As part of SXSW, UK Trade & Investment (UKTI) will host “Content, New Technologies and the Consumer Experience,” a specially curated half-day event, showcasing UK creative excellence. It will be a centerpiece of the UK presence at SXSW, providing the perfect platform for UK companies looking to build their network of US partners, clients, customers and contacts. Focusing on business opportunities around new technologies, digital and mobile, the event will include panel discussions with key industry representatives, as well as networking and speed networking sessions between specially invited US and UK companies.

Ted Cohen’s TAG Strategic, the leading Digital Media consulting agency, has been specially commissioned to organize the event on behalf of UKTI. The agency has enlisted senior executives from brands, film studios, consumer electronics manufacturers, music services, rights owners, mobile companies, and artist management to engage with delegates in a series of panels, networking breaks and keynote addresses.

Event Details:
Tuesday, March 16, 2010
10:30am – 6pm
Hilton Garden Inn, 500 North I-35, Austin, Texas
(5th St and I-35, 3 blocks NW of Austin Convention Center)

10:30am Registration

11:00am Welcome

11:15am Speed Networking with Liverpool Sound City
Legal Consultations
- Milt Olin, Altschul & Olin (US)
- Cliff Fluet, Lewis Silken (UK)

12:30pm Lunch

1:30pm Panel: Is Content King?How great interactive content can define the relationship between media platforms, brands and the consumer.

- TED COHEN, MODERATOR – TAG STRATEGIC – US
- PETER COWLEY – ENDEMOL – UK
- MARCELINO FORD-LIVENE – INTEL – USA
- JON MANSFIELD – BBC WORLDWIDE/COMMERCIAL – UK
- PAUL KANE – BSKYB – UK
- PETE WATSON – BLACKBERRY/RIM – USA
- ANTHONY WOOD – ROKU – USA

2:15pm Keynote: Michael Petricone, CEA

2:45pm Break
Legal Consultations
- Milt Olin, Altschul & Olin (US)
- Cliff Fluet, Lewis Silken (UK)

3:00pm Martin Atkins (Author, Tour:Smart; Musician, NIN, PiL, Ministry)

3:00pm Panel: Punk Attitude: What can we learn from the attitude of musicians/artists?

- MARTIN ATKINS – MODERATOR – UK
- SCOTT COHEN – THE ORCHARD – UK
- VINCE BANNON – GETTY IMAGES – USA
- EVAN SHAPIRO – IFC – USA
- JOSH GERTZ – HIP DIGITAL MEDIA – USA
- DAVE ALLEN – GANG OF FOUR, FIGHT DIGITAL STRATEGY- USA
- PATRICK FAUCHER – NIMBIT – USA

4-6 pm Speed Networking by TAG & Cocktail Reception
Legal Consultations
- Milt Olin, Altschul & Olin (US)
- Cliff Fluet, Lewis Silken (UK)

Attendance is free but strictly limited and must be pre-booked.

To reserve your space (one person per company maximum):
Send your name, job title, company and a short business biography to ukti@tagstrategic.com.

You must RSVP by Friday, March 12, 2010.

For more information, contact Faron McKenzie at TAG Strategic at:
+44 (0)7932 069967, faron@tagstrategic.com

UK Trade & Investment is the government organization that helps UK-based companies succeed in the global economy and assists overseas companies to bring their high quality investment to the UK. For more information, visit www.uktradeinvest.gov.uk.

Although iTunes is still the Internet’s biggest music retailer, more music is still traded illegally than ever gets sold on iTunes. Now, the big labels are looking at another way to entice fans into buying music. A lot of buzz is circulating about one service in particular: Spotify. According to Ted Cohen, EMI’s senior VP of Digital Development and Distribution, it’s been a hit with more than 7 million fans overseas.

“Spotify has just completely charmed Europe with its ability to deliver to you unlimited streaming of any song you’ve ever thought of in your life,” Cohen says. “It’s a wonderful experience when you try and stump it, and everything you try and stump it with comes up.”

Spotify subscribers have access to stream more than 7 million songs from any computer with an Internet connection — and it’s free if you’re willing to listen to a few ads. It may sound like an ideal solution for both listeners and artists, but Cohen says the record companies aren’t anxious to let Spotify into the U.S.

