Posts Tagged ‘Music’


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Online-music service Pandora Media today filed its much anticipated IPO, which gives us our first public glimpse at the company’s business plans and successes.
First, the good news.
Pandora’s revenue has sharply ramped up in the last couple of years. Revenue shot up from $19.3 million in the fiscal year ended Jan. 31, 2009, to $55.2 million for the next fiscal year. For the nine months ended Oct. 31, Pandora posted another huge revenue jump to $90.1 million. More than 85% of Pandora’s revenue comes from advertising, with the bulk of the rest from subscriptions that Pandora sells for ad-free streaming music.

Bloomberg News
Pandora founder Tim Westergren
But wow. Content acquisition — what Pandora pays for the rights to songs — is costing them a fortune. That’s the (very) bad news.
Those costs were $45.4 million for the latest nine month period — equal to half of Pandora’s revenue. The more people listen to Pandora and the more money Pandora makes, the more those costs will grow, putting pressure on the company to sell a boat load more ads than it does now. Largely because of the content acquisition costs, Pandora mostly has been unprofitable.
That’s not totally a surprise, of course. The music royalty fees long have been a question mark about Pandora’s business. Pandora fought hard several years ago to rework the music industry’s royalty fee structure. But now we know just how much those royalties are denting Pandora. On a percentage basis, those costs are down from about 80% of revenue in the fiscal year ended Jan. 31, 2009. But still: How sustainable is Pandora’s business if it has to pay out half or more of its revenue just for the rights to music?
Pandora doesn’t expect the problem to abate soon. The company said it expects it revenue growth rate will slow, because of competition and the “maturation of our business.” And here’s what the company said in its IPO filing about its profits (or lack thereof):
“[A]s our number of listener hours increases, the royalties we pay for content acquisition also increase. We have not in the past generated, and may not in the future generate, sufficient revenue from the sale of advertising and subscriptions to offset such royalty expenses. If we cannot successfully earn revenue at a rate that exceeds the operational costs associated with increased listener hours, we may not be able to achieve or sustain profitability. In addition, we expect to invest heavily in our operations to support anticipated future growth and public company reporting and compliance obligations. As a result of these factors, we expect to continue to incur operating losses on an annual basis through at least the end of fiscal 2012.”

Pandora Files for IPO, But Can It Ever Make Money? – Deal Journal – WSJ

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Still a player: guitar legend Jeff Beck

