Digital music downloads set record but fail to make up for decline in CD sales

Digital music downloads reached a milestone in 2008, exceeding a billion songs purchased online, according to a newly released report from Nielsen SoundScan, which tracks music sales. That represents a 27% gain over a year ago.

But the soaring popularity of the 99-cent download is not enough to offset continued declines in CD sales, which still account for the bulk of the music industry's revenue. Physical disc sales fell nearly 20% to 362.6 million, the seventh decline in eight years, according to SoundScan.

Overall album sales -- including CDs and the digital equivalent -- dropped 8.5% compared with 2007. Every musical genre, from alternative rock to Christian and gospel to new age to rap, reported across the board declines in album sales. Holiday sales -- hello recession -- were off by a steep 19%.

In an effort to cope with changing technology and the threat of Internet piracy, the recorded music industry has been exploring new sources of revenue. Royalties from satellite and Internet radio and so-called 360 deals with artists, in which the label shares in concert ticket and merchandise sales, contribute to the labels' bottom line. Video games such as "Rock Band" and "Guitar Hero" also generate licensing fees.

Nielsen doesn't track those alternative revenue streams

Universal Music Group remained the industry's big dog, with a nearly 32% share of the album market, followed by Sony BMG Music Entertainment at 25%. Warner Music Group claimed 21% of sales, and the smallest of the major labels, EMI Music, saw its market share drop slightly to 9%.

Lil Wayne's "Tha Carter III" was the bestselling album of the year, and country crossover artist Taylor Swift was the top solo artist. The '70s heavy-metal rock group AC/DC -- a group that long labored in the shadow of such contemporaries as Led Zeppelin -- was the bestselling group.

--Dawn C. Chmielewski

AC/DC lead singer Brian Johnson performs on the "Black Ice" tour at Madison Square Garden in New York. (AP Photo/Jeff Zelevansky)

SAG moderates seek to oust negotiating committee

Adding to the drama that has engulfed contract talks between actors and Hollywood studios, moderates on the Screen Actors Guild board are expected to push for the ouster of the union’s negotiators.

The move, which is designed to break the six-month-long deadlock, could undermine the guild’s current leadership, which some fear is bringing Hollywood to the brink of another strike.

SAG has been shaken internally by rival membership groups that take opposing views on what course of action the 120,000-member union -– the largest in Hollywood -– should take in efforts to reach a new contract with the studios. But despite those sharp differences, the strategy has largely been set by the union’s hard-line leadership, which includes guild President Alan Rosenberg and Executive Director Doug Allen, the chief negotiator.

Now a coalition of the union’s board members, frustrated at the stalemate with the studios that has left SAG in limbo, is expected to call for disbanding the union’s negotiating committee at an upcoming meeting.

It also plans to vote against holding a strike referendum, and instead replace the current negotiating team with a “task force” appointed by the board, people close to the situation said. The people asked not to be identified because they were not authorized to discuss the plans.

The negotiating committee is dominated by the Membership First faction that has backed Rosenberg and Allen, whose future as the union’s chief negotiator also could be on the table at the Jan. 12 meeting, the people said.

The new negotiating team would be constituted to reflect the results of an election last fall, when a group of moderate actors known as Unite for Strength won key seats on the board, forming a slight majority with supporters in New York and elsewhere.

If approved, the new negotiators would seek to jump-start talks with the studios, probably by consenting to new media pay terms negotiated by other unions in exchange for improvements in traditional media pay areas.

Such a move, however, would be a major blow to SAG leaders, who’ve argued that a strike authorization from members is needed to give them leverage with studios in what they view as landmark negotiations that could determine how actors are paid in the digital era.

But the proposed referendum has faced mounting opposition within the union, including from New York board members who this month called on the union to scrap the vote, arguing that it was ill-timed in light of the sour economy. The recommendation won a significant boost from more than 130 high profile actors, including Tom Hanks, George Clooney and Sally Field. Other actors, including Martin Sheen, Ed Asner and Mel Gibson, are openly supporting the authorization, splintering Hollywood’s largest union.

