Dark Monday for Music and Entertainment Stocks
-- A number of investment bank stocks declined sharply Monday after S&P downgraded the U.S. late Friday. The Dow Jones index dropped 5.55% to 10.809.85. The S&P 500 sank an ominous 6.66% to 1,119.46. The tech-heavy Nasdaq fell 6.9% to 2,357.69.
Music-related stocks of American-based companies suffered along with the markets. Live Nation closed down 6.29% at $8.79 after falling as far as $8.37. However, the company turned out to be a rare bright spot Monday after its strong second-quarter earnings released after trading ended. Second-quarter revenue increased 23.1% to $1.559 billion behind a 25.9% improvement in concert revenue. The news sent its stock up nearly 13% in after-hours trading and the stock got back its losses from the previous two trading days.
There was little to cheer about elsewhere. Pandora Media closed down 7.4% at $12.52 and is now 34% down from its July high of $20.45. Madison Square Garden closed down 5.89% at $23.62. Sirius XM fell 12.7% to $1.65, far from its 52-week low of $0.95 but also down considerably from its 52-week high of $2.44 set in May. Viacom dropped 8.75% to $41.00. Cumulus Media fell 11.86% to $2.60. Foreign-based parent companies of two major music groups fared a bit better. Vivendi (parent of Universal Music Group) dropped a mere 1.97% to $15.18. Sony Corp. (parent of Sony Music Entertainment) dropped 6.35% to $21.67.
Monday's fall occurred as executives at many investment banks downplayed the importance of S&P's downgrade, according to The Street. "We do not think the downgrade will have any noticeable impact on the operations of financial markets or financial institutions," Barclays Wealth's chief investment officer wrote to clients Monday. JP Morgan's chief equity strategist called S&P's downgrade a "sideshow."
Monday's decline came after a miserable five days last week. As Billboard noted, music stocks finished last week with big losses that were deepened by S&P's downgrade late Friday and panicked investors around the world.
Clearing the Air on 'Watch the Throne'
-- You may read something different in the press, so let's clear up some confusion about "Watch the Throne," the new album by Jay-Z and Kanye West. iTunes and Best Buy do indeed have exclusives on "WTT," but they are exclusive windows rather than outright exclusives. iTunes started selling "WTT" Tuesday and will have an exclusive on the album until Aug. 12. Other retailers -- both digital and physical -- will start selling "WTT" on the Aug. 12. Best Buy will have an exclusive on only the deluxe CD package from Aug. 12-22.
But did this strategy play into the absence of online leaks of "WTT"? Rolling Stone believes the limited supply chain was a factor, although that report incorrectly implies iTunes and Best Buy had outright exclusives and not just exclusive windows. And because Best Buy has only a window, the supply chain is not as "limited" as Rolling Stone would lead you to believe. The CD is still going from the manufacturer to distributors and retailers.
Then again, the reports may have got it wrong. A post claiming to have the leak of "WTT" appeared at ThisizGame.com Sunday evening.
Spotify's $98 Million Summer
-- Spotify raised $98 million this summer in funding rounds that valued the statup at $1.1 billion, according to documents seen by paidContent. About $32 million of that investment was "contribution in kind" rather than an actual cash investment. It has been widely reported that -- and Billboard has confirmed with sources -- that major labels and indie rights association Merlin collectively own 18% of the company.
Right now that valuation is based on potential. As paidContent notes, the company's division in Luxembourg, where Spotify is registered, reported a $37.7 million net loss for 2010.
MySpace's Tom on Google+
-- MySpace co-founder Tom Anderson believes Google+ is putting Facebook on the defensive. Facebook may specialize in social networking and may have a considerable lead in both users and developers, but Anderson sees a cost advantage in dealing with Google.
"If it's not obvious yet, Google+ is going to be able to 'undercut' Facebook when it comes to game developers and platform transactions. Instead of taking a 30% cut of all Farmville seeds (or whatever people are buying), Google will be able to take a smaller percentage for themselves. They may even take nothing. And when it comes to 'monetization' on the G+ 'website,' Google's trump card against Facebook is that we may never even see an ad on G+. Google has plenty to gain without ever showing an ad and, put simply, Google doesn't need the money. Facebook's got to know this, and it's got to have them just a little bit concerned."
Improved costs may be a point of differentiation for Google+, but will it become the social network where most people spend their time? My early experience with Google+ has shown the social network able to entice registrants but unable to get them to post frequently. Out of 118 people in my Google+ network only four of them post on a regular basis. And it's no surprise because those four people are the type of early adopter to try out just about any new social media or online service. Outside of the early adopters who are prone to experiment with new tech products, Google+ has lacked the constant chatter that makes Facebook such a busy, welcoming place.
In spite of its library-like ambience, Google+ seems to be humming along. A survey by YouGov found that 13% of adult Internet users have signed up for an account and 45% of users report reading content at least once a day (second to Facebook's 62% among social networks). "Google+ is well-positioned to become the second-largest social networking site in the U.S. within the next 12 months," YouGov concludes.