UMG, the world’s largest music company with artists like U2, Amy Winehouse, Lady Gaga, Taylor Swift, Black Eyed Peas, Rihanna, Eminem, Lil Wayne under contract, as expected finds its revenue from physical product sales (CDs) in a seemingly unstoppable decline. Last year, the company’s revenues were €4,363 million, a 6.2% decrease compared to 2008.

Still, Universal Music Group’s digital sales grew 8.4% in 2009, which the company attributed to strong growth in online sales yet “tempered by softening demand for mobile products in the United States and Japan”.

UMG says it will “continue to encourage and support innovation”, citing Spotify’s iPhone application and MusicStation’s presence on the Android Market as examples. Universal is also a major shareholder of VEVO, a service launched in December, 2009 that quickly rose to become the number 1 music property in the United States.

We should note that UMG is also largely responsible for the demise of video sharing site Veoh, and has sued or threatened to sue companies like YouTube, MySpace, Bolt, Grouper and many more to date.

Universal Music Group recently appointed Lucian Grainge as Chief Executive Officer of the company, succeeding Doug Morris who remained as Chairman. When the promotion was announced, Jean-Bernard Levy, chairman of the Vivendi Management Board, said:

“I am delighted that Lucian Grainge has agreed to move to New York to take on the Chief Executive role. His track record speaks for itself, finding stars, growing revenues and building new business models. He has the right combination of experience and innovation to take UMG forward as the migration into the digital era accelerates.”

Do you think Universal Music Group can offset the decline in revenue from physical product sales with a continued increase in digital sales revenue in the foreseeable future?

Netbiscuits serves the mobile Internet programs for brands like Yahoo, MTV, and eBay, and well known digital agencies such as Razorfish, Isobar, and ad networks like Google-owned AdMob. To give you an idea of its size: globally, Netbiscuits claims to deliver more than 1.5 billion mobile page impressions on a monthly basis.

This morning, the decade-old company announced that it has partnered with Universal Music Group to help the music company expand its line-up of direct-to-consumer mobile content and services, after a successful test run centered around a mobile website for Bon Jovi in November 2009.

The terms of the agreement were not disclosed.

Netbiscuits will essentially be aiding UMG in setting up and operating artist-branded mobile websites, which will give fans the ability to interact with other fans and to make purchases directly from their handsets. Based on the mobile websites, Netbiscuits also enables UMG to set up hybrid apps for several major platforms, including the iPhone, Android, and Windows Mobile devices.

UMG also plans to utilize the text messaging service that comes integrated within the Netbiscuits platform, providing music fans with SMS alerts whenever their favorite artists are in town.

Universal Music Group is partnering with new ad-sponsored digital music download service FreeAllMusic.com to let anyone download music from the record label’s artists, which include Lady Gaga, Rihanna, Taylor Swift and Jay Sean.

Via Free All Music’s platform, thousands of tracks will be offered at a rate of 20 free downloads per month, five per week, starting every Tuesday. The recently launched FreeAllMusic.com, which appears to be in private beta, lets users access downloadable, high-quality, iPod-compatible MP3s of advertiser-paid, free, legal, and unrestricted song. The catch: users watch a video commercial per download on the site, Users’ music selections and sponsoring brands are then promoted externally through an opt-in, digital advertising network.

To download a free track, users can select a participating brand and then need to watch a video advertisement from that brand. Brands who are participating in the initial launch are Coca-Cola, Warner Bros, Zappos, Lionsgate, LG, and others.

Universal Music has long been a little trigger-happy on the lawsuits against music and video sharing services (MySpace, Veoh and its investors, Grouper / Bolt.com, etc.), so its interesting that the startup has been able to bring on the record label. With the ad-supported downloads, FreeAllMusic may have found a way around the music label’s onerous fees. According to a New York Times article from December, FreeAllMusic has already signed on another record label but declined to name the new label.

VEVO has just announced a ‘strategic’ investment was made by Abu Dhabi Media Company (ADMC), a giant of a media company with headquarters in Abu Dhabi, capital of the United Arab Emirates, reports MediaMemo. The specifics of the deal remain under cover, but the rumor mill suggests the company is being valued at around $300 million.