“Obviously, the board has to consider withdrawing the strike authorization given what’s happening, and we may need to shake things up to get what we need,” said Ned Vaughn, spokesman for the Unite for Strength group who serves as an alternate member of the national board.

Added Paul Christie, a board member and former president of SAG’s New York division, “We feel this is a negotiating committee that has... gotten us nowhere.”

Actors have been without a contract since June 30. The question is how willing studios will be to sweeten the current offer on the table, which studios have repeatedly insisted is their final one, even though it contains some provisions that are widely unpopular, such as a proposal to eliminate mandatory mealtimes.

Negotiating committee member Anne-Marie Johnson said it would be “undemocratic” to prohibit members from voting on a strike authorization because the studios’ final offer was unacceptable.

Johnson vigorously defended Allen, whom critics accuse of mishandling the negotiations as well as alienating the smaller sister actors union, the American Federation of Television and Radio Artists. “To want to fire your lead negotiator whose only fault is that he’s trying to get the best possible contract he can get, baffles the mind,” Johnson said.

Allen could not be reached for comment.

Allen said in an e-mail to members last week that he and Rosenberg postponed plans for the strike referendum, which was scheduled to begin Friday, to “address the unfortunate division and restore consensus.” However, he said, the vote would proceed immediately after the Jan. 12 meeting.

Rosenberg was not available for comment. In a recent holiday message to members, he called on them to put aside their differences. “We must stay true to our solidarity votes in the boardroom and true to our responsibility to better the lives of all SAG members and their families. Make no mistake, a house divided is doomed to fall.”

-- Richard Verrier

Viacom threatens to yank programming off Time Warner Cable systems

"Spongebob Squarepants," "Dora the Explorer" and Jon Stewart soon might be pulled off Time Warner Cable systems in Los Angeles and around the country if the cable operator and Viacom Inc. cannot reach a new contract before midnight tomorrow. The move could knock Viacom's cable channels, which include Nickelodeon, MTV, VH1 and Comedy Central off nearly 2 million households in Los Angeles.

"We've been attempting to negotiate in good faith but they seem to taken it to the brink. Unfortunately, we are now at an impasse," said Philippe Dauman, chief executive of Viacom Inc.  "It's unfortunate for all of our viewers should they lose the ability to watch our programming."

Viacom's license agreement with Time Warner Cable, which serves 12.3 million homes in the U.S., is set to expire at midnight Wednesday. If no deal is reached,  Time Warner must take the Viacom channels off its cable systems and use alternative programming instead.

"Advertising revenue stinks so they are looking to stick our customers for the difference," said Alex Dudley, Time Warner Cable spokesman. "They are holding our customers hostage for a bunch of networks with sagging ratings and only one or two good channels. We have to hold the line for our customers."

Viacom said that it is asking for an increase of about 25 cents per month for the package of channels, which comes to about $3 a year per customer. Time Warner said that could trigger cable networks to demand higher fees as well, which ultimately could add as much $30 a year to a subscribers' bill.

This wouldn't be the first time that a cable channel has gone dark. It is not unusual for cable networks and cable system operators to pull or block programming during difficult negotiations. In 2004, for example, Viacom's cable channels disappeared from EchoStar's Dish Network for two days while both sides quarelled over the terms of a new contract. Earlier, Time Warner blocked ABC from its cable systems in New York during a breakdown in contract negotiations with parent company Disney involving carriage of its cable networks such as the Disney Channel and Toon Disney.

But the high-stakes dispute could prove to be different this time around because much of Viacom's programming, including Comedy Central's John Stewart and Steven Colbert, is now available free online. Moreover, Viacom no longer owns CBS, so it can't threaten to pull the network off cable systems on the eve of NFL playoffs, as leverage in negotiations. The hard-nosed tactics also come at a time when Viacom's stock is trading at historic lows and the company's controlling shareholder, Sumner Redstone, is facing hard choices in refinacing the debt of his holding company, National Amusements Inc.

