Newsletter: 2014 Q1

2014 Q1: End of Year Update

2013 was a very exciting year in the music industry! Please take a moment look at our SMG Update section below for many new trends, announcements and music sales & market share updates that are affecting all of us.

Here in 2014, Sugo Music Group offers the largest, most comprehensive global music distribution solution services in the industry! This year, we are providing a number of new distribution services!

Music Distribution: Grow, Grow & GROW!

Sugo Music Group is the only distributor to integrate global digital distribution as well on-demand physical distribution services, acknowledging the importance of selling and marketing across both formats with superior supply chain management. Whether it's a full length album on iTunes, an EP compilation on Spotify, a single on our various YouTube radio channels, a ringtone through Telefonica, or a one-at-a-time manufactured "on demand" CD via Amazon, we supply hundreds of outlets around the world through our unparalleled distribution supply chain and asset management system!

From San Francisco to South Korea, Chile to China, and from India to Indonesia, your music will be distributed the right way! 

Sugo Music Group's distribution platform stems from 30 years of strategic partnerships and will connect you to more listeners & more paying customers!



Hot Off the Press:

***At the end of December, Spotify announced it was going free on mobile to keep up with growing mobile listening trends. It also launched in 20 new countries, bringing its total markets to 55 and keeping its spot as the second largest music subscription service in the world in terms of countries serviced, behind Deezer.

***Just hours before Spotify's announcement, Rdio also touted its launch in 20 new countries, increasing its total markets serviced to 51.

***Deezer has partnered with Singapore's M1 mobile service provider in a special promotion for mobile subscribers, who can get a discounted rate for a limited time.

***Streaming has officially made it to German charts by way of inclusion in the country's Singles charts and a separate, dedicated Streaming chart.

End of the Year Update:

iTunes Radio  Apple's very own Internet radio service, has launched in the U.S. Similar to Pandora and iHeartRadio, iTunes Radio is a non-interactive streaming radio service with the advantage that it includes a one-click buy button so users can easily and immediately add the song they've just discovered to their library. As a non-interactive streaming service, half of the revenue generated from iTunes Radio will be paid out via SoundExchange, while the other half will go to our labels & artists through Sugo Music Group. Designed with the goal to connect downloads with discovery, iTunes Radio is more than just a pure-play radio service and we're very excited to see this new service in action.

In-Car Entertainment  Google and NVIDIA have already partnered with some of the biggest car companies in the world, encompassing the American, European, and Asian markets: General Motors, Honda, Audi, and Hyundai. The word on the streets is that Google will be teaming up with Audi to supply "in-car entertainment". Already working with Google and rumored to be integrating full "in-car entertainment", are Toyota Motor Corp. of Japan and Tesla Motors Inc. FYI, Apple has been integrating with BMW AG, Daimler AG's Mercedes-Benz division, General Motors, and Honda Motors. Look out SiriusXM and Pandora!

Digital Sales  For the first time since the iTunes store opened its doors, the U.S. music industry finished the year with a decrease in digital music sales. While the digital track sales decline had been expected due to weaker sales in the first three quarters, the digital album downturn comes as more of a surprise as the album bundle had started out the year with a strong first quarter. Overall for the full year 2013, digital track sales fell 5.7% from 1.34 billion units to 1.26 billion units while digital album sales fell 0.1% to 117.6 million units from the previous year's total of 117.7 million, according to Nielsen SoundScan. While this may feel discouraging, remember that it's simply indicative of a changing landscape, and there is still much to look forward to in 2014 and beyond.

Streaming  While SoundScan has not yet released its annual streaming numbers numbers, so far industry executives have been reporting that the growth in streaming revenue has been offsetting the decline in digital sales revenue!

Big Sellers  Despite the decline in album sales, million sellers increased in 2013 to 13 titles versus the 10 that passed that milestone the prior year when Adele's "21" led the way with 4.4 million units followed by Taylor's Swift;s "Red," which scanned 3.1 million units. In 2013, only one album sold more than one million units, Justin Timberlake's 20/20 Experience, with 2.4 million units. The top selling track in 2013 was Robin Thicke's "Blurred Lines," featuring T.I. & Pharrell, which scanned nearly 6.5 million units, followed by Macklemore & Ryan Lewis' "Thrift Shop," featuring Wanz  with 6.1 million units and Imagine Dragon's "Radioactive" with 5.5 million units. Gotye's "Somebody That I Used To Know" featuring Kimbra was the top selling digital song with 6.8 million units the prior year. In 2013, 106 songs hit million units mark, versus 108 titles that achieved that feat in 2012.

Market Share  Despite the decline in digital album sales, download stores like iTunes gained market share growing to 40.6% of U.S album sales, while mass merchants like Target and Walmart saw sales drop 16.3% to about 78 million units and now comprise nearly 27% market share; with chain stores like Best Buy and Trans World seeing sales decline by nearly 20% to 39 million album units to comprise 13.5% market share. Meanwhile non-traditional CD merchants like Amazon, Starbucks and concert venues saw album sales increase by 2.4% to 36.5 million units; and indie merchants dropped by nearly 12% to 18.3 million units. Respectively, the former comprises 12.6% of album sales while the latter accounts for 6.3%.

Clear Channel's iHeartRadio is expanding its availability in the automotive realm. The company, which offers streaming internet radio to over 40 million registered users, is pushing into new territories by integrating with Jaguar, Land Rover, Volvo, and Kia automobiles. As it stands, iHeartRadio is already available in various Chrysler, Ford, GM, Lexus, Lincoln, Nissan and Toyota vehicles.

Thanks for your time and interest.
We're here to help get you plugged-in to your Complete Distribution Portfolio,
Stevan Pasero

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