U2's 'Horizon' sales bring band back to Earth

First-week sales of U2’s “No Line on the Horizon” brought the superstar rock band back down to Earth. The album, given the band's stature and sales history, was essentially preordained to debut atop the U.S. pop charts when it was announced last year. The only question was how many it would sell.

The Interscope album sold a brisk 484,000 copies in the U.S., according to data from Nielsen SoundScan. It’s the biggest first-week tally since Britney Spears’ “Circus” sold 505,000 copies during the holiday season last year.

But the number everyone will talk about is 840,000. That’s what U2’s “How to Dismantle an Atomic Bomb” sold when it debuted at No. 1 in 2004. Another recent barometer, the U2-influenced band Coldplay's album "Viva la Vida," sold more than 700,000 units when it was released last year.

Though the 356,000-unit sales gap can certainly be attributed to year after year of double-digit declines in album sales, a closer look at U2’s recent sales stats suggests that “Atomic Bomb” was a bit of an aberration in the career of the Irish superstars.

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)

Digital music track sales surpass 1 billion

Annual sales of digital songs will surpass 1 billion downloads this year, a first for the struggling music industry.

Nielsen SoundScan predicted in April that music downloads would reach this milestone, and with two weeks remaining in the year, that forecast appears to be proving accurate.

Individual song downloads will reach about 1,040,000 for the year, with the top 200 tracks accounting for 17% of sales. The best-selling digital song of the year is Leona Lewis' "Bleeding Love," which sold 3.3 million downloads.

Still, that's not enough to offset the decline in CD sales. This year's album sales are off 45% from the same time in 2000. A recent Forrester Research report projects that disc sales will continue to fall by an annual rate of 8% a year over the next five years.

-- Dawn C. Chmielewski

Chart Source: Nielsen SoundScan

'The Big 10': Who needs a Hollywood bailout?

Forget the Big Three automakers -- who's going to help Paris Hilton?

Uncle Sam's been pretty free with his pocketbook in the past few weeks. Banks and insurance firms have already gotten hefty sums to keep their boats afloat in the current economic crisis. Now the Big 3 automakers are asking for some cash. It seems everyone has an idea for who should get some green goodness: Can Las Vegas casinos, movie studios and TV networks be far behind?

We surveyed the entertainment landscape and hit upon some other bloated, creaky entertainment franchises that once bestrode the world like Colossus but now are desperately in need of some outside assistance (whether they want to admit it or not). Luckily, our crack team of experts has words of wisdom for each of them. Take a look.

MySpace Music (finally) names president

MySpace named MTV executive Courtney Holt as president of MySpace Music, concluding a months-long search for a candidate to run the social network's joint venture with the world's largest music companies.

Holt, whose appointment has been the subject of online speculation for weeks, has had a career that bridges music and technology. As executive vice president of digital music for MTV Networks, he oversaw digital initiatives for MTV, VH1 and CMT channels. Before joining MTV, he was senior vice president of new media for Interscope Geffen A&M.

"He was the first person that we really found that had the music experience, both from a marketing perspective and from a music programming perspective, the technical knowledge, and the relationships with all the major labels as well as independent labels," said MySpace co-founder Chris DeWolfe, who said 40 candidates were interviewed for the job. "He’s the only one out there that had all those variables that we could check off."

DeWolfe said he first met Holt in 2005, when he worked for Interscope. Holt was the first label executive to use MySpace's social network as a launch pad for new singles and albums from such major acts as Black Eyed Peas, Weezer and Audioslave, he said.

"In each case, each of those bands sold more albums than they’d ever sold before," DeWolfe said. " He was a visionary."

Despite a career working for a major label and MTV, DeWolfe said Holt brings an appreciation for the independent artists who have long used MySpace as a launch pad. Holt owns The Echo, which DeWolfe characterized as one of the largest venues for independent artists on the West Coast.

Inside image-conscious L.A., Courtney even scored fashion points.

"If you look at Courtney, from the clothes that he wears to the glasses that he may wear, he’s got a very eclectic style to him," DeWolfe said. "A very unique style." 

--Dawn C. Chmielewski

Photo credit: Nicole Bengiveno

New report: EMI lost $1.2 billion, revenue declined

To paraphrase one of its late great former acts, when EMI was 77, it wasn’t a very good year.

According to new figures just released, the underdog of the four major labels suffered losses of $1.2 billion in the financial year ended March 31, far deeper than the prior year’s $455 million. Revenue declined to $2.3 billion from $2.8 billion. 

The report came from Maltby Capital, owned by funds managed by Guy Hands' private equity firm Terra Firma, which purchased EMI -- home of Katy Perry and Coldplay -- last year.

The loss stems from “poor" operational performance, according to the company, which cites in particular a high-spending culture (including high executive salaries), overly traditional artist relationships and poor reporting of data related to artist profitability.

Those practices meant that, despite EMI’s strong artist roster and well-performing publishing business, the company finances suffered. EMI lost its third-place rank among the labels to Warner Music Group in 2006. Physical CD sales for the label fell 45% from 2005 to 2007, the report notes, even though the average market decline was 19%. Also, the label’s digital music revenue has had slower growth than the industry overall.

