The acquisition, which is subject to regulatory approval, will be roughly half cash and half stock. It includes all of Lucasfilm — not just the Star Wars franchise but “its operating businesses in live action film production, consumer products, animation, visual effects, and audio post production,” as well as “the substantial portfolio of cutting-edge entertainment technologies that have kept audiences enthralled for many years.”

“We’re likely to focus more on social and mobile than we are on console,” Disney chairman and CEO Robert Iger said in an investor call Tuesday afternoon, “given the nature of these characters and how well-known they are…they lend themselves quite nicely to [these] platforms.”

Kathleen Kennedy, who has served as co-chairman of Lucasfilm since June when George Lucas announced that he was getting ready for retirement, will become president, reporting to Walt Disney Studios chairman Alan Horn. She “will serve as executive producer on new Star Wars feature films, with George Lucas serving as creative consultant.” Star Wars Episode 7 is slated for a 2015 release, with the next films to come every two to three years after that. ”A lot of the value that we attribute to this deal is [still] to come,” Jay Rasulo, Disney senior EVP and CFO said on the investor call.

Lucas — who was not on the investor call — said in a statement, “I’ve always believed that Star Wars could live beyond me, and I thought it was important to set up the transition during my lifetime. I’m confident that with Lucasfilm under the leadership of Kathleen Kennedy, and having a new home within the Disney organization, Star Wars will certainly live on and flourish for many generations to come. Disney’s reach and experience give Lucasfilm the opportunity to blaze new trails in film, television, interactive media, theme parks, live entertainment, and consumer products.”

Disney would not disclose Lucasfilm’s annual revenue, but the Star Wars films have pulled in over $4.4 billion worldwide.

Disney’s most recent major acquisition was Marvel Entertainment in 2009. Disney bought Pixar Animation Studios for $7.4 billion in 2006.

“The directors expect this trend to continue over the next three years as both physical music sold by internet mail order and digital downloads continue to take market share,” the UK music and entertainment retailer said, as it announced 19.7 percent lower annual sales and a £16.2 million ($25 million) loss on Thursday.

HMV has operated its own HMVDigital download store, powered by 7digital, since it bought half of the retailer and white label provider in 2009. But it has never presented any figures showing any success. 7digital lost HMV £700,000 last year, though is set to hang on to the well-thought-of operator, whose importance to HMV must actually grow as physical diminishes.

The company now plans: “Developing HMV’s online and multichannel offerings, particularly in light of the removal of LVCR (low value consignment relief), which will assist HMV to compete on a level playing field with pure internet competitors, and to offer improved services such as click-and-collect in stores.”

The UK’s LVCR had allowed tax-tree imports of CDs from Channel Islands-registered startups, but was abolished this April.

But both online sales and of and in-store pick-up for music CDs are two variants of an overall market HMV knows is shrinking to vanishing point.

Mostly, HMV wants to continue its recent strategy under which selling entertainment devices like tablets and smartphones – themselves bundled with music – becomes more lucrative than selling music itself.

Music and movie studios rescued the struggling retailer in January when they agreed to take equity in HMV rather than call in its unpaid fees for their disc shipments.

We do — that was that state of digital media when paidContent launched in 2002. Other weird things were happening back then too: People still got much of their news from television and newspapers, and they learned about major events after they had already happened.

There have been some huge shifts since 2002: Tablets and smartphones are now ubiquitous, lots of people read on their digital devices, and just about everyone is part of a social network or three. This summer is the tenth anniversary of our launch. In an effort to gain some perspective on the past decade in digital media, I’ve been reading back through paidContent’s archives — a collection of over 80,000 posts.

Since I was only a freshman in college when paidContent came to life, I often didn’t know, as I read through the stories from the early days, how things had begun or how they turned out. As I watched them unfold, I wanted to grab our readers’ arms and give them advice (“Don’t buy that Zune!” “Invest in Facebook!” “Go for the good Twitter handle now!”). But I also realized how difficult it is to predict success.

