Alas, the Foursquare conference, hosted by the Quadrangle PE fund, is an invitation-only affair. And the event, which kicks off tomorrow, is closed to the press except for reporters onstage to interview the stars. And those conversations don’t get released to the public.

That’s a particular bummer this time. Because the Quadrangle guys–who have had a rough year–had the foresight to get a lineup that includes GE (GE) CEO Jeff Immelt, who appears to be in the final stages of selling NBC Universal to Comcast (CMCSA) CEO Brian Roberts, who will also be onstage. Sure would be nice to hear what they say.

Another panel that piques my interest, if only because of the title: “Are Popularity and Profitability Correlated?” It features Twitter’s Stone, LinkedIn founder Reid Hoffman and YouTube co-founder Chad Hurley. And would-be moguls are represented by a start-up pitch panel that includes Dennis Crowley of Foursquare, the superbuzzy mobile service whose name has nothing to do with Quadrangle’s conference.

So once again, here’s the complete list of those you won’t be hearing from this week as they gather at the Plaza in Manhattan. Unless, perhaps, one of my more ambitious colleagues sneaks in–I’m thinking of you, Bobby MacMillan–and gets us a first-hand account.

2009 SPEAKERS
EMILIO AZCÁRRAGA President, Board of Directors and CEO, Grupo Televisa
DENNIS CROWLEY Co-Founder, foursquare
BARRY DILLER Chairman and CEO, IAC; Chairman, Expedia, Inc. and Ticketmaster Entertainment, Inc.
BRIAN DUNN CEO, Best Buy
CHARLES FORMAN Founder, OMGPOP
REED HASTINGS Founder, Chairman and CEO, Netflix
REID HOFFMAN Executive Chairman and Founder, LinkedIn Corporation
CHAD HURLEY CEO and Co-Founder, YouTube
JEFF IMMELT Chairman and CEO, GE
PAUL JACOBS Chairman and CEO, Qualcomm Incorporated
OLLI-PEKKA KALLASVUO President and CEO, Nokia
JASON KILAR CEO, Hulu
LESLIE MOONVES President and CEO, CBS Corporation
ANNE MULCAHY Chairman, Xerox Corporation
JAMES MURDOCH Chairman and Chief Executive, Europe & Asia, News Corporation
BRIAN PHILLIPS CEO and Co-Founder, Thread
DAN PORTER CEO, OMGPOP
BRIAN ROBERTS Chairman and CEO, Comcast Corporation
PAUL SAGAN President and CEO, Akamai
ERIC SCHMIDT Chairman and CEO, Google
IVAN SEIDENBERG Chairman and CEO, Verizon Communications
BIZ STONE Co-Founder, Twitter
HOWARD STRINGER Chairman, CEO and President, Sony Corporation
BEN VERWAAYEN CEO, Alcatel-Lucent
DAVID ZASLAV President and CEO, Discovery Communications

MODERATORS
MARC ANDREESSEN General Partner, Andreessen Horowitz
KEN AULETTA Author and Writer, “Annals of Communications”, The New Yorker
MARIA BARTIROMO Anchor, Closing Bell; Host & Managing Editor, Wall Street Journal Report, CNBC
JAMES CITRIN Co-Leader, Board & CEO Practice, North America, Spencer Stuart
DAVID FABER Anchor, Reporter, CNBC
MICHAEL HUBER Co-President and Managing Principal, Quadrangle Group
BECKY QUICK Co-Anchor, Squawk Box, CNBC
GEOFFREY SANDS Director & Leader, Global Media, Entertainment & Information Practice, McKinsey & Co.
JOSHUA L. STEINER Co-President and Managing Principal, Quadrangle Group
GEORGE STEPHANOPOULOS Anchor, This Week; Chief Washington Correspondent, ABC News

Apple (AAPL) gave Spotify the go-ahead for its streaming-music iPhone app last month. But the service doesn’t have deals to distribute music in the U.S. yet. RealNetworks’s (RNWK) Rhapsody, however, does have deals, and its app just got Apple’s nod.

