The company’s revenue climbed 7.4 percent in the 12 months ending March 31, the company disclosed (via PaidContent).

The rise is due to increases in both the sale of recorded music and publishing revenue; increases in the former are particularly rare these days. And these numbers ought to bump again in the coming year given that they’ll include dollars/pounds generated by the re-release of the Beatles albums.

Alas, since EMI owner Terra Firma is deep in the midst of negotiations with Citigroup (C), which lent it billions to buy the company, it’s not handing out any other details about the company’s performance, so hard to tell what’s really going on there.

Still, we do know that music has been in decline for a decade, and EMI’s bump up is the first, no matter how modest, in many moons (click on table below to enlarge).

A Los Angeles federal judge has issued a preliminary injunction against BlueBeat, a California-based site that had briefly sold the band’s music, arguing it used “psycho-acoustic simulation”–basically, making a note-for-note recording of the band’s recordings–to make the songs its own.

The same judge had already issued a temporary restraining order on behalf of music label EMI Music Group against the site earlier in the month and had scheduled a hearing for Friday, Nov. 20. But this ruling cancels out the hearing and by any reasonable standard should end the case.

Then again, this whole story has been a head-scratcher from the start, so who knows? Maybe the BlueBeat guys will try an even more preposterous argument down the road.

Part of me thinks that the whole thing may be some sort of Negativeland/U2 hack/stunt/performance art piece. Or maybe there were a lot of mood-altering substances involved. Or maybe it’s part of a conspiracy to create work for copyright lawyers.

Whatever. I’ve embedded the court ruling below, if you insist on reading it. But here’s a clip of Richard Pryor reading the alphabet on “Sesame Street,” which is just as edifying and much more entertaining.

bluebeat beatles suit –

But oddly, the deal is the only one of its kind. While the big music labels have played footsie with Hulu in the past, they have yet to actually move any of their clips there.

That could still happen one day, and the site hints that you may see more clips coming down the road. But Hulu is less valuable for the labels than it could have been a year ago: Since then, three of the big four have struck deals that give them much more incentive to show their stuff on Google’s (GOOG) YouTube, the world’s biggest video site.

Vivendi’s Universal Music and Sony (SNE) have a deal that locks up their stuff exclusively on Vevo, a sort of “Hulu for music videos” that will be powered by YouTube. And Warner Music Group (WMG) has convinced YouTube to give the label its own branded channel for its clips.

No word on financials for the Hulu deal, but I’d surprised if this generates much cash for EMI. Hulu’s core partners–News Corp.’s (NWS) Fox, GE’s (GE) NBC Universal and Disney’s (DIS) ABC–have deals that let them keep 70 percent of any ad revenue their stuff generates on the site. But other partners get closer to 50 percent.

In other Norah news, my soon-to-be sort-of neighbor is having construction problems. Here she is taking on one of the great Wilco songs:

That’s the obvious question in light of news that both Terra Firma, the private equity group that bought EMI in 2007, and Citigroup, which funded most of the transaction, have written down most of their investments in the music company.

This isn’t a surprise–the move has been a long time coming–but it does open the door for Warner, which restructured its debt with an eye toward making such a deal earlier this year.

Pali Research’s Rich Greenfield thinks that Citi (C) will push to break up EMI and sell Warner (WMG) the record music group, which tends to lose money, and keep the music publishing business, which has been a reliable money maker, even during the industry’s 10-year freefall.

But at this point, I don’t know why Warner couldn’t try to swallow the whole thing. In the past, that deal would have been scuttled due to antitrust issues (and in fact, it was), but the music industry is a different beast right now–a sick beast–and I think regulators would be a lot more forgiving this time around.

[Image credit: beggs]

$279.99, exactly.

What do you get for that? The same thing the band and EMI Music Group are already selling for $219: All of the band’s music, in a remastered stereo mix. But if you’re willing to pay extra, you can now get the same tunes bundled up in a single USB stick. Like so:

People who care about this stuff will be pleased to know the files will be available in both FLAC and MP3 formats. More details here, although there does seem to be some confusion about whether there are 30,000 of these puppies or just a couple hundred. Either way, they go on sale Dec. 7 in the U.K. and the next day in the U.S.

