Capitol Music Group Formed

Indie Retail Tries to Survive

Pretty Ricky, The Shins Get New Years Started

Bulletin Board

Reprinted with permission from Hits Magazine

January 25, 2007

It's a done deal.

Here is the text of a letter that went out from EMI Music head Eric Nicoli to the company this morning:

As part of our recently announced restructuring program, and after careful review of our US operations, I now want to share with you some important new initiatives for EMI Music in America.

New Capitol Music Group
Today we are announcing the merger of EMI's Capitol and Virgin labels in the U.S. to form the Capitol Music Group, a front line pop, rock and urban label group. The combined artist roster, talent and market share of this new label group establishes Capitol Music Group as one of the U.S. music industry's leading labels. We will maintain operations in both New York and Los Angeles. Capitol Records and Virgin Records will remain as imprints under this new label group.

The music business shows exciting growth potential, but the environment remains extremely challenging. In order to thrive and meet the demands of a rapidly evolving and dynamic music market, we must re-think our operations, not only to make them more efficient, but also more effective and focused on creative excellence. By bringing Capitol and Virgin into one label group, we'll be better equipped than ever to promote and nurture artistic talent. We remain strongly committed to developing artists in America in all genres as this is a key repertoire source for the world, and to that end, we will maintain our A&R focus and keep a presence in both LA and New York.

I have appointed Jason Flom to lead The Capitol Music Group as Chairman/CEO, reporting directly to me. Since joining EMI in 2005 as Chairman and CEO of Virgin Records America, Jason has quickly proven his leadership abilities and artist development talents. He and his team have aggressively and creatively pursued digital opportunities that have made a demonstrable impact on the company's performance. His track record as a hit maker was well established prior coming to EMI, with artists he signed and worked closely with selling more than 150 million records worldwide.

I am confident that as leader of the Capitol Music Group, Jason will help elevate EMI's US front line label operations to new levels of success in the pop, rock and urban genres.

Andy Slater has today stepped down as President and Chief Executive Officer of Capitol Records, a post he has held since 2001. While here, Andy revitalized Capitol as a home for quality music and made significant contributions to the business, including breaking key artists from outside the U.S. such as Corinne Bailey Rae, Coldplay and Kylie Minogue in an extremely competitive American marketplace. I thank him for his efforts over the years and wish him well in all that he does in the future.

More specific announcements about the management team at Capitol Music Group will be made shortly.

Additional Restructuring Initiatives
Our restructuring program will result in additional workforce reductions throughout our U.S. operations. At the same time, we will increase our focus on building our digital capability.

Many of you will hear more about these changes in meetings with your department heads and HR.

These changes won't be easy. Some of you will be asked to take on new responsibilities and roles. But these measures are absolutely necessary for our business to succeed in a world where fans are evermore demanding and expect instant access to their favorite artists and music. We must be ready to satisfy rapidly changing consumer appetites. And, we have to be prepared to seize opportunities that we can't even predict today.

EMI's US Portfolio of Labels
The new Capitol Music Group, headed by Jason Flom will be part of a portfolio of labels that position us to be best-of-class in all genres in the US market. These labels will be supported by a talented central staff and reporting responsibilities will be as follows:

Ivan Gavin, COO EMI Music North America, will continue to report directly to me, as will Colin Finkelstein, CFO EMI Music North America, and the legendary Bruce Lundvall, President and CEO of the Blue Note Label Group.

Reporting to Gavin will be:

Ronn Werre, President EMI Music Marketing, who will continue to oversee the US sales organization, EMI's successful catalog marketing unit and its strategic marketing and special markets units;

Mike Dungan, Capitol Nashville President and CEO, who has been responsible for some of EMI's best-selling records in the US in recent years;

Bill Hearn, EMI Christian Music Group Chairman/CEO & President, who continues to set the gold standard for the Christian market; and;

Bill Hein, General Manager and SVP, Caroline Distribution, as we continue to develop a full service distribution and marketing operation for independent labels. Bill will also continue to oversee Astralwerks.

