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THE INDUSTRY STANDARD'S
B E A T S H E E T
A Weekly Report on the Convergence of Music and the Net
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| http://www.thestandard.com |
Tuesday, May 23, 2000
TOP STORY:
* Love is a Fickle Thing
Spinrecords.com lays off nearly half its staff
NET NOISE:
* Bad attitude rules at hitsdailydouble.com
DOWNBEAT:
* Music for Nothing?
MP3.com's Michael Robertson denies San Diego Reader story
* Napster Gets Some Quarters
VC Firm Hummer Winblad leads round of financing
* Dot Dot Dot
Courtney lets loose ... U2 for You ... Not-so-Sublime anniversary ...
Epitonic meets ZDNet
SOUND OFF:
* Is it theft to return a CD to the store for a cash refund after
you've made a copy of it?
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TOP STORY
~~~~~~~~~
Love is a Fickle Thing
SpinRecords.com lays off nearly half its staff
By Julene Snyder
Last week, on the very day we ran an upbeat piece on San Diego's
SpinRecords.com titled "Love, SpinRecords.com Style," CEO Wayne Irving
II wasn't spreading love - he was spreading pink slips. Forty people
were let go that day. None of them were given notice.
To hear Irving tell it, he had no idea that he was just a few days
away from laying off nearly half his staff when he escorted us around
the offices of his company the Friday before last. As our tour
concluded, he rushed off to a meeting with auditors. That meeting
apparently involved intense interest in the bottom line of the San
Diego-based company. But Irving downplayed the significance of the
layoffs, and of the San Diego Union-Tribune story that broke the
story. "We restructured," he says. "So we had some layoffs and we
hired for new departments, so some of the people that were laid off
were hired for new departments." He says that some departments were
completely eliminated - including the A&R department, which has been
re-christened "genre management" - so that the company could "really
begin to focus on generating revenues," and that layoffs occurred
across the board. Irving says the layoffs are "a preemptive response
[to the vagaries of the stock market] and an attempt to strengthen the
company and push it forward in a way that will give back to our
shareholders and dress us up for any future opportunities."
"We operate on a very constrained budget, as all Internet companies do
that haven't gone public and raised $100 million or more," Irving
says. "We had to respond as quickly as we could to prepare for what
was to come. If you look at the market, we took steps that we felt
that we had to take. Otherwise, who knows where we would be."
Superficial appearances, at least, gave no indication that anything
was wrong. When we visited, we saw a bustling workplace with dozens of
employees busily involved in a variety of projects, and foolishly
assumed that all was well with SpinRecords.com. Irving rushed off from
our tour to meet with those auditors and left us with his chief
operating officer, Robert Shapiro. The COO, a one-time senior creative
consultant and co-producer for the Oscars, is a glitzy show-biz sort
of guy who knows to watch his step when talking with reporters.
Caution is an understandable mode for SpinRecords. The company's
parent, Solutions Media, is a privately held company with the usual
hopes of one day going public and making a bunch of people rich. Bad
press doesn't help. Still, the carefully orchestrated tour did reveal
a few chinks in the armor.
One memorable moment came in the hallway, where Irving was waylaid by
Paul Thomas, a sales associate for No Cover magazine, a free monthly
music publication that shares office space with the company. Thomas
and Irving openly conducted a conversation about an upcoming cover
while the tape recorder caught every word:
"This is your (music conference) EAT-M cover," Thomas said. "We've got
to do some photography. Do you want to go with Alien Ant Farm?"
"I'd rather do a band that we're going to get some love from," said
Irving.
"We need to know which band is going to be your EAT-M band,"
reiterated Thomas. "We have to book the photographer, location,
everything. So are you going to choose the band? Do you know which
band you want on the cover?"
"I think we should choose a band... " Irving pauses, thinking. "I
would call the labels, and find out who's willing to buy three
full-page ads. Whoever does, we'll put them on the cover."
"You don't want to put one of your bands on there?" asked Thomas.
"I'm more worried about the survival of the magazine," answered
Irving.
"Call the labels, find out if they want to put somebody on the cover,
and tell them you'll do it if they buy three full-page ads. That's
what you should do every month."
A full-page ad in No Cover, which Irving claims has circulation of
130,000, goes for $1,500. That's quite a deal: for less than $5,000,
you can get your face on the cover of a magazine without worries that
the quality of your music will hold you back. Wayne Irving II likes to
talk about love, but one has to wonder what unannounced layoffs have
to do with love. "It's so dangerous to try to give them notice," he
says.
"They could do damage or steal from the company. Not that any of our
employees would do that," he hastens to add. "Thirty of the 40 either
emailed me or called me and told me that they loved me no matter what
the company was going through. They said they were still ambassadors
for the company, no matter what."
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NET NOISE
~~~~~~~~~
Hitsdailydouble.com
Sure, you could go here just to catch up on the latest music industry
news --which increasingly has a lot to do with the space where tunes
intersect with all things digital - or to catch up on your gossip,
innuendo and rumors. But the online presence of Hits Magazine is more
than just another pretty Web site. For one thing, the opening salvo of
caricatures of a Hollywood Squares-type grouping of folks like Guy
Oseary, Michael Robertson and Hilary Rosen - joined by a sheep and the
"Prince O' Darkness" is a hoot, as are the ultra-cool renderings of
some writers that accompany their bylines. But even more fun are the
oh-so-snarky photo captions that go along with the stories. For
example, a current story about Napster getting funding from
institutional investor Hummer Winblad Venture Partners is accompanied
by a sidebar showing a pious Bill Clinton, with hands folded as if in
prayer, above the text, "President Clinton warns Napster that a Hummer
might sound like a great idea, but can cause real problems." Tee hee.