So. If you want on-demand access to nearly any song you want, it’s all yours: You’re just going to need to pay Real $14.99 a month for its “Rhapsody-to-Go” subscription service.

What’s that? You like the idea of getting all the music you can eat on your iPhone, without listening to ads, but you don’t want to pay for it? Alas, no dice. Spotify mobile users in Europe are paying, too–about $16 a month–and if and when the service gets distribution in the U.S., you can expect to pay about the same.

So will anyone pay for either app? Good question. Best Buy’s (BBY) Napster says that the pricing level is too high and that it won’t offer a music app until it can get the labels to charge less for their music, adding that it thinks $5 a month is a reasonable charge.

And up until now, Rhapsody hasn’t had a whole lot of luck with its “to go” subscription pricing. But! Up until now, Rhapsody wouldn’t work with Apple’s iPod, which has made it a very, very hard sell. Now it has a very large base to sell against.

Will that make a difference? We’re about to find out.

Here’s a video that previews the app.

Rhapsody on iPhone from Rhapsody on Vimeo.

What about the company’s awesome new iPhone app, the one that will let you stream music directly to your handset? You know, like the one that Apple (AAPL) just approved for Spotify, the superhyped service you can’t even get in the U.S. yet?

Don’t hold your breath says Best Buy (BBY). That Napster app is not coming anytime soon. And neither are apps for Google’s (GOOG) Android platform or Research In Motion’s (RIMM) BlackBerry.  And it’s because of those darn music labels. From a press note the company sent out this morning:

One of the most common questions Napster receives is, “When will you offer an iPhone app?” Well, Napster has created an iPhone application that allows subscribers to stream music on-demand to their iPhone—including personal playlists, albums and radio stations. You can imagine the company is also looking at streaming applications for several other mobile platforms as well (Blackberry, Android). However, due to the high licensing fees for streaming to a mobile phone, Napster has not yet submitted the iPhone app to Apple for approval or attempted to bring the application to market.

Now that’s an interesting approach–something akin to showing off a shiny new sled in a toy store window below a sign that reads “Not coming soon, not our fault.” Or that bank ad where the jerk takes the truck from the chubby kid.

I also don’t know if Napster’s explanation tells the whole story: Best Buy/Napster and the big labels already have an agreement that lets the company stream unlimited music to your PC for $5 a month. Just how much more would the company have to charge to accommodate the fees the labels want for mobile streaming? I’m supposed to talk with Napster folks later today, and if there’s anything I can pass along, I will.

UPDATE:  A little clarification from Napster president Brad Duea. His company’s position is that it doesn’t want to move about its $5 a month price, and that it would have to do so in order to offer streaming.

Why would it have to do that? Duea won’t spell it out. But henotes that RealNetworks’ (RNWK) Rhapsody, which has submitted an streaming music app to Apple, charges $15 a month for “on the go” service it already offers, and assumes it will charge the same for a service that works with the iPhone. Similarly, Spotify charges the equivalent of $16 a month for its premium service in the UK.

Of course, it’s possible that RealNetworks or Spotify will try subsidizing some of the cost for a mobile app in order to grab market share, and offer their iPhone/mobile services for something closer to Napster’s $5 fee.

The service took one step toward wider distribution today when Apple (AAPL) approved its iPhone app (for a glimpse of the app, see the video at the bottom of this post). But that won’t help U.S. users until the big music labels–Warner Music Group (WMG), Sony (SNE), EMI and Universal Music Group–agree to American distribution deals.

But before we get to that, let’s back up and explain what Spotify is: A streaming-music service that lets you listen to whatever you want whenever you want, as long as you have a Web connection. A free version comes with ads, and if you want to do away with those, you can pay for a subscription.

