Filed under: Products and services, Consumer experience, Apple Inc (AAPL), Marketing and advertising, Sony Corp ADR (SNE)

With the monumental changes the music industry experienced in 2007, this year has huge shoes to fill in order to see if the developments will continue or stall. One of the biggest developments that will likely continue to change is the place of anti-piracy technology, namely the use of Digital Rights Management software (DRM). It’s been quite a while since EMI Group plc (ADR) (OTC: EMIPY) decided to halt its use of the technology (last April) and since then the other majors have been slow to adopt similar stances, while EMI has changed hands (literally) becoming a part of European-based private equity firm Terra Firma.

Sony BMG, a merger between Sony Corp. (NYSE: SNE) and Germany based BMG, have recently debuted “MP3 cards” which will enable consumers to purchase DRM-free albums from stores versus buying the tracks strictly from an online store. The program is intended to “bring digital stores into the physical retail space” with Sony BMG using the website MusicPass.com to grant buyers to retrieve albums. In essence, Sony hopes that the program will expand both the digital and physical markets. Apple (NASDAQ: AAPL)’s iTunes Store debuted a similar program with Starbucks (NASDAQ: SBUX) last autumn, but the new program will see a bigger market due to the retail stores chosen to stock the cards.

Finally, the other major development is the band’s Radiohead online-only decision to initially release an album without label involvement. Even though this kind of move will likely not be repeated across the board, some bands have mentioned intentions to follow the direction and offer new music in a similar method. The problem with this method is that Radiohead is a firmly established act with a huge fan base. New acts and smaller groups will still need to rely on the music industry to further their names unfortunately. It is unlikely that this method will ever be viable for a band unless they’re firmly established and can foot the bill without label money. Of course, Radiohead itself has labeled the release an “official” leak, which means that it conforms to similar patterns that album releases face, albeit one from the band itself and not fans getting material out illegally before the CD is released.

It seems that the future of the music industry will rely on these kinds of developments, even if they are not successful. The benefit they bring to the industry is a new level of excitement and interest peaked in changing business practices and models.

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Filed under: Products and services, Consumer experience, Apple Inc (AAPL), Marketing and advertising, Sony Corp ADR (SNE)

With the monumental changes the music industry experienced in 2007, this year has massive shoes to fill in order to see if the developments will continue or stall. One of the biggest developments that will likely continue to change is the place of anti-piracy technology, namely the use of Digital Rights Management software (DRM). It’s been quite a while since EMI Group plc (ADR) (OTC: EMIPY) decided to stop its use of the technology (last April) and since then the other majors have been slow to adopt similar stances, while EMI has changed hands (literally) becoming a part of European-based private equity firm Terra Firma.

Sony BMG, a merger between Sony Corp. (NYSE: SNE) and Germany based BMG, have recently debuted “MP3 cards” which will enable consumers to purchase DRM-free albums from stores versus buying the tracks strictly from an on the internet store. The program is intended to “bring digital stores into the physical retail space” with Sony BMG using the website MusicPass.com to grant buyers to retrieve albums. In essence, Sony hopes that the program will expand both the digital and physical markets. Apple (NASDAQ: AAPL)’s iTunes Store debuted a similar program with Starbucks (NASDAQ: SBUX) last autumn, but the new program will see a bigger market due to the retail stores chosen to stock the cards.

Finally, the other major development is the band’s Radiohead online-only decision to initially release an album without label involvement. Although this kind of move will likely not be repeated across the board, some bands have mentioned intentions to follow the direction and offer new music in a similar method. The problem with this method is that Radiohead is a firmly established act with a massive fan base. New acts and smaller groups will still need to rely on the music industry to further their names unfortunately. It is unlikely that this method will ever be viable for a band unless they are firmly established and can foot the bill without label money. Of course, Radiohead itself has labeled the release an “official” leak, which means that it conforms to similar patterns that album releases face, albeit one from the band itself and not fans getting material out illegally before the CD is released.

It seems that the future of the music industry will rely on these kinds of developments, even if they are not successful. The benefit they bring to the industry is a new level of excitement and interest peaked in changing business practices and models.

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Filed under: Products and services, Launches, General Motors (GM)

General Motors Corp. (NYSE: GM) joined the slew of companies this week at the Consumer Electronics Show (CES) in Las Vegas which touted their technological advances and gave insight into what was ahead. CEO Rick Wagoner even took the opportunity to introduce a Cadillac concept vehicle during his keynote speech that uses fuel-cell and battery technology for propulsion. Translated: no fossil fuels needed.

