Sonos Gets $25 Million For Wireless Music System

Sonos

Sonos, which sells a digital music system that can be used to play music throughout a home, has raised $25 million in a third round of funding from Index Ventures. The funding was first reported by TechCrunch earlier this week and confirmed by Sonos CEO John MacFarlane in an interview with AllThingsD. Index Ventures Partner (and former Cisco exec) Mike Volpi is joining Sonos’ board.

Sonos’ system lets users wirelessly play music from their own collections or from online throughout their homes with minimal equipment; the entire system can be controlled via Sonos’ iPhone app. Seems very cool, although from the looks of the screenshots on the site it’s not being marketed to the average consumer. The cheapest bundle—which is good for streaming music in two rooms—costs $999.00. (A spokeswoman notes however that a single system—appropriate for one room—costs $399.00).

The new cash brings Sonos’ total funding to $61 million. The company raised a $6 million second round in June 2007.

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Return Of The Album? Pink Floyd Wins Online Bundling Right

Dark Side Of The Moon

The album’s not dead yet - well, not in Pink Floyd’s case at least. A judge has ruled in favour of the prog rock band, which went to the UK High Court for the right to have its material sold online only the form of albums, not individual singles, which have became the dominant form of digital download.

Pink Floyd’s contract with EMI - which was signed 11 years ago ago, before the online music boom - says its albums must only be sold as a whole and in a set order. EMI argued this applied only to “physical product”, but, according to Justice Andrew Morrit’s ruling, via Bloomberg: “There is nothing in the terms ‘album’ or ‘record’ to suggest they apply to the physical product only.”

So Pink Floyd has taken a major to court to maintain its creative wish (and has further shaken EMI’s increasingly rickety foundation in the process) - but does its victory really mean a resurgence for the album online, or is it just another brick in the wall… ?

We live in a single world, at least online. Digital singles outsold digital albums in the Floyd’s native UK nearly tenfold last year - likely because collections of songs still feel better on plastic. And 98 percent of British track purchases are now digital.

But albums are coming back faster. Global single-track growth of only 10 percent last year is causing the industry to worry about a plateauing of its biggest earner - but digital album sales are now growing by 20 percent a year, twice as fast as singles, IFPI says. In percentage terms, there’s more opportunity for digital migration growth from what is still a considerably analogue segment.

Digital stores aren’t geared to albums: iTunes Store atomised the album industry, and other retailers have followed suit. Sure, iTunes Store has “Buy Album” options all over its Pink Floyd page - but, to iTunes, an “album” is just a sales multiplication opportunity - and songs purchased can be played in any order buyers want. Apple’s “deluxe” iTunes LP - offering albums with artwork and multimedia extras - seemed like a reluctant concession to labels for exploding the album as a form; stocks a paltry less-than-30 releases, as Gigaom observes. Still, the IFPI says the iTunes LP version of Michael Bublé‘s latest release outsold the standard edition 3:1 this way.

What about new models? Much consumption is set to move to the cloud or, otherwise, to ad-supported platforms. It’s unclear whether a contract like Pink Floyd’s accounts for music that isn’t “sold” but, rather, streamed or subscribed to. Even if a la carte retailers are forced to offer true albums for download, what’s the equivalent of “album” in a streaming environment? Being forced to listen to all 43 minutes of Dark Side Of The Moon in its entirety and in its intended order?

Artists are embracing the single: Not every artist will put art before income as Pink Floyd have done, nor will necessarily feel that bundling is an artistic consideration. Former EMI band Radiohead, too, was, for many years, creatively opposed to track-by-track downloads - but it’s now relented (indeed, last time around, it even released the individual stem components of songs for fans to remix). This case could prompt similar actions from a small number of acts who feel the same way as the Floyd, if they have a similar old contract - but it’s likely most will just take the royalties.


Good News for Netflix Web Users: Disney Re-Ups With Starz

Premium TV network Starz Entertainment has re-upped with Disney on its distribution deal, assuring access to the studio’s movies through 2015.

Why are you reading about this on a site that pays attention to digital media? Because the Starz renewal includes the rights to redistribute Disney’s movies on all platforms, including digital.

Meaning that Netflix (NFLX), which has been able to stream Disney (DIS) movies via its own Starz deal, will continue to do so.

This news will be a bit surprising to some observers, who expected that Disney would shut down that option sooner or later.

Here’s the release:

Disney and Starz Entertainment Extend Pay TV Output Agreement
 
Burbank, Calif. and Englewood, Colo. – March 11, 2010 – Starz Entertainment, LLC, and Disney-ABC Domestic Television, a division of The Walt Disney Company, announced today the signing of a new, exclusive long-term licensing agreement for theatrical releases from The Walt Disney Studios through 2015. The previous output agreement was set to run through 2012. Financial terms of the agreement were not disclosed.
 