Jeff Beck

Guitar legend: Jeff Beck

By Stephen Wilmot

Published: September 30 2010 18:01 | Last updated: September 30 2010 18:01

Most musicians are known for a particular sound, style or song. But not rock guitar legend Jeff Beck, who says the secret of his staying power has been the ability to “move on to something else”. It’s a journey that has taken him – via rock, heavy metal, jazz and soul – to his current world tour, backed by a full string orchestra.
“I’m at home with anything that’s got a groove to it,” says the ex-Yardbirds guitarist, pointing to a DVD he is making in tribute to legendary guitarist Les Paul and 1950s jazz. “I get just as much of a kick from that as I do coming up with something from tomorrow-land.”
But Beck’s taste for experimentation does not stretch to his finances – something in which he claims to have no interest but just a little “intuition”. He was almost persuaded to buy a portfolio of shares just before the financial crisis; luckily, he decided at the last minute not to sign. “It was a near-miss for me. But I said no, because I wasn’t satisfied with – or didn’t understand – what was being proposed. When people talk bank-talk, I glaze over after five minutes,” he admits.
Beck now uses the London-based private bank Duncan Lawrie, mainly because it offers a reassuringly old-fashioned experience. Lamenting the passing of the days when “you could almost have a pint with your local bank manager”, he remembers how he and his former concert manager grew frustrated with the impersonal service and “incompetence” of their high street bank. After doing research, manager settled on Duncan Lawrie and suggested Beck switch too.
“I felt nervous at first, because I didn’t really know whether I was making the right decision. But I’ve no complaints. It’s so important to have a one-to-one talk with someone at your bank. They’re handling your money, after all. You go around the world and make your money, and you want to be sure it’s being looked after.”
Beck is currently on the second leg of his world tour. He is still basking in the success of his latest album, Emotion & Commotion, which was released in April and is now up for eight Grammys. He says it is the best response that he has received since 1975, when he teamed up with Beatles producer George Martin to make the album Blow by Blow.
Fans have been particularly struck by Beck’s lush use of strings as backing for his electric guitar. “There’s no substitute for a full string orchestra,” he explains. “I was fulfilling a dream – I wanted to do it back in 1966, but couldn’t afford it. I was always impressed by people like Tina Turner and the way that kind of record was produced. It’s a beautiful sound that can only be achieved with acoustic instruments.”
Beck is also pleased with the popularity of Emotion & Commotion because singers, not instrumentalists, tend to dominate the charts. The guitarist has been wary of working too closely with singers ever since he parted ways with Rod Stewart – then the unknown lead singer of his up-and-coming band the Jeff Beck Group – back in 1969.
“Rod was a bit of a problem because his name wasn’t on the ticket, and the whole ego thing kicked off. I said if you put your name on the ticket you won’t sell any seats, but he wasn’t happy being treated as a sideman,” Beck laughs.
Stewart left to join the group the Faces, which seemed a career upset for Beck, but turned out to be liberating. “The singer problem was gone when Rod left. Rather than see that as negative, I thought: the doors are open.” He says it was working with the New York jazz-rock group Mahavishnu Orchestra in the mid-1970s that made him realise there was “life after singers”.
Beck considers the US his second home. He cites American rock and roll, blues and jazz as his original creative sources, and the US still gives him the warmest reception. It was there he spent a year in tax exile in 1977, which ironically was to pay for his English home – an Elizabethan manor house in the Sussex Weald that he fell in love with on first viewing.
“It was complete lunacy, as I didn’t know if I had the money. But when the estate agents opened the door I just wanted them gone,” he reminisces, grateful that his home turned out to be a good investment too.
Beck struggles to single out one highlight of his career, which has spanned four and a half decades and at least 10 different groups. “The big highlight is that I’m still in the business,” he says with another raucous laugh.

FT.com / Special Reports – Still a player: guitar legend Jeff Beck

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The importance of David Bowie

By Paul Morley FT.com
Published: September 3 2010 21:59 | Last updated: September 3 2010 21:59

David Bowie on stage in Rotterdam in 1976
David Bowie on stage in Rotterdam in 1976, the year he made ‘Station to Station’