Does that sound familiar? It should. There are plenty of models like this available in the U.S. right now, from RealNetworks’s (RNWK) Rhapsody to MySpace Music, a joint venture owned by News Corp.’s (NWS) social network and the big labels. For various reasons, equivalent (and legal) models have been much harder to come by in Europe, which explains part of the appeal there. The other explanation is that Spotify works beautifully.

But don’t take my word for it. Ask Slate.com columnist Farhad Manjoo (“The best streaming music service in the world”). Or better yet, Facebook CEO Mark Zuckerberg (“Spotify is so good”).

Meanwhile, investors–primarily European ones–have been throwing money at Spotify, and the big music labels’ international arms are enthusiastic partners (and equity shareholders). And the company’s boosters have been pointing to a U.S. launch as early as the fourth quarter of this year.

So let’s assume this happens. What then? The problem with the digital music business, as company after company has found out, is that it’s a miserable business:

• Selling music by the track is a low-margin affair that only works if you have enormous scale–Apple sells some two billion songs a year.
• It’s been nearly impossible to get more than a few hundred thousand people to pay a monthly fee for music–ask Rhapsody or Best Buy’s (BBY) Napster, which have been slogging away at this for years without gaining any traction.
• And it’s been impossible to support a free service with advertising while ponying up big licensing fees to the labels–ask Imeem, et al.

So why will Spotify be any different? Depends on whom you ask. Some figure that it has the best chance of working as a mobile service and that since phone users aren’t used to the idea of getting all the music they can eat on their phones for free, they’ll pay up if given the chance. Others think the big labels have gotten wiser and/or more benevolent about their licensing fees and are willing to wring less out of Spotify at the start in the hope that it will pay off down the road.

Still others just shrug and figure it will work out somehow because…well, one of these days, someone has to figure out how to make this work. “Everybody loves the product,” says an industry executive familiar with the company’s plans. “And there’s a hope that the business model is realistic.”

I have heard rumbling that not all of the big labels are equally enthusiastic about a U.S. licensing deal. It’s unclear whether that’s due to something specific about the U.S. market or to internecine squabbles at particular labels. But Spotify will need at least three of the big four to play along. And then we can see just how realistic the model really is.

But it will come at a price: The device, shown below (click on image to enlarge), will retail in December for $399. That’s $100 more than the current price of Amazon’s Kindle 2. And that price point is almost certain to drop in coming months.

Sony wouldn’t let reporters handle the Daily, and didn’t put it through its paces, either. So hard to get a sense of much here. But here’s a video I shot of Sony exec Steve Haber holding the machine while talking up its virtues — which include free access to books from your public library.

EXTRA, EXTRA: SONY’S DAILY EDITION ROUNDS OUT NEW LINE OF DIGITAL READERS

Wireless 3G Reader Extends Sony’s Commitment to Bring
Open Digital Reading to Mass Audience

