Opinion and analysis of the day's music news.


Ad Firm Must Pay Studios In Infringement Settlement
-- A federal judge has approved the settlement reached between online advertising firm Triton Media of Scotsdale, Arizona (not to be confused with Triton Media Group of Sherman Oaks, Calif.), and movie studios Disney and Warner Bros. Triton will pay $400,000 for "contributory copyright infringement" related to its index of unauthorized movie sites. News of the settlement was broke last week by The Hollywood Reporter. View the judge's consent judgment here.

Triton referred advertisements to sites that offered free streams of pirated films and TV shows. The decision bars Triton from operating or assisting eight sites named in the studios' complaint or other similar sites.

This case doesn't apply to other cases in which online advertising companies place ads on websites that offer pirated material, says the Los Angeles Times' Jon Healey. Instead of merely placing ads on these sites, it explains, "Triton acted as a matchmaker, fixing the sites up with the networks that served ads onto their pages. So it was more intimately involved in the operation of those sites than the average ad network might be."

But perhaps, as the Hollywood Reporter suggests, movie studios will feel emboldened by this case's outcome to further pursue companies that financially aid piracy. "It won't help (the studios) persuade any judges to accept their theories of liability, but it does seem to validate their follow-the-money strategy," writes Healey. Around the music industry it is a well known fact that ad networks - such Google AdWords - place ads on many sites that offer pirated movies and music. If copyright owners can choke off or slow ad revenue to some of these sites, they will reduce the incentive to create such sites in the first place. (The Hollywood Reporter, MPAA press release, Los Angeles Times)


Spotify 2010 Payout: $42 Million
-- Spotify paid out €30 million ($42 million) to rights holders in the first eight months of 2010, according to figures obtained by Music Ally. The total paid out since its October 2008 inception is said to be €40 million ($56 million). If those numbers are accurate, we can draw a number of conclusions from them. The specifics of Spotify's deals are not known, but there is a way to estimate how much revenue it has taken in. If we use Rhapsody's cost of sales to estimate Spotify's revenue, we get $92 million since launch and $69 million in the first eight months of 2010. RealNetworks' cost of revenue for its music segment was 61% of revenue for the first quarter of 2010, according to the company's 10-Q filing. The question is whether Spotify is paying rights holders a percent of revenue or fixed per-stream royalties - or a combination of the two. Again, these are hypothetical numbers based on an assumption that Spotify's royalty obligations are similar to that of Rhapsody, which was the last music service to release financial results as part of a publicly traded company.

This year was a big one for Spotify, with 75% of royalties paid to rights holders coming in the last eight months. The first 14 months of operation was represented by only 25% of royalties paid to rights holders. It's easy to imagine most of that growth in royalties coming from increases in paid subscribers. That would mean the company has improved in converting free users into paying subscribers. Part of that improvement could have come from partnerships with telcos Telia (in Sweden) and 3 (in the UK) that bundle Spotify's premium service with service plans. (MusicAlly, RealNetworks Q1 10-Q)


Spotlight Raises $2.5 Million
-- Spotlight Ticket Management has raised $2.5 million in Series A funding in a round led by Point Judith Capital. The company was founded by former StubHub executives. Its software helps companies make better use of their corporate entertainment spending. (Press release)


Convenience Vs. Free
-- David from Digital Audio Insider notes that the first five tracks from Apple’s “Indie Spotlight” playlist of 69-cent tracks have been given away for free. He writes: “The Sufjan Stevens track is a freebie at his Bandcamp page, songs from Wild Nothing and Deerhunter are authorized free downloads at Pitchfork, a Blonde Redhead track was given to Fader, and a Kitten song appears to be another label-authorized music blog giveaway.”

Had he checked songs six through nine, he would have found out they can be found for free (legally) as well. Aloe Blacc’s “I Need a Dollar” was a free download at The Fader’s website back in February is still being hosted. S. Carey’s “In the Dirt” is currently a free download at the website of the label, Jagjaguwar Records. Ra Ra Riot’s “Boy” is currently a free download at Barsuk Records – it’s right there on the site’s splash page. Blackbird Blackbird’s “Hawaii” can be found at XLR8R and other music blogs, and it appears some bloggers were given explicit permission to post the song.

This is a perfect example of why people shop at Apple: convenience. People may love free music, but they don’t love spending the time to look for it. These tracks can be found elsewhere with just a little digging. But some consumers aren’t aware of their legal availability elsewhere and don’t have the wherewithal to search for them. (Digital Audio Insider)


Mark The Calendars
-- Live Nation will report third quarter earnings on Thursday, November 4, after the close of the market. Warner Music Group reports its latest quarter on Wednesday, November 17 at 8:30am ET.

Questions? Comments? Let us know: @billboardbiz

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