Some takeaways from my trip through the archives:  Some companies — AOL and Yahoo come to mind — have been consistently bad at predicting what consumers want. And a couple of companies, namely Apple and Amazon, have been very good at it. Also, being a native digital company helps, but it’s no guarantee of success (what up, MySpace?). And after all these years, it’s still not clear what content customers will pay for, or how much they’ll pay.

Streaming and Moviebeaming

What do analysts, CEOs and bloggers have in common? None of us can predict the future. Roger Ebert joked in 2002 that “on-demand streaming movies on the Web, like HDTV, are five years in the future — and will be for at least another 10 years.”

If Disney’s Moviebeam had been the only game in town, Ebert probably would have been right. When it launched in three cities in 2003, customers paid $6.99 a month to use a device that could hold 100 movies and plugged into the back of a TV set. They also had to pay for each movie they watched– billing was done via the phone line. The company went through various unsuccessful iterations before India’s Valuable Group bought it in 2008. It was never heard from again.

Netflix almost went down the same road. It had a plan to release a Moviebeam-like “proprietary set-top box with an Internet connection that could download movies overnight.” But instead, it decided to forge ahead with streaming — starting with a complicated “quota hours” system in 2007 and moving to unlimited streaming in 2008. By 2010, the majority of subscribers were streaming something, and the company began offering streaming-only subscriptions, though CEO Reed Hastings said that same year that the company would keep shipping DVDs until 2030. (We’ll see about that.)

ABC was the first network to sell episodes of its shows on iTunes, back in 2006, and to stream shows free with ads on ABC.com — and later on AOL. But by the time premium subscription service Hulu Plus launched in 2010, the platforms getting the attention were devices with built-in access, like Internet-enabled TVs, Blu-ray players, and tablets.

Return of the living dead

Speaking of AOL: It’s something of a miracle that the company still exists. In 2000, when it merged with Time Warner, it was valued at $350 billion, and the next year, more than 24 million people in the U.S. were paying for its Internet access service. By the end of last year, that number had dwindled to just 3.3 million subscribers. Here’s a quick recap of some of AOL’s miscues over the years:

• AOL Voicemail ($5.95 per month)
• A teen service called Red (featuring “a talking head—using the image of an actual employee—that uses software to answer users’ questions”)
• A digital music partnership with Burger King
• A reality show called “Gold Rush”
• Social networking site AIM Pages
• Going free
• The hyperlocal Patch blogs

Though AOL was once a high flier, no other company ever liked it quite enough to buy it. Google bought a five-percent, $1 billion stake in AOL in 2005, leading analysts to wonder if Microsoft missed out. That resulted in a $726 million writedown in 2009. Time Warner bought back Google’s stake and finally spun off “the albatross” in December 2009.  AOL is still promising a bounceback. “The executive team expects a profitable content business by next year,” CEO Tim Armstrong said in May 2011.

Yahoo hasn’t fared much better. The company launched Yahoo Platinum in 2003; for $9.95 a month, subscribers got access to audio and videos.  The program was dead by October of that same year. It later tried a Twitter-wannabe microblogging service (“Meme…where you share everything that you find that’s interesting,”). Perhaps the smartest move Yahoo ever made was not buying AOL.

Where did these companies go wrong? In 2010, former Time Warner CEO Gerald Levin pondered that question in an interview with the New York Times . The AOL-Time Warner deal was “undone by the Internet itself,” he said. “I think it’s something that no one could have foreseen, and to this day, whether Apple is going to dominate entertainment or whether Amazon is going to dominate publishing, all the old business plans are out the window. How do you get paid for content?”

Know what’s cool? A billion dollars

In 2006, an RBC Capital analyst estimated that a certain social networking company would be worth $15 billion in a few years, based on “raw, unprecedented user/usage growth.”

Six years later, Facebook went public with a valuation of $104 billion. Too bad the analyst wasn’t talking about Facebook but about MySpace. The social networking company that Rupert Murdoch acquired for $580 million in 2005 sold for just $35 million in 2011.