NEW YORK, August 25, 2009 Delivering on its promise to give consumers a variety of choices, Sony today announced the third member of its new Reader family–the Reader Daily Edition™, a highly-anticipated wireless model with 3G connectivity. The Daily Edition caps its new line of Reader products, joining the Reader Pocket Edition™ and the Reader Touch Edition™ which were announced earlier this month.
The Reader Pocket Edition and the Reader Touch Edition are available immediately, and the Reader Daily Edition will be available this December in time for the holidays at SonyStyle stores and SonyStyle.com.
“We firmly believe consumers should have choice in every aspect of their digital reading experience,” said Steve Haber, president of Sony’s Digital Reading Business Division. “Today, we take another large stride to deliver on that promise. We now have the most affordable devices on the market, the greatest access to free and affordable eBooks through The eBook Store from Sony and our affiliated ecosystem, and now round out our Reader offering with a wireless device that lets consumer purchase and download content on the go.”
A Family of Three Readers
The Reader Pocket Edition sports a five-inch electronic paper display packaged in a stylish chassis and is available in a variety of colors, including navy blue, rose and silver. It is available for the ground-breaking price of $199, making it the most affordable dedicated reading device on the market.
The Reader Touch Edition features a responsive, menu-driven six-inch touch screen panel that enables quick, intuitive navigation, page turning, highlighting and note taking with the swipe of a finger or by using the included stylus pen. It comes in red, black or silver and retails for about $299.
The Reader Daily Edition gives consumers wireless access via AT&T’s 3G mobile broadband network to Sony’s eBook store from just about anywhere in the U.S. Book lovers will be able to browse, purchase and download books as well as select newspapers and magazines when and where they want. There are no monthly fees or transaction charges for the basic wireless connectivity and users still have the option to side load personal documents or content from other compatible sites via USB.
The seven-inch wide, touch screen display provides for intuitive navigation and comfortable layout of content, including newspapers and magazines, whether you’re reading in portrait or landscape orientation. In portrait mode, about 30-35 lines of text are visible, making the experience very similar to that of a printed paperback book. A high contrast ratio with 16 levels of grayscale ensures that text and images are crisp and easy to read. The Daily Edition also boasts an attractive aluminum body with an integrated cover for durability. It has enough internal memory to hold more than one thousand standard eBooks and expansion slots for memory cards to hold even more. It will sell for about $399.
All three models feature Sony’s award-winning industrial design and an E Ink® Vizplex™ electronic paper display that emulates the look of ink on paper. Sony’s eBook Library software 3.0, which now includes support for many Apple® Macintosh® computers as well as PCs, makes it easy to transfer and read any Adobe® PDF (with reflow capability), EPUB, Microsoft® Word®, BBeB® files, or other text file formats on the Reader.
Access to Even More Content at the eBook Store by Sony
In addition to announcing a new family of Readers, Sony has also made several changes and improvements to its eBook Store to provide better access to an even greater variety of ebooks. Earlier this summer Sony announced the availability of more than one million free public domain books from Google, and the company made new releases and New York Times bestseller titles available for $9.99.
Today also marks the launch of Sony’s Library Finder application. Sony, working with OverDrive (www.overdrive.com), the leading global digital distributor of eBooks and to libraries, will now offer visitors to the eBook Store by Sony easy access to their local library’s collection of eBooks. Thousands of libraries in the OverDrive network offer eBooks optimized for the Sony Reader, and visitors can now find these libraries by typing their zip code into the Library Finder. Through the selected library’s download website, visitors can check out eBooks with a valid library card, download them to a PC and transfer to their Reader. At the end of the library’s lending period, eBooks simply expire, so there are never any late fees.
The Reader Pocket and Touch Editions, as well as available accessories such as AC adaptors, cases and covers with reading lights, are available now at SonyStyle.com and SonyStyle stores. Book lovers interested in trying out a Reader in person will also be able to find them for sale at Best Buy, BJs, Borders, Sam’s Club, Staples, Target, Toys“R”Us, Wal-Mart and other authorized retailers nationwide.