By the way, if you’re the kind of Beatles fan who considers plunking down more than $200 for music you already own, then you’ve most likely seen this. But it’s free to everyone, thanks to Google’s (GOOG) YouTube:

This one isn’t a total shock, as EMI and Grooveshark had supposedly been close to a deal prior to the lawsuit. And it wouldn’t be the first time that a label sued a Web company: See Warner Music Group (WMG) and Imeem, as well as Universal Music Group and News Corp.’s (NWS) MySpace, among others.

No details on the deal from EMI or Florida-based Grooveshark, which offers free streaming music, a la MySpace Music, Imeem, Spotify and others. Unlike those services, though, Grooveshark doesn’t appear to have licensing deals with three of the big four labels and plays their music anyway. But with the exception of the EMI suit, it has remained unmolested. Interesting.

For the record, here’s the release (Inside baseball note to Grooveshark guys: Please don’t attach press releases as PDF files. Really cumbersome. Thanks.):

Music streaming service Grooveshark signs deal with EMI Music and EMI Music Publishing
Gainesville, FL–Today, digital music service Grooveshark.com announced it has entered into agreements with major label EMI Music and EMI Music Publishing that will give Grooveshark users access to content from EMI’s roster of current and legendary catalog artists and EMI Music Publishing’s songwriters.

Grooveshark offers music fans the ability to stream songs for no fee from a vast catalog of music. Fans can enjoy Grooveshark’s music without having to download client software or register. The basic service is free to fans and supported by visual advertising. Fans who opt for a $3 per month premium service can enjoy unlimited ad-free streaming music. The site was recently named the best way to listen to music on the web by Rolling Stone, and just surpassed one million registered users.

“EMI Music and EMI Music Publishing have collaborated with us to create a mutually sustainable deal which represents the future of digital music,” says Grooveshark CEO Sam Tarantino. “We will continue to deliver the best music service on the Internet to our users, and we will expand our capacity to strengthen fan-to-artist connections through our technology.”

“We think services like Grooveshark offer great music discovery options for fans,” said Mark Piibe, EMI Music’s Global Head of Digital Business Development. ”In turn, Grooveshark offers a new revenue stream for our artists and will help us learn more about how we can better connect different types of fans with artists.”

My story about EMI’s lawsuit against Web music start-up Grooveshark elicited this email from Ben Patterson, who runs indie Web music distributor DashGo, about his experience with the service.

I think Patterson’s remarks are useful because they spell out Grooveshark’s business plan, or at least part of it: Charge labels to promote their acts on the service’s search engine. And I think it’s also helpful to hear an obvious but little-voiced argument about the “free Web music = valuable promotion” thesis: It works best when the act or label is playing along. With Ben’s permission, I’m publishing his entire email.

I’ll caveat this by saying they are nice guys and big music fans and I’m always rooting for new music services that work for bands and music fans alike.

Back in 2007 DashGo signed a deal with Grooveshark that basically amounted to a digital download service delivered via P2P. Users who used Grooveshark’s P2P service to search for songs would be presented with a download / buy link and the revenue would be split between fan hosting the file, Grooveshark and the band.

A couple months later we got a nice packet–a t-shirt, letter and wax-sealed, yes, wax-sealed, envelope with a check for $0.59 in royalties. (Coconut Records “West Coast” I think)

Then I didn’t hear much for 6 months. No checks, no real action. At the end of 2008, they reached out and told me about their new music search engine at listen.grooveshark.com–basically Seeqpod / Songza / all other stream song aggregators…not what we licensed for, but not egregious enough to get huffy.

Of course, that was before they offered to sell me advertising for my bands as the default search keyword. For $0.05 per search, I could make the default phrase “DashGo Band Name” instead of “Search here.” I had to ask–am I getting paid per play? No of course not. Because “[they] are not profitable and can’t afford to share that advertising revenue.” So I’m paying, not even for a play, but for a search term on a service where they have users and can sell ads ONLY because people can listen to music, and because it’s free, what incentive is there EVER to buy the song?

So we don’t deliver there anymore.