“The rights holders are all concerned that we went from selling a $10 CD to selling a 99-cent track, and now we’re talking about a quarter of a cent per stream played by user.”

Spotify has been trying to get fans to pay 10 euros per month in exchange for an ad-free version of the service, and it has finally started to catch on since customers have been able to access the full catalog from their smart phones. Even if Spotify doesn’t take off in the U.S., Apple seems interested in pursuing streaming music. Recently, the computer giant purchased the online music service Lala.com. Analysts say that means that Apple is likely to add streaming music to iTunes.

But subscription services such as Rhapsody and Napster have been around for years, and they aren’t that popular. It’s a hard sell for Carlo Sicat, a 21-year-old at San Francisco State University.

“I don’t want to go through the process of opening up my Internet browser, finding the music, searching for it … I could just go on my computer,” Sicat says. “It’s much less of a hassle to do that.”

Greg Harty, another student at SFSU, says he doesn’t even listen to all of the songs he has on his iPod.

“Most people I know don’t listen to all 500 of the songs they have on there,” Harty says. “They might just cycle through 30 or 40 of the same songs.”

And, of course, many students get their music free from friends and illegal download sites. Still, Spotify could entice them with a chance to try the service for free before signing up. Bruce Houghton, who edits the music and technology blog Hypebot, says that’s what’s happened in Europe.

“The average Spotify user, and this isn’t a secret, had 10,000 tracks in their Spotify playlist — their favorites. How many of us own 15,000 tracks? So the case with a lot of these services is simply getting people to try them, and then the word spreads.”

It’s not yet certain whether Spotify will offer a free service when it launches in the U.S. But at a time when record sales continue to drop, the major music labels may be ready to try anything.

To hear the radio segment from NPR, click here.

AFTER the Grammy Awards last Sunday, the stars came out for EMI’s party at the W Hollywood Hotel. The country music hunk Keith Urban arrived with his wife, Nicole Kidman. Katy (“I Kissed a Girl”) Perry sparkled in a form-fitting dress that would become gossip fodder on the Internet. There were also rappers (Cypress Hill), guitar heroes (Slash and Dave Navarro) and a coffeehouse darling (Norah Jones).

There was one person, however, whose absence was conspicuous at the soirée: Guy Hands, the chairman of Terra Firma, the British private equity firm that bought EMI, the music publishing and recording company, for what it now says was $8 billion at the peak of the credit bubble in 2007.

Mr. Hands was once a mainstay at such glitzy affairs, happy to pose for pictures with the likes of Ms. Perry. Now, he is less eager to be seen at those events because, by his own acknowledgment, the EMI acquisition has been a disaster for his firm and his investors.

As soon as Terra Firma took control, Mr. Hands spoke publicly about the need to drastically reduce artist advances at EMI and immediately alienated some of the storied company’s most famous acts. Radiohead and the Rolling Stones departed. Lily Allen, a major star in England, told the British press, “I hate Terra Firma.”

“I don’t think he appreciated how sensitive and unpredictable artists can be,” says Bill Werde, editorial director of Billboard. “It seemed to me at the time that he looked at artists like just another asset — like the company’s distribution channel or its music publishing company.”

But the real clash has been between Mr. Hands and Citigroup, the bank that financed the EMI acquisition and many other Terra Firma deals. Terra Firma used only $3 billion of its investors’ cash to buy the music company; it borrowed the remaining $5.2 billion from Citi. Why was Terra Firma’s lender so generous? The bank thought it could later offload this debt by selling it in smaller chunks to other investors.

Then reality intruded. Before the deal closed in August 2007, the credit market froze — leaving Citi holding a vast bag of debt that it designated as “substandard.” The transaction offered yet another example of the kind of promiscuous lending that forced the government to rescue Citi the next year.

Two and a half years later, EMI’s results are improving. The company says its revenue for the most recent fiscal year, ended last March, was $2.4 billion, an increase of 7.4 percent from the previous year. Last week, “Need You Now,” the new album by EMI’s breakout country music act, Lady Antebellum, topped the Billboard 200.

