Saturday 18th April 2015
NEWS TICKER FRIDAY APRIL 17TH 2015: -On June 9, 2015, the Federal Trade Commission will host a workshop to examine competition, consumer protection, and economic issues raised by the proliferation of online and mobile peer-to peer business platforms in certain sectors of the economy, often referred to as the “sharing economy.” The workshop will take place in Washington, D.C., at the FTC’s Constitution Center conference space. Peer-to-peer platforms, which enable suppliers and consumers to connect and do business, have led to the emergence of new business models in industries that have been subject to regulation. The FTC’s sharing economy workshop will explore how regulatory frameworks can accommodate new sharing economy business models while maintaining appropriate consumer protections and a competitive marketplace. “We are seeing a dramatic growth in products and services that are built on peer-to-peer platforms, such as ride-sharing and property rentals, as more entrepreneurs harness the power of technology to reach more consumers,” says FTC Chairwoman Edith Ramirez. “The resulting business models have great potential to benefit our economy and consumers. Through our workshop, we want to better understand the competitive impact of these new business models, as well as their interactions with existing regulatory frameworks.” - he Straits Times Index (STI) ended 6.42 points or 0.18% lower to 3525.19, taking the year-to-date performance to +4.76%. The top active stocks today were Keppel Corp, which declined 2.01%, DBS, which gained 0.91%, SingTel, which gained 0.23%, UOB, which gained 0.38% and ComfortDelGro, with a 1.70% advance. The FTSE ST Mid Cap Index fell 0.30%, while the FTSE ST Small Cap Index rose 0.06%. The outperforming sectors today were represented by the FTSE ST Utilities Index, which rose 1.60%. The two biggest stocks of the Index - United Envirotech and Hyflux – ended 5.12% higher and 2.09% lower respectively. The underperforming sector was the FTSE ST Basic Materials Index, which slipped 1.82%. Midas Holdings shares declined 2.56% and Geo Energy Resources remained unchanged - It has been a testing day in the markets, with most stock markets reporting substantial losses. The spectre of another crisis in Greece as the IMF talked tough on the country adhering to its repayment schedule, a terminal outage at Bloomberg and a clampdown on OTC and short selling in China combined to test investor sentiment. The FTSE 100, fell briefly below 7000 to end up finding support at 7007; however Spain's Ibex and Italy's FTSE MIB were both 2% down while the German DAX 30 slid 1.8% and France's CAC 40 fell 1.2% - The outage impacted the UK DMO’s offer of £300m 1 month bill, due 18-May-2015(ISIN GB00BDNKWT09); the £1,000m 3-months bill due 20-Jul-2015 (ISIN GB00BDNLZ833), and the £1,500m 6-months bill due 19-Oct-2015 (ISIN GB00BDNNDG38) was conducted between midday and14.30 today. Any bids submitted in the aborted operation earlier this morning were deemed null and void - Catastrophe bond issuance is forecast to have risen almost 30% so far this year, though the size of the market remains modest. The increase in demand for cat bonds means that some bonds are now trading at a discount to their original issue price for the first time in years. Issuance for the year through to mid-April is predicted to be up 27% on 2014, at around $2.1bn, The full-year trend also looks positive, following on from a record cat bond issuance of $8.4bn in 2014 - Moody's Investors Service has described in detail the approach it takes to allocating expected credit losses across the various classes of debt issued by banks in the US, the EU and Switzerland. The liability hierarchy or "waterfall" that Moody's employs to allocate estimated losses to debt classes in these three jurisdictions incorporates the implications of key structural differences in their bank resolution and bail-in frameworks. In this way, the liability hierarchy aims to capture the prioritisation authorities will give different debt classes when apportioning losses to creditors in the event of a bank's failure. The construction of a given bank's liability structure at failure serves as the starting point of Moody's Loss Given Failure (LGF) analysis, instituted as part of its new bank rating methodology. The LGF framework is used to assess and differentiate creditor risk across banks' liability structures, as detailed in Moody's report "How Resolution Frameworks Drive Our Creditor Hierarchies." The bank resolution and bail-in frameworks in the US, EU, and Switzerland all aim to limit the use of public funds in bank resolutions while mitigating risks to financial stability. Important differences in these frameworks include the degree of power authorities have to write down or convert capital instruments, differences in depositor preference, and variations in the obligations of holding companies to their operating companies - Close Brothers has reportedly acquired advisory firm Mackay Stewart & Brown for an undisclosed amount. Andy Cumming, head of advice at Close Brothers Asset Management, said the acquisition would strengthen the national advice firm’s Scottish operation.