EMI Televisa will continue to operate as EMI Music's US Latin label, with Rodolfo Lopez-Negrete continuing in his role as President, reporting to EMI Music Latin America's Marco Bissi.

Notwithstanding the anxiety that a restructuring program of this scale inevitably creates, I believe passionately that EMI has a tremendous future in America. I am excited by the opportunities open to us all and to our artists.

You have my assurance that we will get through these changes as quickly as possible so that we can get on with our business of finding and nurturing the best artists, serving consumers and delivering music to fans whenever, wherever and however they want it.

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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Reprinted with permission from Hits Magazine

January 24, 2007
By Don VanCleave

We live in an age where our customer can get anything they want for free just by booting up their computer. We work around that by offering the music freak that wants, no needs, to possess the physical, the best selection possible.

We also live in an age where a VP of Sales will look you in the eye and tell you that you need to sell a major label $18.98 list CD that cost you $12.50 for $9.99 to remain competitive. See, that is what the big box guys are doing for the marketplace. For example, some of these stores have the Shins on sale today for $8.99 in some markets. Many indie stores have to pay $9.80 or more for this release. Does that sound healthy? We try to work around that by beating up the same guys they do, which is not that much fun. We are the first place labels turn to develop and break new artists only to be forgotten when that artist sells enough to warrant attention from the tonnage customers.

In 1995, thanks to Mark Cope and Yvette Ziraldo from Album Network, a large gathering of independent retailers met in San Francisco to discuss common issues and problems. Out of that meeting sprang the Coalition of Independent Music Stores. The goal of the group was to present a united front to the record labels on several levels. On the promotions level, we provide one-stop shopping for labels to promote their releases listening booths, positioning, genre programs, catalog sales, etc. in some of the best stores in the country. On the activist level, we were able to provide a unified voice against some of the worst practices of the industry, which of course is a full-time job. On the music level, we were able to help break some of the biggest names out there by working together.

Individually we are small stores and large stores. We stock every known genre and have people working for us who know music because it is their life. Not a single one of our staff were selling microwaves or tires in our stores last week... we promise. Most of our locations (59 in all) have been around over 20 years and have seen boom times and troubling times. We have monopolized the NARM Retailer of the Year (small and medium) for years. Contrary to popular press spin, the best stores in the country are not going out of business any time soon. Our stores sell music on CD and vinyl as well as lifestyle items and DVD. Our stores sell the magic of music on many levels. We are known for getting behind bands before anyone else. Our owners and staff have let many a band crash at their house and have provided late-night advice counseling mentoring to starving artists who later become big names.

A few years ago, we grew very alarmed at the way large chains and big box retailers were allowed to sell more and more exclusive content. So we formed an internal distribution company called junketboy and invited every other indie store out there to participate with us to put out product geared towards our customers: the uber fan. In the past year alone, we have released music by Pearl Jam, John Mayer, Kings of Leon, Bright Eyes, Flaming Lips, Gov't Mule and about 100 other acts. We now actively work with 300 or more great indie stores, including the accounts of our sister organizations Music Monitor Network and AIMS along with Newbury Comics, Amoeba and other well-known indie stores. We now distribute our own version of Mojo Magazine and help run the Paste Recommends program. For a look at what we have done release-wise, visit

On the digital side, we fully intend to sell music. However, we have watched one idea after another throw tons of money at the concept with only one winner : Apple. We are only interested in launching a digital service that is DRM-free. Hopefully we will get on the map in the coming year with our ideas. One thing is for sure; we have amazing brands in many parts of the country. Trusted brands that will continue to be a filter for fans of music.

Even though the Internet is worldwide, we find that many people are using it locally. I hear constantly from owners who report amazing response to their e-mail blasts about what is happening in the stores and from customers who actually check stock levels online before driving to their favorite music emporium.

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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Reprinted with permission from Hits Magazine

January 24, 2007

OK, it's finally 2007.