-- Meg James

Photos: Left: Philippe Dauman, chief executive, Viacom Inc. (Chip Somodevilla/Getty Images); Right: Glenn Britt, chief executive, Time Warner Cable (Seth Wenig/AP)

'Marley' bites into Christmas day box office

Christmas has gone to the dogs ... at least at the cineplex.

First-day box office estimates are in, and it looks like in the battle of Jennifer Aniston versus ex-husband Brad Pitt, Aniston's record-breaking "Marley & Me" wins by a puppy's tail.

The Owen Wilson-Aniston vehicle took in $14.6 million (A Christmas Day record), while award-nomination darling "The Curious Case of Benjamin Button" followed in second with $11.7 million, according to BoxOfficeMojo.com.

Slashfilm.com estimates "Marley & Me's" holiday weekend haul to be in the ballpark of $54 million while "Button" is expected to ring up $45 million in ticket sales. Third-place finisher "Bedtime Stories" may have split some of Adam Sandler's male audience with Tom Cruise's fourth-place "Valkyrie."  The Christmas Day top 10 estimates are:

1. MARLEY AND ME
Fox - playing on 3,480 screens
$14,600,000

2. THE CURIOUS CASE OF BENJAMIN BUTTON
Paramount - 2,988
$11,700,000

3. BEDTIME STORIES
Buena Vista - 3,681
$10,325,000

4. VALKYRIE
United Artists - 2,711
$8,350,000

5. YES MAN
Warner Bros. - 3,434
$5,900,000

6. SEVEN POUNDS
Sony / Columbia - 2,758
$4,750,000

7. THE SPIRIT
Lionsgate - 2,509
$3,825,000

8. THE DAY THE EARTH STOOD STILL (2008)
Fox - 2,402
$2,685,000

9. FOUR CHRISTMASES
Warner Bros. (New Line) - 2,510
$2,280,000

10. THE TALE OF DESPEREAUX
Universal - 3,104
$1,987,000

Source: BoxOfficeMojo.com

-- Jevon Phillips

Related posts:
Word of Mouth: Moviegoers may warm up to 'Bedtime Stories,' 'Marley & Me'
Jennifer Aniston's media blitz worked

(Photo courtesy 20th Century Fox)

Scene Stealer: Beating the count with 'The Wrestler's' life story

Title designer Kristyn Hume had less than two minutes to summarize the life of pro wrestler Randy "The Ram" Robinson for the opening title sequence of director Darren Aronofsky’s "The Wrestler." Using a basic outline of the Ram's early wrestling days leading up to the biggest match of his career in Madison Square Garden, Hume created dozens of posters, magazine covers, newspaper articles and photo spreads in Photoshop over the course of a full year to simulate a massive collage spread. "When we started, it was going to be one magazine spread per credit," she says. "Then it escalated." For many of the spreads, Hume took actual magazine articles and cleared out the info and replaced it with articles she wrote. "I grew up with my brothers watching [wrestling], but I used base ideas from other articles to get the terminology right." For the fliers, she included names of friends of loved ones and then "wrestlerized" them. Hume even used her own middle name to become the wrestler Killer Joy.

-- Patrick Kevin Day

(Photo courtesy Kristyn Hume / Fox Searchlight)

SAG delays strike vote, calls special board meeting

Shaken by growing internal dissent that is splintering Hollywood's largest union, the Screen Actors Guild has postponed plans for a controversial strike authorization vote until after the union's national board meets to discuss the matter.

The union's 120,000 members were poised to vote on the planned strike referendum next month, with ballots going out Jan. 2 and tabulated by Jan. 23.

