Business Matters: What HP's Bargain Tablet Sale Means to Music Companies
Business Matters: What HP's Bargain Tablet Sale Means to Music Companies

What HP's Bargain Tablet Sale Means to Music Companies
-- Consumers love cheap tablet PCs, if the price is right. HP's move to chop prices on its tablets -- the company wants to get out of the consumer hardware business and needed to move inventory -- has resulted in massive demand for its TouchPad tablets. HP.com sold out of both the 16 GB ($99) and 32 GB ($149) versions. The two units usually cost $400 and $500, respectively. Other retailers -- Amazon, Fry's, Office Max, Radio Shack -- also sold out.

HP's move suggests people will clamor for a low-priced tablet. And if a tablet PC maker happened to adopt the strategy of selling cheap tablets, it could try to make up the difference be selling digital goods. In that event, media companies could be squarely on the side of the tablet maker. The opposite situation is more typical: technology company makes money on tablets and/or operating system and would prefer consumers had access to free and/or cheap digital media.

But what about Amazon? If Amazon's upcoming tablet is priced low, it could actually add greater emphasis to the value of digital content. PC Mag has reported that Amazon is considering pricing its tablets as much as 25% below cost and make up the loss by selling digital content such as ebooks, movies and music. That might be a good move -- why fight Apple on the high end of prices when you have an unfair advantage at the low end of prices. Rather than use cheap digital media to lure hardware buyers, the company could lure digital media buyers with cheap hardware. By switching which products are used as a loss leader, Amazon would implicitly support the value of the content it sells. And if priced anywhere near HP's fire sale tablets, Amazon could sell a large number of units.
(The Next Web)

Rdio Rolls Out Family-Friendly Pricing
-- For all the innovation in digital music in recent years, there has been little innovation in how the services are priced -- until now. Cloud-based music service Rdio has rolled out a family-friendly pricing plan that lets allows two or three user IDs per account. The two-person account costs $17.99 per month, a 10% discount to the normal $9.99 for the top-tier plan (which includes mobile access in addition to PC access). The three-person account costs $22.99 per month, a 23% savings over three individual accounts. Beyond three, each additional account costs $9.99 per month.
(Press release)

Fanrank Raises 230K In Angel Funding
-- Fanrank has raised $320,000 in angel funding. The company's app has been installed on the Facebook pages of more than 3,000 brands, music artists, films and celebrities. Fanrank's Facebook app lets users rank their fans on social networks. A fan gains points by updating their status or tweeting using the keyword provided by the artist, brand, celebrity or what have you. The highest-ranking fans can be rewarded, although it's up to the artist, brand or celebrity to take care of fulfillment (the app lets you locate the most active fans, but Fanrank itself is not on the hook for free albums or concert tickets).

Fanrank's two founders have deep music backgrounds. Co-founder Jeff Marois used to work at Last.fm and later MXP4. And the other, Tuhin Roy, founded Digital Rights Agency, the earliest incarnation of what eventually became digital distributor the Orchard.
(Press release)

TransWorld Stock Rises Amid Tumultuous Week

-- Stocks were mostly higher Monday after a tumultuous week that saw many music-related stocks fall. Live Nation sank 9.9% to $8.44 in the five days ending Aug. 19. Pandora Media fell 2.8% to $13.02. Sirius XM dropped 11.5% to $1.70. Madison Square Garden Entertainment fell 5.8% to $22.78. Vivendi dipped 2.4% to $15.29. And Sony Corp fell 7.2% to $20.53. Bucking the trend was TransWorld, which rose 1.5% to $1.98.

Pandora Media fell another 6.68% on Monday, the second-biggest biggest decline of the music and media stocks followed by Billboard.biz (Radio One dropped 15.67% to $1.13). The sharp decline is notable not just because it occurred on a day most stocks were up, but because it precedes the company's first quarterly earnings release this Thursday. Given the stock's large swings since the company's July 12 debut, it appears investors are unsure how to value the company and how to figure in macro developments and competitive threats. Thursday's earnings call will offer valuable clues into the company's growth trajectory.

What Are U.S. Spotify Users Listening To?
-- If you want to understand what type of people are listening to Spotify, check out the top tracks and albums in the United States. A quick glance at the top 100 albums reveals that Spotify users are listening to less mainstream music than what is being purchased.

The top 10 albums are, in order: "Torches" by Foster the People, "Bon Iver" by Bon Iver, "Young Love" by Mat Kearney, "Sigh No More" by Mumford & Sons, "Teenage Dream" by Katy Perry, "Hands All Over" by Maroon 5, "4" by Beyonce, "Watch the Throne" by Jay-Z and Kanye West, "Pink Friday" by Nicki Minaj and "Back to Black" by Amy Winehouse.

The top three albums say it all: indie rock. The prevalence of indie rock in the top albums is out of whack with Nielsen SoundScan digital sales. In the previous week, "Torches" was the No. 4 digital album behind "Watch the Throne," "Tailgates & Tanlines" by Luke Bryan and "21" by Adele. "Young Love" was No. 6 and "Hands All Over" was No. 8.

That indie rock-leaning user base comes as no surprise to me. I've noticed which of my Facebook friends are using Spotify, and have recognized a thread running through nearly all of them. As of Monday I have 87 friends who have connected their Spotify and Facebook accounts (which enables sharing between friends and sharing to one's Facebook page). Nearly all of those friends -- 77 of 87, or 89% -- currently or have in the past worked in the music business. The remaining 10 people do not work in music, but are people I would consider to be very active in music. They frequently attend concerts, follow new music, generally keep up trends and regularly spend money on recorded music. I'm not at all surprised they have signed up.

In its pre-launch marketing material, Spotify predicted it would have 50 million U.S. users in the first year. And that may be the case -- some day. But until Spotify signs up my friends and family members who I don't consider to be particular avid followers of music, I will know it hasn't penetrated those mainstream users it needs to approach 50 million users.