I’ll tell you why all these free streaming music services are broken–because they rely on music advertising to pay the rent but give away the advertisers product. If I got free McDonald’s and Budweiser by watching the Super Bowl, why would I buy the food? As an advertiser, why would I pay a CPC to advertise streaming music and promote listens when the per stream rate a existing subscription services is AT BEST $0.02 per play?

It sucks to get sued. I’m sorry Grooveshark, but really..what did you expect? You’re soliciting labels and bands to pay your bandwidth, rent and operating costs and giving away the product.

While I’ve got this soapbox out, let me preach one more gospel; offering free music accessible via a search engine is NOT promotional if the band hasn’t opted in.

If a user SEARCHES for the music and listens to it for free in an environment where someone ELSE has posted the music and the band doesn’t have the option to ask for an email address or even pitch a tour or merch or actual album; then the service is just ripping off the band by giving free content to someone who asked for it–not promoting it to a new fan or adding a filter that helps expose and distinguish music.

[Image credit: Mrs. Logic]

Digital music start-ups seem to come in two flavors these days: Those being sued by the major music labels and those with expensive licensing deals they can’t afford.

But for some reason, plucky Grooveshark, which runs a very nice, free streaming music service, has stayed out of both of those buckets until now. I’ve confirmed that EMI Music Group is suing the site–whose motto is “Play any song in the world, for free!”–for copyright violation.

The label filed suit against Gainesville, Fla.-based Grooveshark in a New York court on May 8. I don’t have a copy of the complaint yet, but if you feel like sharing, hit me at peter@allthingsd.com or use the blind tip box here. No comment from EMI, but Grooveshark sent me a very long statement, which I’ve printed at the bottom of the post.

The takeaway: Grooveshark says it was working on a licensing deal with EMI and now finds itself in court instead. The company does refer to deals with “many artists, labels and publishers,” but as far as I can tell, it doesn’t have deals with any of the other three majors–Warner Music Group (WMG), Universal Music Group, or Sony (SNE)–either.

Grooveshark started out as a peer-to-peer file-sharing start-up in 2006, and has since morphed into a streaming model. When I talked to marketing VP Joshua Bonnain in May, he told me the company was primarily funded by friends and family–most of the company’s employees are either students at or graduates of the University of Florida, he said. But he also said the company had received a “substantial investment from a large party” that he wouldn’t identify.

Bonnain said the site, which generates at least some ad revenue, planned on splitting half of it with the copyright owners of the music it played. But I was never clear about how that was going to work since Grooveshark doesn’t have deals with the majors. Then again, Bonnain didn’t tell me that the company had been sued a few days before we talked, either.

In the music world, negotiations don’t preclude suits and vice versa; Warner was, at one point, suing iMeem, but then became an investor in the site. Same thing with Universal and News Corp.’s (NWS) MySpace. The only real question I’ve had is why the big guys haven’t gone after Grooveshark yet. I’ve been asking label folks about the start-up since November and I’ve only gotten shrugs for an answer.

Anyway, as I said, it’s very nice service, and it would be a shame if the labels can’t figure out a way to work with it or help it survive. But the odds of that happening, based on the unpleasant history of digital music start-ups to date, are very low. So enjoy this themed playlist I created with the site’s help, which features music from all four majors, while you can. Grooveshark’s statement is below.

For the past year, Grooveshark has been in talks with EMI Records and other copyright holders to negotiate licensing agreements for the use of their content. We are pleased to announce that over the past few months Grooveshark successfully concluded mutually beneficial agreements with many artists, labels, and publishers that we hope to be a template for other such agreements with additional copyright holders.

Recently, EMI Records chose to abandon the template we’ve built with the help of other major copyright holders and opted for their traditional intimidation tactic of filing a lawsuit as a negotiating tool. We find the use of this negotiating strategy counterproductive, as Grooveshark has been willing to conclude an agreement with EMI Records that is economically sustainable for both EMI Records and a start-up company the size of Grooveshark.

Grooveshark is run by a group of young and passionate musicians. We love music, we make music, and we believe that the use of all music should be paid for. We adopted this core philosophy at our inception and to date have concluded agreements with hundreds of record labels, major US performance rights organizations, and thousands of independent artists who support Grooveshark’s business model. (See: Grooveshark Artists)

As musicians, we support the rights of copyright holders and strive to sign sustainable agreements with all content owners, ensuring that all artists get paid– or we agree to remove content from our system in accordance with our DMCA Takedown Policy. We hope that EMI Records eventually follows the lead of the many forward-thinking labels we are already working with, who would rather get their artists exposure and a fair share of our revenue than block content access and force customers to illegal networks.