Why did Facebook soar while MySpace — and other social networking services like Friendster — sank? It allowed people to build real connections using their actual personal information, and rolled out a product that was ready to scale and had good technology. Other companies realized sharing was important too — in 2005, Yahoo SVP Jeff Weiner called sharing “the next chapter of the World Wide Web” — but Facebook was able to implement it in a way that kept users coming back. The site surpassed Yahoo and AOL for “stickiness” in 2009, when Nielsen found users spending an average of four hours and thirty-nine minutes a month on Facebook.

Social has already disrupted some industries — witness the rise of Twitter and the way it has changed the way news is reported, with stories like Osama Bin Laden’s assassination breaking there first. In a sign of the importance of these emerging platforms, newspapers like the Wall Street Journal and New York Times are launching “Everywhere” initiatives to deliver news to readers where they are already hanging out.

Fast food and music don’t mix

Hard to believe it now, but there was real skepticism that iTunes’ 99-cent songs would be able to compete with peer-to-peer file-sharing services. “According to academics who’ve studied the economics of digital music distribution,” we wrote in 2003, the year iTunes launched, “the cost still seems too high to attract users of peer-to-peer file trading services.” The piece cited an economist who believed “the appropriate price of a downloaded song is 18 cents.” In fact, Real Networks dropped its song prices to $0.49 in an attempt to compete against Apple.

In the end, consumers choose selection and convenience over P2P networks. We called iTunes “a kickstart for the micropayments industry.” Was it? While Steve Jobs said in 2004 that Apple wouldn’t hit its one-year, 100 million songs downloaded goal, global digital music sales crossed $1.1 billion in 2006. In April 2008, Apple surpassed Walmart  as the largest music seller in the United States.

The company that arguably started the digital music revolution — Napster — didn’t survive. Once it no longer offered “free,” it was done, though it tried to reincarnate itself: launching a mobile music service, “Napster To Go,” with AT&T in 2004 (the one smartphone that supported it could hold up to 6 songs), partnering with Circuit City on a digital music store, getting itself acquired by Best Buy in 2008 ,and then being bought back by Rhapsody in 2011. Unfortunately, Rhapsody was already losing out to newer (and free) streaming services like Pandora and Spotify.

The partnerships with Circuit City and Best Buy, though, were probably the kiss of death. One of the big trends of the past 10 years has been brick-and-mortar retail stores’ consistent failure to compete effectively against digital-native companies. Best Buy wasn’t the only retailer to try to crack the digital-content business — and fail: Target and Sears both took a shot. And McDonald’s sold digital content over its WiFi network and even tried DVD rentals in its restaurants.

Do you like the feel of paper?

Just as digital music didn’t really take off until Apple introduced the iPod, the ebook revolution didn’t take place until the arrival of the Kindle. In paidContent’s early years, ebooks were written off as a failure in part because publishers couldn’t figure out what to do with DRM. (In 2003, “temporary electronic ink” that would disappear after a few months was floated as a possible solution.) Barnes & Noble decided to stop selling ebooks in 2003, and Yahoo stopped selling them in 2004.

Meanwhile, Amazon and Google were pushing forward. Google launched Google Print – now called Google Book Search, and still besieged by lawsuits seven years later. Amazon tested two now-defunct programs: Amazon Pages, which allowed customers to buy access to digital copies of select pages from books, and Amazon Upgrade, which bundled print books with online access to the complete work.

Customers weren’t biting. Then Amazon came out with the Kindle in 2007 for $399. Less than two years later, Amazon was selling more Kindle books than print books, and ebooks now make up over 20 percent of some big-six publishers’ sales. Barnes & Noble has had some success with its Nook e-reader and digital bookstore, but bankrupt Borders shuttered all its stores in 2011. Meanwhile, the Department of Justice suit against Apple and five big publishers for allegedly colluding to set e-book prices drags on.

Good thing Steve Jobs looked beyond ringtones

A Forbes survey back in 2002 found that “business professionals” would be willing to pay for “news content to be delivered to their cellular devices,” and some media companies tried early mobile experiments. Verizon offered a cell phone version of the Yellow Pages — which, at $19.95 per year, gained 15,000 subscribers in three months. But starting in 2004, everyone decided the future was in ringtones. A $4 billion global business by the end of the year, one company projected.