Slated for launch in the U.S. and Canada next December, VEVO is going to attempt to leverage YouTube’s massive audience to build a destination and syndication network for “the very best in top-notch music video content”. The three founding shareholders will be sharing the revenue from the music video site with YouTube as it will be using Google’s video sharing site as its main distribution platform.

Question is: how attractive will the service turn out to be considering the fact two other majors, Warner Music and EMI, are still holding out? And how did Abu Dhabi Media Company come into play?

ADMC was created in June 2007 as a joint stock company (wholly owned by the government of Abu Dhabi) from the assets of Emirates Media Incorporated. The company owns a host of television and radio networks and multiple newspaper and magazine businesses.

The company boasts dozens of partnership and distribution agreements with media companies from around the globe, including Bertelsmann, Warner Bros., Participant Media and National Geographic. Its CEO is veteran media pro Edward Borgerding, who was Executive Vice-President of Walt Disney International in Hong Kong before joining ADMC in 2007.

ADMC Chairman H.E. Mohamed Khalaf Al Mazroui in a statement said the deal will help the company establish a leading position in the digital media industry, and added that taking a stake in the joint venture is part of an integrated approach to expand its global presence and brand portfolio.

Update: the news item has been updated as a result of this coverage. Good thing we have a screenshot.

The link can be found on this January 7 news item on the UMG website about the ‘leaking’ of Eminem’s newest track, and leads to this YouTube clip posted by a regular YouTube user. In case you were wondering, Universal Music Group has an official channel on the video sharing site which does not feature a clip for this particular track yet.

Ironically, there is a notice from YouTube below the video stating that the video “contains an audio track that has not been authorized by all copyright holders”. Furthermore, the audio has been disabled as a result of YouTube’s new policy whereby audio that has not been authorized is simply stripped away from the video, effectively generating a ton of creepy, soundless music videos.

Way to encourage uploading copyrighted material without your consent, UMG!

Things are not going well for Universal Music Group’s in its lawsuit against video-sharing site Veoh. First, the Los Angeles judge, A. Howard Matz, ruled last month that the safe harbor provisions of the Digital Millennium Copyright Act do apply to the case, contrary to UMG’s request for summary judgment.

On Monday, Veoh scored another point in the preliminary legal sparring that always precedes the main event. The same judge threw out the part of the complaint that named Veoh’s investors as defendants in the suit. UMG had tried to argue that Shelter Capital, Spark Capital, and Michael Eisner’s Tornante Company were guilty of “vicarious copyright infringement” and “inducement of copyright infringement” (yes, those are actual crimes) because they effectively control the company and sit on its board.

UMG cited as its precedent a case involving Napster and its then-single investor Bertelsmann, which actually was found guilty of vicarious copyright infringement, but only because Bertelsmann chose to keep Napster running even after it was obvious that it was an infringing service.

Judge Matz noted in his ruling that Veoh has so far not been found guilty of any copyright infringement, and his previous position on the DMCA’s protections shows that he understands the difference between users infringing copyright and Veoh. He also ruled that the mere act of being an investor or board member of a company facing copyright issues and fulfilling those normal duties does not constitute infringement, even if the company they “control” is found guilty.

Merely exercising ownership power to select members for a Board of Directors cannot invite derivative liability for infringement. Nor is there a common law duty for investors (even ones who collectively control the Board) “to remove copyrighted content,” in light of the DMCA. . . . these descriptions of how the Investor Defendants exercised control are the equivalent of “plain vanilla” characterizations of what directors ordinarily do . . . and are expected to do.

Rather, the board members and investors have to go out of their way to encourage copyright infringement. Yet if you read the ruling (embedded below), it is clear that Shelter and the other investors were doing everything they could to get rid of and filter out infringing content.

If this ruling and the last one are any indication, Universal Music Group has a tough road ahead as it presents its central case.

Jan 31 Umg Filing http://d.scribd.com/ScribdViewer.swf?document_id=11656017&access_key=key-igepf903sdjouu9pj01&page=1&version=1&viewMode=

For those Web companies that comply by it, the Digital Millennium Copyright Act is turning out to be their best friend. Last week, Universal Music Group (UMG) was denied a summary judgment by a Los Angeles court in its copyright infringement case against Veoh. (Court order embedded below). UMG wanted a summary judgment against Veoh, arguing that it could not hide behind the safe harbor provisions of the DMCA, which state that Web services are not liable for the copyright infringement of its users if it takes certain steps to prevent it.