We understand that the economy of the digital music business is in a state of flux, and we hope to help ease this transition by providing the required new tools and services that lead to the next generation of the music industry. We respect the ownership rights of the major labels and publishers, and our core mission has always been to compete with piracy by offering a service that is genuinely better than what illegal networks offer, while also ensuring fair payment to copyright holders. Our next important step on our road to success is to conclude a mutually beneficial agreement with EMI Records that is sustainable for both EMI and Grooveshark.

Details on the new notes, which mature in 2016, are available here, and there’s more fine print here. But the broad strokes are that the offering will allow Warner to bolster its balance sheet, and remove investors’ concerns about its ability to finance existing debt load. Those concerns had prompted Warner to dump its dividend a year ago–long before dividend-slashing became trendy.

But the most interesting part of the offering, per Pali Research analyst Rich Greenfield, is language allowing Warner to redeem the notes early “if a major music transaction occurs.” Translation: Warner still isn’t giving up on the idea of combining with EMI Music Group, a merger the two labels have been trying to pull off for nearly a decade.

Hey! Also, there’s a new album out from Green Day, one of Warner’s biggest acts. I’d show you  a YouTube clip, but Warner (WMG) and Google’s (GOOG) video site are still sparring, so the label’s videos aren’t on the world’s largest video site. So here’s Green Day 1.0 (per “High Fidelity”): Stiff Little Fingers, circa 1980:

People familiar with the matter tell me that DeWolfe and News Corp., specifically new digital boss Jon Miller, are discussing a leadership change today. News Corp. (NWS) officials declined to comment. (News Corp. is the owner of Dow Jones, which owns this Web site.)

Sources tell me Miller hadn’t been planning on getting rid of DeWolfe (pictured above) in the near future, and that until yesterday he was still evaluating his options. News Corp. CEO Rupert Murdoch had once treated DeWolfe as a favorite and gave him significant autonomy at MySpace. But Murdoch, who brought Miller on earlier this month, has been leaning toward a change as MySpace’s traffic has stagnated and its buzz and momentum have moved to Facebook.

Still, Murdoch had left the decision about the site’s leadership to Miller, his new hire, sources said. One possibility: Elevating DeWolfe to a nonexecutive advisory position.

Those options narrowed last night once TechCrunch ran a story claiming that News Corp. had hired a headhunting firm to “scour for possible replacements” for DeWolfe.

News Corp. hadn’t actually hired a headhunter, I’m told by multiple sources. But I’m also told that the report was enough to spook DeWolfe into calling Miller to ask what his plans were. That conversation led to today’s negotiations, which will likely lead to his stepping down as CEO, although he may remain affiliated with MySpace in some capacity.

Meanwhile, News Corp. has been talking to Van Natta (pictured here) about taking DeWolfe’s place. Van Natta, who had been a highly regarded executive at Facebook, was at one point the leading candidate to head up MySpace Music, which launched last fall, and the two sides held extensive conversations.

But Van Natta, like many other potential hires for that position, bristled at the job’s org chart: Rather than a standalone company, a la Hulu, the site News Corp. set up with GE’s (GE) NBC, MySpace Music is simply a unit of MySpace, reporting to DeWolfe. MTV executive Courtney Holt eventually took the job.

But Van Natta’s fate has remained closely intertwined with MySpace anyway. Project Playlist, the free music-streaming site he took over last fall, has seen traffic plummet after MySpace, along with Facebook, cut off the site’s access to their users, a move prompted by lawsuits from several major music companies.

Van Natta has made some headway at extracting the company from its legal mess, which predated his hiring, and he has hammered out a settlement with EMI Music Group. But Playlist is still being sued by Warner Music Group (WMG) and Vivendi’s Universal Music Group, and even music sites that aren’t in legal trouble are struggling to keep their heads above water. Plenty of Silicon Valley watchers wonder why Van Natta landed at Playlist in the first place and think that he has been looking for a way out.