So, so many ringtones. You could buy them from Rolling Stone or from an ATM-like device called E2Go. A fall 2004 marketing campaign let you mix your own ringtones on Levi’s website. Billboard launched a top ringtones chart.

Could ringtones “prove to be a passing fad”? we wondered late in 2004. Luckily, yes — a new technology came along to shake up the mobile market. No, it wasn’t the $500 ESPN phone, but the iPhone, which came out in 2007. And by opening its platform up to third-party app developers, Apple got users ready for its next ecosystem-changing device, the iPad, in 2010.

Monetizing mobile

Advertising has always been a fuzzy business — how exactly do you measure engagement and success? Well, that’s still the big debate about advertising in the digital era.  ”If here’s anything that’s really holding back ad spending on the web, it’s the lack of good measurements,” Tim Armstrong, then Google’s VP of national sales, said in 2007.

Mobile advertising has also faced obstacles. In 2006, mobile carriers began allowing advertising despite fears of annoying customers. Customers were indeed annoyed – 79 percent of them found mobile advertising annoying, according to a 2007 Forrester study — but they could “see the potential benefits of mobile advertising and marketing to themselves,” particularly if they could get a useful special offer or coupon.

Further complicating matters for advertisers: The smartphone market is fragmented among different brands — marketers don’t want to spend the money to create different ads for Android and iOS — and there are two mobile ad universes: mobile browser and apps.

Nevertheless, mobile advertising has gained ground, crossing  $1 billion in the U.S. for the first time in 2011, according to the Interactive Advertising Bureau, totaling $1.6 billion for the year.

The next opportunity is social media advertising. And once again, it will be a challenge to figure out some standardized metrics. What’s a retweet worth, anyways?

Back to where we all began

Though micropayments worked well for music when Apple launched iTunes, the path to payments for written content has been rockier. In 2004, we wrote that “micropayments today are still characterized by a large number of competing transaction types” – including direct-to-bill, merchant aggregation, prepaid accounts and direct transfer – and “each of these face the current incumbent in digital content distribution: the flat-fee subscription model.”

Eight years later, it appears that the subscription model has won out. The iPad opened the door for magazine and newspaper publishers to create new revenue selling content on that platform, but the results have been mixed. When Rupert Murdoch’s “The Daily” iPad newspaper launched in early 2011, the company called it “the model for how stories are told and consumed.” We wrote, “The bet here is that while consumers are less and less likely to reach into their pocket for a few quarters to buy a newspaper, they might not care about the 14 cents on their credit card for a copy of an e-newspaper.” A year and a half later, The Daily has over 100,000 paying subscribers — but it’s living on borrowed time and may not get through the five years its publisher has said it needs to break even.

Writing for the web, of course, has been around for awhile. At the beginning of the decade, blogging was called “nanopublishing,” and the question was how blogs could support themselves doing it. All sorts of models have arisen. For example, Gawker tried a licensing deal with Yahoo, but that relationship ended a year later. The deal “garnered way more attention than we expected, but less traffic,” Gawker CEO Nick Denton said in 2006.

Some bloggers have stayed independent and make a living from advertising (or from their day job); others write their blogs under a newspaper, website or larger magazine’s umbrella — see the Dish’s Andrew Sullivan, FiveThirtyEight’s Nate Silver, WaPo’s Ezra Klein. Or, they go to work for the Huffington Post!

Magazine companies have grappled with whether to bundle digital editions with print subscriptions or charge for them separately. Time Inc. — which first put digital editions of its magazines behind AOL’s paywall in 2003 — started out charging separately, but today Time Inc. and Condé Nast print subscribers get the digital edition free. Hearst, meanwhile, is charging separately, and it said its digital business in the U.S. became “solidly profitable” for the first time in 2011.

Could there ever be a Netflix for magazines? Time tried it for print versions with its 2008 Maghound service. It failed, due to a lack of marketing and reader interest. Magazine publishers are trying again with joint venture Next Issue Media.