DIGITAL READING ECOSYSTEM EXPANDS FOR SONY’S READER

NEW YORK, August 25, 2009 Further evidence of the broad support for its open approach to digital reading, Sony today announced relationships with a variety of traditional and digital publishers who provide content in industry standard formats to create a universe of reading material compatible with the Reader.
All of these sites will offer content in the EPUB format, the International Digital Publishing Forum’s (IDPF) XML-based standard format for reflowable digital books and publications. EPUB has gained acceptance among major trade book publishers with dozens of publishers already producing the majority of their eBooks using the standard. Sony recently announced that the company is transitioning its entire content library to the EPUB format, giving consumers the freedom to purchase or download free eBooks from the eBook Store by Sony and read them on any EPUB-compatible device.
“From the beginning, we have said that an open format means more choice for consumers,” said Steve Haber, president of Sony’s Digital Reading Business Division. “Now, working with other industry leaders, we can provide a device that is compatible with the widest selection of content available. Readers can shop around for what interests them rather than be locked into one store.”
Sony’s eBook Store already provides access to more than one million public domain Google Books in EPUB format and, starting today, Sony’s Library Finder application will go live. Library Finder offers visitors to the eBook Store by Sony easy access to their local library’s collection of eBooks. Thousands of libraries offer eBooks optimized for the Sony Reader, and visitors can now find these libraries by typing their zip code into the Library Finder. Through the selected library’s download website, visitors can check out eBooks with a valid library card, download them to a PC and transfer to their Reader.
Other sites offering EPUB content include:
• Independent Bookstores–More than 200 participating members of the American Booksellers Association–including stores such as Tattered Cover (Denver, CO) and Vroman’s Bookstore (Pasadena, CA)–will have the ability to sell e-content to consumers beginning this fall. The stores using ABA’s IndieCommerce platform will offer content in the EPUB format and protected by Adobe’s Content Server 4 (ACS4) digital rights management, which is compatible with Sony e-Reader products. In addition, plans are underway to make Sony’s e-Reader devices available for purchase from independent bookstores in time for this holiday season. ABA is a not-for-profit trade organization devoted to meeting the needs of its core members–independently owned bookstores with storefront locations–through education, information dissemination, business products and services, and advocacy.
·        BooksOnBoard–BooksOnBoard, the largest independent eBook bookseller and member of both the ABA and IDPF, has been a staunch supporter of the EPUB standard through its founder Bob Livolsi. BooksOnBoard was the first eBook site to offer the EPUB standard to its burgeoning customer base and has sold more EPUB formatted books than any other online bookstore. BooksOnBoard believes that the EPUB standard significantly benefits the publisher, authors and most importantly the consumer.
·        NetGalley–NetGalley is an innovative and easy-to-use online service and connection point for book publishers, reviewers, media, librarians, booksellers, bloggers and educators. NetGalley delivers digital galleys and promotional materials to professional readers and helps promote new and upcoming titles. Starting today, NetGalley will support the Reader with the ability to download a protected PDF file and this fall the company will offer digital galleys in EPUB format.
• Powell’s Books and Powells.com–Powell’s Books is the largest independent bookseller in the world.  Innovative since its inception in 1971, it was one of the first booksellers online (beginning in 1994), and one of the first to sell eBooks for reading devices (the Rocket eBook) in 1999. Powell’s offers EPUB content for a wide range of compatible devices, including the Sony line.  Powell’s is an important player in the open access world of eBooks, where titles are provided by a wide range of publishers in a competitive retail environment, read on a range of devices, and downloaded and owned by millions of people around the world.

But game sales have been weak in 2009, even as movie theaters set box office records. What gives?

I’ll let someone else try to explain the movie side of the ledger (although those box office numbers aren’t always what they seem to be). But it turns out that there’s a simple explanation for game slump: It’s that gamers are huddled in their basements playing Grand Theft Auto over and over and over.

Gamers are indeed spending more time playing videogames, say new data from Nielsen. It’s just that gamers aren’t spending more money on games. Instead, they’re playing the games they have, buying used games, and increasingly turning to game subscription services.

Here’s the argument in chart form–you can get a summary here or download the full report here (PDF). Click on the charts to enlarge:

Hours played:

Used games purchased:

Subscription rate:

All of which explains why Best Buy (BBY) and Wal-Mart (WMT) are both getting into the used game business and why Blockbuster (BBI) and GameFly are expanding their game rental business. Now, if you’ll excuse me, I’ve got to get back to my game of Hover Kart.

But I have a question: Whatever happened to eMusic’s search for a new CEO?

David Pakman, who ran the company since 2005, left last fall to join Venrock, the Rockefeller family’s venture capital arm. Last I heard, in late October, the company was “looking at a handful of very qualified candidates” to replace him. And in the meantime, eMusic Chairman Danny Stein–who runs the investment company that owns eMusic and who ran eMusic himself prior to Pakman–was serving as interim CEO.

So who’s the new boss? Same as the old boss. It’s also old news.