The deal extension provides Starz with exclusive pay TV rights to exhibit theatrically released Walt Disney Studios 
live-action and animated feature films, including those from Marvel Entertainment, on its Starz, Encore and MoviePlex linear channels, and its related on-demand and IP-based services, both in standard and high definition. Walt Disney Studios theatrical releases in the agreement, in addition to Marvel, include pictures produced under the Walt Disney Pictures, Walt Disney Animation Studios, Disney-Pixar, Touchstone Pictures, and Hollywood Pictures labels. Theatrical releases from DreamWorks Studios and Miramax Films will not be licensed to Starz under the new agreement.
 
Janice Marinelli, president, Disney-ABC Domestic Television, and Bill Myers, Starz Entertainment president and chief operating officer, announced the agreement on behalf of the companies.


“Disney and Starz have been partners since the launch of the flagship Starz premium channel back in 1994, and we are pleased to be able to extend our very successful relationship,” said Marinelli. “With this long-term extension, Starz’s subscribers will continue to experience the magic and excitement of our Walt Disney Studios motion pictures,” she continued.
 
Myers said, “Commercial-free movies from Disney have always been a cornerstone of our programming and will remain so for years to come even as we add original series to our movie mix.” Myers noted that Starz has been a leader in making use of new technology to allow subscribers to enjoy programming in more convenient ways. ”This agreement secures our ability to meet the needs of current and future subscribers in a fast-changing media landscape,” he said.
 
Walt Disney Studios animated movies and live-action feature films coming exclusively to Starz in 2010 include: Up, The Princess and the Frog, The Proposal (starring Sandra Bullock and Ryan Reynolds), G-Force, Old Dogs 
(starring Robin Williams and John Travolta), Hannah Montana: The Movie, Alice in Wonderland; and Race to Witch Mountain.

Pink Floyd Wins Court Case: Will “Money” Leave iTunes? [UPDATED]

Want to buy Pink Floyd’s “Time” on iTunes but don’t want to pay for all of “Dark Side of the Moon”? You’ll want to make that purchase soon.

A ruling in the band’s lawsuit against EMI Music Group may mean that the band’s songs will only be available online in album form. BBC:

The rock legends, signed to EMI since 1967, said their contract meant their albums could not be split up without their permission.

A judge agreed, saying the contract contained a clause to “preserve the artistic integrity of the albums”.

EMI has been ordered to pay £40,000 ($60,000) in costs, with a further fine to be decided.

…In court, Chancellor Sir Andrew Morritt declared that the contract means EMI is not entitled to exploit recordings by online distribution or by any other means other than the complete original album without Pink Floyd’s consent.

As of this morning, you could still buy much of the band’s output on a track-by-track basis at the online music stores that Apple (AAPL) and Amazon (AMZN) run.

And just because the band has won the ruling doesn’t mean that’s going to stop–its entirely possible, for instance, that a check of a certain size could allay the band’s concerns. Other album-only holdouts like Metallica and Radiohead eventually held their noses and allowed their stuff to be sold by the song on iTunes, too.

But if you really want to buy “Pigs on the Wing Pt. 1,” but not all of “Animals” (apologies to fans of the album I offended earlier in the week), you might want to buy now, just to be safe.

UPDATE: EMI says it hasn’t been ordered to stop selling individual tracks, adding that this will be hashed out in the courts for a while. Here’s the full text:

Today’s judgment does not require EMI to cease making Pink Floyd’s catalogue available as single track downloads, and EMI continues to sell Pink Floyd’s music digitally and in other formats.

This litigation has been running for well over a year and most of its points have already been settled.

This week’s court hearing was around the interpretation of two contractual points, both linked to the digital sale of Pink Floyd’s music. But there are further arguments to be heard on this and the case will go on for some time.

Can You Make a Living From Viral Videos? The OK Go Gives It a Shot.

Difficult week for EMI, at least in the business press. Yesterday, Pink Floyd sued the music label. This morning, the company’s chief executive left after an 18-month stint. Newest story: The OK Go, a digitally savvy act best known for its viral videos, is breaking up with the company.

My colleagues are lapping the last one up, with good reason: The OK Go are fun to write about, because they make cool videos and because lead singer Damian Kulash is very quotable when he talks about the state of the music business and his band’s relationship with EMI.