Download Upswing

Monday, 16 April 2012
Download Upswing The rapid deployment of handheld devices such as tablets and smartphones, combined with the steady growth in emerging online retail models, have helped breath life into a music business hobbled by years of sagging revenues. Has the long-suffering industry finally found its feet as a result of this technological convergence? And if the turnaround is at hand, where do investors go to rock and roll? Dave Simons reports from Boston. http://www.ftseglobalmarkets.com/

The rapid deployment of handheld devices such as tablets and smartphones, combined with the steady growth in emerging online retail models, have helped breath life into a music business hobbled by years of sagging revenues. Has the long-suffering industry finally found its feet as a result of this technological convergence? And if the turnaround is at hand, where do investors go to rock and roll? Dave Simons reports from Boston.

On paper, the ultra-exclusionary business model championed by Apple Inc—keeping competitors at arm’s length while pumping up its vast inventory of proprietary apps—should have given investors and consumers cause to reassess the way they buy music. However, on the day it launched its latest technological marvel, the new iPad third-generation tablet, shares of the Cupertino, California-based company were trading in the vicinity of $600, roughly double last summer’s stock price.

Numerous market watchers maintained a solid ‘buy’ rating, some even calling the stock ‘underpriced’ at current levels. Apple could move more than 65m iPads this year alone, according to some analysts.



In fact, the rapid deployment of handheld devices such as the iPad, combined with the steady growth of emerging digital-music models, have helped breathe life into a record industry hobbled by years of sagging revenues.

While Apple and its league-leading iTunes Music Store continues to dominate (holding down an estimated 70% of digital music sales), “all-you-can-eat” subscription services such as UK-based Spotify and France’s Deezer themselves attracted some 13m paying customers last year. This is a 60% increase over 2010, according to UK’s International Federation of the Phonographic Industry (IFPI).

Music downloading has also been helped in no small part by ‘in-the-cloud’ services; those that use a central network infrastructure, rather than a home-computer application, among them Amazon’s Cloud Drive and Apple’s newly launched iTunes Match.

All told, digital-music revenues rose 8% in 2011, according to IFPI, the first year-over-year growth increase since 2004. Providing music to users wherever and whenever they want appears to be the lynchpin going forward. By 2016, an estimated 161m subscribers worldwide are expected to access music from a mobile device, up from less than 6m in 2011. Frances Moore, chief executive for UK-based International Federation of the Phonographic Industry (IFPI), agrees that consumer choice “has been revolutionised…as new models for consuming and accessing music are rolled out in new and existing markets.”

Has the long-suffering music industry finally found its feet as a result of this technological convergence? And if the turnaround is at hand, where do investors go to rock and roll?

Hear today—gone tomorrow

Back in 1999 the record industry was sitting pretty—that year, 847m CDs were sold, according to the Record Industry Association of America (RIAA). By that time, intense consolidation from the Telecommunications Act of 1996—which enabled a handful of conglomerates to secure majority stakes in numerous media markets—had turned the airwaves into an increasingly exclusive club.

Eventually, listeners began seeking alternative sources online—some of them legit, many of them not. As faster connection speeds accelerated the trend toward peer-to-peer file sharing, recording artists began flocking to upstart venues such as MySpace, YouTube and Facebook (and, more recently, Bandcamp and Soundcloud), bypassing traditional distribution channels in the process. As the online phenomenon reached new heights, sales of physical media were suddenly in free fall; by last year, CDs hit an all-time low of 223.5m units sold.