Even so, the company still had a net loss of $1.6 billion during the fiscal year, and it still isn’t generating enough cash to cover the debt that was larded onto EMI’s books to finance Mr. Hands’s takeover. In the last 17 months, Terra Firma has breached loan covenants on its EMI debt five times and has had to inject nearly $150 million into the ailing company to stave off default.

Mr. Hands tried restructuring his deal with Citi, but the talks broke down in October. People familiar with the discussions, who requested anonymity because the talks are confidential, say Citi believes that Terra Firma’s equity in EMI is worthless and that the firm should hand over the company to the bank.

Mr. Hands, who declined to be interviewed, doesn’t give up so easily. He hired David Boies, who is to the legal profession what Bono is to arena rock, to do battle with Citi. In December, Terra Firma sued Citi in New York State Supreme Court, accusing the bank of defrauding the private equity firm. The suit, which has been moved to federal court in Manhattan, highlights the dual role Citi played in the transaction as both an adviser to EMI’s former management on the sale and Terra Firm’s lender — a common practice in the private equity boom.

No matter the outcome, the lawsuit has illuminated the relationship between Citi and Britain’s most famous private equity investor. After a string of successful deals together, the investor and his bankers plunged into a catastrophic deal that is emblematic of the credit boom’s excesses.

Terra Firma’s lawyers say David Wormsley, one of Citi’s top London dealmakers, didn’t inform Mr. Hands in the final hours of a bidding war for EMI that Terra Firma’s only rival, Cerberus Capital Management, had dropped out. Instead, the complaint says, Mr. Wormsley urged Mr. Hands to offer an inflated price for EMI.

Mr. Boies and his team say the Citi executive’s alleged failure to convey that fact was “at minimum, negligent, and fell below the standard to be expected of a reasonably competent investment banker in Mr. Wormsley’s position.”

A Citi spokeswoman, Danielle Romero-Apsilos, denies the lawsuit’s claims. “We believe this suit is without merit, and we will defend ourselves vigorously,” she said, declining to comment further. Citi’s lawyers at Paul, Weiss, Rifkind, Wharton & Garrison argue that the case should be heard in Britain, where many of the events in Terra Firma’s complaint transpired.

This could complicate matters for Mr. Hands. Last year, he moved to Guernsey, a tax haven in the Channel Islands, and can therefore spend only a limited amount of time on British soil. Not surprisingly, his lawyers counter that Terra Firma and Citi had plenty of dealings in New York, Citi’s base.

Some people in the industry say Terra Firma’s suit is merely a negotiating ploy meant to recoup part of its EMI investment and to avoid reputational damage that would make it harder for the firm to raise money in the future.

“It sounds to me like a textbook case of a private equity firm that bet the ranch, and now it has buyer’s remorse” says Paul Povel, a finance professor at the University of Houston who has studied Mr. Hands’s industry.

Jonathan H. Sherman, a Boies, Schiller & Flexner partner and Terra Firma’s chief litigator in the case, dismisses that notion. “At the heart of this case is an allegation as serious as it is simple,” Mr. Sherman says. Citi, he says, “induced Terra Firma to invest $3 billion by manufacturing the appearance of competition in an auction when it knew the auction was a bust. That is fraud.”

IN Britain, Guy Hands is a financial rock star. He has amassed a tidy fortune by snapping up undervalued assets like British pubs, European movie theaters and roadside concession stands in Germany and wringing cash out of them after borrowing the money he needed to buy them.

Along the way, he became the British equivalent of the Blackstone Group’s founder, Stephen A. Schwarzman. Mr. Hands owns a 12th-century estate in Tuscany, where he produces wine and olive oil. He has an enormous collection of karaoke records, and, on at least one occasion, has belted out “My Way” after an exhausting day of deal-making.

Citi played a key role in Mr. Hands’s ascent, with Mr. Wormsley bringing him some of his best deals. According to several people familiar with the dealings of Terra Firma and Citi, Mr. Hands’s other close contact at the bank was Michael S. Klein, a rising star who would become the head of Citi’s investment banking operation and was in a position to help arrange financing for these transactions.

