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After a month of rumors, it was officially confirmed Monday that Google is acquiring consumer telephony/internet integration company Grand Central Communications.  Official terms have not been disclosed but widespread speculation is that the price was surprisingly high; above $50m.  That’s hard to believe, improbable seeming but not impossible.  Reports are the  two year old company had raised approximately $4m in venture funding from investors including Micro Ventures.

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In part one of a two part article published June 19th, subtitled, “Record sales are tanking and there’s no hope in sight: How it all went wrong ” Rolling Stone magazine indirectly decreed the end of the music labels (the Big 4 at least) and the end of the music business as the world has known it.

Quoted in the article, industry attorney Peter Paterno said unequivocally “the record business is over.  The labels have wonderful assets – they just can’t make money off them.”    The numbers presented support his, and the article’s, claim. In 2000, for example, the top ten albums in the US sold 60 million copies combined.  In 2006, the top ten sold only 25m.  Digital sales (of both songs and ringtones) meanwhile, while booming, are largely in single song increments where revenues and the margins are much lower.

It’s for certain, the industry, as it once was, is on life-support.  The Big 4 (Universal, Sony BMG, Warner, and EMI) control nearly 70% of music distribution but they’ve been caught between a mess of conflicting needs and ideologies: the competing demands of traditional retailers (who themselves fear the loss of their business), the interests of the artists, and, of course the entrenched thinking of the labels themselves.    It’s been a struggle to balance those interests and adapt to the changing dynamics of the music marketplace – particularly online sales. 

The question is, is Peter Paterno correct, and is the inference in the Rolling Stone article right?  Click to Read More

With sales numbers for the opening weekend of the iPhone expected to read like the returns of a summer blockbuster, today should be a good day for Apple but an article in the Wall Street Journal may cast a small cloud over what should be the start of a good week.

The Journal is reporting that Vivendi’s Universal Music (the biggest of the Big 4 record labels by some metrics)  is “considering notifying” Apple that they aren’t interested in a long-term renewal of their iTunes contract.   The article carefully uses the word “considering” and it cites its source as “a person familiar with the situation.”   With such phrasing, it’s not so much news as rumor and innuendo but it could still be enough to dampen the start of the week.

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As part of an apparent strategy to get its musical catalog as much retail exposure as possible, Big 4 record label EMI has been signing licensing deals with, seemingly, any distributor interested.

Today, EMI will add another distributor to its slate.  EMI is expected to announce a deal with music licensing/distribution company Snocap similar to a deal it struck recently with business to business music sales company PassAlong Networks.

In the Snocap deal, Snocap will sell EMI’s music through it’s MyStores online shops which can be added to various Internet sites. Click to Read More

Palm reported Q4 earnings after the close of market Thursday.  The numbers easily beat Wall Street analyst consensus expectations but overall were poor year over year; and especially dim in comparison to very positive results from competitor Research in Motion.

For the quarter ending June 1, Palm earned $15.4m (15c/share) on revenue of $401.3 compared to $27.2m (25c/share) for the same period last year.  Excluding one-time charges Palm said it would have earned $17.8m (17c/share) this quarter.   Analyst consensus estimates (Thompson) were for earnings of $14.43m (15c/share).

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With a day and a few hours until the iPhone launch, added bits of information are trickling out that may add more credibility to speculation about a Beatles announcement being revealed alongside the iPhone – as was first theorized here on Metue (The full text of the Metue article from two days ago is here)

In addition to all the previously noted information.  Add the following two pieces, with a heavy weighting for the first:

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With Facebook trying to steal audience and the hip-factor, with YouTube working on delivering more interactive social networking features, leading social network MySpace is today defending its territory with the launch of a renamed, newly improved video sharing site and service. 

As noted by MySpace CEO Chris DeWolf in the New York Times, an upgrade was over do.  He said “We [hadn’t] really freshened up our video offering since we launched it… We wanted to highlight the fact that we have a video destination on the Web with all this great content that we’ve acquired.”

MySpace TV will be operated as an independent website where users can watch or share videos whether they have a MySpace account or not.  Those with MySpace pages will be able to use embedded tools to make videos accessible from their personal pages.   Later in the year, though not part of the original offering, MySpace will also launch a video editing service based on technology it acquired in the purchase of Flektor.

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