Many newspaper publishers, most notably the New York Times, tried paywalls at the start of the decade and then abandoned them – only to return to the model in the past couple years.  In its most recent earnings report, the NYT said it has 454,000 digital subscribers. Is that enough to sustain the newspaper in its 21st-century transition?  Probably the best answer to that came from  Vivian Schiller. But it was in response not to the NYT’s recent digital subscriber numbers, but to the NYT’s decision in 2004 to close the paper’s first paywall, known as TimesSelect. Schiller, then the SVP and general manager of NYTimes.com, was asked whether TimesSelect had worked.  “It did work,” she said. “It’s just a matter of as compared to what.”

Birthday cake photo courtesy of Shutterstock user [Robyn Mackenzie].

TV photo courtesy of Shutterstock user [Somchai Buddha].

Zombie hand photo courtesy of Shutterstock user [lineartestpilot].

Piggybank photo courtesy of Shutterstock user [cardiae]

Fast food photo courtesy of Shutterstock user [Sergio Martinez].

Book photo courtesy of Shutterstock user [TrotzOlga].

Ringtones and apps photo courtesy of Shutterstock user [violetkaipa].

Cash register photo courtesy of Shutterstock user [titelio].

Magazines photo courtesy of Shutterstock user [bernashafo].

I picture the market like a game of Risk. Every week, the likes of Spotify, Rdio and Deezer are racing in to new countries with a new model — unlimited subscription access to millions of songs.

But, as the services embark on this VC-funded globalisation, which are the world’s most competitive, most lucrative and most digital music markets? Our clickable map has the details…

Takeaways:

• In China, digital music sales are a high proportion of the total (73 percent) because CD piracy is rife, unmonetised, in Asia.
• The UK is the world’s most competitive market, with 73 licensed digital services operating.
• Some Latin American countries have few music services, making iTunes Store, which recently rolled out there, influential.
• CDs still sell well in Germany and France, thanks partly to high sales of classical music.
• In the U.S. now, a majority of trade revenue from recorded music comes from digital – a globe-topping $2.2 billion.

Data sources: IFPI Digital Music Report 2011, Pro Music (Mar 2012), and services.

Tylted: Social and casual games company Tylted has made several additions to its management team: Steven Van Blarcom as EVP, Stellah De Ville as creative director, David Waldman in the strategic business development role, Wonny Lee as director of marketing, and Christian Montoya as producer. The new hires are part of a major expansion that includes the opening of a new corporate headquarters in Manhattan’s Silicon Alley.

Van Blarcom previously held executive positions at Source Media, AOL Time Warner and Clear Channel. De Ville most recently helped develop the iHeartRadio app. Waldman comes from entertainment studios like Madwood Studios, Worldwide Biggies and A&E Television Networks International. Lee previously was game monetization manager at Gameloft, and Montoya was VP of product for OMGPOP.

XING AG: Thomas Vollmoeller will be joining XING AG’s board of directors effective August 15. He will take on the role as CEO in January 2013, when current CEO Stefan Groß-Selbeck’s contract expires. Currently, Vollmoeller is acting CEO of the Swiss-based company Valora Holding AG. He joined the Valora Group in 2008.

Future Publishing: The publisher does a reorg of its entertainment group: Don Ditri becomes head of commercial development for entertainment, focusing on business development and forming partnerships. He’ll relinquish publishing responsibilities for CVG and GamesRadar UK. Clair Porteous is now head of digital development for entertainment, focusing on the games space and relinquishing publishing responsibilities for the film group. Lee Nutter continues as publisher of the Nintendo titles and Richard Keith continues as publisher for PCGamer, Edge and the Xbox brands.

mDialog: Jeff Clark has been appointed chief revenue officer of the video stream solutions provider. In this role, he will open the U.S. headquarters in San Francisco, as well as expand the customer base. No stranger to the media and technology sectors, Clark was most recently VP and GM of CBS Interactive’s entertainment division.

Telegraph Media Group: Julian Shambles has been promoted to digital product director from digital operations director. He first joined Telegraph in 2006 as head of online operations. Prior to this, he was managing director at Rightmove.co.uk.