How much do you like David Bowie? You will have to like him a lot to want to spend more than £80 on a deluxe box set edition of his 10th studio album Station to Station (1976), an ostentatious souvenir collection of memorabilia, outtakes, live concerts, photography, essays, remastered versions, exclusive mixes and heavyweight vinyl inspired by the mere six tracks that made up the original record.
It is a mesmerising album, one of Bowie’s best, which is saying something, as he made many, most of them during the 1970s, that were sold as entertainment but contained the moving detail and mysterious, transformative depth of art.
It may well be one of rock’s very greatest, as a comment both on where the smart, neurotic artist who made it was, psychologically, creatively and commercially, but also where rock music itself was, on its compelling journey from Sinatra, Presley and the Beatles to Prince, Jay-Z and Gaga, from the Velvet Underground, the Kinks and Kraftwerk to Madonna, Nirvana and Nine Inch Nails. It is one of those Bowie albums, like Hunky Dory (1971), or Ziggy Stardust (1972), or Low (1977), or Lodger (1979), that are at times my favourite of his, because they demonstrate with such elan what a sparkling, mischievous mind he had, and what ambition, and what a stupendous ego, and how dangerously charming he was.
His impact as a musician, as a brand, as a sign of the times, has been as great as Dylan and the Beatles, his influence as an otherworldly pop star actually greater, and if you just want one example of what he got up to as this erudite pop combination of shaman, singer, thinker and shameless self-promoter, then Station to Station is as good a place as any. But is all of that worth £80? And does wrapping it up inside such technological and geeky paraphernalia clarify its position as a musical masterpiece, or turn it into a banal collector’s item, a nicely designed object of desire for committed Bowie fetishists and connoisseurs?
There’s no obvious anniversary marking the release of the deluxe edition. It’s a non-special 34 years since Station to Station was produced, coming between the Americanised soul-funk slickness of his Young Americans (1975) album and the radiant, challenging Euro-bleakness of Low. He was working on Nic Roeg’s dark film fable The Man Who Fell to Earth (1976). Peter O’Toole was not available to play Thomas Jerome Newton, an exiled visitor from outer space, a role that seemed perfect for the lost, distracted, preternaturally bright Bowie. Station to Station was a soundtrack that never was to the film as Bowie was strangely not asked to compose the movie’s music. Roeg just wanted the cracked, emaciated Bowie that was falling apart in real life, the wired, burnt-out pop star playing the baffled but brilliant spaceman from the future, part new-born innocent, part ancient guru.
Playing an alien, and having lost sight of his real self after years of relentless shapeshifting, Bowie constructed a new character, the Thin White Duke. Inside six years, since 1970, he’d been a psychedelic music hall singer channelling Syd Barrett and Anthony Newley, a whimsical novelty specialist, surreal folkie, risqué glam rock starman, cosmic wizard, apocalyptic androgynous Diamond Dog and blanked-out white soul man flirting with superstardom. Now, he would play a transparently autobiographical, ghostly, narcissistic, cocaine obsessed, existential adventurer, anxiously yearning for deeper meaning in a superficial, chilling world.
Bowie would kill off the damaged, demented Thin White Duke a little quicker than he killed off Ziggy Stardust, just in case the Duke took over like Ziggy appeared to. The soundtrack to this character showed Bowie withdrawing from his fascination with the expressive, penetrating showmanship of American soul and turning to more enigmatic and forward looking European music. Young Americans, containing hits such as “Fame” and an appearance by John Lennon, was the calculatedly commercial Bowie response to achieving the American fame he had set his heart on. He was becoming so successful he was peering into some form of the middle of the road, a fixed place Bowie wasn’t quite ready for.
Station to Station – feeling hunted, he was moving from place to place, character to character, fixation to fixation, charade to charade – was where he faced his demons, and made a kind of baroque soul music where it is not quite clear if there is soul involved. It retains the iced funk and post disco groove of Young Americans, alongside decaying traces of the kinky folk, metal, glam, and cabaret melodrama he’d passed through in the early 1970s. But it was already anticipating his less obviously commercial next destination, abstract and minimalist European electronic music. Station to Station contains echoes of everything Bowie had done, or was about to do. Previous characters re-dream themselves. It becomes the link, the tunnel, through which Bowie crawled – spent, emptied out – from fraying pop star decadence to the three classic made in Berlin albums he released next. On Low, Heroes (1977) and Lodger, Bowie and close collaborators Brian Eno and Tony Visconti created a stark, pulsating post-pop soundtrack to personal and historical tensions where Bowie broke out into the wider spaces of the universe. On this trilogy, Bowie refrained from entering the worlds himself, and losing himself in all the offbeat theatre. Station to Station was where he recovered himself, or at least enough of himself that he could continue his search for new extremes, and new experiences, and the kind of unusual, unforced new pop music he craved, music that produced worlds all of his own.
. . .
Depending on your age, you might already have bought a few versions of Station to Station. First of all, pretty much on the day it came out, the original RCA vinyl disc, released when the deliciously unstable Bowie dominated the pop planet in a way that makes Gaga, Beyoncé, Florence and co seem a little lightweight. Then, a few years later, the CD version, and then perhaps, depending how much you loved Bowie, a remastered CD version, even a Japanese import. Or two.

