The Great Headphone Gold Rush Is On, Skullcandy Files IPO
-- Headphone manufacturer Skullcandy has filed for an initial public offering, signaling a strong belief in the increasingly crowded high-end headphone market. The company says it plans on using the proceeds from the IPO to repay debts and use for general business purposes.
Skullcandy has grown quickly in recent years. Net sales have increased from $35.3 million in 2007 to $95 million in the first nine months of 2010. And Skullcandy turned a profit of $7.6 million in the first nine months of 2010.
The company makes a wide range of designer headphones for music and gaming. Through a partnership with Jay-Z's RocNation, the company launched a line of aviator-inspired headphones (retail price $149.95) last November. The company's involvement in lifestyle marketing carries through to its sponsorships of individuals and events. Although the company sponsors mostly athletes, Skullcandy also sponsors many musicians (Snoop Dogg, Metallica, Slightly Stoopid, Thrice, others) and DJs (Mix Master Mike, DJ Z-Trip, The Crystal Method, others).
The designer headphone market is becoming crowded with musicians. Beats By Dr. Dre was an early entrant and now has branded lines by Dr. Dre, Lady Gaga, P Diddy and Justin Bieber. Late last year, AKG by Harman introduced its Quincy Jones Signature Line of high-end headphones. Then in January, 50 Cent and Ludacris followed with product unveilings at the CES conference. 50 Cent's headphones, which operate both wired and wireless, are made by Sleek Audio. The SOUL by Ludacris headphones are made by Signeo USA.
And there are many products competing with the artist-branded headphones. Nixon, for example, offers a wide range of high-end headphones for the lifestyle market targeted by Skullcandy. Even sports brands are getting involved. Adidas has partnered with Sennheiser for the high-end Adidas Originals line as well as a line of sports headphones. Nike also offers a line of sports headphones.
Merch Prices To Rise
-- Expect clothing prices to increase 10% this spring, say the experts. Spikes in raw materials, higher labor costs and rising worldwide demand are causing companies to raise apparel prices. That means bands and merchandise companies may need to consider eating the increases, passing along the higher prices to customers or using less expensive alternatives in their apparel. It's an unfortunate development for an industry that increasingly relies on apparel to buttress falling music sales, and it was seen coming late last year.
Billboard covered the rise in cotton prices last November (subscription required). After cotton prices hit unprecedented highs late last year, some companies had been able to lock in lower prices or absorb all or most of the increase. Online retailer Wolfgang's Vault had already seen its wholesale apparel costs go up 5-15% but had resisted passing the price increase along to customers. Bands on a Budget told Billboard they had already raised prices 3-4%.
Windish Agency Launching Windish Music Licensing
-- Here's an interesting twist to the new business model: The Windish Agency has launched an in-house music licensing department called Windish Music Licensing. The department will be overseen by Director of Music Licensing Glen Phillips and will be housed in the company's recently opened offices in Los Angeles.
President Tom Windish underscored the important of sync placements to his roster of artists. "Music placements have been integral to the overall presence of many of our clients, especially early on in their careers, and can also provide an important source of revenue," he said in a statement. "I'm hopeful that we will be able to extend the awareness and reach of many of our clients with our music licensing division."
Adding music licensing to a booking agency makes perfect sense in this case. Windish is like an early stage investor, taking young artists and helping them build their careers through touring. Music licensing provides young artists with both revenue and awareness at a time they need it most. Record labels play a role here but more often artists are using the agent, not the record label, as a starting point. And as Phillips points out, many Windish artists own the rights to their sound recordings.
Grammys Defy Social Media Predictions
-- Social media buzz did not turn out to be an accurate prediction for Grammy winners. Social media monitoring firm Meltwater measured the pre-Grammy buzz for nominees and made some predictions. And got them all wrong. It picked Cee Lo Green's "F**k You" for Record of the Year, Eminem's "Recovery" for Album of the Year and Justin Bieber for Best New Artist. (It's notable that Best New Artist winner Esperanza Spalding had the least social media mentions of the five nominees and about 1/15th the buzz of Justin Bieber.)
This actually makes perfect sense when you think about it. The sentiment of hundreds of millions of people using social media is simply not representative of the sentiment of a small block of Grammy voters. The Grammys are not like the stock market, presidential elections or the American Music Awards. The opinions of the public at large don't matter because the public doesn't get a vote.
By The Way, Who Is Arcade Fire?
-- Album of the Year winner the Arcade Fire are so unknown outside of indie music circles that a Tumblr page titled Who Is Arcade Fire??!!? has been created to showcase the social media posts of people unfamiliar with the Grammy winners from Montreal. "Never heard of Arcade Fire," wrote one person. "My boy Slim had that locked up. It's like Smirnoff winning vodka of the year or something."