“Whenever we needed money, we’d rob the airport. To us, it was better than Citibank.” — Henry Hill, Goodfellas

Seven years ago, Walmart controlled nearly half of a U.S. DVD sell-through business that generated nearly $16.3 billion in annual revenue. But even with disc sales plunging below $9 billion last year, and overall home entertainment revenue dipping to $18 billion from $24.3 billion over that same span, Hollywood’s movie business is still beholden to Walmart’s Bentonville, Ark. headquarters.

Fortunately for them, studio executives — and members of the media and tech press — only needed to travel about 15 miles East on the 60 Freeway to Rosemead, Calif., Wednesday to see the retailer show off what might be the home entertainment business’ last hope to resuscitate growth, the so-called “Disc to Digital” service.

Disc to Digital is a key component of the major studios’ UltraViolet initiative, which is designed to let consumers store digital  versions of the movies they’ve purchased on disc in a cloud.

Starting Monday, within the photo processing areas inside about 3,500 U.S. Walmart stores, consumers can begin uploading their disc collections to the cloud, paying $2 for each authenticated title (or $5 if they want to convert a standard-definition DVD to a high-def digital file).

$2 and two minutes of your time

I showed up at Wednesday’s demo at about 1:15 p.m., right ahead of a small contingent of Universal Home Entertainment executives, led by division president Craig Kornblau, holding a DVD copy of Universal’s 1997 Jim Carrey hit Liar Liar.

“Hurry, I just can’t wait to get into the cloud,” the affable Kornblau quipped, delighting a small cadre of chain and consortium PR staffers, as well as store employees who were still learning about how to administer the Disc to Digital service.

I had forgotten to bring my discs for upload, but Louis, a kind Walmart employee loaned me a copy of Warner Bros.’ 1990 Martin Scorsese gangster classic Goodfellas, so that I could test drive the system.

Walmart’s Disc to Digital service enables users of UltraViolet-authenticated DVD and Blu-ray titles to also own digital versions of their movies in Vudu, the retailer’s popular digital movie rental and sell-through service. Since I’m already a happily registered Vudu user, getting set up was pretty easy.

I filled out a form, offering up my Vudu user email, and also indicating what version of Goodfellas I wished to upload (I chose HD).

About two minutes later, Louis emerged from a computer workstation — he had stamped the disc with a little Walmart insignia, so that it couldn’t be authenticated again, and I had a high-def version of Goodfellas waiting for me in my Vudu account, ready to download or stream to a wide range of living-room and mobile devices, and share with select family members.

Bringing back $20 movie purchases

The system is designed to rekindle consumers’ willingness to buy movies rather than merely stream them on platforms like Netflix. Last month, research firm IHS Screen Digest, for example, noted that low-margin movie and TV show streams will surpass  higher-margin disc sales and rentals in quantity, with the overall home entertainment sector still continuing to see revenue declines.

As of late February — about four months after launch — UltraViolet had claimed only around 1 million sign-ups. However, the Hollywood majors — who will greatly expand the number of UltraViolet-eligible titles to around 4,000 on Monday — hope the inclusion of Walmart and Vudu will accelerate the initiative’s buy-in.

Having already talked to a number of ranking home entertainment executives who are quietly pessimistic regarding UltraViolet’s success, I still left Rosemead Wednesday slightly excited.

The house of no Mouse

With a trip to my mother-in-law’s retirement-community condo rendered upon me for this upcoming weekend, I saw value in being able to watch Joe Pesci’s Tommy DeVito savagely beat and murder all who annoyed him as I distracted myself with Goodfellas on my iPad 2. But since a wireless connection isn’t available there, I might be as out of luck as Michael Imperioli’s poor, half-witted Spider — on the iPad, Vudu will only let me stream the movie and not download it. (I can always buy it again on iTunes — Apple, which is conspicuously absent from the UltraViolet grouping, will let me download movies to the iPad, of course — but the whole point of UltraViolet is supposed to be about letting me enjoy the movie on any device I want with a single purchase.)

