. He calls it “enough to give us a good start.” He also isn’t talking about staff size, although he is hiring for a Manhattan office. A company name? That probably will wait until there’s a product.

—Other groups: Squires isn’t stressing over possible competition or complications from others, including efforts that might involve the partners. News Corp. is still working on its own consortium, for instance. “I don’t know that that’s relevant to us. We’ve got an incredible group of companies behind us. We know what we want to produce. ... I don’t think there’s a question of how many. It’s a question of which ones bring the right product to market..”

Four key goals: The venture has four key goals initially:

—Be ready for full-color devices with an application that renders publications “in be

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structural change Publishing

"Hip hop entrepreneur Russell Simmons’ Global Grind has purchased CelebrityTweet.com, which aggregates Tweets from celebrities, including Simmons (pictured) himself. Global Grind features a wide array of coverage geared towards hip hop fans, including videos, a number of celebrity blogs and political news. The company says it will continue to maintain CelebrityTweet.com as an independent site, although it will also now appear as a feed on the Global Grind home page. The company has landed SoBe Lifewater as a sponsor for both CelebrityTweet.com and its celebrity blogs. No word on a purchase price, although the acquisition comes only two months after Global Grind raised $2.6 million in new funding. More in the release here."

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m&a structural change

"MySpace says it has acquired “certain assets” of social music service imeem and it’s going to move fast to capitalize on the biggest one: users. Sometime today, imeem’s 16 million-plus users will redirected to MySpace Music. MySpace CEO Owen Van Natta promises via blog post to move fast to offer their imeem playlists on MySpace Music.

But—and that’s a serious capital “B”—it looks like they’re starting the transition without users’ playlists, which would annoy the heck out of me if that’s how I managed my music listening. Van Vatta promises: “As quickly as possible, we’ll be working to offer users the imeem playlists they’ve created on MySpace Music.”

One of the sticking points that waas holding up the deal when we first reported on it was whether the current exec team would make the transition. Well, yes, but for now it looks like only during the transition. Van Natta: “We’re also happy to welcome imeem CEO Dalton Caldwell, CTO Brian Berg, COO Ali Aydar and VP of Sales David Wade to the team as consultants to help manage this transition.” More to come."

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Music

"How much money do artists really make from Spotify? According to Swedish paper Expressen, 2009’s standout breakthrough artist Lady Gaga and her songwriter Redone made just SEK1150 (£100.76; $166.56) in songwriting royalties from one million Spotify plays of her hit Poker Face in Sweden in the first five months after Spotify’s launch in October 2008, according to figures from the Swedish Performing Rights Society (STIM).

STIM told paidContent:UK that Universal Music-signed Gaga actually generated SEK 2,300 (£201.53) through plays of Poker Face—she keeps half while the other half goes to STIM, which handles songwriters’ copyright payments in Spotify’s native Sweden. STIM points out to us that Gaga has her own separate deal with her label when it comes to streaming—I asked Universal to tell us what that relationship is, but have yet to receive an answer. Spotify has also yet to answer our questions.

Update: Spotify told us in a statement that any STIM payment “would only represent a fraction” of the money that goes to rights holders from the service. The company stresses that it pays “not only collecting societies, but also publishers and the record company to play their music.” It also argues that the $167 is from “way before we’d established ourselves as a music service and built up a large user base”. Actual payment amounts for individual artists remain confidential but Spotify calls this one “certainly wide of the mark”.

So that’s royalties, but by how much are artists reimbursed in total for plays on streaming sites? As with much of the murky world of on-demand music rights, it all depends…

Mark Mulligan, VP and research director at Forrester, says digital platforms should give artists the same ratio of rights revenue they get for CD sales—for most indie labels it’s a 50/50 split between artist and label, for the majors it’s skewed more towards the company than the performer.

But there’s another problem: “When you start getting into situations where record label has taken a stake in the service—as is the

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Music

"This is not a surprise considering the continued decline of Rhapsody music service in the face of lots of new competition and the general malaise in the digital music market: MTV Networks (NYSE: VIA) and RealNetworks (NSDQ: RNWK) are talking about restructuring their Rhapsody America music JV, according to an SEC filing just filed by RNWK. The relevant part: “to enable Rhapsody to operate more independently of either party. If these discussions result in a definitive agreement, RealNetworks may agree, among other things, to adjust the corporate governance and/or management structure of Rhapsody and to reallocate the ownership of Rhapsody between RealNetworks and MTVN such that RealNetworks’ percentage ownership of Rhapsody could be reduced from 51% resulting in both parties owning 50% or slightly less.” What that likely means is bringing an outside investor in the JV, if not an outright sale of the venture. BW’s Arik Hesseldahl did a good piece recently about the rationale to sell off Rhapsody, and it seems the companies are listening. Considering that MySpace is picking up the assets of all troubled digital music assets, maybe that’s the best party to bring in or sell to? Especially if MySpace Music JV with labels is dismantled and brought in-house.