The Cadillac concept is powered by the promising fuel-cell technology along with lithium batteries. Additionally, it will be built on the same platform as GM’s previously-announced and uber-anticipated Volt 100% electric automobile scheduled to roll off assembly lines sometime before or in 2010. Wagoner even drove a Volt onto the stage where he gave his keynote. If that’s not grandstanding for the future of the auto industry, I’m not sure what’s.

The Cadillac Provoq will have all the style and luxury of the Cadillac brand if it makes its way from concept to reality, to which Wagoner said “it is fitting that our premium brand would be propelled by our most advanced technology.” The details pit this as not a bad auto performer all things considered: 300 mile range before re-fueling, 0 to 60 in under nine seconds and a 100 mph top speed. It’s good to see GM really promoting a green car agenda instead of $2,500 DVD navigation systems linked to Bluetooth smartphones that dress you and cook your breakfast while you drive. Well, something like that anyway.

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Filed under: Products and services, Consumer experience, Apple Inc (AAPL), Marketing and advertising, Sony Corp ADR (SNE)

With the monumental changes the music industry experienced in 2007, this year has large shoes to fill in order to see if the developments will continue or stall. One of the biggest developments that’ll likely continue to change is the place of anti-piracy technology, namely the use of Digital Rights Management software (DRM). It’s been quite a while since EMI Group plc (ADR) (OTC: EMIPY) decided to stop its use of the technology (last April) and since then the other majors have been slow to adopt similar stances, while EMI has changed hands (literally) becoming a part of European-based private equity firm Terra Firma.

Sony BMG, a merger between Sony Corp. (NYSE: SNE) and Germany based BMG, have recently debuted “MP3 cards” which will enable consumers to buy DRM-free albums from stores versus buying the tracks strictly from an on the internet store. The program is intended to “bring digital stores into the physical retail space” with Sony BMG using the website MusicPass.com to grant buyers to retrieve albums. In essence, Sony hopes that the program will expand both the digital and physical markets. Apple (NASDAQ: AAPL)’s iTunes Store debuted a similar program with Starbucks (NASDAQ: SBUX) last autumn, but the new program will see a larger market due to the retail stores chosen to stock the cards.

Finally, the other major development is the band’s Radiohead online-only decision to initially release an album without label involvement. Although this kind of move will likely not be repeated across the board, some bands have mentioned intentions to follow the direction and offer new music in a similar method. The problem with this method is that Radiohead is a firmly established act with a large fan base. New acts and smaller groups will still need to rely on the music industry to further their names unfortunately. It is unlikely that this method will ever be viable for a band unless they are firmly established and can foot the bill without label money. Of course, Radiohead itself has labeled the release an “official” leak, which means that it conforms to similar patterns that album releases face, albeit one from the band itself and not fans getting material out illegally before the CD is released.

It seems that the future of the music industry will rely on these kinds of developments, even if they are not successful. The benefit they bring to the industry is a new level of excitement and interest peaked in changing business practices and models.

Share This

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Filed under: Products and services, Launches, General Motors (GM)

General Motors Corp. (NYSE: GM) joined the slew of companies this week at the Consumer Electronics Show (CES) in Las Vegas which touted their technological advances and gave insight into what was ahead. CEO Rick Wagoner even took the chance to introduce a Cadillac concept vehicle during his keynote speech that uses fuel-cell and battery technology for propulsion. Translated: no fossil fuels needed.

The Cadillac concept is powered by the promising fuel-cell technology along with lithium batteries. Additionally, it will be built on the same platform as GM’s previously-announced and uber-anticipated Volt 100% electric automobile scheduled to roll off assembly lines sometime before or in 2010. Wagoner even drove a Volt onto the stage where he gave his keynote. If that’s not grandstanding for the future of the auto industry, I’m not sure what is.

The Cadillac Provoq will have all the style and luxury of the Cadillac brand if it makes its way from concept to reality, to which Wagoner said “it is fitting that our premium brand would be propelled by our most advanced technology.” The details pit this as not a bad auto performer all things considered: 300 mile range before re-fueling, 0 to 60 in under nine seconds and a 100 mph top speed. It’s good to see GM really promoting a green car agenda instead of $2,500 DVD navigation systems linked to Bluetooth smartphones that dress you and cook your breakfast while you drive. Well, something like that anyway.