Mr. Wormsley and Mr. Klein declined to be interviewed for this article.

The three men enjoyed one another’s company. According to people familiar with their extracurricular activities, Mr. Wormsley regularly took Mr. Hands and his wife, Julia, to the opera in London. Mr. Hands reciprocated by making his Italian vineyard available for the 40th birthday party of Mr. Wormsley’s wife, Vicky. For his part, Mr. Klein invited Mr. Hands and his wife, Julie, to his 40th birthday on Barbados.

So not surprisingly, according to the suit, Mr. Hands listened intently when Mr. Wormsley called him in November 2006 to tell him another company was for sale: EMI. And EMI seemed to fit the mold Mr. Hands preferred: a troubled enterprise with untapped value.

One of the company’s founders, Emile Berliner, invented the disk phonograph record in 1887. Over the years, EMI became a force in the music industry. In 1955, it bought Capitol, the American company whose roster included Frank Sinatra; . the company signed the Beatles seven years later.

EMI’s publishing division, meanwhile, amassed copyrights to songs from “Over the Rainbow” to ones made famous by Kanye West and Beyoncé.

EMI seemed to lose its momentum in 2001 after its Virgin Records unit unfurled a bomb: Mariah Carey’s album “Glitter,” which did so poorly that the company had to pay the singer $28 million to sever its relationship with her.

“After that, it was all about, ‘Have you hit your numbers this week?,’ ” says Ted Cohen, a former EMI senior vice president who now runs a consulting business. “I think they just took their eyes off the ball when it came to the creative side of the business.”

EMI’s weaknesses became abundantly clear in the last decade, when the industry was shaken by music piracy and declining CD sales. Unlike all but one of its rivals, the Warner Music Group, it was a standalone, publicly traded music company. In 2005, EMI’s stock tumbled when it revealed that forthcoming albums from its hit bands, Coldplay and Gorillaz, wouldn’t arrive on schedule.

This prompted it to seek an acquirer the next year. In strolled Mr. Hands — right behind a number of his rivals, including Cerberus; JPMorgan Chase’s buyout unit, One Equity Partners; and the Fortress Investment Group, all of which submitted preliminary bids for EMI in April 2007.

IN conversations recounted in court documents, Mr. Hands told Mr. Wormsley that he would need Citi’s backing for an EMI bid because he was coming in on his rivals’ heels.

According to the lawsuit, Mr. Wormsley alerted Citi’s debt team and, shortly thereafter, Mr. Klein sent Terra Firma’s founder an e-mail saying he was “personally involved” in getting the deal underwritten.

EMI then told its suitors that they would have to present their final offers on a Monday in May 2007. One Equity and Fortress dropped out. Terra Firma’s lawyers say Cerberus abandoned its hunt the day before the meeting. Cerberus declined to comment. The lawyers contend, however, that Mr. Wormsley prodded Mr. Hands until early Monday morning, telling him he needed to submit a high number if he didn’t want to lose EMI to his firm’s American rival.

“Citi’s representations to Terra Firma were knowingly false” Terra Firma’s lawyers said in their complaint.

Once Terra Firma submitted its binding offer for EMI, however, there was still a two-month closing period, during which the financial world began to unravel. While it would be another year before Wall Street approached an outright breakdown, the debt markets went into a coma as traders realized the severity of the subprime mortgage crisis (which Citi had played a pivotal role in fomenting.)

It soon became clear that Citi wouldn’t be able to syndicate the billions in debt it took on to do the deal. It also meant that Terra Firma would have difficulty refinancing or raising more money in the future.

In hindsight, Terra Firma could have exited the deal before it was completed, and there were opportunities to do just that. According to people familiar with the closing process, Cerberus approached Terra Firma with an offer to put equity into EMI, which would have reduced the British firm’s investment. Terra Firma, however, has a policy of not doing “club deals” with other private equity firms. So it spurned Cerberus’s advances.

Citi could also have shut down the deal altogether but chose otherwise. A person with knowledge of Citi’s deliberations, who requested anonymity because of the litigation, says the bank was fearful of losing its standing with private equity borrowers if it abandoned a longstanding client like Terra Firma. So Citi stayed in.