Album cover of David Bowie's 'Station to Station'
The original 1976 cover

Digging through my record cupboard, preparing the space for the big box of Station to Station, I find I have the vinyl version, with original black and white cover, and the bright orange RCA label that induces Proustian pangs of feeling for those days when a male teenager could fall in love with Bowie because he seemed so alive, and so scandalously full of himself. I’ve also got a CD version bought at full price, and then one bought for less than a fiver when I thought I’d lost the first one. The music business survived well into the 1990s following a policy of blind greed persuading people to buy albums they already owned all over again on CD. Now, perhaps at the end of its tether, devastated by the arrival of such alternative music sources as iTunes, the music industry is hoping to persuade people to buy once more in a gorgeous new format the same thing yet again, still relying on its back catalogues for sustenance. Or, depending on your point of view, ensuring that in a world where music can be so easily distributed through the air, the album can still exist in tempting solid form, as a tangible thing, something that you can hold, not merely store, and place in a sterile list of your favourite music.
The vinyl version is something that I have clearly held a lot, and loved, and still love, prized like a hardback first edition, now looking strangely oversized and florid in a world where even the miniaturised CD has been replaced by essentially the featureless, soulless, click-click nothing of the download. The CD versions look less powerful, more paperback, and more clinical.
Somehow, an old collection of music that could recently be bought for a few pounds, on the verge of being something you could get on tap, is now on sale, admittedly smartly done up, for almost £90. This is a lavish way of pointing out that a big part of the appeal of a pop record in the last few years of the vinyl era was the combination of the music and the art, the image, the design – the overall story, a constantly developing context – that went with it.
It calls into question just what is going to happen to all those albums that have been made and that artistically deserve to endure now that the era of this kind of vinyl-shaped album is more or less over. What was an album, what is Station to Station, how will we remember it? As a complete, significant work, as a series of loosely connected songs that will just randomly flow off into space and time, separated from each other, available on demand until they just fade away into silence, or some kind of work of art that needs to be celebrated and dissected in this way?
It seems right that David Bowie is at the forefront of such consideration of how vinyl era music – songs and stardom that existed because of the nature of the 45rpm single and the 33⅓ album – will survive this new period in music. He may not have been especially active for the past 20 years or so but he’s never stopped thinking, and plotting, and fastidiously nurturing his image.
After making his extraordinary albums in the 1970s, and inevitably running out of energy in the 1980s, he then settled down into his reputation, his history, with a knowing, Dylan-like acceptance, and an occasional Dylan-like reminder of his unique powers. He wasn’t as aloof and inscrutable as Dylan, but had his own ways of protecting, and projecting, his mystique. In Bowie’s case, this meant not just an occasional good new album, or a memorable tour. It also meant a strategic understanding of how entertainment itself was changing because of the technological progression that meant there would be more and more music, less and less originality, and newer ways of receiving and playing that music. He ended his formal alliances with record labels at the beginning of the century, set himself up as web location, turned himself into a sort of bank, and in 1997 sold his future royalties to the Prudential Insurance Company as Bowie Bonds, leading some wags to suggest he invented derivatives and was directly responsible for the latest recession. A confirmed futurist, he anticipated a breakdown in music industry and media certainties, and prepared himself for the science fiction future he always craved. A future where his 20th-century music could still exist, and still sound contemporary.
Albums such as Station to Station are from the past. Boxing them up in expensive deluxe editions is essentially a commercially based nostalgic act, extending their life as product, to some extent one last mad music industry fling. But the music itself, six songs, expertly weaving their enchanting phantom spell, from the opening title track, an extended montage of despair and determination, lunacy and sorrow, to the final track, a precious, caressing version of “Wild is the Wind” first sung in 1957 by Johnny Mathis, where Bowie appears to repair his self-control, via the tricky, nervily jaunty big hit “Golden Years”, is thus given yet another lease of life. The music is strong and intriguing enough to resist the vulgarisation of being repackaged and resold one more time. Somehow, the ornate deluxe edition of Station to Station says: the album is dead, long live the album.
…………………………………………..
From Ziggy Stardust to SpongeBob SquarePants
1947 David Robert Jones born January 8 in Brixton, south London. Shares same birthday as Elvis Presley.
1953 Family moves to Kent. Attends Bromley Technical High School where Peter Frampton, later a rock guitarist, is a friend.
1961 Fight with friend leaves one pupil severely dilated, causing illusion his eyes are different colours.
1963 Leaves school with art O-level. Becomes junior paste-up artist at ad agency.
1964 First release, under the name of Davie Jones, is “Liza Jane/Louie Louie Go Home”. Interviewed on TV as founder of Society for the Prevention of Cruelty to Long-haired Men, he complains, “It’s not nice when people call you darling and that.”
1966 Changes name to Bowie to avoid clash with Davy Jones of the Monkees.
1967First solo album, David Bowie, an odd, jolly mix of pop and psychedelia.
1969 “Space Oddity”, song set in outer space, released to coincide with moon landing
1970 Marries Mary Angela (Angie) Barnett for whom the Rolling Stones song “Angie” was written. Begins unequalled run of 11 studio albums from Man Who Sold The World (1970) to Scary Monsters (1980).
1972 First appearance of glam group Ziggy Stardust and the Spiders from Mars. Produces Lou Reed’s Transformer.
1973 Breaks up Ziggy Stardust and the Spiders From Mars.
1975 Re-release of “Space Oddity” is first UK number one.
1977 Bing Crosby records “The Little Drummer Boy”, with Bowie, a month before crooner’s death. Appears on old friend Marc Bolan’s ITV music show, duetting on “Heroes”. Bolan dies in car crash two days later.
1980 “Ashes to Ashes” is second UK number one.
1981 “Under Pressure”, with Queen, is third number one.