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Filed under: Rumors, Products and services, Apple Inc (AAPL), Netflix, Inc. (NFLX)

It’s been stated that the physical disc format, including the DVD and the Blu-ray disc, will eventually become extinct as more customers download movies and content right from the internet. While that scenario is not stopping the Blu-ray disc camp from saying exciting things about having customers buy their beloved movies on yet another format, some are already looking past the latest motion picture disc craze.

Apple, Inc. (NASDAQ: AAPL), always one to take a firm grasp of the future and make it today’s reality, has announced that it will start giving its iTunes customers the ability to rent digital movies in addition to buying them directly from its iTunes store — and it’s already signed up Fox Studios and Warner Bros. as partners in the new venture.

With JVC and other manufacturers building iPod ability directly into new TV sets, the capability to rent a movie from iTunes, download it onto your iPod and then dock that unit into a new 50-inch flat-panel television is a scenario that might become reality soon. If it does, then renting movies using the DVD format would begin to become stale. Netflix, Inc. (NASDAQ: NFLX) knows this, which is why it’s moving into substitute distribution methods already. Even though movies are already available via Apple’s iTunes, the capability to rent content from all the major motion picture studios might be on the agenda for 2008. If so, how long will it be before DVDs and physical media become extinct? Give it a few years.

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Filed under: Consumer experience, Rants and raves, Citigroup Inc. (C), Bank of America (BAC), Bank of New York (BK), Economic data, Personal finance, Wells Fargo (WFC), Housing

Consumers are still willing to run their lives based on credit, so states an Associated Press report. Consumer borrowing increased at an annual rate of 7.4% in November compared to an increase of just 1% in October - ah yes, the faux magic of a consumerist Christmas.

The truth of the matter rests in the cause for the rise. Is it because consumers are still confident in their earning potential? The more likely cause is that consumers are running out of funding options, read that — they’re running out of cash.

So why is it that mortgages are getting harder to write but consumer purchases can still be funded with just a signature? Even though they’re deflating in value, homes still provide significant backing for lenders to lean their bets on whereas credit cards float in the unknown. With bankruptcies at an all time high, are we setting up for the final crash?

It’s a mystery to me why I’m having trouble getting a $50,000 mortgage on a $70,000 property when I carry a total debt load of only $8,000, secured by a vehicle worth 50% more than that, yet I can get credit of $20,000 at 15% interest with just a swift swipe of my pen. Almost every day, pre-approved credit applications jam my mailbox with offers of easy money and no credit check, but no one wants to bet on the home that I’m writing to you from. How dumb is that?

My message to lenders is easy, and I’ll put it here for you all to see:

If there’s a bank that wants to fund my mortgage based on my desired real estate, my income and a relatively solid credit history, they’re welcome to discuss it with me. However, if there are any lenders who want to forward me $20,000 based on my signature and without a credit check, they’re the stupid ones and they have the ability to kiss my…

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Filed under: Forecasts, Other issues, Bad news, Goldman Sachs Group (GS), Housing, Federal Reserve

On Wall Street, there are forecasts…and then there are forecasts that investors/readers ignore only at their peril.

Put investment banking giant Goldman Sachs decidedly in the later category.

On Wednesday, Goldman Sachs (NYSE: GS) said the U.S economy is probably slipping into a recession, and also predicted that the U.S. Federal Reserve will cut its benchmark interest rate, the Fed funds rate, substantially, to 2.5% from 4.25% by third quarter, Bloomberg News reported.

Goldman, which projects an anemic 0.8% growth rate for the U.S. economy for all of 2008, also said it anticipates the Fed to lower its key interest rate to 3% by the middle of 2008, Bloomberg News reported.

To counteract the effects of the housing’s sector’s correction and other drags on the U.S. economy, including high energy prices, the Fed has cut benchmark interest rates three times since September.. The Fed Funds rate, the rate banks charge each other, now stands at 4.25%, and the discount rate, the rate the Fed charges banks for short-term loans, is at 4.50%. The Fed also set up a special term auction facility to help banks maintain short-term liquidity.

Analyst C. Leonard Bauer, formerly of Prudential, told BloggingStocks Wednesday, the Goldman Sachs forecast is in-line with Wall Street’s overall defensive tone for stocks in 2008.

