November 14, 2024

Media Decoder Blog: Warner Music Owner Bets on Competing Digital Services

Len Blavatnik, the Russian-born billionaire investor who bought the Warner Music Group two years ago, has placed big bets on multiple digital music services as the streaming model grows around the world.

Digital Notes

Daily updates on the business of digital music.

Mr. Blavatnik’s holding company, Access Industries, is one of several parties investing $60 million in Daisy, a planned service by Beats Electronics, the high-end headphone company, Beats announced late Tuesday. The others are Marc Rowan of Apollo Global Management; James Packer, of Australia; and the Texas oil heir Lee M. Bass.

Daisy — still only a code name, and not confirmed as the service’s eventual brand name — will compete with Spotify, Rhapsody, Rdio and others by letting users stream millions of songs by subscription. But it is not the only such service backed by Mr. Blavatnik. In October, Access invested $130 million in Deezer, a French company that has said it wants to open in over 100 countries around the world, including the major developed markets like the United States and Western Europe and also throughout Asia, Africa and Latin America.

Beats said that Daisy — based on the technology of Mog, a struggling service that Beats bought last year — would be spun off as a separate company and introduced by the end of the year. But it has given few details about how Daisy would be distinguished from others in an increasingly crowded marketplace.

Reuters, citing anonymous sources, reported early Wednesday that Jimmy Iovine, one of the founders of Beats, had met with top Apple executives over a “potential partnership” involving Beats. A spokeswoman for Beats declined to comment on the report.

Reinventing Radio: Clear Channel Communications continues to add to its series of historic royalty deals with record companies covering Internet and terrestrial radio.

The company, which operates more than 800 radio stations, announced on Wednesday that it had made a deal with Entertainment One, an independent label and distributor, to “share revenue from digital and terrestrial radio.” The deal with Entertainment One, also known as eOne, follows others with influential independent record companies like Big Machine, the label behind Taylor Swift, and Glassnote, whose acts include the bands Mumford Sons and Phoenix.

In those deals, Clear Channel has made the move — unprecedented in American radio — of offering record companies a royalty whenever their music is played, either on the air or on Clear Channel’s Web sites and apps like iHeartRadio. In the United States, radio stations are required to pay royalties only to songwriters and music publishers, not to record companies. These deals can help Clear Channel limit its exposure to rising licensing costs for online music, which have become a headache for Internet radio services like Pandora.

Big Machine has also been a driving force for these licensing deals. In addition to its deal with Clear Channel, it has made similar arrangements with the broadcasters Entercom and Beasley, which together have about 150 stations.


Ben Sisario writes about the music industry. Follow @sisario on Twitter.

Article source: http://mediadecoder.blogs.nytimes.com/2013/03/06/warner-music-owner-bets-on-competing-digital-services/?partner=rss&emc=rss

For Apple, a Big Loss Requires a Balancing Act

The risk is this: How to follow the lessons Mr. Jobs imparted to his fellow Apple executives over the last 14 years without being trapped by his legacy and unable to adapt to future changes.

Timothy D. Cook, Mr. Jobs’s longtime lieutenant at Apple, captured the difficult balancing act in an e-mail he sent to all Apple employees in late August after taking over from Mr. Jobs as chief executive. “I want you to be confident that Apple is not going to change,” Mr. Cook wrote.

On one level, the message was an effort to reassure nervous Apple staff members that the commitment to innovation that Mr. Jobs established would not change, even if Mr. Jobs was no longer involved in Apple’s day-to-day operations. But management experts say change is often exactly what companies need as market conditions shift in the years after their founders are gone.

The Walt Disney Company is one cautionary tale. In the years after the death in 1966 of the entertainment company’s founder, the executives strived to stay true to Walt Disney’s spirit. For years, Mr. Disney’s old office was preserved like an untouched museum.

Its executives often praised corporate decision-making by saying, “Walt would have liked it.” But by the late 1970s, Disney was struggling after a string of box-office flops and was the subject of a hostile takeover attempt. It took the hiring of Michael Eisner and other top executives in the 1980s to revitalize Disney through more aggressive investments in animated filmmaking, theme parks and stores.

“Apple can’t fall into that,” said David Yoffie, a professor at the Harvard Business School. “It’s not, ‘What would Steve have done?’ That’s a recipe for problems.”

Mr. Yoffie said Mr. Cook had to “walk a fine line” in how he managed the transition into the post-Jobs era. “For most of the people at Apple, they have to have a sense that the creativity and enthusiasm of Steve will continue,” he said. “He’s got to send a signal to troops that the heart of Apple won’t change. Otherwise he risks losing talent.

“At the same time, Tim can’t be another Steve Jobs,” Mr. Yoffie continued. “At some level, the company will have to evolve. The way it evolves and the types of changes are yet to be understood, probably by Tim himself.”

For the moment, Mr. Jobs has left Apple with so much momentum in the market, with surging sales of products like the iPad and iPhone, that it is unlikely to face any huge immediate challenges. The day before Mr. Jobs died, Mr. Cook made his debut at the first public event since taking over the top post: the introduction of a new model of iPhone.

Rick Devine, an executive recruiter, said that the “market winds are at their back,” and that Mr. Cook is the best-qualified person to continue that success. “He knows that organization,” he said. “If there’s anyone who can keep that course, it’s him.”

Mr. Devine is familiar with Mr. Cook because he was the recruiter who introduced him to Mr. Jobs in 1998, when Mr. Jobs was looking for a seasoned executive to help him clean up Apple’s disorganized manufacturing operations. Mr. Jobs and Mr. Cook quickly hit it off when they met, as Mr. Jobs told Mr. Devine after their meeting.

“He said, ‘This is the guy,’ ” Mr. Devine said.

Mr. Jobs’s death left technology executives and legions of Apple fans struggling to imagine an industry without one of its founding fathers. Bill Gates, the Microsoft chairman and co-founder, said he would “miss Steve immensely.”

“The world rarely sees someone who has had the profound impact Steve has had, the effects of which will be felt for many generations to come,” Mr. Gates said in a statement. “For those of us lucky enough to get to work with him, it’s been an insanely great honor.”

Consumers of Apple products expressed somewhat similar emotions on Wednesday.

Vansi Gadey, 30, a designer who works at a large technology company, was visiting the Apple store near Union Square in San Francisco, to charge his phone. He said: “I’m from India. In my childhood, Gandhi was an inspiration. After that, it’s been Steve Jobs.”

Burt Miller, 56, was on his way to a San Francisco Apple store to pick up some replacement parts when his wife called to tell him that Mr. Jobs had died. He said he was crushed. Mr. Miller, who works in construction, said he had followed the presentation of the new iPhone the day before and was convinced that Mr. Jobs had too. “I think he saw it and knew Apple was going to make it and he let go.”

Matt Richtel and Somini Sengupta contributed reporting.

Article source: http://www.nytimes.com/2011/10/06/technology/for-apple-a-big-loss-requires-a-balancing-act.html?partner=rss&emc=rss