Here’s a video of DeWolfe talking with BoomTown’s Kara Swisher a little more than a year ago when MySpace opened a new office in San Francisco. Below that is a video of Van Natta talking to Swisher in 2007 about Facebook’s ill-fated “Beacon” project.

They’re coming, music label execs tell me. Just hold your horses.

None of the label executives I contacted at Warner Music Group (WMG), Universal Music Group, Sony (SNE) and EMI Music Group would talk to me on the record. But several of them promised that consumers will soon start seeing lots of old stuff marked down at the new bottom tier price. “For every one track at $1.29, there are about 10 tracks at 69 cents,” one told me. “75% of the tracks are staying at .99 and we will be pricing down a far greater number of tracks than we will price up,” added another. (Another inexplicably argued that the labels don’t set retail pricing at all, but that’s a stretch: The labels do set wholesale pricing, which correlates to Apple’s retail price).

The label folks say that it takes longer for Apple (AAPL) to ingest the pricing changes than you’d think, and that’s the reason for the delay. Then again, this stuff has been in the works since early January. And you’d think that Apple or the labels would have made a point of coming out of the gate with lots of cheap stuff so that folks like me wouldn’t obsess about the more expensive tracks.

But they’re getting there. Today, for instance, iTunes is promoting two collections of “Great Songs At A Great Price”–a “Classic R&B” set and a “Rock” set. The R&B collection has some pretty good stuff, in my humble opinion: Tracks like “O-O-H Child” by The Five Stairsteps and Marvin Gaye’s “Can I Get A Witness?” The rock collection is a little more, um, eclectic. But you can get the Clash’s “London Calling” there. And anyway, one man’s trash is another’s treasure, and I’m sure someone’s psyched to get Blue Oyster Cult’s “Godzilla” for 69 cents.

And here’s another track I like from the R&B set, or at least a YouTube video of someone playing a vinyl version of it: Solomon Burke’s “Cry To Me”:

[Image credit: specialkrb]

Seeqpod, founded in 2005, has raised either $5 million or $7 million since then (I can’t vouch for either number). But its Chapter 11 filing lists assets of just $2 million, and debts of $1.6 million.

I’m used to seeing bankruptcy filings where the debt number is much bigger than the asset number. But as Seeqpod bankruptcy attorney Scott L. Goodsell patiently explained to me last night, companies frequently seek Chapter 11 specifically so they can stay pending litigation.

In this case, Seeqpod is trying to get a breather from lawsuits filed by Warner Music Group (WMG), and, more recently, EMI Music Group. Both music labels say the search engine violates their copyright by offering users streaming music it hasn’t licensed.

Seeqpod says it’s protected by the Digital Millennium Copyright Act, but at this point, Seeqpod’s legal arguments don’t matter nearly as much as its bank account.

It already owes Farella Braun + Martel, its lawyers in the copyright cases, $424,235.06, according to the filing. That’s four times more than what it owes Level 3 Communications (LVLT), its bandwidth provider.

Meanwhile, as battered as the big music companies are, they can certainly afford to keep paying their lawyers. Warner’s stock price is hovering in the $2 range, but it threw off $160 million in free cash flow in the last quarter.

Even in the good old bubble days, it would be hard for a site like Seeqpod to find investors willing to back it in a legal fight where it was that badly outgunned. Seems unlikely that it will find a champion willing to pick up the tab now.

No terms were disclosed. The settlement, in conjunction with an earlier deal struck with Sony’s Sony Music Entertainment (SNE), means that Project Playlist now has deals with two of the big four music labels. But Warner Music Group (WMG) and Vivendi’s Universal Music Group are still suing the company.

Just as important: Project Playlist hasn’t been reinstated by MySpace and Facebook, both of which booted the service off their social networks last November. Since Project Playlist depended on those sites to drive traffic to its site, it’s hard to see how it can gain much traction unless it can sweet-talk the two other labels into coming aboard.

My expectation was that a settlement was in the works last fall because that’s when former Facebook COO Owen Van Natta joined the company as CEO and investor Bob Pittman poured several millions of dollars into it. Neither of those men, I assumed, was betting on a prolonged lawsuit.