After three weeks without any notable releases capable of breaking into the Top 10, with the notable exception of Disney's Jump In soundtrack, several new albums hit retail yesterday with some welcome sales punch.

Pretty Ricky is an R&B/hip-hop foursome from Miami, FL, featuring four brothers. Their 2005 debut, Bluestars, went platinum thanks to the Top 10 single, "Grind With Me," and their sophomore effort, Late Night Special, on Bluestar International/Atlantic, already boasts the #1 single at BET's 106 & Park in "On the Hotline," a salacious tribute to phone sex. Based on one-day reports from suddenly aroused retailers from our vast national network, the album is on track to sell more than 110k copies, and maybe as much as 125k. Needless to say, it will top next week's HITS chart.

Sub Pop alternative darlings The Shins, who Natalie Portman promised would change our life in Garden State, return with Wincing the Night Away. Thanks to an impressive pre-order at iTunes and a Saturday Night Live appearance a couple of weeks back, the album could sell as much as 90k, giving it a #2 debut, the highest for the pioneering indie label in its history.

Rock veteran John Mellencamp is next with his first album for new label UMe/Universal Republic, Freedom's Road, which includes "Our Country," the ubiquitous anthem he penned for Chevrolet, which could just drive sales to over 55k, especially considering its an upper title demo that could gain during the week.

John Ingrassia's Commercial Music Group at Sony Music has the new 2007 Grammy Nominations album, which is being compared to a Now-styled compilation and could do 55-60k, based on first-day sales.

IDJ's Memphis post-grunge rockers Saliva are back with Blood Stained Love Story, which appears headed for the 30k mark, plus or minus.

Next Tuesday, the games begin with the release of Norah Jones' eagerly anticipated third album for Blue Note, Not Too Late, with the label shipping out some 1.7 million copies.

The market was basically flat vs. last week, down nearly 15% vs. same week last year and now down 15.5% year-to-date.

Not Too Late arrives not a moment too soon.

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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By Kenny Kerner

Rolling Stone Magazine has issued its Top 10 Albums of the Year list.
Here's how the Top 10 stack up:
1. Modern Times, Bob Dylan
2. Stadium Arcadium, Red Hot Chili Peppers
3. Rather Ripped, Sonic Youth
4. Return to Cookie Mountain, TV on the Radio
5. Fishscale, Ghostface Killah
6. The Greatest, Cat Power
7. Hell Hath No Fury, Clipse
8. Boys and Girls in America, The Hold Steady
9. Blood Mountain, Mastodon
10. Orphans: Brawlers, Bawlers & Bastards, Tom Waits

Microsoft claims it's on track to sell one million Zune devices by June 2007. The new digital music player debuted in mid-November.

Rascal Flatts begins its continuation of their Me And My Gang tour on February 8 in West Virginia. Before concluding this leg, the band will play 21 cities.

Piano Man Billy Joel has just added tour dates for February: Orlando, Florida (10); Miami, Florida (12); Columbia, South Carolina (14); Greensville, South Carolina (17); Nashville, Tennessee (21); Charlottesville, Virginia (23); Birmingham, Alabama (26); and Atlanta, Georgia on March 1.

Velvet Revolver is scheduling their sophomore RCA album in mid-to-late spring. Brendan O' Brien is producing. Because their first choice, Rick Rubin, in the words of singer Scott Weiland..."just didn't work out."

The new single from Hanson is called "Great Divide" and all proceeds from its sales will go to HIV research. The band is back from South Africa where they were devastated by what AIDS has done to the local inhabitants. Single is culled from their CD, The Walk.

Former Guided By Voices songwriter Robert Pollard is planning to release seven albums over the next couple of years. His next effort on Merge Records is Silverfish Trivia.

Allure recording artist Heiarii has just released an album in his native Polynesian and French called Back to the Island and is scheduled to go back into the studio this spring to complete a CD of inspirational songs.

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