Barry Willis

Last year wasn't kind to UK entertainment conglomerate <A HREF="http://www.emigroup.com">EMI Group PLC</A>. On February 5, the company issued its second profit warning since September, blaming a slow market for recorded music. EMI is now predicting that pretax profits for the year ending March 31 will total $213.4 million (245.1 million euros, or &#163;150 million), far below analysts' predictions. The news caused an immediate 6.4% drop in the price of EMI shares on the London market.

All available statistics demonstrate that the Internet is still a growing phenomenon, one destined to play an increasingly important role in the distribution of information and entertainment. Recently published studies by Jupiter Media Metrix, Inc., a division of <A HREF="http://www.jupiterresearch.com">Jupiter Research</A>, show that Internet usage has achieved greater than 50% penetration among US households, giving it what researchers call "mass-market status." Jupiter describes "online consumers" as people who have computers and Internet service provision in their homes, as opposed to having Internet access through a computer at work. "Online users," for the sake of the studies, were defined as people who use the Internet at least once per month.

The Telecommunications Act of 1996 loosened many long-established constraints on the ownership and operation of radio and television stations in the United States. The regulatory changes launched waves of mergers and acquisitions through the nation's broadcasting industry, consolidating what had been many regional companies into a few large conglomerates in just a few years. Backed by vice president Al Gore and the then chairman of the Federal Communications Commission (FCC), William Kennard, the changes were intended to make the broadcasting industry more responsive to the "free market."

Few music lovers who grew up in the 1950s and '60s could have failed to be influenced by torch singer Peggy Lee, who died of heart failure at her Bel Air home on Monday, January 21. Lee was 81 and had been in ill health for several years.

Vivendi Universal's <A HREF="www.umusic.com">Universal Music Group</A> will establish a settlement fund of approximately $4.75 million to pay royalties to as many as 300 artists and their heirs. The fund is the result of a lawsuit brought by torch singer Peggy Lee, who had accused the music giant of accounting improprieties reaching back as far as the 1940s.

Slow beginnings are sometimes the most successful. Months after its <A HREF="http://www.stereophile.com/news/11033/">acquisition</A&gt; by Chicago-based <A HREF="http://www.amusicdirect.com">Music Direct</A>, legendary audiophile record label Mobile Fidelity Sound Lab plans to release Super Audio Compact Discs this winter.

A year-end report by Nielsen <A HREF="http://www.soundscan.com">SoundScan</A&gt;, which tracks retail activity, states that compact disc sales through December 22, 2002, were off 9.3% compared to the same period the previous year, with 624.2 million units sold compared to 688.2 sold in 2001. Of all recorded music sold, 94% of it was on CD, the remainder on cassette tape and vinyl records. An insignificant amount of music was sold as legitimate downloads from industry-sponsored music sites. SoundScan did not expect the last week of December to impact the year's total.