“EMI Music had a history of signing great artists but had not adapted sufficiently to the changing consumer market for music,” the report states.

And, the report suggests, the company may not see solid returns from signing those great artists, either. The report notes that EMI artists’ marketing and production budgets generously estimate likely sales. In the end, marketing and production eat up on average 81% of sales; nearly 9 in 10 EMI artists aren’t profitable.

Still, the report states that a change in strategy and operations, pursued out of the public-company spotlight, could turn the company around, if slowly.

“[T]here should be no false expectations,” the report reads. “EMI cannot be turned around overnight.”

EMI spokesman Neil Bennett noted also that since the end of the financial year, much of EMI's restructuring has moved forward.

"An awful lot has happened since then," he says. "EMI is a company going through radical change." 

--Swati Pandey

*Photo: Katy Perry. Credit: Kevin Winter/Getty Images

Ticketmaster gets in the artist management game

The turf war between the world's top ticketing company and the world's top concert promoter just got bloodier.

Ticketmaster Inc. announced today that it had acquired a controlling stake in Front Line Management Group Inc., the artist management company that's home to legacy acts like the Eagles and Journey along with divas and divos like Christina Aguilera and Axl Rose's Guns N' Roses.

The deal gives the much-maligned ticket giant a boost in a category in which it previously didn't have a chance against its former client, concert promoter Live Nation Inc.: sex appeal.

"Ticketmaster and Live Nation are walking closer and closer to each other. They're both encroaching on each other's territory to compete," says entertainment attorney Josh Hiller.

Ticketmaster, which had owned a piece of Front Line since last year, picked up Warner Music Group's minority stake for $123 million in cash. It also handed Front Line head Irving Azoff about 4.5% of Ticketmaster stock, worth at least $35 million, in exchange for part of Azoff's stake in Front Line. Azoff will head the new company, to be christened Ticketmaster Entertainment Inc.

Front Line's roster of 200 artists will give the new venture a major advantage as it tries to hang on to venues tempted by Live Nation's budding ticket business, set to launch next year.

Live Nation, meanwhile, has far-reaching deals with five major stars, all made within the last 12 months or so. The company is betting big on them, and on its ability to enter the infrastructure-heavy ticketing business.

Live Nation also has smaller relationships with about 1,200 artists, and Front Line artists often play at Live Nation venues. That could create some conflict of interest, Hiller says, if Front Line artists were steered away from Live Nation venues, or if they had priority over other artists at Ticketmaster-contracted venues. (Azoff brushed off conflict-of-interest concerns in an interview with the Wall Street Journal.) Alternatively, the deal could prompt more competition among venue operators and promoters if Live Nation has to work harder to attract Front Line artists. 

In any case, Ticketmaster's latest move ups the ante as both companies try to position themselves as the key link between artists and their fans' wallets -- touring remains something of a bright spot in a music industry struck by declining CD sales and the movement toward free or low-priced digital music.

"Since 2000 the most vibrant part of the business has been live events, and they are not suffering from lack of attendance. There has been a tremendous resilience on the part of the consumer to accept increased attendance fees," says attorney Aydin Caginalp, a partner at Manatt, Phelps & Phillips. "This is a natural evolution and expansion of these businesses."

So what's the next step? If the two companies want to get deeper into each other's turfs, Live Nation could try artist management, or Ticketmaster could think about venue operation and concert promotion.

"We imagine that Live Nation and Ticketmaster should continue to trade actions and reactions with each other going forward," writes CL King & Associates analyst Jim Boyle in a note to investors, but he notes that Ticketmaster's refraining from signing 360-type deals has prevented "expensive bidding wars, for now."

Still, the companies might think twice before pursuing more expansion, at least if the stock price is signaling what investors think of the moves. Live Nation's stock has dropped by half in the months since it began signing its marquee artists. Today, Live Nation shares fell 7.92% to $9.30 on the New York Stock Exchange. And after its announcement, Ticketmaster shares fell 4.96% to $10.35 in trading on Nasdaq. They're down by about half since the company spun off from its parent IAC/Interactive in August.

-- Swati Pandey

Photo (top): Axl Rose. Credit: George Chin

Photo (middle): Christina Aguilera. Credit: Dave Hogan / Getty Images

Stocks, options and rock 'n roll: U2 picks up Live Nation equity

The rock band U2 now owns a chunk of concert promoter Live Nation Inc.

U2 will receive 1.56 million shares currently worth about $18.5 million, or about 2.1% of Live Nation's shares outstanding, according to filings made with the U.S. Securities and Exchange Commission.

Back in March, Bono and mates announced a 12-year deal with Live Nation, handing over merchandising, branding, touring and other rights to the concert promoter but keeping its recording rights with Universal Music Group. Financial details beyond the stock issuance haven’t been disclosed, so the total value of U2's deal with Live Nation isn't known.

U2 is one of five artists that Live Nation has signed in the last year to expand its business beyond touring, and the only act that didn’t hand over recording rights.