But in an e-mail to board members Monday night, SAG Executive Director Doug Allen said he and SAG President Alan Rosenberg agreed to push back the strike referendum until after the board convened a special meeting Jan. 12 to "address the unfortunate division and restore consensus."

"This division does not help  our effort to get an agreement from the [studios] that our members will ratify,'' Allen wrote. "This will provide us with more time to conduct member education and outreach on the referendum before the balloting."

The move doesn't mean Hollywood will avoid its second strike in a year, after the 100-day walkout by writers that ended in February. But it does suggest the union's leadership is facing mounting pressure from within the ranks to reconsider its options amid a historic recession that would make a strike authorization difficult. A work stoppage must be approved by 75% of members who vote.

SAG members also have expressed growing concerns that a strike would weaken the union while strengthening the smaller actors union, the American Federation of Television and Radio Artists, which has already signed a deal with the studios and picked up a number of television pilots.

The union's leadership has argued that a strike authorization vote is necessary to give them leverage in stalled contract negotiations with the studios. The actors have been without a contract since June 30.

SAG's negotiating committee announced plans to seek a strike vote last month, after efforts by a federal mediator to jump-start negotiations failed.

But the decision has touched off a firestorm in the guild, pitting actor against actor and creating a level of discord that is unusual even by SAG's standards.  Tempers flared last weeek, when SAG's New York division members openly rebuked Rosenberg and demanded he call off the strike vote. Rosenberg initially spurned the idea, saying that would undermine the union and only benefit the studios.

Celebrities have lined up on either side of the fracas. More than 130 high-profile actors, including Tom Hanks, Robert Redford and George Clooney, have also urged the union to reconsider its decision. But celebrities including Mel Gibson, Rob Schneider and former SAG President Ed Asner have sided with the leadership, arguing that the studios' contract offer is unacceptable and threatens the future of actors in the digital era.

Allen's e-mail was sent out after he and Rosenberg met earlier in the day with actors Ned Vaughn and "Chicago Hope" star Adam Arkin, representatives of Unite for Strength, a coalition of actors with moderate views that recently won key seats on the national board.

In a statement, the actors said they expressed their concerns about the "growing rift" over the strike authorization referendum.  "We feel it’s imperative that the National Board have a chance to reconsider whether the referendum should proceed, given what’s been happening. We appreciate that they’ve taken our concerns seriously."

Just what the board may do at the Jan. 12 meeting is uncertain. While Allen said in the e-mail that the strike vote would begin immediately after the meeting, that's by no means clear.

In fact, moderates, who hold a slim majority on the board, are expected to press for a delay in the strike vote to see if negotiations with the studios can resume. The board could vote to replace the current negotiating committee with a task force, as New York division board members have advocated, or even move to have Allen step aside as chief negotiator.

--Richard Verrier

'No Strike' protest draws small turnout

Call it the protest that wasn't.

For months, Hollywood's below-the-line workers have been stewing about the prospect of another industry walkout. Crew members were hit hard during the 100-day writers strike, which shut down most film and TV production. Then came the fallout from a so-called de facto strike caused by uncertainty in contract talks between the studios and the Screen Actors Guild. Studios rushed to wrap their 2009 movies by June 30, before the actors contract expired, causing a steep falloff in production for the remainder of the year.

So it was no surprise that some location scouts, grips, electricians and others opted to protest a "town hall" meeting in Hollywood on Wednesday night held by the Screen Actors Guild. The workers, carrying signs saying "Please No Strike Now-The Crew," contended that an actors walkout would be devastating to below-the-line crew members, coming in the teeth of a historic recession.

Even so, the gathering drew only about a dozen protesters, barely a trickle given the roughly 30,000 crew members who work in the Los Angeles region.

Blame the foul weather and Hollywood union politics. 

The rally was not endorsed by either of the two major unions representing Hollywood's blue-collar workers. Teamsters Local 399, which strongly supported the writers during their walkout, prides itself on showing solidarity with other unions. And the International Alliance of Theatrical Stage Employees, which has been critical of SAG leadership in the past, has been uncharacteristically quiet this time. The IA is facing its own internal challenges, including persuading its members to support a recently negotiated contract that includes unpopular cuts in health insurance benefits.

