INDUSTRY NEWS
For daily music industry news on CMJ.com go here.
Layoffs and lawsuits overwhelmed CMJ’s Industry News in 2002. With the RIAA suing pretty much
anyone and anything in its path, the slow economy hitting the music industry particularly hard
and Webcasters being drawn through the ringer before a fair royalty rate could be found, there was
certainly more than enough to keep anyone who works in the music industry stressed this year.
But it wasn’t all bad news — satellite radio has officially launched and weathered the initial storm, legitimate online music subscription services are finally offering enough of a catalogue to make them worthwhile and several indie labels have received the financing to ensure they can provide great music for years to come.
In hopes that 2003 only gets better, here’s a month-by-month look back at what happened in the
industry during 2002.
JANUARY
Representative John Conyers
(D-MI) pushes for deeper
investigations and harsher
penalties regarding payola in
the music industry, stating, “A
lot of artists’ careers get compromised
after they get to the
top because of these [payola]
transactions. And many more
never even get a chance to get
near the top. They get squeezed
out.” • After a long wait and
much hype, satellite radio
becomes a reality, as XM
Satellite Radio officially hits
the retail shelves. Over 30,000
people sign up for the subscription
service within the
first 60 days, making it the
fastest selling audio product in
the last 20 years.
FEBRUARY
Arista’s L.A. Reid signs a deal
with guaranteed hit-makers the
Neptunes (Pharrell Williams
and Chad Hugo) and their
manager, Robert Walker, which
will bring their Star Trak
Entertainment imprint to
Arista. • CMJ New Music
Report turns a new page by
putting Island Def Jam’s John
Rosenfelder on its cover. This
marks the first time someone
other than an artist has graced
the magazine’s front page. •
Sirius Satellite Radio begins
the first phase of its national
rollout.
MARCH
EMI Records officially becomes
known as Capitol. • MusicNet
and pressplay, two of the supposedly
“legit” subscription
services, come under fire from
artists and their managers for
not distributing a fair percentage
of royalties. • The
Copyright Arbitration Royalty
Panel (CARP) establishes a
royalty rate between 0.07 and
0.14 cents per performance for
broadcasters who stream
online. In addition to the payments,
Webcasters will have to
make arduously detailed
reports about songs played and
listeners receiving the streams.
APRIL
Sirius Satellite Radio
announces its 2001 fourth
quarter net loss of $83.6 million.
Meanwhile, XM doubles
its previous quarter’s number
of subscribers with 350,000
customers. • Morgan Stanley
takes a 47.5 percent stake in V2
Records, directing a reported
$22–29 million into the label. •
BMG announces plans to issue
“copy managed” promotional
CDs in an effort to curb unauthorized
duplication. • Napster
lays off 30 more employees. •
EMI announces plans to cut
1,800 jobs.
MAY
The International Federation
of the Phonographic Industry
officially announces a 5 percent
drop in value in the music
industry worldwide and a 6.5
percent decline in units sold. •
National Academy of
Recording Arts and Sciences
President Michael Greene
resigns after 14 years amid
investigations of sexual harassment.
Greene receives an $8
million severance package. •
AOL Time Warner posts a
$54.2 billion loss — the largest
loss in U.S. corporate history.
JUNE
The RIAA promotes Hilary
Rosen from President to
Chairman/CEO, while Cary
Sherman rises from Sr.
Executive VP to President. •
Bertelsmann announces its
intent to buy Napster for $8
million. • The Librarian of
Congress rejects the proposed
CARP online royalty rates. •
Napster files for Chapter 11
bankruptcy. • Atlantic Records
cuts 30 jobs.
JULY
The Reverend Al Sharpton,
Johnny Cochran and Michael
Jackson form a coalition to
investigate the financial
exploitation of artists by record
labels. • Zomba Music Group
exercises its option to allow
BMG to purchase its remaining
shares by the end of the year. •
The Librarian of Congress
announces new royalty rates
for Webstreamers. • Billboard
Editor-In-Chief Timothy
White passes away at 50. •
Listen.com signs a licensing
agreement with Universal,
making it the only online service
with agreements with all
five major labels. • Columbia,
Palm and Gold Circle all
announce layoffs.
AUGUST
Congressmen Howard Berman
(D-CA) and Howard Coble (RNC)
propose a bill that would
grant copyright holders the
ability to disable the PCs of
those who participate in filesharing,
while giving the RIAA
immunity from all state and
federal laws. • Beggars Group
purchases a 50 percent share
of Matador Records. • The
RIAA files for a court appeal
of the Librarian of Congress’
decision on webcasting royalty
rates. • DeSoto Records
announces plans to slowly shut
down the label.
SEPTEMBER
The ironically titled
Listen4ever.com shuts down
after the RIAA files lawsuits
with the company’s server. •
The RIAA’s Web site is hacked
and links to file-sharing sites,
as well as MP3s of an entire
Linkin Park album, are posted.
• A Delaware bankruptcy court
blocks the sale of Napster to
Bertelsmann. Napster lays off
its remaining 44 employees. •
Sirius Satellite Radio
announces major layoffs and
initiates a staffing freeze.
OCTOBER
The RIAA announces the
launch of an anti-piracy advertising
campaign that features
artists explaining how downloading
music hurts their
careers. • The five major U.S.
music distributors (UMVD,
BMG, WEA, EMI and Sony),
as well as retailers Trans World
Entertainment, Tower Records
and Musicland Stores, settle an
antitrust lawsuit filed by attorney
generals in 41 states. The
suit charged the defendants with
conspiring to inflate the price of
CDs, costing consumers millions
of dollars. As part of the
settlement, the defendants agree
to donate 5.5 million CDs (valued
at $75.7 million) to public
and nonprofit organizations and
give up $67.38 million in cash to
compensate consumers. •
Courtney Love and Geffen settle
their lawsuit, allowing Love out
of her contract and giving
Geffen the right to offer future
Nirvana releases. • Napster
founder Shawn Fanning signs a
deal with MTV for the rights to
make a movie about his life
story. • The CMJ Music
Marathon descends on New
York City. • Hollywood Records
downsizes 20 positions.
NOVEMBER
On November 14, the Senate
and House of Representatives
pass the “Small Webcaster
Settlement Act,” which, among
other things, extends the deadline
for the recording industry
and small and non-profit
Webcasters to sort out royalty
payments. • The RIAA wins an
all-encompassing preliminary
injunction against file-swapping
site Aimster.com. • The
SEC launches an investigation
into Vivendi Universal for
alleged financial improprieties
under former Chairman Jean-
Marie Messier. • Heavy layoffs
hit V2 and Kinetic Records.
DECEMBER
Roxio agrees to purchase the
remaining assets of Napster for
$5.3 million. • Bertelsmann’s
purchase of the Zomba Music
Group is finalized — for a
record-breaking $2.74 billion.
Additionally, BMG buys out
Clive Davis’ share in J Records
and selects him as chairman
for both J and RCA Records.
Both labels will operate independently
under the newly
fashioned RCA Music Group. •
CDNow closes its daily music
news source, allstar, and allows
its operations to be taken over
by Amazon.com.