Of course it is hardly the first time the music establishment has been forced to re-group in response to a major cultural backlash. But despite the potential to attract millions of newcomers, for years record executives have bristled at the idea of unfettered digital access, and have leaned on companies to push premium-pricing plans in an effort to optimize revenue.

However, after years of waging war over no-charge music streaming, record companies are now beginning to see the benefits of ‘freemium’ services—which, say analysts, are used by providers mainly as an acquisition strategy, roughly 15% of Spotify’s paid subscribers for instance consist of former ‘freemium’ users drawn to premium-level benefits such as higher-quality downloads and no intrusive banner advertising. Spotify chief executive officer Daniel Ek argues that his service has helped the music business enter a "golden age," as people who share music online are more likely to buy more tracks and albums.

“Even though labels worried about the impact of free Internet radio, music social networks, and other streaming services like Pandora and Spotify, it looks as if those services are having the same effect that radio did back during the height of its viability,” notes Anthony John Agnello in financial news site InvestorPlace.com. “Free Internet music broadcasts appear to be encouraging digital music sales,” he says.

Looking for a leader

The speed with which the digital-download business has evolved has turned more than a few would-be sure-shots into eventual also-rans. One notable casualty was (former) digital-music provider Napster, which went head-to-head with Apple back in 2005 on the assumption that its Napster To Go portable subscription service—which gave customers access to over a million songs for a mere $15 a month—would help revolutionise the music-listening experience.

In 2008, however, a floundering Napster was acquired by retailer Best Buy on the cheap, and last year its remaining assets were sold to rival subscription service Rhapsody. By then, Rhapsody itself was feeling the heat from new arrivals such as  Pandora. “There are a lot of bodies on the road leading to success with a digital music service,” muses Tim Schaaff, chief executive officer of Sony Network Entertainment.

As such, betting on who will be tomorrow’s music-delivery heroes is no easy task. While up-and-comers such as Spotify are certainly attractive at the moment, it’s tough to argue with the proven track records and 25% profit margins of behemoths Apple and Google. Despite the lure of all-you-can-eat plans such as Rhapsody, Apple’s iTunes ownership model shows no signs of weakening.

During the final quarter of 2011, iTunes users downloaded estimated 16bn songs, good for approximately $1.5bn in revenue. Not to be outdone by the cloud crowd, Apple now offers its ITunes Match, a service that wirelessly syncs users’ iTunes music library between Apple devices using a cloud-based personal storage locker.

The fact that Apple has managed to maintain download supremacy through the creation of must-have proprietary devices (such as the iPad, iPhone and iPod) is obviously not lost on rival Google, which has already announced its intentions to move into the hardware market.

Earlier this year, Google got the green light to acquire Motorola Mobility––part of its ongoing effort to boost production of Android-based smartphones. Currently 40% of smartphones utilise the Android operating system, the Linux-based, Google-owned rival to Apple’s iOS 5 mobile OS. Additionally, the Mountain View, California-based company is said to be developing a proprietary wireless music-streaming system for the home that can be operated from an Android-based handheld device.

In with the in-cloud

While not nearly as competitive on an earnings-per-share basis as Apple or Google, Amazon’s standing as the industry’s overall download sales king makes it a strong contender going forward. Last year, the Seattle-based online retailing giant announced the premier of its Cloud Drive, a music-backup service that allows Amazon customers to store music in the cloud, using a “digital locker” hosted on the company’s servers, with the ability to access personal libraries from any location and on any computer.

Providing a more practical means of accessing users’ personal media libraries appears to be at the heart of Amazon’s cloud-based model, notes Frank Gillett, vice president and principal analyst for Forrester Research, called the move a “first salvo in a series of steps that will lead Amazon to compete directly for the primary computing platform for individuals, as an online platform, as a device operating system, and as a maker of branded tablets,” says Gillett.