Stein says that’s he’s going to run the company for the foreseeable future, and that he figured that out way back in December: He just never announced it. “It was an easy decision to make”, he says.

Stein says he saw plenty of “very capable people”  but figures, a la Dick Cheney, that he was the right man for the job. He also says that the various headhunting companies who say they’re helping eMusic find a new CEO are doing so without his knowledge (or dollars).

Fair enough! The bigger question, as it has been for many years, is how eMusic fits into the larger digital music ecosystem. It sells DRM-free MP3 downloads, which some consumers like, via a subscription service, which most consumers don’t enjoy. Stein says the company has around 400,000 subscribers, and that that number has remained stready for a while. But he says his topline revenue still grew 40 percent last year, to $70 million. (No word on profits or lack thereof).

That’s a pittance compared to Apple’s iTunes (AAPL)  store, which moves about $2 billion worth of songs every year. And while eMusic was once a couple of signatures away from selling to Amazon (AMZN), that window looks like it’s closed, as the retailer launched its own MP3 store a year ago.

But perhaps there’s still an M&A opportunity for eMusic for a different retailer that wants to get into digital goods; Best Buy (BBY) did something similar when it bought up Napster last year.

Neither company will disclose how much money Best Buy (BBY) is putting into the fund, so it’s difficult to gauge how big a deal this is, or isn’t. But we do know that the retailer has already shelled out $121 million for Napster, so presumably it’s ready to spend that much again, at least. Another sign Best Buy is serious about this whole digital thing, or at least wants to signal that it is: Multiple sources tell me it has created a position for a chief digital officer and is searching for one now.

The deal also signals that Velocity, the firm Levinsohn created with former AOL CEO Jon Miller, will continue even though Miller is now heading up digital operations for News Corp. (NWS), which owns this Web site.

Miller took Velocity partner Jorge Espinel with him when he joined News Corp., but Levinsohn, who earned his reputation when he helped News Corp. buy MySpace (following this?), will be staying on. Oh, and for good measure, Velocity is changing its name to Fuse Capital. Presumably there’s a good reason for that, but the press release below doesn’t spell that out.

VELOCITY INTERACTIVE GROUP CREATES NEW DIGITAL MEDIA FUND WITH BEST BUY;
MARKS LAUNCH OF STRATEGIC EQUITY MANAGEMENT INITIATIVE FOR FIRM

Velocity to Change Name to Fuse Capital
Los Angeles – May 28, 2009 – Velocity Interactive Group, a leading venture capital firm in digital media and communications with more than $1.4 billion under management, today announced a strategic partnership with Best Buy that includes the launch of a new digital media fund.  With Best Buy as the sole limited partner, the fund will seek to leverage the scale and scope of the multinational consumer electronics retailer to help drive growth and enhance performance of the portfolio companies.  The fund will focus on strategic digital media investments as a complement to Best Buy’s current digital media and emerging technology investment activity.  Separately, Velocity is also announcing that it will change its name to Fuse Capital.

The new fund is designed to focus on investments in digital media companies that will help create the next generation of leaders in categories such as music, video, games, and personal media management, as well as other areas that leverage the touch points and reach of Best Buy.  As part of the relationship, Fuse will work closely with Best Buy on digital media strategies and support the company’s existing digital assets.

The Best Buy partnership marks the launch of Fuse’s expansion into strategic equity management. The focus of the strategic equity management initiative is to become partners with global corporations that seek to augment their digital strategic initiatives with the knowledge and expertise of an investment firm dedicated to digital media and communications.  Fuse’s portfolio will benefit from the partnerships with these global corporations which enable them to jump-start and launch with critical mass, greatly improving the likelihood of success.  Fuse’s decision to change its name from Velocity to Fuse Capital reflects this strategic focus.