Then there’s title availability. Any urge to selflessly provide my 6-year-old son the same kind of relief with a downloaded copy of Cars 2 or Toy Story 3 can’t happen either, whether or not I can find a wireless connection, since the biggest supplier of kids’ movies, Disney, doesn’t do UltraViolet.

Meanwhile, not every title from every participating studio is available. For example, as we reported earlier this week, Fox movies like Rise of the Planet of the Apes become unavailable on platforms like UltraViolet and Apple’s iCloud once they enter any of HBO’s pay-TV windows.

“Today, everything is different … I ordered some spaghetti with marinara sauce and I got egg noodles and ketchup. I’m an average nobody. I get to live the rest of my life like a schnook.” — Henry Hill

Payouts via PRS For Music from online services surged 45.3 percent to £38.5 million, overtaking pubs and clubs, which must pay PRS for playing recorded music, as an earner for the artists. Many UK bars closed last year.

PRS For Music credits both existing services like iTunes and emerging streaming and subscription services like Spotify, Deezer and We7 for the growth.

Ringtones’ contribution continued to fall, to just £600,000 for the year.

Online royalties are only six percent of the total collected by PRS For Music but are nonetheless welcome because payouts from sales of CDs and DVDs fell by 13.3 percent.

PRS CEO Robert Ashcroft: “The licensed digital market is now delivering a significant income stream for our members. This goes some way to replacing revenues lost from the declining CD market although online piracy continues to be a problem.”

PRS For Music confirmed that it renewed Spotify’s licensing deal in 2011.

The highest royalty growth came from collection deals PRS signed in overseas countries.

Turnaround firm OptCapita, through Baker Acquisitions, will buy its UK assets, comprising the 333 out of 609 that weren’t closed last week and almost 3,200 staff.

“This is good news for Game and for UK consumers,” says games industry umbrella group TIGA’s CEO Dr Richard Wilson. “This deal should save many jobs and stores and will buy Game breathing space during which it can develop a new business strategy.

“Game has suffered from physical and online competition, the shift from physical to digital games, and the decision by big global publishers not to stock Game with new releases.

“Given the rapid transition to digital gaming with consumers spending money on platforms such as Steam, Origin, the App Store, PSN, XBLA and Android market, Game will have to develop a digital strategy – fast.”

Last week, paidContent:UK reported how Game Group, several years ago, declined to adopt a proposed strategy that identified a 2012 tipping point from physical to digital sales and that could have given it a viable digital strategy.

It has since been pointed out to us that Game tried a digital strategy a decade ago when it bought online multiplayer gaming service BarrysWorld, to create its own such service, which it later closed.

OpCapita managing partner Henry Jackson: “We strongly believe there is a place on the high street for a video gaming specialist and Game is the leading brand in a £2.8 billion market in the UK.

“We have assembled a strong team of experienced industry operators to implement the programme of operational change that is needed. There is a huge amount to do but we look forward to the challenge of restoring Game’s fortunes in partnership with its employees and suppliers.”

PwC shut 277 of Game’s 609 UK and Ireland stores and made 2,104 out of 5,126 staff redundant when it was called in as administrator last week.

In the latest refinement to its market strategy, Spotify in many countries is now abolishing a five-free-plays-per-track limit it introduced last year.

The limit was implemented along with a 10-hours-per-month free listening cap one year ago, apparently at labels’ behest, as they ratcheted up pressure on Spotify to bring them paying subscribers. Even Spotify staff, reluctantly implementing the measure, called it a “very tough day”.

Now, however, the service is dropping the plays limit in Sweden, Finland, Norway, the Netherlands and Spain, according to MusicAlly, and in the United States. The 10-hours limit stays in Europe.

What has changed? In short, Facebook has become a key conversion tool.

Spotify isn’t saying it along with this announcement, but all media services which announced controversial integration with Facebook’s frictionless sharing system last fall have seen a big influx in usage.

Facebook is a massive funnel that is bringing operators hot business prospects – potential customers. These incomers are unlikely to pay immediately – to convert them to pay, developing a free relationship is essential.