In a sworn statement filed last week, Mr. Hands said Mr. Klein arranged for him to meet with Charles Prince, then Citi’s chief executive, to discuss the deal in New York five days before the closing. Shortly afterward, Mr. Hands said, Mr. Klein set up a telephone call between Terra Firma’s founder and Edgar Bronfman Jr., C.E.O. of the Warner Music Group.

Mr. Hands said in his statement that he made the call to Mr. Bronfman because he eventually wanted to merge EMI with Warner Music. Warner Music declined to comment, and Mr. Prince could not be reached for comment.

Even before Mr. Hands completed the acquisition of EMI, cracks in the Terra Firma-Citi relationship were already beginning to show — including some frosty closing meetings in New York, where Citi tightened the covenants on Terra Firma’s debt. Nevertheless, Mr. Hands remained confident. Even if Terra Firma violated its covenants, it could avoid default by injecting more equity into the company. Terra Firma raised $200 million from investors like the Canadian Pension Plan and set it aside for this purpose.

The music industry has a long, tortured history of treating outsiders roughly. (Think of the animosity directed at the former NBC president Andy Lack when he took over SonyBMG.)

But Mr. Hands was a fairly sharp-elbowed guy himself. He granted autonomy to EMI’s profitable music publishing business. But as soon as the deal closed in 2007, he inserted himself into the day-to-day operations of the recorded music division, eliciting a hue and cry from artists and their managers about heavy-handedness.

That didn’t stop Mr. Hands. He cut the recorded music division’s payroll of 4,500 by a third, bolstering EMI’s cash flow. Still, hopes for a 51 percent increase in digital music sales — a key element in Mr. Hands’s turnaround plan— didn’t materialize.

EMI’s hit-making apparatus, meanwhile, remained moribund. According to Nielsen SoundScan, EMI had only one album — “Viva la Vida” by Coldplay — in the annual Top 10 in the United States in 2008. As a result, sales and profits plummeted, and by the end of 2008, Terra Firma had written down its EMI investment by 90 percent.

MR. HANDS, meanwhile, relinquished his managerial duties at EMI to Elio Leoni-Sceti, a former brand manager for Reckitt Benckiser, the consumer products company with brands like Mop & Glo, French’s Mustard and Lysol. Mr. Leoni-Sceti had no previous music experience before taking the job. But according to Billboard’s Mr. Werde, he is a less polarizing figure than Terra Firma’s founder, and has done a surprisingly good job of repositioning the company.

“What EMI and Terra Firma need more than anything is time,” says Jon Cohen, a music promoter who is working with Mr. Leoni-Sceti’s team. “They are under so much pressure with all that debt.”

But time may be running out. In a recent corporate filing, Terra Firma says it has exhausted all but $15 million of a $200 million financing line it had created to resolve covenant violations. The company is trying to raise $188 million to avoid defaulting on its next covenant test in March.

All of this lent a sense of urgency to Mr. Hands’s attempts to restructure the company’s debt. But he is no longer dealing with some of his old mates at Citi. Mr. Klein left in 2008 after a management shakeup caused by the bank’s near-collapse. Mr. Wormsley remains at Citi.

Indeed, until talks fell apart in September, Mr. Hands sat across the table from bankers interested in one thing: getting Citi’s money back. He offered to put $1.6 billion into EMI if Citi wrote down that amount. That would have left Terra Firma in control of a company with a more manageable debt-to-equity ratio.

Citi’s position was that Terra Firma’s equity in the company was worthless and that Mr. Hands should therefore just hand over the company in exchange for a small percentage of the upside if the bank could later sell it.

Richard X. Bove, a banking analyst at Rochdale Securities, says Citi has written down nearly all of its EMI debt. “I think they think they have a pretty good chance at getting something back now,” Mr. Bove says.

There would be no shortage of bidders for EMI Publishing, which has remained healthy through all the turmoil. As for the recorded music division, there is one likely buyer: Warner Music. In December, Richard Greenfield, a media analyst at Pali Research, wrote that Warner Music was “hoarding cash” in the hope of doing just that sometime in the coming year. In short, it could be Citi that sells EMI to Warner instead of Terra Firma, which would be a cruel irony for Mr. Hands.