“This strategic initiative is a natural extension and evolution of our capabilities, given our firm’s extensive strategic, investment and operational experience in both emerging companies and large corporations across digital media,” said Ross Levinsohn, managing partner, Fuse.  “As for our first partner, Best Buy is the preeminent retail leader in technology and entertainment products and services, and is exceedingly well positioned to take advantage of the massive shifts occurring across the media and commerce landscapes.”

“This partnership is another example of how we strive to be at the forefront of consumers’ entertainment and digital lives,” said Mike Vitelli, executive vice president, customer operating groups, Best Buy.  “We are pleased to be working with Fuse and look forward to working with them to lead the market transformation in digital media.”

But just in case you weren’t convinced, here’s some new data from NPD Group:

• CD sales dropped by 19 percent last year.
• The number of U.S. CD buyers  dropped by 17 million last year.
• The number of music buyers dropped by 13 million last year.

Only the last number is noteworthy. Because while NPD says that digital music downloads increased by 29 percent in the last year–good for Apple (APPL)–the research firm also notes that many Americans have simply stopped paying for recorded music, period.

Up until last fall, music optimists would argue that this was OK, because people were more engaged with music than ever. Semi-true cliche: The music labels are in trouble. The music business is doing just fine.

And indeed, NPD throws out a series of stats which show that more people are listening to free music provided by the likes of Pandora, iMeem and News Corp.’s (NWS) MySpace Music. But all of the sites that are providing free music are having a very hard time figuring out how to make a business out of it. It’s quite likely that we’ll see some of them fold or sell out in the next few months. Stay tuned.

Note: News Corp. owns Dow Jones, which owns this site.

The six-unit Virgin Megastore chain will close two more stores, the Union Square location in New York City at the end of May and the Market St. store in San Francisco at the end of April, sources say….

In August 2007, the Virgin Entertainment Group North America was acquired by two real estate companies–the Related Cos. and Vornado. Since then, the chain has been reduced from 11 units–with the industry awaiting word of the fate of the three remaining stores in Denver, Los Angeles, and Orlando, Fla.”

At this point the real news should be when people buy music at brick-and-mortar outlets at all. They still do: CD sales continue account for the majority of big music’s revenues.

But as the handful of remaining music stores vanishes, and the big boxes like Wal-Mart (WMT) and Best Buy (BBY) keep cutting back the space they allot to discs, that won’t remain true for long.

Last June, a Vornado executive told Reuters that the store would shut down in the first quarter of 2009. The decision to close the store appears related to real estate and the value connected to the location. That executive was quoted as saying that Virgin pays only $54 per square-foot when the market rent in the area is about $700 a square foot.

So, while the store, which does an estimated $55 million in annual volume, is profitable to the tune of $6 million, according to sources, the space would be even more profitable for its owner with a higher rent tenant. Vornado bought the 180,000 square foot retail component of the Bertelsmann building, which houses the Times Square store, in 2006, and will lease the space to Century 21, according to reports.

The closure leaves the Virgin chain with five stores, and one of them, the Union Square store in New York, will now be the city’s premiere record store, with an estimated $40 million annual volume. But the status of that store is also at question as the Related Cos. and Vornado leased the ground floor of the store to Nordstrom Rack for the holiday season, only to have the deal fall through.”

I get that the decision appears to be “related to real estate,” but it’s really about the health–or lack thereof–of bricks-and-mortar music retail. If the No. 1 store in the country can’t make it, and if New York City’s “premiere record store” rented out a floor during the peak sales season, then why is anyone bothering to sell CDs in stores, period?

Plenty of retail executives seem to be asking themselves the same question, and are responding by cutting the small space they’ve devoted to CDs even further. The exceptions: Special promotions for exclusive albums, like Wal-Mart’s (WMT) successful push for the new AC/DC album last year, and Best Buy’s (BBY) unsuccessful gambit with Guns N’ Roses.