David Bowie in 'The Man Who Fell To Earth'
In ‘The Man Who Fell To Earth’ (1976)

1983 Releases Let’s Dance, produced by Nile Rodgers; title track fourth number one
1985 Having won praise as actor in films The Man Who Fell To Earth (1976), The Hunger (1983), Merry Christmas, Mr Lawrence (1983) and on Broadway in The Elephant Man in 1980, turns down role in Bond film A View to a Kill. Duet with Mick Jagger on “Dancing in the Streets” leads to fifth number one.
1989 Forms Tin Machine. Critics sneer, live album does not chart.
1992 Marries Iman Abdul Majid in Switzerland.
1996 Plays Andy Warhol in Julian Schnabel’s Basquiat.
1997 Releases internet-only single “Telling Lies”. Predicts time when music will be freely available at click of a switch. Sells back catalogue for $55m, creating Bowie Bonds, planning to pay back money from future royalties.
2003 Declines knighthood.
2004 Suffers heart attack, undergoes triple bypass.
2006 Receives lifetime award at Grammys.
2007 Voices Lord Royal Highness on TV cartoon SpongeBob SquarePants.
2010 Lady Gaga says Bowie is her biggest influence and she wants to work with him

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FT.com / Arts – The importance of David Bowie

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O Jerusalem!

If I forget you, O Jerusalem, May my right hand forget its skill,
May my tongue cling top the roof of my mouth if I do not remember you,
if I do not consider Jerusalem my highest joy!

(Psalm 137: 5-6)


November 24, 2008 
For Luxury Brands, Less Money to Spend on Ads

Gold was raining from above for luxury brands in the good old days of 2007.

Last December, the designer Marc Jacobs held his annual holiday party for 800 guests, including revelers from Vogue, W, and Harper’s Bazaar, in the Rainbow Room at Rockefeller Center. With the theme of Arabian Nights, Mr. Jacobs had arranged for tableaux vivants, contortionists, five open bars, bare-chested women bedecked in gold necklaces, bare-chested men balancing candelabras on their heads and, at one point, a shower of gold glitter poured over the guests.