Update: Spoke to a RealNetworks spokesperson, who said that the talks are in very early stage and anything is possible.

The only reason they had to disclose these talks at this point is because Real also filed for a new tender offer to issue new stock, which has very strict disclosure policies, he said, and that’s why the filing about the JV reorg. This comes as Rhapsody has done small cuts in multiple rounds through the last year, including laying off 12 people earlier in late summer.

Update: The new tender offer is to allow employees to exchange underwater options for fewer options at a new strike price.

The full filing text: RealNetworks, Inc. (“RealNetworks”) is currently in discussions with MTV Networks, a division of Viacom International Inc. (“MTVN”), rel

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Music

"Media technology company Roku, Inc., maker of the family of Roku players, is launching the Roku Channel Store and 10 new free channels available to customers on their TVs on Monday, Nov. 23.

In addition to audio and video podcasts, Web content, photo sharing and children's entertainment, the Roku Channel Store--accessible via all of Roku's players--will offer an open platform to deliver content to user's TV sets. The additional channels being made available for customers to add include Blip.tv, Facebook Photos, Flickr, FrameChannel, Mediafly, MobileTribe, Motionbox, Pandora, Revision3 and TWiT.

"Our customers now have more choice in content and even greater control over their Rolu player experience," said Roku Founder and CEO Anthony Wood, in a statement. "Because we have created an open platform for development, customers can expect even more new content channels in the near future."

Roku customers can add or remove channels from their home screen. The channel store is being delivered automatically to existing customers over the next two weeks. All Roku players are compatible with the store and the company's large content partners, including Netflix, Amazon, Video On Demand, and MLB.TV will remain available to existing customers regardless of whether they set up an account to access the channel store."

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Media

"After years of trying, lawmakers in the potential powerhouse market of Brazil finally appear ready to pass a gaming bill.

At the time this article went to press, Bill 270/2003 had just been passed by the lower house Committee on Constitution, Justice and Citizenship (CCJ), and adopted by a vote of 40-to-7.

Significant, given the nearly 6-to-1 for-to-against ratio, but even more so because the CCJ was the final committee through which the bill needed to pass before proceeding to a vote by the plenary of the Congress. If the bill passes through the lower house, as expected, it will be the first gaming proposal to have made it that far. Then only a favorable Senate vote would be required to pass
the bill.

What follows is a timeline of events which will highlight why bill 270/2003 marks several firsts in the turbulent history of Brazilian gaming, and how these translate into circumstances that will likely make you bullish on Brazil.

Bad Start
While the last seven years have proven tumultuous times for the industry, especially the period between 2003 and 2007, one must look further back to find how it came to be as such. The seeds were sown in the '90s under a series of loose and ill-conceived policies which enabled the local courts to bypass the 1946 law banning all forms of gaming at their whim, but failed to establish a regulatory body or protocol for policing the industry. It was a recipe for disaster from the very beginning.

The lack of enforcement at the federal level meant that for every bingo that legitimately received the protection of the courts, two would pop up illegally. These illegitimate operations mushroomed as corrupt politicians and judges turned a blind eye in their districts, in some cases given a lack of policing resources, but often purporting to later solicit bribes from the illegal facilities.

In this way, bribes from illegal game runners for the protection of judges or influence of politicians became commonplace. What ultimately materialized was a mix of 1,500 legitimate and illegitimat

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gaming

"South East Asia's largest telecoms firm, Sing Tel, has won the rights to show English Premier League football matches in the state from 2010 to 2013.

It beat rival Singapore telecoms and cable TV provider, and present rights holder, Starhub, to secure the deal.

Starhub will now lose the majority of its existing sports offering. Its shares fell 7% after the announcement.

Singapore is the first market in Asia to agree a deal following the closure of Premier League bid deadlines.

'Revolutionary'

Sing Tel did not say how much the rights cost, but analysts say the figure should be higher than the 250m Singapore dollars ($177.6m; £111m) Starhub paid in 2007 for a three-season deal.

"Football fans can look forward to a revolutionary way of viewing live soccer matches on TV, the internet and their mobile phones," said Mr Allen Lew, Sing Tel's chief executive for Singapore.

He said users would not be charged "more than what they are currently paying to their cable TV operator", with the additional benefits of Sing Tel's integrated platform offering.

Sing Tel said it would be working closely with the Premier League and its production partners. "

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Sports

"Beijing-based private equity fund Hopu Investment Management has made its first investment outside China, according to reports.