That is the mantra Spotify has successfully preached to labels. And it is one which rivals Mog and Rdio adopted in September when, on the same day ahead of Facebook’s announcement, they each introduced new free options alongside their paid services.

The abolition of the five-plays-per-track limit indicates Spotify’s label pay-masters are becoming more and more comfortable with allowing some free, unlimited listening if it ultimately brings them more paid custom. But the free part in isolation is a business concept some artists remain uncomfortable with.

When Spotify launched in the US in June 2011, it gave users a six-month, all-free access period. By year’s end, those free users were due to have hit limits.

But, as paidContent first reported in January, Spotify, fresh from the Facebook implementation, had never actually put these roadblocks in front of anyone. Today’s announcement confirms that this approach is indefinite.

This is the latest in what has been a yo-yoing freemium strategy for Spotify since its 2008 launch.

It initially limited new sign-ups whilst it managed growth. After an initial period of unlimited free, Spotify then introduced a 20-hours-per-month limit before halving it to 10 hours.

Finding the balance between free and paid is an interesting challenge, including finding the tolerance of free users toward free monetisation methods. Clear Channel (OTCBB: CCMO) says it will delay adding in-stream ads to its iHeartRadio service after noting complaints about the frequency of ads in Pandora’s free streams.

“There are a lot of negative comments about in-stream ads,” Clear Channel CEO Bob Pittman says (via AP). “When you’re in your music collection, you want to escape from the world. It’s a completely different experience”

“There are some major competitors in Europe,” Rdio’s partnerships and internationalisation VP Scott Bagby tells paidContent. “We are a couple of years behind others in terms of expansion there.

“But Europe is an immediate focus. We’ll be expanding in all countries in Europe – within the next few months, you’ll see several pop up.”

No timescale on UK launch

Rdio recently added Germany, Brazil, Portugal, Spain, Australia and New Zealand to its U.S. and Canada availability. And it just quietly soft-launched access in Denmark.

Now it has gained a PRS For Music license to play UK artists across Europe, speculation has mounted on the timescale of other continental launches, including in the UK. But Bagby said the “exact date is not set in stone”: “Lining all the stakeholders up and making them happy is extremely difficult.”

It transpired Spotify launched in Germany without being in full possession of expected licenses. But Bagby says Rdio will make sure it has all necessary rights, and a range of local music repertoire, before going in to any new country.

Europe, then Asia

“I did the international expansion for Skype, I’ve known (Rdio founders) Niklas (Zennstrom) and Janus (Friis) for some time now,” he told me. “One of the important things for them, beside product usability, is they love international expansion. So I came in in August 2010 to immediately look at international expansion. It’s always been on our roadmap.

“We already have a guy on the ground in Asia and have been talking with stakeholders out there.”

Young guns

But all the other music-access services have the same idea. Spotify, Deezer, We7 and Rhapsody are amongst those expanding to new countries. Rdio will need to fend off the throng.

Still, the segment is still young – at 2011′s end, there were only 13.4 million music subscribers in the whole world, according to the IFPI.

“The streaming space is very nascent,” Bagby says. “The general population is not familiar at all with what is going on. There is huge room for growth.”

Too many cooks?

Even so, with multiple music-subscription services entering each developed market, the scene could be set for later bloodbath.

“I think there’ll be some consolidation,” Bagby says. “But it’s definitely not a one- or two-person game. When water comes in to a lake, all the boats go up.”

Unsurprisingly, Bagby shakes off suggestion that his Rdio might be involved in that consolidation, as Mog has been to Beats Audio/HTC: “The vision for our company from the beginning was to be a strong brand of its own.”

Partner or not

For its recent Brazil launch, Rdio partnered with telco Oi on a bundled offering. Such a deal is not essential to each new roll-out, Bagby says.

“Each individual market is different. Brazil, as a developing market, has issues with scepticism on credit card payments – people trust their mobile providers a lot more.

“In Scandinavia, that’s not an issue. So is a partner in every market a necessity? I don’t think so. But, even so, if the right partner comes along, we’re very interested.”