Mr. Jacobs has held the party for each of the last 18 years, but on Nov. 4, a short e-mail message was sent out by his business partner, Robert Duffy: “Due to the financial climate, I had to make the decision to cancel the 2008 holiday party.”

After getting through most of this year unscathed, luxury brands are suffering. Rich consumers who were relatively insulated from the economic downturn continued spending, but that has changed in the last few months. While luxury spending began to fall slightly from June, in October alone, it dropped 20.1 percent, according toMasterCard SpendingPulse, which estimates consumer spending in the retail and service sectors.

That drop-off means more bad news for magazines and newspapers in the United States that had grown increasingly dependent on luxury advertising.

Ad pages at the top luxury magazines fell 22 percent year over year for the December issues, according to Media Industry Newsletter. Vogue, for example, dropped from 284 pages last December, to 221 pages this December, while Food & Wine went from 160 pages to 126, according to the newsletter.

That has meant cutbacks at publishers. In October, Condé Nast announced it would reduce Men’s Vogue from 10 issues a year to two, reduce the number of issues of Condé Nast Portfolio and cut magazine budgets by 5 percent. Niche Media, which publishes Gotham and Hamptons, laid off some employees and closed a shelter magazine. American Express Publishing, which owns Departures, Travel & Leisure and Food & Wine, is laying off 4 percent of its staff.

“It’s definitely an environment that most have never seen,” said Ed Ventimiglia, the publisher of Departures. “Everyone is very concerned and somewhat confused as to what they should do.”

High-end advertising was one of the few strong advertising categories earlier in the year. Luxury ad spending in categories measured by Nielsen Monitor-Plus actually rose 6.7 percent through August of this year over last year, even as almost all other areas slashed their spending.

Publishers did not miss that trend. In September, Dow Jones & Company introduced WSJ., a glossy magazine, to attract luxury advertisers, and The Washington Post introduced FW, a fashion magazine. The New York Times Company has said its style magazines are big revenue sources for the company, and magazine publishers like Hearst, Condé Nast and Niche Media have also bet that high-end consumption and advertisements would continue.

For now, publishers are trying to persuade brands to maintain their ad commitments. More than half of affluent consumers have cut their spending on luxury products compared with a year ago, according to a study by Unity Marketing, a market-research firm. Those consumers’ confidence in the economy is the lowest it has been in five years.

“The stereotype in our sector is the high-end luxury brands are Teflon to a recession, which, of course, is nonsense,” said Alexander Duckworth, the founder of Point One Percent, a New York City company that advises luxury brands on marketing. “Much more so than in a traditional recession, this has really hit quite hard at the top, and quite quickly at the top.”

“We’re just seeing the very beginning of this,” Mr. Duckworth said.

Ronald Jackson, the chief executive of Tradema of America, which markets and distributes Girard-Perregaux watches in the United States, said he was reducing his advertising budget in the United States by about 20 percent for the first quarter.

“We have retailers that are saying, ‘You know what? We have this on order, but we need you to not ship it until things get better,’ ” Mr. Jackson said. “We have to react in some way.”

Graff Diamonds, the London-based retailer, is also cutting its budget. “We’re definitely not taking on any new advertising, and we’re cutting back on all our current advertising,” a Graff spokeswoman said. She declined to specify a figure, but said the cuts were higher in the United States than in Britain.

Brioni, the Italian fashion line, will cut its advertising by 10 to 15 percent in United States publications, said Antonella De Simone, the co-chief executive.