Then again, it’s unlikely that either Terra Firma or EMI will emerge from their mutual woes without feeling more pain. Claire Enders, a London-based media analyst who has followed the deal closely, says that there is no other way it could have ended.

“For Terra Firma, it was ego,” she says. “Citigroup did not want to be the one that brought the party to an end. But this was the pin coming out of the private equity balloon. After that, it went poof.”

Ted Cohen, founder and Managing Partner of TAG Strategic, commented, “We are very excited about working with OML. Since we first started our dialogue with Vijay Nair and his management team, it was clear to us that this was a business with great potential, run by a great management team, and perfectly positioned to benefit from the huge interest we have seen in the Indian music and entertainment marketplace. Working together, TAG and OML will develop major opportunities across a number of verticals, in particular using our collective experience and industry networks to help businesses desiring a significant presence in India.”

Vijay Nair, founder and CEO of Only Much Louder, one of India’s brightest entrepreneurs and a recent winner of the UK British Council Young Music Entrepreneur award, added, “For the last 8 years, we have focused on developing the independent music scene in India and built an organic, sustainable business spanning across various verticals. Expanding our reach to America and Europe has been the logical next step for us, and we couldn’t have asked for better partners than TAG Strategic. With their immense experience in the industry and our understanding of the music
business in India, we hope to further develop the potential India has to be one of the major players in the global music business. We share Ted and Khalid’s passion in building a scalable business and continue defying trends and having fun, while we are at it.”

The negotiations forming the partnership were led by Ajay Nair, Director, Only Much Louder, and Khalid Amin, MD Europe, TAG Strategic.

# # #

For more information contact:

Vijay Nair, Only Much Louder
vijay@oml.in, Tel: +91 98 92 262782 (India)

Khalid Amin, TAG Strategic
khalid@tagstrategic.com, Tel: +44 7533 806286 (UK)

About TAG Strategic:
Founded by Ted Cohen, TAG Strategic is a digital entertainment consulting firm providing expert strategy, market intelligence, product ideation, business modeling and business development services to multinational companies and select emerging businesses. TAG accelerates business development for its clients and delivers market leadership and sustainable, defensible advantage in the dynamic and rapidly evolving global marketplace. TAG’s executives routinely speak at key industry trade shows, conferences and events. They have written on, and been written about, a wide variety of media and thought leadership events.

About Only Much Louder:
Only Much Louder Entertainment (OML) Pvt. Ltd is a group of companies focused on the independent music business in India. OML conceptualizes and produces music festivals, manages leading independent artists and produces concerts across the country. It runs a music label Counter Culture Records that has released several Indian artists in the last few years. Through its sister company, Babble Fish Productions, OML also produces audio and visual content including music videos, promotional videos and covers live events and concerts. OML recently founded OML Digital to focus on developing technology products and services for independent artists and other entertainment businesses. OML was founded by Vijay Nair and Girish Talwar.

While most of the gearheads rubbing elbows at CES are there for the gadgets, plenty of service providers use the conference to announce their new applications – you know, the things that make all the shiny new toys interesting to use. Below are a few music-based apps that bubbled to the surface, so far.

- The Recording Academy was at CES showing off both a new iPhone app and a social media research widget. The Grammy iPhone app lets users predict winners in 21 different categories, Grammy and music industry trivia, photos of past Grammy moments and more. The social media app is called Fan Visualizer, a index of sorts that seeks to track the online buzz of any artist. Expected to be released Jan. 12, the Recording Academy is demonstrating the app Friday their suite in the Venetian.

- Former Virgin Records America CEO Matt Serletic’s new company Music Mastermind is using CES to evangelize a suite of mobile and social gaming products aimed to help anyone create music. The company is holding private meetings to show off the various applications, and has tapped digital consultant Ted Cohen to help spread the word. (Cohen slipped Music Mastermind into a Twitter post on top things at CES, which also included Intel, Panasonic, Samsung and Google.)