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DOWNBEAT
~~~~~~~~
Music for Nothing?
MP3.com's Michael Robertson denies San Diego Reader story
An inflammatory story in the most recent issue of the San Diego Reader
claims that MP3.com employees have made a practice of buying "numerous
used CDs at a time and then brought them back a day or two later with
the receipt for a full refund" from the local Music Trader record
store chain, presumably for its since disconnected "Beam-it" service.
In an interview with Beat Sheet about the story, CEO Michael Robertson
explained that "there are minor differences in pressings depending on
what factory it came from and when it was pressed," which explains why
MP3.com's library would contain multiple copies in the first place. As
to the allegations proper, Robertson says that any records that were
returned to Music Trader stores were never recorded or used by
MP3.com, which flies in the face of the anonymous insider in the
Reader story, who said of Robertson, "Not only is he not paying
licensing fees, he won't even pay the relatively small cost of owning
the CDs." In other MP3.com developments, Reuters reported last week
that pop singer Alanis Morissette was looking to unload 100,000 shares
of MP3.com stock according to a filing she made with the SEC, which
would bring in about $1.2 million and leave her with more than 200,000
shares of the company's stock. She acquired the stock a little more
than a year ago as part of her cut for a concert tour sponsored by the
site. "I think it's great," says Robertson. "Alanis helped us out a
lot. Those shares were her payment for working with MP3.com and I'm
thankful that she's getting a return on her investment."
Napster Gets Some Quarters VC Firm Hummer Winblad leads round of
financing
Napster took the first step toward actual solvency last week when the
file-sharing music service closed its first round of venture
financing. San Francisco-based Hummer Winblad led a $15 million round
of financing and placed one of the firm's partners, Hank Barry, in the
interim CEO seat, replacing Eileen Richardson. Another Hummer Winblad
partner, John Hummer, will be joining Napster's board as well. See
http://www.thestandard.com/article/display/0,1151,15319,00.html
Dot Dot Dot
Courtney lets loose ... U2 for You ... Not-so-Sublime anniversary ...
Epitonic meets ZDNet
As an ex-Love lover says in Nick Broomfield's documentary, you've got
to love Courtney. The Hole front-woman-turned-Tinseltown-bad-girl
addressed New York's Digital Hollywood Conference last week and had
more than a few choice words for the record industry: "It's become
quite fashionable lately for artists to express outrage at music
piracy, and I'm a fashionable gal. Stealing artists' music without
paying for it fairly is absolutely piracy, and I'm talking about
major-label recording contracts, not Napster." A must-read feature
about La Courtney can be found at:
http://www.inside.com/story/Premium_Story?art_id=4806 ... According to
Reuters, once-relevant pop-rockers U2 said Monday that the group will
broadcast its popular 1997-98 PopMart Concert for free for a few weeks
starting June 8 using Burst.com's new broadband delivery technology at
http://www.burst.com ... A live chat for those looking to share
their thoughts and feelings on the third anniversary of the death of
Bradley Nowell, late Sublime frontman, will be held at 4:20 PST on May
25 at Skunk Records' Web site (http://www.skunk.com) ... Epitonic.com
and ZDNet have teamed up to point visitors to "10 Bands You Need to
Hear" at http://www.zdnet.com/music. The first selection of bands
includes somewhat obscure groups like Heavenly and Tara Jane O'Neil,
along with more recognizable names like Beck and Sarah McLachlan.
Interestingly, one of Epitonic's big investors is CNET, a competitor
of ZDNet.
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SOUND OFF
~~~~~~~~~
This week's question: Is it theft to return a CD to the store for a
cash refund after you've made a copy of it?
E-mail your opinions to julene@well.com with "sound off" in the
subject line, and we'll print a selection of the responses in next
week's newsletter. Letters may be edited for clarity and length, so
keep them short and include your name and affiliation, if any.
Last week's question: Did video kill the radio star?
"No, the music business did."
- Chris Finch
Former A&R Exec
"It didn't kill the radio star. It killed attention spans. It killed
imagination while listening to music. It killed writing colorful music
vs. music with pov of buzzsaws."
- Charles Rosenberg
"Not only did video kill the radio star, it killed the listener's
imagination as well. Music is supposed to be listened to, not watched.
Now songs are just mere background music to special effects and
supermodels. I don't want your MTV!"
- J. David Evans
"Video DID kill the radio star, but then it was resurrected (right
around the time MTV stopped showing videos and started to show
original programming). Oh well, there goes the days where a kid could
come back after school and watch the latest videos on MTV. Now a kid
can come back after school and watch back-to-back episodes of Spring
Break or the Blair Witch Project Hawaii. I guess sooner or later we
all have to face reality...we've grown up! We're now part of the VH-1
audience!"
- Gustavo Alvarado
STAFF
~~~~~
Written by Julene Snyder. Send newstips and press releases to
julene@well.com.
Edited by Steven Zeitchik (szeitchik@thestandard.com).
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