Other high-end projects, and the advertising that would accompany them, are being delayed or canceled. General Motors is postponing the introduction of the Buick LaCrosse until January, Ford is holding off redesigning its Volvo S60 sedan and XC90 sports-utility vehicle, and Chrysler has stopped production on its Aspen hybrid sports-utility vehicle. Orient-Express Hotels canceled new buildings in Miami; Cartagena, Colombia; Zambia; and Puglia, Italy. Donald Trump is postponing a $300 million development in Philadelphia, and the Ritz-Carlton Hotel Company has halted projects in Florida, Vancouver and California.

Facing a steeper decline, publishers are feeling very vulnerable.

“What the first salvo seems to be, going into 2009, is luxury advertisers — who will go unnamed — are trying to take advantage of the negative news in the market in order to secure a more favorable rate,” said Jim Taylor, the publisher of Town & Country, a Hearst magazine.

“It would be a reasonable argument if our costs weren’t going up dramatically, but we’re affected by the same things they’re affected by,” he said. “Paper’s way up, postal’s way up.”

Mr. Taylor said he was expecting smaller brands, in particular, to reduce the number of ads they would run in his magazine.

At Condé Nast Traveler, advertisers are being slow to commit, and financial services and real estate ads are plummeting, the publisher, Lisa Hughes, said.

Michael Rooney, the chief revenue officer of Dow Jones & Company, the News Corporation division that publishes the Wall Street Journal and WSJ., said luxury advertising in the newspaper was about flat. There were 51 advertisers in the premiere issue of WSJ., he said, and 52 so far in the second issue, which comes out in December.

Luxury advertising in The New York Times has been “very stable” this year, said Denise Warren, senior vice president and chief advertising officer at The New York Times Media Group. She said the holiday issue of the fashion publication T Magazine was up by one page of advertising compared with last year. Still, she said, “there is absolutely nervousness in the marketplace.”

And Mr. Ventimiglia of Departures said the January issue was down in ad pages.

“A page here and a page there add up,” Mr. Ventimiglia said, “even though many lost pages are a result of delayed budgets, and we’re taking a hit.”

Though luxury brands are reducing advertising, many continue — quietly — to spend on client dinners and launch parties, which they view as directly affecting sales. But the events may not erase economic concerns.

In October, the Swiss watch brand Vacheron Constantin hosted a party to promote a new line of watches, some costing as much as $60,000. Inside the event, it seemed like precrisis times: waiters passed trays of lobster wrapped in zucchini and beef en croûte, and filled glasses with Moët & Chandon champagne.

“As of today I think it would be wrong to stop everything because of the crisis,” said Julien Tornare, the president of Vacheron Constantin North America, in an interview. “Of course we will adjust if we have to in the future, but right now we don’t want to react.”

Two men in suits, sipping drinks, walked past one of the watches, mounted on a pedestal like a museum piece.

“You see the watch?” one asked.

“Nice little watch,” the other replied.

“Yeah, it is,” the first one said.

But they kept walking.

This article has been revised to reflect the following correction:

Correction: November 26, 2008 
Because of an editing error, an article on Monday about advertising cutbacks by luxury brands misidentified the site of an Orient-Express Hotels project that has been canceled. It is Cartagena, Colombia, not Cartagena, Spain.


November 24, 2008 
For Luxury Brands, Less Money to Spend on Ads

Gold was raining from above for luxury brands in the good old days of 2007.

Last December, the designer Marc Jacobs held his annual holiday party for 800 guests, including revelers from Vogue, W, and Harper’s Bazaar, in the Rainbow Room at Rockefeller Center. With the theme of Arabian Nights, Mr. Jacobs had arranged for tableaux vivants, contortionists, five open bars, bare-chested women bedecked in gold necklaces, bare-chested men balancing candelabras on their heads and, at one point, a shower of gold glitter poured over the guests.

Mr. Jacobs has held the party for each of the last 18 years, but on Nov. 4, a short e-mail message was sent out by his business partner, Robert Duffy: “Due to the financial climate, I had to make the decision to cancel the 2008 holiday party.”