The firm, which was set up by ex-Goldman Sachs investors, has acquired a 4.9 per cent stake in Lippo Karawaci, a real estate and hospital developer listed on the Indonesia Stock Exchange for a reported $45m.

Lippo is one of Indonesia’s largest listed property development companies, and has built five hospitals in Indonesia to cater for the rising demand for improved medical services by the fast-growing nation’s middle classes.

Hopu was set up last year by ex-Goldman Sachs execs, and quickly became a significant player in Chinese private equity when the firm partnered with Singapore state investment company Temasek Holdings to buy a 5.8 per cent stake in China Construction Bank from Bank of America for $7.3bn.

In July, the firm reportedly co-invested $800m with China National Oils, Foodstuffs and Cereals to share a 20 per cent stake in the China Mengniu Dairy, which had been rocked alongside other Chinese dairy companies by the scandal over melamine-tainted milk."

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Private Equity china

"Private equity firm Apollo Management is doubling down on its investments in Harrah's Entertainment by buying bonds in the debt-laden casino chain, according to the New York Post.

The move is reported to be to give the firm more power in the event of a debt restructuring, despite the chance it would still have its large stake wiped out.

Blackstone Group and TPG, who have also backed America’s biggest casino operator, are not reinvesting.

The three private equity firms bought Harrah's in a $27bn buy-out in January 2008. Despite streamlining measures, Harrah's still owes around $18bn.

Apollo and TPG have roughly equal stakes in the casino company, while Blackstone's is smaller, the report said.

Early this year, Apollo and TPG bought Harrah's loans with a face value of $2bn at a discount, in order to reduce the company’s debt.

Casino chains are said to have been hit hard by the recession."

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Private Equity gaming

"Kraft Foods Inc.'s (NYSE:KFT) third-quarter earnings report on Tuesday appears to have undermined its $16 billion hostile takeover proposal for Cadbury plc (NYSE:CBY), with sales declining a worse-than-expected 5.7% even as earnings per share comfortably exceeded consensus forecasts.

The Northfield, Ill., food group was expected to artfully deploy the figures to argue that it is the best manager for Cadbury; Cadbury itself employed its own trading bulletin to full effect last month to assert its independence. Instead, the report, coupled with Kraft CEO Irene Rosenfeld's insistence Tuesday that she will maintain acquisition "discipline" has tempered expectations Kraft will lodge a formal bid by the U.K. Takeover Panel's Monday deadline.

Analysts at J.P. Morgan Chase & Co. (NYSE:JPM) are notably undecided, with U.K.-based Pablo Zuanic, who covers Cadbury, voicing a "growing belief" that Kraft will walk away as he cut his price target on Cadbury by 5% to 780 pence ($12.89). But colleagues Terry Bivens and Jason English, who cover Kraft for the bank from New York, said: "We continue to believe that Kraft will make a formal offer by the deadline." They said that Kraft may initially offer less than the 800 pence to 820 pence per share that they estimate it will ultimately need to pay for Cadbury.

Kraft's original offer for the maker of Dairy Milk chocolate and Trident gum was worth 745 pence per share as of Sept. 4, breaking down into 300 pence per share in cash and 0.2589 of a Kraft share. The proposal was worth 735.7 pence as of Tuesday's close, while Cadbury shares were trading at 772.5 pence by early afternoon in London on Wednesday.

Some analysts think that Kraft might walk away and leave Cadbury to feel the pain of rising import prices before returning with a bid next year. Could Rosenfeld's insistence Tuesday that she will impose a range of conditions on the Cadbury purchase -- including that the deal be cash accretive by year two -- be a prelude to her doing just that? - Laura Board"

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Food m&a Kraft

"In a year when DVD sales are falling and studios are facing major shakeups in their executive ranks, Hollywood is beginning to look a lot like one of its own slasher films, the Los Angeles Times noted recently. Amid all the turmoil, however, there is at least one success story in the movie industry: Netflix.

Founded in 1997, Los Gatos, Calif.-based Netflix made a splash in the movie rental business by offering an online subscription model with a flat monthly fee for unlimited rentals and no late charges. Since then, despite a recession, fierce competition and the emergence of online video delivery, the company continues to thrive. According to experts at Wharton, Netflix is now in a race to transition to a business model focused on streaming content online, while continuing to exploit its current model based on physical DVD distribution via the U.S. Postal Service. "You would think that Netflix would be entrenched in its old model and fighting off digital distribution, but it is embracing the future," says Wharton marketing professor Peter Fader.