Project Playlist isn’t the only music start-up struggling these days–even those that haven’t been sued by the labels, or have deals with them or even investments from them, are trying to figure out how to survive. Most assumed they’d be able to make money via advertising, but that was a hard sell even before the recession/depression.

Still, better to have a deal than a lawsuit.

Preprepared quotes from both sides:

Van Natta: “It is crucial for us to continue connecting our users with more of their favorite music. This partnership will provide us with a wide-ranging selection of content to satisfy our users’ appetites to share and purchase music. We are excited to now have both EMI and SONY BMG Music catalogs available and we hope to continue to expand and enhance our service.”

Ronn Werre, EMI Music’s President, Music Services worldwide: “Making our music available on a fan favorite like Project Playlist is part of EMI Music’s mission to connect artists and fans and to give fans more ways to discover new artists. Project Playlist is becoming a fan favorite. Our artists also know that word-of-mouth among friends is a powerful part of music discovery.”

Try it yourself. Head to YouTube and look up an “official” clip from any of the big three labels that still put their stuff on YouTube–Vivendi’s Universal Music Group, EMI Music Group and Sony’s (SNE) Sony Music Entertainment. Inevitably, you’ll find the embedding code “has been disabled by request.” (This doesn’t apply to Warner Music Group (WMG), since that label’s stuff isn’t on YouTube at all anymore.)

This isn’t the end of the world. I can almost always find an unofficial clip that does the job. But why do I have to do that at all? Don’t the labels, and Google’s video site, want this stuff distributed as widely as possible–either because the clips can help them sell music or sell advertising?

I’ve asked both Google (GOOG) and the labels about this in the past and have never gotten a satisfactory answer. Essentially, both sides point the finger at each other. But yesterday an employee at one of the big labels tried to answer the question for me, via an email. His argument: Both the labels and YouTube are really collaborating on this one.

Meanwhile, he says, the fact that the labels would be much, much better off if they let people promote their products, for free, all over the Web isn’t lost on label employees themselves. Just not the ones that are cutting deals with YouTube.

Here’s his letter, sans identifying details. Below that: An excellent, and unofficial, Beatles clip.

I wanted to point out something that might explain the inability to embed [major label] videos outside of YouTube.

I work at a major label and I’ve been told informally that embedding is disabled on our label’s YouTube clips because the deal terms negotiated with YouTube on our first licensing deal a couple years back demanded such large advance and per-stream payments that YouTube could only come close to the ad rates required to satisfy the terms by selling the advertising around the video, and not just on in-video overlays. So in the negotiation, YouTube told us only way we could get the terms we asked for was to disable the embedding on our videos.

The decision not to compromise on terms so we could allow embedding has been really difficult to label employees in digital marketing and publicity. The digital business division is rewarded for bringing in big money from deals, but we at the labels are rewarded for realizing profits from breaking artists, and end up being constrained by many of those deals.

We would absolutely prefer the videos to be embeddable to increase the reach of our artists through blogs, MySpace pages, and now (this is a huge detriment, I think) through the YouTube video items on Facebook that people post to their walls.

Maybe it’s not a huge story, but it’s definitely more complex than “major labels are so protective of their content that they disable embedding.” It’s more a result of the complex incentives created by centralizing digital business deals in a division that is not at all responsible for music and marketing. It can be frustrating.

[Image credit: MoonSoleil]

He’s probably being too conservative.

At least if you use Warner Music Group (WMG) as a comp. Edgar Bronfman Jr.’s music company is (very) roughly the size of Hands’s music company and was forever slated to buy, sell to, or merge with EMI. (In May 2006, EMI was willing to pay $26 a share in cash for Warner, but Bronfman rejected the deal; a year later, EMI rejected a Warner offer.)

Take a look: WMG, currently trading at $1.86 a share, is down 86 percent since Terra Firma bought EMI in August 2007. At what point will Hands have to fess up and take another write-down? (Click chart to enlarge).

Here’s an EMI employee with no complaints about the music business–Norah Jones, whose 2002 debut album was really EMI’s last super-huge success. Those days are gone, but she’s managed to hang on to her money–or at least enough to pay $5 million for a Brooklyn townhouse a couple months ago. Check out this excellent duet with Dolly Parton (yup, that Dolly Parton).