Bronfmans as White Knights?
A Price War for Music Sold Online
Idol Chatter

Reprinted from Hits Magazine

Junior Miles to the rescue?
As due diligence commences for those bidding on Vivendi’s entertainment assets, all eyes are on Edgar Bronfman Jr. as he and Edgar Sr. throw their hats into the ring. Despite widespread skepticism, the Edgars are said to have already secured some $9 billion in financing. In the event a deal for the entire Vivendi entertainment pie fails, would the Bs be willing to buy just UMG?

Meanwhile, as Junior takes it on the chin in the press, noters noting that a share of Seagram stock, worth about $30 when Seagram bought MCA in June ’95, was valued at $77.35 when Vivendi bought Seagram in December 2000. That’s a lot of wine coolers.

HITS magazine is the most powerful information vehicle in the music industry, and is read religiously by all the top executives and everyone else.

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AP, Bloomberg

Thursday, May 29, 2003

SEATTLE -- The online music price war has begun:, which offers Internet radio broadcasts and other programming for $9.95 a month, is lowering the price for burning digital music onto compact disks to 79 cents a song.

The move comes a month after Apple Computer Inc. started an online music store in which Macintosh users can download a song for 99 cents with few restrictions and no monthly subscription fee.

The announcement also reflects how companies are casting about for effective strategies to lure customers in the nascent business of selling songs online.

"We're starting to see the business model experiments," said Michael McGuire of Gartner Inc.

The Seattle-based RealNetworks Inc., which is acquiring the San Francisco-based, also announced Wednesday that it was offering the Rhapsody subscription feature under its own RealOne brand in a product called RealOne Rhapsody. The acquisition, valued at about $36 million in cash and stock, is expected to close this year.

Companies are trying to allow consumers to copy music from the Internet onto personal computers and CDs legally, cheaply and with few restrictions - while still satisfying major record labels wary of piracy.

Apple's Music Store approach, in which customers pay 99 cents a song, has been popular in its initial month, with more than 2 million downloaded songs in its first 16 days. offers a different strategy. For a monthly fee, customers can access online radio stations, custom playlists and other programming. It claims "tens of thousands" of subscribers but is hoping for more by lowering the fee to burn songs to 79 cents, down from 99 cents. The $9.95-a-month subscription fee remains.

The company decided on the 79-cent price after a six-week experiment, in which charged 49 cents a song, said Sean Ryan, chief executive. The move attracted more subscribers and increased song downloading, although he declined to reveal figures. may allow customers to burn songs for a fee without buying a monthly subscription, Ryan said.

Apple drew widespread attention, and customers, with its new iTunes Music Store. But McGuire said the key would be who offers the best and most updated mix of music on a regular basis.

Lee Black, an analyst with Jupiter Research, said Apple would need substantial sales to make its store work, since downloads do not generate recurring revenue.(AP, Bloomberg)

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If you’re fed up with American Idol there’s more bad news on the horizon. Simon Fuller, mastermind behind the incredibly successful TV show (which originally began in England), merchandising blitz and 19 Entertainment—the company that produces the shows and manages the Idols, has at least two more series in the works for Fox Television. The first is called Junior Idols—a scaled-down version of the grown-up show for younger idol-wannabees. The second show is tentatively called Second Chance and it’s based on former one-hit wonders performing new material and allowing the viewing audience to decide if they should get a second chance at stardom. Wow!

On a more realistic note, Fuller has proven beyond a shadow of a doubt that he can create “stars” by virtue of the Kelly Clarkson single and CD topping the Billboard charts, the American Idol Finalists hitting big with their version of the Lee Greenwood tune, “God Bless the USA” and the forthcoming Kelly—Justin Guarneini full-length feature film about to open in theatres nationally. So, like it or not, AI is here to stay. Personally, I’d give anything to hear just one original song from the entire batch of contestants.

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