While many companies see the need to develop new business models as older, more profitable ones erode, not all of them deftly manage the transition. For years, Netflix has been mailing DVDs to subscribers in its recognizable red envelopes, but in 2008 it introduced a "Watch Instantly" service that allows consumers to stream movies on their home computers. Since then, the company has forged a bevy of partnerships to embed its Watch Instantly service in television sets, game consoles such as the Xbox, Blu-ray DVD players and set-top boxes. In its latest move, on October 26, the company announced a partnership with Sony to deliver its streaming service via Sony's PlayStation 3 game console, nine million of which have sold since it was first introduced in 2006.

Netflix had 11.1 million subscribers through the third quarter ended September 30, up from 8.67 million for the same period a year earlier. The company predicts it will have 12 million to 12.3 million subscribers

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Media structural change

"Hulu CEO Jason Kilar responded to TV industry critics who complain that Hulu is undermining current models, saying they haven’t seen his business plan. Talking to B&C after the closing session of Denver, Colorado, cable conference CTAM, Kilar said, “We’re very bullish about the future of Hulu, we’re well ahead of plan.”

He wouldn’t comment on whether the site was profitable but added, “I like to say that I’m a capitalist,” adding “We don’t do this overnight.“ Hulu recently signed an upfront deal with MediaVest, which transferred a couple of million dollars from the media agency’s TV budget to the Website. Hulu is also exploring subscription areas of its service, which provides network TV content without charge to consumers."

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structural change

"ave Goldberg and Bob Roback, formerly VP and GM of Yahoo Music, respectively, have teamed up again to launch Dashbox, an online music licensing exchange. The goal is to help advertisers, movie studios, and other companies that need to buy music, keep track of which record labels and artists they need to pay. It’s a business model that’s more evergreen than many of the new consumer-facing music subscription services.

Dashbox runs on digital asset management software developed by mSoft, a startup that Goldberg and Roback’s firm, Twain Media, recently acquired. Sources tell MediaMemo that the deal was worth less than $10 million.

Roback will serve as CEO; Goldberg, who took the reins as CEO of SurveyMonkey in April, will be chairman. The duo founded music site, magazine and streaming service Launch Media in the early 90s, then sold to Yahoo (NSDQ: YHOO) for $12 million in 2001. They left Yahoo Music during a reorg in 2007."

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Music

"The e-reader market is beginning to resemble a crowded subway train at rush hour and the latest entry could make it feel even more crowded. Marvell Technology Group and E Ink are partnering on a “turnkey” tech solution based on one integrated chip called the Marvell Armada 166E, with the first devices due in 2010. The chip is designed to render high-res PDFs “ultra fast,” save power, extend battery life and support ePaper in thin formats. For access, it includes 3G, Bluetooth and Wi-Fi. Through an agreement with FirstPaper, the companies say the Armada also should be able to handle a variety of screen sizes, including larger formats that can handle magazine and newspaper-like layouts and graphics.

The first devices that will use the Armada are due in 2010, including Plastic Logic’s notebook-paper-sized Que for business readers; the $490 enTourage eDGe—a dualbook that is supposed to combine E-ink reading with netbook, notepad, audio/video player and recorder; and dual-screen e-reader Alex from Spring Design, built on Google (NSDQ: GOOG) Android with E Ink and color LCD. "

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structural change Publishing

"eMusic owner JDS Capital’s private equity arm Dimensional Associates is negotiating with digital music and video distributor The Orchard to buy up all of the outstanding common stock it does not already own.

Dimensional previously owned The Orchard (NSDQ: ORCD) prior to its 2007 merger with Digital Music Group Inc (DMGI), which saw the ownership structure change but the name remain.

Dimensional still owns a majority of the firm, which lost its CEO and president Greg Scholl in September.

Now The Orchard confirms in an SEC filing that Dimensional offered $1.68-a-share on October 15; after discussions with the board, it’s now offering $1.84 - an offer The Orchard is “reviewing and evaluating”.

But The Orchard says in a follow-up filing that interim CEO Daniel Stein (Dimensional’s CEO) has resigned for an unspecified reason, replaced in the interim by EVP/GM Brad Navin.

Scholl’s resignation to take on the role of president of NBC Universal’s Local Media Platforms, had come during a cost-cutting drive that axed 20 percent of Orchard staff (16 staff, five consultants and temporary workers). The Orchard is competing with digital distributors like IODA.

Orchard stock - already trading way below the 2006, pre-merger high of $26.88 - began falling again in August, to a price of about $1.33 when Dimensional first bid last month. News of the offer bumped the price back up again on Monday.

Bringing eMusic and The Orchard under the same owner would unite two companies at different parts of the online music value chain - one that shifts digital music across networks for labels and one that plays that music to consumers on a subscription basis. "

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Music structural change