Of the others, Jay-Z and Madonna also received shares — about 775,000 to the rap mogul (along with an option to purchase 500,000 more) and about 1.17 million to the Material Girl, according to Live Nation filings made earlier this year.

Shakira and Nickelback — the two most recent Live Nation acts to sign on, and the only two who arguably have growing recording careers ahead of them — didn’t receive any stock as part of their deals.

Live Nation closed down 3.87% to $11.93 in trading on the New York Stock Exchange today, giving the company a current market cap of about $900 million. That's only slightly lower than the share price when the U2 deal was announced, but significantly lower than the year-to-date high of $17.48, set in August shortly after the company reported a stronger-than-expected second quarter.

-- Swati Pandey

Photo: U2's Bono. Credit: Martin Meissner / Associated Press.

Live Nation picking up venues one by one

Concert promoter and soon-to-be-ticket-vendor Live Nation Inc. already scored a ticket-selling deal last month with SMG, a client of its rival Ticketmaster. Now the company is getting down to the nitty-gritty.

Live Nation announced Tuesday that it would handle tickets for New York’s 3,200-capacity Roseland Ballroom, which has hosted major acts such as My Bloody Valentine and Madonna (a Live Nation artist).

It’s not a huge venue, and the deal isn’t a big surprise — Live Nation already handled booking for the midtown site. But it does signal that Live Nation will be aggressively pursuing Ticketmaster clients as it prepares to launch its ticketing service next year. In the words of Morgan Joseph & Co. Inc. analyst David B. Kestenbaum, “Ticketmaster is under attack.”

So which venue is next? Live Nation couldn’t be reached for comment. But the Hammerstein Ballroom, onetime host to Jay-Z and Nine Inch Nails and exclusively booked by Live Nation, could be an option. And Kestenbaum didn’t rule out larger venues such as the Cablevision-owned Madison Square Garden.

“They’re going after every venue that Ticketmaster controls,” he says.

Cablevision head James Dolan set off speculation last month by suggesting at a Goldman Sachs-sponsored conference that the Garden would consider ticketing through Live Nation, lifting Live Nation’s stock 21%. But he later backpedaled and confirmed his commitment to Ticketmaster.

On Tuesday, Live Nation shares rose 1.22% to $13.32.

--Swati Pandey

*Photo: Madonna performing at Madison Square Garden, courtesy Kathy Willens/Associated Press.

Ubiquitous Clear Channel radio now invades your iPhone

In the latest instance of retro pastimes adapting to new technology -- like playing Pacman on Facebook or making pot roast in a microwave -- old media broadcaster Clear Channel is trying to make the leap to the iPhone.

The San Antonio-based radio and billboard giant launched iheartradio, a free application for the iPhone and iPod Touch that will give listeners another shot at hearing "Hotel California" just in case they find themselves out of range from one of Clear Channel's 1,100 radio stations.

The move comes amid what Jim Kerr, a vice president for digital development with the Pollack Media Group, calls a "land rush into the iPhone app space." Clear Channel Radio brings its traditional content -- well-worn songs and all the commercials in between -- to a device already crowded with applications enabling Internet radio listening. Existing applications like FlyCast and RadioTime offer broad selections of terrestrial and Internet radio stations. FlyCast is free, while RadioTime costs $5.99. Internet streaming and recommendation services like Last.fm and Pandora are on the iPhone, too.

Despite the competition, Kerr thinks it's not too late for Clear Channel to get into the iPhone app game. "Whoever gets there first and carves the ground wins," he says.

And it’s not the first time Big Radio has been available off its traditional sliver of airwaves -- Clear Channel has offered content through other cellphones, created podcasts and built specifically branded websites for its stations, with live streams of radio broadcasts and some on-demand tracks. The company has also launched online-only stations like the LGBT-friendly Pride (up-tempo danceable tracks plus relevant news and talk) and the quirkier eRockster. Combined, the station websites bring in more than 10 million unique visitors a month, the company claims, citing a comScore report.

Clear Channel’s latest online effort centralizes all its stations at one site, still in beta testing, called iHeartMusic. Listeners can stream hundreds of stations, selected by location or format. As with the individual sites, some content will be available on-demand, but generally listeners are at the mercy of the programmer.

For now, the iPhone app is a streamlined version of the iHeartMusic website, without on-demand content and with only 10 terrestrial stations -- including L.A.’s KIIS-FM and KFI-AM -- along with eRockster and Pride. Clear Channel plans to add about three to five stations each week, says Evan Harrison, executive vice president of Clear Channel Radio, who notified employees about the application in an e-mail Wednesday. 

The lack of flexibility and relatively slim offerings are not necessarily a handicap, says Pollack Media's Kerr. He notes that Clear Channel has the advantage with more passive music fans, who would rather listen to familiar local stations and who aren't necessarily interested in discovering new music themselves.

In a little over 24 hours, Harrison says, iheartradio was downloaded about 5,000 times.

--Swati Pandey

Photo of Evan Harrison courtesy Clear Channel. Photo of radio courtesy baboon (via Flickr, Creative Commons License)