- UK music video service Muzu.tv unveiled a deal with Samsung to add music programming to the company’s line of Internet-connected TVs. There was a lot of focus on 3D TVs at the show, most of which also featured Internet access, so we should expect to see a lot more such content arrangements from Web-based service providers down the pike. Might be the thing that ramps up the production values for music videos again.

- Streaming music service Omnifone and Gracenote extended their relationship, adding the company’s music recognition and recommendation technology to the MusicStation app. Omnifone also released a set of APIs to let third party developers integrate MusicStation into their respective products and services.

CES isn’t usually a place for mulling existential questions, but here’s a couple for you: What constitutes a musical instrument, and what does it mean to be a musician? I couldn’t help wondering about that after seeing a demo of a prototype from Music Mastermind, a two-year-old Calabasas-based start-up founded by a former major-label executive and a Wall Street trader. MMM is developing a music-creation tool that erases the line between video games and composition. It enables people to create full-blown, professional-sounding songs by singing into a computer or specialized portable device, then using a software band to provide the backing track. And it does so with the look and feel of a video game.

Co-founder Matt Serletic, former CEO of EMI’s Virgin label and current owner of Emblem Music Group, said the software is designed to give amateurs a way to translate the melody in their heads into a song they can share. But by creating a community around the game, it enables would-be professionals to use the software to audition their material and build an audience for it. It also gives established professional recording artists a new way to interact with fans — for example, by putting the vocals and instrument tracks for a song into the game and inviting fans to add their mark.

Although the software, which is based on Unity’s engine for 3-D animated games, is still being developed, MMM provided a sample at a private party in Las Vegas Thursday evening. Serletic brought in a ringer — Angie Aparo, a professional singer-songwriter — to use the program’s virtual recording studio, which was staffed by rock-garbed avatars on vocals, drums and bass. As Aparo sang a brief melody into a microphone wired to the laptop through a small mixing board, the program recorded it and tweaked the pitch to bring it into tune. (Aparo didn’t need it, but one can imagine how important that feature would be for some users.) He then mimicked the sounds of a bass drum, snare and cymbals to trigger and record sounds from a synthesized kit, which the program turned into a drum loop. To fill out the song, Aparo chose a virtual bass and acoustic guitar, whose tracks were generated automatically by the software. (Users can change notes and chords as desired by adjusting some on-screen controls.) He was about to overdub some backing vocals when the demo gremlins attacked, sending the session into hiatus.

Despite the technical problems, the results were impressively polished, even hi-fi. It’s obviously not the same as playing the notes yourself on real instruments with honest-to-goodness recording equipment, but it’s close enough to be startling. That’s why MMM’s chief technical officer, Reza Rassool, calls the software “the first 21st century musical instrument.” He, Serletic and co-founder Bo Bazylevsky consider themselves part of the movement democratizing the creation of music and reinventing how the next generation of artists gets discovered. Noting how karaoke shattered the wall between the masses and the performing class, Rassool said, “We think there’s another wall that we can break, and bring people into the composers’ realm.”

Of course, the barrier involves more than just the amount of time, effort and money it takes to learn how to play instruments and record them. Most people don’t create music (or art or books or movies) because they’d rather enjoy the fruits of other people’s labor. Still, interest in music and video games is well-nigh universal, and MMM has combined the two in an instantly appealing way. Even pros like Aparo are drawn to the software. “For songwriting, I wish I had it now,” he said. But wouldn’t he miss playing the guitars and other instruments himself? “It’s almost like a different instrument,” he replied, then added, “That is the instrument.”

The price and release date of the MMM software and its hand-held version are still to be determined.

– Jon Healey

By Ted Cohen

As I sit here at the end of an eventful year, it feels like we’ve made a lot of progress in digital music, but we have such a long way to go. My wish is that the gains we’ve made are the basis for the digital music landscape we’ve all dreamed of.