[Image Credit: Troshy]

Apple (AAPL) has quietly allowed some of its vendors to resell gently used iPhones for a while, but now Best Buy (BBY) is making it a standing policy. Reuters:

The electronics chain said the used iPhones, which were returned within 30 days of purchase, are priced at $149 for the model with 8 gigabytes of storage, while the 16-gigabyte version is $249. A two-year service contract with AT&T Inc. is required.

New iPhone 3Gs currently sell for $199 and $299 at Best Buy Mobile stores.”

AT&T (T) will also sell you a used iPhone at the same discount, though only online. But don’t bother looking for iPhone bargains at Apple’s online store: It’s one of the only products the company doesn’t offer in its bargain/refurbished section.

Yup, more of the same: Holiday sales from Nov. 1 through Dec. 19 are down one percent compared to the same period in 2007. Which is right in line with comScore’s (SCOR) prediction of flat online sales for the holiday.

If you’d like a rosier glow to these numbers, comScore tries to oblige, by noting that average online spending between Thanksgiving and Dec. 19 is actually up five percent per day. But since there are fewer days between Thanksgiving and Christmas this year compared to previous years, that won’t help retailers’ top or bottom lines.

What are people buying on Amazon (AMZN) and other electronic storefronts? Fewer flat screen TVs, ComScore says, either because promotional discounts have tapered off or because those who need a 42-inch LCD on their walls have already got one.

Meanwhile, I’m not sure what constitutes an online “Sports and Fitness” purchase, but ComScore says people have been making many more of them this year, because the category is up 31 percent. Music, movies and videos are much more familiar, and much less popular. Sales are down 24 percent, which mirrors what Best Buy (BBY) said about its brick and mortar sales for the same goods earlier this month.

The blogger who leaked most of ”Chinese Democracy,” the sort-of long-awaited album from Gun N’ Roses, has pleaded guilty to copyright infringement and will cooperate with the Feds in order to stay out of jail.

But he isn’t the only one who’s in hot water over the album. Someone at Best Buy (BBY) has to explain why they thought it was a good idea to buy 1.3 million nonreturnable copies of the album, most of which look destined to become drink coasters.

Before anyone gets tempted to put two and two together here and blame the Internet for poor music sales, be warned: The music that is most popular among file sharers is the music that is most popular among buyers. In retrospect, it was easy to tell that this album would stiff, based on the reactions of MySpace browsers who came to check out a legal stream of the album–they listened to one track and bailed out.

The Wall Street Journal floats another theory: That Axl Rose, who is the only person left from the original band and whose cloistered neuroticism/paranoia became legendary during the gazillion years it took for the album to come out, didn’t work hard enough to sell the album. He shunned interviews, didn’t make a video for the album, etc.

But just because Axl Rose is turning down a chance to chat with the likes of the New York Times doesn’t mean you can’t find him online. He’s been dropping by fan sites to leave message on bulletin boards, and this weekend did a lengthy Q&A with his followers, who seem to have lots of patience. If you’ve got a similar amount of time, the entire transcript is here via Idolator.

Still unclear about the company’s prospects? CEO Brad Anderson tries to spell it out: “We believe that there has been a dramatic and potentially long-lasting change in consumer behavior as people adjust to the new realities of the marketplace.”

But! There is at least one glimmer of not-terrible news buried in the retail giant’s report this morning: Same-store sales for November–that is, year-to-year comparisons for stores that have been open for at least 14 months–were “essentially flat.”

That’s once you factor out a weird calendar anomaly between this year and last year. If you don’t account for that, same-store sales were down 8.7 percent. But whatever. Flat is the new up, and we need good news, so we’re taking what we can. The company says that while store traffic was down, people were buying bigger ticket items like notebook computers and mobile phones.

Why are you reading about a retail giant’s performance in a media column? Because the performance of Best Buy (BBY) and other retailers during November and December is going to have a big impact on ad budgets for 2009.

Alas, not all of the media news coming out of Best Buy is as good (or at least not bad). The company reports “double-digit declines” in movie and music sales (thanks for nothing, Guns ‘N Roses fans) and single-digit declines in videogames.