Digital switch at top echelon for Sony BMG

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Sony BMG Music Entertainment has announced some changes in its digital music executive ranks as a Wall Street analyst raised concerns about the outlook for the music industry in the new year.

Sony BMG Music Entertainment, a 50-50 joint venture of Sony Corp. of America and German media company Bertelsmann AG, said it has named JJ Rosen as executive vp for its commercial music group.

Rosen was senior vp and general manager, U.S. digital business, at Sony BMG since March.

Adam Mirabella will take over Rosen's old post. He was senior vp e-commerce at Warner Music Group, which has been very aggressive and successful in the digital space. Mirabella reports to Thomas Hesse, president of global digital business, Sony BMG said.

Based in New York, Rosen will report to John Ingrassia, president of the commercial music group. He will oversee the company's strategic marketing and business development efforts, including its master synchronization licensing activities for film, TV, commercials and related areas.

Rosen also will oversee digital marketing and sales for all of the commercial music group's operations, which include Legacy Recordings, Sony BMG Masterworks and Burgundy Records.

Meanwhile, Pali Research analyst Richard Greenfield on Thursday struck bearish notes on the outlook for the music space in 2007.

In a research report, he called 2006 year-end digital trends "uninspiring" and said that "2007 looks to be a no-growth year." Greenfield uses data from Nielsen SoundScan, a part of Nielsen, whose parent company — like The Hollywood Reporter's — is VNU Group.

Full-year 2006 physical and digital units sales — assuming singles converted to albums at a 10-to-1 ratio — were down 1.2%, or up about 1% if mobile/subscription/content revenue is included, Greenfield said. "We continue to believe 2007 will at best be down 0.8% (about flat at best with mobile/subscription included), and it could be significantly worse," the analyst added.

Greenfield pointed out that for the week after Christmas, digital track sales showed the second-lowest year-over-year gains of any week in 2006, while in 2005 the comparable week exhibited the strongest growth of the year.

"Not only did year-end '06 digital sales fall short of our expectations, more concerning is the deceleration in growth during the fourth quarter," Greenfield said. "We are increasingly concerned that digital track sales will struggle to show 40% growth in 2007."

In a second note to investors later in the day, he said, "The physical unit sales figures from the final week of 2006 are of even greater concern heading into 2007."

Despite wholesale CD price reductions, U.S. physical album sales fell 20% year-over-year during the last week of 2006, the worst decline of the year, Greenfield said. In 2005, the final week turned out to be the second best of the whole year.
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