“Goldman’s announcement is in-line with other forecasts, but Goldman’s report will reinforce the thesis that the defensive days are here for several quarters. In this environment, the obvious plays are consumer staples, drug stocks, and some health care stocks, in my interpretation,” Bauer said. “I’d also raise the quality corporate bond component of a portfolio, with the bond percentage varying, depending on your risk tolerance. It looks like 2008 is going to be a very challenging year for stocks, and I’d like to call it a stock pickers market, but it’s not even that. It’s a market for isolated stocks in defensive sectors, only.”

Further, Bauer, while underscoring that he’s “not a Federal Reserve or interest rate analyst,” also stated he doesn’t anticipate the Fed to lower interest rates as assertively as Goldman forecast.

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Filed under: Consumer experience, Rants and raves, Citigroup Inc. (C), Bank of America (BAC), Bank of New York (BK), Economic data, Personal finance, Wells Fargo (WFC), Housing

Consumers are still willing to run their lives based on credit, so states an Associated Press report. Consumer borrowing increased at an annual rate of 7.4% in November compared to an increase of just 1% in October - ah yes, the faux magic of a consumerist Christmas.

The truth of the matter rests in the cause for the rise. Is it because consumers are still confident in their earning potential? The more likely cause is that consumers are running out of funding options, read that — they’re running out of cash.

So why is it that mortgages are getting harder to write but consumer purchases can still be funded with just a signature? Although they’re deflating in value, homes still provide significant backing for lenders to lean their bets on whereas credit cards float in the unknown. With bankruptcies at an all time high, are we setting up for the final crash?

It’s a mystery to me why I’m having trouble getting a $50,000 mortgage on a $70,000 property when I carry a total debt load of only $8,000, secured by a car worth 50% more than that, yet I can get credit of $20,000 at 15% interest with just a swift swipe of my pen. Nearly each day, pre-approved credit applications jam my mailbox with offers of simple money and no credit check, but no one wants to bet on the home that I’m writing to you from. How dumb is that?

My message to lenders is easy, and I’ll put it here for you all to see:

If there’s a bank that wants to fund my mortgage based on my desired real estate, my income and a relatively solid credit history, they’re welcome to discuss it with me. However, if there are any lenders who want to forward me $20,000 based on my signature and without a credit check, they’re the stupid ones and they have the ability to kiss my…

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Filed under: Forecasts, Bad news, Countrywide Financial (CFC), Housing

Bloomberg News reports that a measure of the danger that corporations won’t make their bond payments is at record high levels. In 2006, it became clear that subprime mortgages might be in trouble and that their problems would injured investors in mortgage backed securities (MBSs). Now there could be trouble in the $3.7 trillion corporate bond market.

How so? The CDX, or Markit CDX North America Investment Grade Series 9 Index, a benchmark gauge of default risk tied to the bonds of 125 companies including Countrywide Financial Corporation (NYSE: CFC), climbed 3.75 basis points to 100 basis points as of 8:15 a.m. this morning in New York. The index is at the widest since the CDX indexes started trading in 2004.

Despite denying bankruptcy rumors, bond buyers are not convinced that Countrywide will be able to stave off bankruptcy. Credit-default swaps on Countrywide moved deeper into distressed levels. Sellers of credit-default swaps were demanding 30% upfront and 5% a year for contracts protecting Countrywide bondholders from default for five years. That’s up from 28% upfront and 5% a year at the close of trading yesterday.

What does this tell us about the future of corporate credit quality? It’s not good. According to Bloomberg News, “The CDX index has soared more than 22 basis points in the first six days of trading this year on concern that the housing slump will drag the broader economy into a recession and deepen losses at financial companies, potentially pushing some into bankruptcy.”

S&P anticipates the default rate for corporate junk bonds to rise from its current 1% rate to as high as 3.4% by the end of October. But this is below the long-term average of 4.5%.

If S&P is right, 56 bonds will default this year — a big jump from 2007’s 14. And if the CDX is any indicator, Countrywide — whose stock is down nearly 10% today — might be one of them.

Update: Countrywide is down 15% as of 2:40pm. According to the Associated Press, that could be due to spiking of bad loans. 6.96% of the loans in its servicing portfolio were delinquent last month, up from 5.02% in December 2006. About 1.04% of the mortgage loans were pending foreclosure, up from 0.65%.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Countrywide securities.

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