Industry Roundup

Karmazin joins Sirius: The satellite radio service gained some serious traction in its recent acquisition of former Viacom, Inc. president Mel Karmazin. Just one month after signing "shock jock" Howard Stern to a multimillion-dollar contract, Sirius signed Karmazin to a five-year contract, bringing him in as its new chief executive officer. Joseph Clayton will relinquish the CEO title but remain chairman of the board. Karmazin departed Viacom in June and began discussions in earnest with Sirius after the satellite service landed Stern, in a move Karmazin described as "brilliant." Karmazin had previously dismissed the potential of satellite radio, but now believes it could be huge—larger, perhaps, than the growth he helped nurture at Infinity Broadcasting, which he took from a few stations to more than 200. Sirius stock rose more than 10% on the day Karmazin's contract was announced.

Slowing CD sales: Music industry hopes for a recovery from a long slump may have been premature. Disc sales rose by almost 10% during the first nine months of 2004, but have dropped by approximately 20% for October and most of November. As of Friday, November 19, year-to-date sales were ahead of the previous year by slightly more than 5%, indicating that the surge seen earlier in the year may not carry through the winter holiday season, a time when the music industry typically enjoys up to 40% of its annual retail sales. Perhaps not coincidentally, on Thursday, November 18, the Recording Industry Association of America (RIAA) announced the filing of copyright infringement lawsuits against 761 computer users, part of a continuing campaign to contain the file-sharing phenomenon. Recent suits include students at Amherst College, Boston College, Bridgewater State, Iowa State, Northeastern, and the University of Massachusetts.

Numbers down for EMI: On November 19, London-based EMI Group PLC announced a net loss of 400,000 ($740,000 or €570,500) for its fiscal first half, attributed to declining sales. The unhappy news wasn't sufficient to drive down the value of company stock however, as investors apparently bought into EMI's predictions for an improved second half, pushing its share price up 7%.

Layoffs at Sony BMG: Sony BMG has laid off 150 workers in its sales and distribution operations, including staffers in its New York home office and in regional offices. The company is also closing BMG branch offices in Boston and Washington, DC. The outcome of an August merger of the music units of Sony Corporation and Bertelsmann Music Group, the new entity established Sony BMG Sales Enterprise in September. The layoffs were expected as the result of integrating parallel operations. As many as 2000 jobs may be lost within the company as the streamlining continues, according to the Hollywood Reporter.

UMG and Snocap: On November 15, Universal Music Group announced the licensing of 150,000 songs to Snocap, Inc., an online venture headed by Napster founder Shawn Fanning. Snocap plans to offer a legitimate peer-to-peer service that would be able to detect and delete unauthorized files. Marketers are paying close attention to Snocap's intention to offer free low-resolution versions of songs as incentives to buy better quality recordings.

Japanese iTunes: Apple Computer reportedly intends to start a music download service in Japan "as soon as possible," according to news reports November 19. The company's iPod music players are popular products in Japan, but at present there is no related music download service. Japanese music fans instead transfer tracks from CDs to the devices using their computers.

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