Tom Lackey, one of the protesters, acknowledged that last-minute planning might have caused the low turnout Wednesday night but said the picketers made their point. "We respect their right to strike; we just think it's a bad time,'' said Lackey, a veteran location scout who has worked on such movies as "Twilight" and "Anger Management."  "The economy is in horrible shape. Everybody is losing their houses. We feel that if they strike now, there would be too much blood left on the table."

That argument has been made by many within SAG, including during a raucous meeting in New York on Monday night, in which many members accused SAG leaders of mishandling negotiations. SAG President Alan Rosenberg faced a much warmer crowd Wednesday, when about 600 SAG members crowded into a ballroom at the Renaissance Hollywood Hotel.

Among them was Robert Schneider, who drew a standing ovation during a speech in which he suggested Tom Hanks and George Clooney didn't understand the studios' final contract offer. Representatives of Clooney and Hanks declined to comment. The "A-Listers," as they're called, were among more than 130 high-profile actors this week who signed a letter opposing the strike authorization vote, expected to begin Jan. 2.

But "Titanic" actress Frances Fisher, a member of the guild's negotiating committee, says there are no plans to scrap the referendum. "If we get a good deal,'' she said," that's going to help our brothers and sisters in the other unions."

-- Richard Verrier

Spielberg expected to dig into own pockets to buy DreamWorks projects from Paramount

Everyone in Hollywood knows that one of the world’s wealthiest filmmakers, Steven Spielberg, hates to spend his own money making movies.

But, Spielberg and India’s Reliance Big Entertainment — his equity partner-in-waiting — are expected to write a hefty check to Paramount Pictures next month to buy 17 projects they need to jump-start their new independent studio.

Facing a due date of Jan. 15, Spielberg and Reliance will have to pay DreamWorks former owner between about $25 million to $35 million for the projects, depending upon commitments to screenwriters.

In their recent divorce settlement with Paramount, Spielberg and his top associate Stacey Snider negotiated the right to buy the DreamWorks projects, which Paramount owns and has an option to co-finance. A second group of DreamWorks projects remain at Paramount in which Spielberg can be a producer, but not an owner.

Spielberg and Snider are eager to get their hands on 17 priority projects that include “Dinner for Schmucks,” a $75 million-budget comedy to star Steve Carell and to be directed by Jay Roach. DreamWorks hopes to make the picture next fall providing it can line up a financing partner. Also earmarked to be made are “Motorcade,” an action thriller about terrorists assaulting the President’s motorcade in Los Angeles; “Hereafter,” a thriller in the vein of “The Sixth Sense”; and “Chicago 7,” a drama about the protesters at the 1968 Democratic Convention in Chicago.

More pressingly, Spielberg and Snider are anxious to secure a $1.25 billion war chest needed to fund their planned studio, which has a distribution deal set with Universal Pictures. But, as reported, the financing efforts have been hampered by the global credit crisis.

Reliance has said it would provide up to $550 million in equity for half ownership of the studio, but not until Spielberg and Snider first obtain that amount or more in debt financing to meet their business plan to produce six movies a year. Lead bank JPMorgan Chase hopes to raise $325 million of $750 million in total debt by the end of the first quarter.

Variety raised an interesting point today questioning whether, in retrospect, Spielberg and Snider would have stayed at Paramount if they knew the economy would collapse. However, the likelihood of that would have been zero-to-none if you ask anyone who knows the pair, who desparately wanted to be free agents.

Since leaving Paramount, Reliance and Spielberg have been bankrolling overhead at the new company, which employs 60 people and is based at the director’s longtime offices on Universal’s lot. The partners have each contributed $12 million to keep operations going, said a person who was not authorized to publicly discuss the studio’s financial issues.

