The Orchard Is (Financially) Fertile
— Digital distributor The Orchard is now profitable and grew revenues 14.7% in 2010, according to information the company shared with Billboard. “We had a profitable Q4 and we expect to remain profitable,” Jaclyn Ranere, VP Product Marketing, tells Billboard.
Revenue rose 14.7% in 2010, according to Ranere. Since the company’s 2009 revenue was $62.3 million, a 14.7% increase would put the company’s 2010 revenue at $71.4 million, according to the last annual report The Orchard filed as a public company.
The Orchard had not turned a profit by the time it issued its last financial statement as a publicly traded company. In the first quarter of 2010, The Orchard had a net loss of $447,000. In the calendar year 2009, the company posted a loss of $17.8 million in 2009 (a more modest loss was deepened by a write down of goodwill of $14.1 million). These numbers are available in the audited financial statements. These latest figures shared with Billboard are not available in publicly available documents.
Perhaps we’re reaching a time when digital music companies can finally have enough scale to boast a profit. A few of The Orchard’s peers have recently reached or neared profitability. Just last week, Rhapsody president Jon Irwin claimed the company is breaking even now and expects “meaningful profits” this year . And Pandora is getting close to its breakeven point, losing $11 million on revenue of $138million in its fiscal year ended January 31, 2011.
The Orchard’s digital revenue grew 10.5% last year. The other growth came from areas such as physical product, distribution of music video, film and TV and public performance royalties.
Digital growth is coming from many areas. iTunes accounts for 64% of the company’s digital clients’ revenue. Amazon and Spotify combined account for just under 11% of digital clients’ revenue. But the dominance of iTunes varies a bit by country. In three countries – Sweden, Norway and Finland – iTunes was not the leading store in 2010. In the fourth quarter, Spain was added to that group. In seven other countries, iTunes accounted for less than 55% of clients’ digital revenue in 2010.
Pirates Beware! The Belgians Are Coming!
— Belgian lawmakers are considering two approaches to dealing with file-sharing. One proposed law, introduced in December, aims at “adapting the perception of copyright to the technological evolution while preserving privacy rights of the Internet users.” It would establish a compulsory license and royalties would be negotiated between stakeholders (if no agreement is reached, the King would intervene and set rates).
The second proposal, introduced in January, would introduce a “three strikes” law similar to the one adopted in France. In contrast to the lawmakers who seek a global license, the proponents of a three strikes framework compare global licenses to expropriation of copyrights and believe tougher law is “in favour of the cultural creation on the Internet.” The first strike would result in a warning letter. A second infringement within six months would result in a fine. A third infringement within two years would result in higher fines, limited Internet connection or a lawsuit brought by the public prosecutor. Further infringements could result in more fines and elimination of Internet access.
A three-strikes law would be a big change in Belgium. Recall that in late 2008 a Belgian ISP escaped a large fine after a court agreed it could not reasonably monitor or control what its subscribers did on its network. The lawsuit was brought by the Belgian Society of Authors, Composers and Publishers (SABEM), which had earlier convinced the court to impose content filtering measures on the ISP.
Spotify for Books?
— If subscription services are good for music, why not books? Spanish company 24symbols launched in beta mode a few weeks ago and is reportedly doing a full launch in June. The service is like Spotify in that it has a freemium business model. Free users must bear through advertisements. Getting rid of the ads will cost €9,99 a month, €19,99 for three months or €59,99 euro for a full year.
The hitch appears to be the devices that access 24symbols. Books are read on the 24symbols website – on a variety of devices. So no ebook readers.
30 Seconds To Mars Foster Super Fandom
— David Bason of the MGMT Company talks to Musician Coaching about 30 Seconds to Mars’ use of social media to create “an on-going interaction” with their fans and build a group of super fans. These are things any artist can do because it takes only a desire to communicate, Bason explains. “It’s a very organic relationship. That doesn’t cost any money.”
“They tweet constantly. For instance, they will say, ‘We’re having theme nights on this run. In this city, show up wearing this, in that city, show up wearing that.’ They might also say, ‘Submit fan videos that we will use as part of something we’re doing.’ It’s an on-going interaction, which everyone has. All my bands have a Facebook, Twitter, Tumblr. These are commonplace and essential, but the most successful bands I’ve had use these tools in a way that builds a group of super fans. In the case of Thirty Second to Mars, they call them the ‘echelon.’ They are just super engaged and always interacting.”