In-the-cloud music plans, which typically offer users the choice of a free, advertising-supported plan, or a premium paid-for option, are fast becoming the medium of choice on the increasingly crowded digital-music frontlines. Compared to portable subscription plans of the past that only worked with a limited number of devices, emerging cloud providers have addressed compatibility issues by allowing users to access music through apps on smartphones and other connected devices. “This has vastly improved the quality and level of the consumer experience,” notes IFPI.

Live streaming music

One of the more visible cloud-based proponents of late has been Spotify, which allows users to live-stream music from the vast libraries of companies such as Sony, EMI and Universal. Like rival Rhapsody, Spotify users rent their music on a monthly basis by accessing tracks through an internet connection; premium members may also listen offline by downloading and storing music to a smart phone or similar portable device.

Where iTunes currently charges $1.29 to own a single track, Spotify users who don’t mind viewing the occasional banner ad may stream tracks free of charge (or pay $15 a month for music without any advertising).

Debuting in the states last summer, Spotify has since signed up some 2m US users, more than a quarter of which are paid subscribers. Spotify also became the first subscription service that enabled users to share personal playlists through a Facebook link, thereby turning conventional music streaming into a social experience. “Spotify has always had a keen sense of how to coexist in the broader ecosystem, rather than try to do everything itself,” says digital-media analyst Mark Mulligan. By integrating with Facebook, Spotify has found a way to simply the learning curve for its new users, suggests Mulligan.

Also joining the ranks of the cloud crowd is Sony Corp and its Music Unlimited Powered by Qriocity service, which links content across Sony-manufactured devices such as its Playstation 3 as well as Android-equipped smartphones. Google too has unveiled its own Google Music streaming/storage service that will allow users to access online music from a variety of devices, and share music through a social network (Google’s own Google+).

Equally important in the resurgence of the music trade has been the ramp-up in smartphone and tablet sales. In areas with higher-than-normal handheld uptake, subscription plans have fared unusually well. In Spotify’s native country, Sweden, for instance, subscription services accounted for some 84% of digital revenues through the end of last year.

Manufacturers of connected devices will continue to expand their reach, say experts, with sales of tablet computers expected to set the pace over the next several years. Research firm Gartner estimates that tablet revenue could reach $326m by 2015, led by Apple, which has shipped an estimated 55m iPads since the product’s debut two years ago. Meanwhile, sales of smartphones grew by 47% during Q4 of last year, reaching 149m units sold, according to Gartner. Apple’s iPhone accounts for nearly one-fourth of global smartphone sales, says Gartner, which expects smartphones to eclipse desktop computer sales over the neat term.

Own or access, or both?

As downloads continue to displace tangible media such as CDs and vinyl albums, for many the term digital has become synonymous with “disposable”—and for those users, subscription services that allow access rather than ownership remains the most logical choice. For that matter, it is the model that would appear to give iTunes a real run for its money.

Rather than battle for digital supremacy, however, subscription and ownership plans have managed to achieve profitability independent of one another. “The fact that these two models of consumption can co-exist speaks volumes about the future,” says Rob Wells, president, global digital business, Universal Music Group. “In fact, we have really only scratched the surface of digital music in the last decade—now we are starting the real mining, and on a global scale,” he says.

The bottom line: analysts and music executives alike believe that the current uptick in digital music sales is sustainable, and that the recent numbers reveal an industry on the cusp of a rebound. “We are still seeing healthy growth in the market for digital-music downloads,” observes Russ Crupnick, senior vice president of industry analysis at NPD Group.

Adds Stephen Bryan, executive vice president, digital strategy and business development, Warner Music Group, “There’s a race among the services to go global and plant the flag in new territories, and we’re seeing services that are generating revenues and growth. There is high engagement with these services. Consumers love them and spend hours using them.”

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