For instance, here’s a stinging part of his exit interview with New York Magazine today:

Q: What other problems were you having with EMI?
A: 
The issue is that they just don’t have any money. The reason a band signs with a label is because they can provide start-up capital, and their business model has sort of collapsed. There was lots of little bones of contention, like when there were chances for us to promote things and they just didn’t have the money to do so. It was a lot easier to be generating the budget ourselves or through corporate partners.

EMI has issued a boilerplate quote wishing the band success–it’s going to create its own label–and leaving it at that.

And EMI does have real money problems. In part because everyone who sells music right now has money problems and in part because private equity fund Terra Firma paid too much and took on too much debt when it bought the label three years ago.

But here’s the thing. If EMI’s executives allowed themselves to speak candidly, they would likely point out that while the OK Go made great videos, it didn’t seem to make music that many people wanted to buy.

Soundscan says the band has sold all of 500,000 albums in the U.S., both in physical and digital form, in its three-album tenure at EMI. That’s 488,608, to be exact. Plus another 25,000 single tracks.

That’s not awful. But it’s not the kind of sales that would inspire a big label to spend big money promoting an act. Even when the industry’s business model was still intact.

But the band really does make nice videos that people like watching on Google’s (GOOG) YouTube. If it can figure out how to turn these into dollars, it’s all set.

OK Go–This Too Shall Pass from OK Go on Vimeo.

EMI Music Swaps Chief For Chairman Allen As Trouble Looms

Charles Allen

In 2008, Terra Firma hired the guy who ran the company which makes Cillit Bang and Air Wick to turn EMI Music around. But now the record label finds itself seeking a reported £100 million to avoid breaching banking covenants.

So now executive chairman Elio Leoni-Sceti is on his way out; he’s being replaced by Charles Allen, the former CEO of the UK’s top commercial broadcaster ITV (LSE: ITV), on March 31. Allen has chaired the board since January 2009.

EMI, in its announcement, says Leoni-Sceti, who had been CEO of household goods maker Reckitt Benckiser, “has successfully led EMI Music through the first phase of its operational turnaround” - but there’s no explanation for the change, nor what phase two involves. “My job here is now done and it is time for me to move on,” says Leoni-Sceti, who has the cover interview in Management Today.

Indeed, within EMI Group itself, fortunes are looking up - 2008/09 earnings rose 7.4 percent to £1.56 billion, with recorded music (EMI Music) sales up 4.6 percent and music publishing (EMI Music Publishing) up 14.6 percent). The 2009/10 performance is likely to be better, benefitting from Beatles reissues including that Rock Band game.

But Terra Firma last year wrote off 90 percent of the $4.7 billion it spent on EMI in 2007 - ultimately, the label will be on high alert for yet more, wider changes. If Terra Firma loses control of EMI to its financier Citigroup, the bank may yet decide to break up or sell the label.

Leoni-Sceti undid some of the digital moves put in motion prior to his arrival - EMI hired high-profile Cory Ondrejka (Linden Labs) and Doug Merrill (Google) as digital strategy SVP and digital VP, before he bid them goodbye, wiping out digital as a standalone unit, replacing them instead with eight, more junior marketing execs.


Viral Video Hitmaker OK Go Does Just That; Parts Ways With EMI

Ok Go:

In another bit of EMI news, less vital to the company’s future than today’s latest change at the top, OK Go and Capitol Records have parted ways after nine years through mutual agreement. OK Go asked; EMI agreed. OK Go is best known for its viral videos—and was touted by previous EMI management as an example for the digital age—but that success hasn’t been reflected in sales. According to a source, their latest video (embedded below) had roughly 7 million views last week but they sold only 3,000 units of their new release Of The Blue Colour Of The Sky.

EMI has taken a lot of heat—much of it from the band—for refusing to allow embedding of the band’s videos for the new album, a policy that’s linked to YouTube’s own policy for major label music videos.

OK Go manager Jamie Kitman announced the separation via e-mail to industry observer Bob Lefsetz last night: “we secured ok go’s release from capitol—two weeks before the current video (up to 6.6 million hits in under a week)—came out. we’re living in the future, about 15 minutes earlier than we’d expected, and loving it.”

EMI confirmed with a mutual statement full of fun for reading between the lines:

OK Go singer Damian Kulash: “We’d like to thank the people at EMI Music who have worked so hard on our behalf.”  Translation: those of you didn’t do anything for us get nothing.

EMI Music said:  “We’ve really enjoyed our relationship with OK Go.  They’ve always pushed creative boundaries and have broken new ground, particularly with their videos.  We wish them the greatest success for the future.” Translation: Way cool videos without sales to match. Buh bye.

OK Go has set up its own label Paracadute Recording and is taking over the distribution and marketing of the new album. Expect lots of embedding; sample below.