Snider said that despite the poor state of the economy and the impact it’s having on the studio’s ambitious plans, she is confident that the financing will come together next year.

“It’s an unprecedented time in the market,” said Snider. “Every day there’s a new headline and a new obstacle, but all of our advisors have known about this and are navigating through it.”

-- Claudia Eller

New entertainment news and events website HitFix to launch

Another day, another new entertainment website clamoring for your attention.

HitFix, a planned online portal for entertainment news and events founded by former LATimes.com consulting editor Gregory Ellwood and former Reed Business Information executive Jennifer Wilhelmi Sargent, will launch before the end of the year.

Variety's Anne Thompson summed up its offerings:

"...the start-up boasts the calendar application Forecast, which enables consumers to track and customize their upcoming entertainment options based on their own zip code and taste. [...] HitFix also offers breaking movie news and blog content from Ellwood (whose blog will focus on awards coverage) and AICN reviewer Drew McWeeny (who retires his [Ain't It Cool News] “Moriarty” monicker after 12 years), TV reporting from Zap2It’s Daniel Fienberg, and music info from ex-Billboard music maven Melinda Newman. Sports will come online soon. HitFix editors will comment on newsfeeds supplied by A.P."

Thompson goes on to say that the site will be geared to both male and female 18- to 34-year-olds, and that the Forecast events will be downloadable to a variety of Web-based applications including Yahoo Calendar, Microsoft Outlook, iPhone and Google.

“There’s a gap between the insider trades and the TMZ gossip side,” Sargent told Thompson. “We’re catering to consumers, like Entertainment Weekly.”

In a statement, McWeeny said HitFix has the potential to become "an important tool in how [readers] plan and enjoy the entire world of entertainment."

Related:
Tina Brown's Daily Beast, the glitziest Web filter in town

Amazon's IMDb.com acquies Boxofficemojo.com

Box Office Mojo, a site created nine years ago by a movie buff who was frustrated by the lack of reliable information about ticket sales, has been acquired by one of the most popular online repositories of movie, television and celebrity trivia, the Internet Movie Database.

The deal, quietly completed in the third quarter, was disclosed today in an email to readers that promised Box Office Mojo would continue to operate as a stand-alone business, producing analysis and tracking box-office sales.

There combination brings together two entities known among film aficionados for providing extensive data about the industry.

"Mojo does to box office what IMDb has done with movies and TV and celebrities, which is bring a serious passion for getting things right," said Keith Simanton, IMDb's managing editor. IMDb is owned by Amazon.

Brandon Gray, Box Office Mojo's 32-year-old president and publisher, said the site brings together his two major interests, math and movies. He started the site in 1999 to offer information that he himself craved -- comprehensive box office data. By 2002, he was able to set aside other writing jobs and focus on his passion project full-time.

Mojo's online momentum validated Gray's hunch that other movie fans would be interested in the sophisticated analysis of the industry's hits and misses, and amused by his quirky sensibilities (Mojo keeps tabs on genres that you won't find in industry trades, including "fat suit comedies"  and "slacker/stoner" flicks.)

"It isn't simply a numbers game that studio executives are interested in," Gray said. "People who love movies want to root for their favorite movies to do well.  If a certain type of movie does well, that typically inspires Hollywood to make similar movies down the road."

Online measurement firm comScore Media Metrix estimates Box Office Mojo attracted about 400,000 visitors last month, which would not rank it among the top 20 online film sites. Gray and partner, Sean Saulsbury, have nonetheless built their business on advertising, subscriptions and licensing its data.

Simanton and Gray offered no details about what the combined sites might do in the future.

"What we're working on right now, to be brutally honest, is to make sure that the integration works," said Simanton. "And that the publication of Mojo continues to be as strong and as consistent as it has been, because you can screw these things up."

--Dawn C. Chmielewski

Photo credit: Don Bartletti / Los Angeles Times