Digital services and devices I’m grateful for this year:

· Spotify
· B&W Zeppelin
· Motorola Droid
· Pacemaker Pocket DJ
· Twitter
· The Beatles on USB
· MOG’s $5 subscription service
· Roku
· The Flip HD
· Zune

Some of the people I’m grateful for, in no particular order:

· Peter Kafka
· Ann Sweeney
· Jeanne Meyer
· Jeff Pulver
· Karen Allen
· Peter Brodsky
· Mark Piibe
· Rio Caraeff
· Chad Hodge
· Sara Haze

All I want for Christmas is:

· Spotify availability in the U.S.
· A revamped Rhapsody (it’s really time for a make-over!)
· A streamlined licensing process from both labels and publishers for new
services
· ISP-based revenue streams for creators and rightholders
· More funding for innovative music start-ups
· Transparency in artist & songwriter royalty payments
· More communication, collaboration and coopetition between stakeholders
· 4G data service
· A digital music conference in Rio during Carnival
· The Apple music subscription service we’ve all been waiting for

A Happy Holiday break to us all, let’s get back to changing the world on January 1st!

by Ted Cohen

By Ted Cohen

For nearly four years, I’ve been evangelizing the transition of the music industry from a product-based business to a service-based economy. I’ve never viewed this as a possible scenario but as the only eventuality. It’s going to happen, it’s got to happen, now maybe sooner than later. With Apple’s acquisition this week of LaLa, the cloud-based music service that started out as a CD swapping marketplace, the Cuppertino giant appears to be making moves toward launching a cloud-based music service.

This will change the game forever.

As consumers have challenged the traditional value of music, the offerings have evolved from full-album digital downloads to a la carte track availability, pioneered by Liquid Audio and Rioport in 2000 and mainstreamed by Apple’s prime time launch of the iTunes Store in April ’03. While iTunes has done a brilliant job of serving the track-based economy, it’s been obvious that music fans want more: more value for their dollar, more information, more tools and unlimited access. Rhapsody and Napster have done a great job demonstrating the service value proposition, but have done a relatively poor job, as evidenced by their low subscriber numbers, of articulating/selling the offering to the masses. In short, Rhapsody is great but their success rate sucks. This is pointed out to me every time I rave about Rhapsody. I had high hopes when Rhapsody aligned with MTV and Verizon, but those dreams were dashed by recent rumblings that the partners want out of the deal.

As a very bright light, Spotify took Europe by storm this past year with their simple, clean and elegant ad-supported freemium model; the USA is currently petitioning the United Nations for equal treatment. At the same time, the economics around ad-supported models are being challenged. Under the current pay-per-play deal structure, the CPM’s necessary to provide profitability are difficult to maintain. As I stated in a previous TMV article, we need to move to a transparent revenue-share model to insure the success of these services. Apple has the necessary market muscle to force that move.

I’ve frequently joked that when Apple finally announces their subscription service, the public will wonder why it took Apple to invent the subscription model. While this might be amusing, it’s completely true. Apple’s ability to connect with consumers is awe-inspiring. They weren’t first with the portable music player, the portable video player, or the media-centric mobile phone, yet they own all three verticals by a large margin, an Apple music service offering should be no exception.

Glenn Peoples of Billboard sees it a bit differently. He states, “Apple appears to have bet on a digital music strategy that places ownership – no matter how ephemeral – over subscription.” I, respectfully, believe that it’s more of a hedged bet, cloud access to owned music AND subscription, the absolute best of both worlds.

It is in Apple’s best interest to offer subscription. With flattening iPod sales, a global footprint of over 200 million owners, an extra $10 a month per user would, even for Apple, represent a significant contribution to the bottom line. Apple’s current offerings in film allow for time-controlled content delivery to their portable devices, it is not a big technological leap for their engineering staff to apply the model to music. Even if only half of the devices in use support timed-out services, this could bring in $1 billion of additional monthly gross revenue.
This number should not be ignored by the stakeholders that will need to bless this hybrid model.

100 million users paying for music each month on a recurring basis!

Do the math, it is a no-brainer! It really blunts the excitement around a million-selling album, doesn’t it?

Currently, Simplify allows me access to my entire library of 75,000 tracks on any of my Macs or my iPhone. My Rhapsody account gives me 7 million more tracks wherever I am, but currently those are two separate experiences.

When I can finally access the music I own from ‘the cloud’ and combine my iTunes library with an all-you-eat subscription service on my iPhone, my vision of our digital future will be truly fulfilled.