This is the second time a summary judgment has been denied to a company trying to sue Veoh for copyright infringement. (The last time it was a porn company). These orders are setting important legal precedents not just for Veoh, but for YouTube and others also facing DMCA lawsuits.

The safe harbor of the DMCA states that Web services are not liable for copyright infringement if the content is stored “at the direction of a user.” UMG tried to argue that Veoh should not be covered by the safe harbor because it did a bunch of things with the music and video content after it was stored on its servers, including converting it into Flash, breaking it up into chunks for peer-to-peer distribution, and allowing other users to stream it or download it.

The judge, A Howartd Matz, didn’t buy the argument. He found Veoh’s position to be “more persuasive,” noting that user’s must agree to Veoh’s Terms of Service before uploading a video, and that the terms of service clearly prohibit uploading copyrighted material. In other words, the initial act of uploading is considered to be user-directed storage under the DMCA, and whatever Veoh does to process the video after that cannot be used to get around the letter of the law.

If you live by the DMCA, be prepared to die by the DMCA.

http://docs.justia.com/dcfdoc.swf?s=california&c=cacdce&cn=2:2007cv05744&cid=395693&dn=293&aid=0&page=1

Much like Radiohead, Trent Reznor and his industrial metal sounds are leaving Universal for greener pastures. That’s right; Nine Inch Nails is no longer under the thumb of some jackass record label. Very exciting.

Hello everyone. I’ve waited a LONG time to be able to make the following announcement: as of right now Nine Inch Nails is a totally free agent, free of any recording contract with any label. I have been under recording contracts for 18 years and have watched the business radically mutate from one thing to something inherently very different and it gives me great pleasure to be able to finally have a direct relationship with the audience as I see fit and appropriate. Look for some announcements in the near future regarding 2008. Exciting times, indeed.

NIN

The other day, people started getting freaky because Universal Music Group stated it was not renewing its iTunes contract with Apple. Everyone, myself included, took it as a sign that UMG would be pulling out of iTunes altogether and that millions of available songs would be lost forever. Luckily, that’s not the case.

After realizing the public flipped out about the statement, Universal decided to downplay the situation a bit, saying that it will continue to offer music on iTunes, just not on the old terms it previously agreed to with Apple. The new deal allows UMG to charge more for exclusive pre-releases of albums, meaning Apple is going to have to fork out more cash for those iTunes Exclusives. Hopefully we won’t see a price increase in iTunes tracks anytime soon.

Universal downgrades kneecapping to kick in nuts [The Register]

The Journal notes that today is also the day that MySpace is introducing a new tool that will allow copyright holders to flag unauthorized content on the site. That tool (our coverage) uses technology from Gracenote. MySpace said in a press release that the suit is “unnecessary and meritless.” That transcoding argument sounds like a serious one to me.

Weeks after threatening YouTube and MySpace both this fall, Universal signed a licensing agreement with YouTube the day before the Google acquisition was announced. It also sued Sony’s Grouper and Bolt for copyright infringement.

Is a fresh round of heavyweight copyright wars breaking out? Is there any possibility of an out of court settlement between the two companies? This week’s Craigslist court decision immediately comes to mind. The online directory was ruled on Wednesday to not be responsible for discriminatory housing postings on its site. The court found that Craigslist is a conduit and not a publisher. That ruling was complicated and fell under the Federal Communications Deceny Act. Universal’s lawsuits, against Grouper, Bolt and now MySpace appear headed for a direct test of the DMCA Safe Harbor provision, which is believed to protect parties to copyright infringement so long as they remove copyrighted content upon request. The argument about transcoding video may be the killer in this case.

Microsoft has announced that it has struck a deal to deliver to its Zune store music from the Universal Music Group. The deal will give Universal a cut of every Zune player sold. This arrangement is a departure from the Apple standard that only pays studios per song sold, with the studios getting no cut of the electronics.

Universal is expected to receive roughly $1 per $250 player sold. It has stated that its artists will receive half of the profit it yields from each device. Universal will also receive a percentage per track sold.

Well played Microsoft. Money makes the world go round, and everyone has a price. It appears that MS is so eager to beat Apple at the digital audio game, that it’s even willing to forgo large chunks of profit to do so.

Microsoft Strikes Deal for Music [NY Times]