Opinion and analysis on the day's music news.


BEHIND THE VIVENDI EARNINGS
-- If you look at Vivendi’s Q2 earnings released on Wednesday, two trends become clear: both revenue and EBITA (earnings before interest, taxes and amortization) are falling at Universal Music Group.
Some quarters may look pretty good. UMG’s Q2 revenue was the same as Q2 2008 and 3% better than Q2 2009. While that may look like improvement, the company’s moving 12-month revenue tells a more accurate picture.

Here’s the quick overview: UMG’s moving 12-month revenue has declined every quarter since Q1 2008. (A moving 12-month period is the most recent 12 months at the end of any one period. So, a moving 12-month period at the end of Q2 2010 counts Q3 2009, Q4 2009, Q1 2010 and Q2 2010.) In other words, revenue has dropped steadily for over two years even though revenue has been fairly strong in some quarters.

In Q2, revenues were up nearly 3% over the prior-year period. But over the previous 12 months, revenues were down nearly 8% compared to the prior 12-month period. The 12-month period ending in Q1 2010 was down 9%. The 12-month period ending in Q4 2009 was down over 6%. The 12-month period ending in Q3 2009 was down just under 6%. And so on.

EBITA is also falling – and at a rate faster than revenue is falling. UMG’s EBITA margin (the ratio of EBITA to revenue) has been falling for the last six quarters. It fell to 12.4% in Q2 from 14.8% in both Q4 2008 and Q1 2010. UMG’s moving 12-month EBITA margin has dropped for four consecutive quarters. That means UMG is not only generating less revenue but has a lower percentage of revenue left over after deducting expenses.


A WARNING ABOUT AMAZON'S VIDEO SUB SERVICE
-- Warning: online video services could steal thunder from music subscriptions. The Wall Street Journal has reported that Amazon.com is working on an online video subscription service that offers consumers TV shows and movies.

According to the article, content partners have already been approached: "The Internet retailer has in recent weeks pitched a Web-based subscription service to several major media companies, including General Electric Co.'s NBC Universal, Time Warner Inc., News Corp. and Viacom Inc., among others, according to people with knowledge of the proposal.”

It appears likely that U.S. consumers are going to have numerous video services to choose from before music subscription services ever get out of niche status. Yes, Rhapsody, MOG and Rdio are already on the market. But not until a major player gets into music subscriptions will the market flourish. As things currently stand, Apple and Amazon.com have a la carte download services and it appears Google is headed that way as well. Frankly, the music industry should be concerned that Amazon.com, Apple and Google are innovating in online video instead of music. Labels and publishers need the best, brightest and biggest companies to push music into the future. Instead, they’re racing into online video. (Wall Street Journal)


CAPITOL INKS HEADPHONE DEAL
-- Capitol Studios has partnered with Ultimate Ears (a division of Logitech) to create professional in-ear reference monitor headphones. Simply put, they’re very high-end headphones created with the input of some very accomplished Capitol Studios engineers. This deal puts EMI in a similar – although not overlapping - -space as Beats By Dr. Dre, the Jimmy Iovine/Dr. Dre venture that has partnered with Monster to create consumer-facing headphones.


YOUNG BUCK FILES FOR CHAPTER 13
-- Rapper Young Buck (David Darnell Brown) has filed for Chapter 13 bankruptcy protection after a raid of his Nashville home by the I.R.S. The bankruptcy filing claims Brown used to make about $19,000 a month from his label, Cashville Records. As part of the plan to pay his back taxes, Brown will have his monthly pay reduced by $12,500 a month for 60 months. (Tennessean)


SPOTIFY, FOURSQUARE NAMED 'PIONEERS'
-- Two companies you read about often at Billboard have been named Technology Pioneers for 2011 by the World Economic Forum: Spotify and Foursquare.

Here’s what the brochure has to say about Spotify: “Spotify is helping to reduce music piracy by providing a viable alternative and is doing so without locking consumers into a hardware platform.” And on Foursquare: “Foursquare is pioneering the extension of social networking into the real world, pushing people to get up from their computers and interact in-person with people and local businesses.”

The World Economic Forum is a Swiss not-for-profit that strives for “entrepreneurship in the global public interest.” It is known for its annual meeting in Davos-Klosters that is attended by leaders from around the world. (World Economic Forum)


PANDORA'S STAGGERING SIGN-UP PACE
-- Pandora is signing up 100,000 new users a day on mobile devices, founder Tim Westergren told a press conference on Wednesday. Westergren was speaking at Samsung’s app developer day event in San Jose. (VentureBeat)