After getting through most of this year unscathed, luxury brands are suffering. Rich consumers who were relatively insulated from the economic downturn continued spending, but that has changed in the last few months. While luxury spending began to fall slightly from June, in October alone, it dropped 20.1 percent, according toMasterCard SpendingPulse, which estimates consumer spending in the retail and service sectors.

That drop-off means more bad news for magazines and newspapers in the United States that had grown increasingly dependent on luxury advertising.

Ad pages at the top luxury magazines fell 22 percent year over year for the December issues, according to Media Industry Newsletter. Vogue, for example, dropped from 284 pages last December, to 221 pages this December, while Food & Wine went from 160 pages to 126, according to the newsletter.

That has meant cutbacks at publishers. In October, Condé Nast announced it would reduce Men’s Vogue from 10 issues a year to two, reduce the number of issues of Condé Nast Portfolio and cut magazine budgets by 5 percent. Niche Media, which publishes Gotham and Hamptons, laid off some employees and closed a shelter magazine. American Express Publishing, which owns Departures, Travel & Leisure and Food & Wine, is laying off 4 percent of its staff.

“It’s definitely an environment that most have never seen,” said Ed Ventimiglia, the publisher of Departures. “Everyone is very concerned and somewhat confused as to what they should do.”

High-end advertising was one of the few strong advertising categories earlier in the year. Luxury ad spending in categories measured by Nielsen Monitor-Plus actually rose 6.7 percent through August of this year over last year, even as almost all other areas slashed their spending.

Publishers did not miss that trend. In September, Dow Jones & Company introduced WSJ., a glossy magazine, to attract luxury advertisers, and The Washington Post introduced FW, a fashion magazine. The New York Times Company has said its style magazines are big revenue sources for the company, and magazine publishers like Hearst, Condé Nast and Niche Media have also bet that high-end consumption and advertisements would continue.

For now, publishers are trying to persuade brands to maintain their ad commitments. More than half of affluent consumers have cut their spending on luxury products compared with a year ago, according to a study by Unity Marketing, a market-research firm. Those consumers’ confidence in the economy is the lowest it has been in five years.

“The stereotype in our sector is the high-end luxury brands are Teflon to a recession, which, of course, is nonsense,” said Alexander Duckworth, the founder of Point One Percent, a New York City company that advises luxury brands on marketing. “Much more so than in a traditional recession, this has really hit quite hard at the top, and quite quickly at the top.”

“We’re just seeing the very beginning of this,” Mr. Duckworth said.

Ronald Jackson, the chief executive of Tradema of America, which markets and distributes Girard-Perregaux watches in the United States, said he was reducing his advertising budget in the United States by about 20 percent for the first quarter.

“We have retailers that are saying, ‘You know what? We have this on order, but we need you to not ship it until things get better,’ ” Mr. Jackson said. “We have to react in some way.”

Graff Diamonds, the London-based retailer, is also cutting its budget. “We’re definitely not taking on any new advertising, and we’re cutting back on all our current advertising,” a Graff spokeswoman said. She declined to specify a figure, but said the cuts were higher in the United States than in Britain.

Brioni, the Italian fashion line, will cut its advertising by 10 to 15 percent in United States publications, said Antonella De Simone, the co-chief executive.

Other high-end projects, and the advertising that would accompany them, are being delayed or canceled. General Motors is postponing the introduction of the Buick LaCrosse until January, Ford is holding off redesigning its Volvo S60 sedan and XC90 sports-utility vehicle, and Chrysler has stopped production on its Aspen hybrid sports-utility vehicle. Orient-Express Hotels canceled new buildings in Miami; Cartagena, Colombia; Zambia; and Puglia, Italy. Donald Trump is postponing a $300 million development in Philadelphia, and the Ritz-Carlton Hotel Company has halted projects in Florida, Vancouver and California.

Facing a steeper decline, publishers are feeling very vulnerable.

“What the first salvo seems to be, going into 2009, is luxury advertisers — who will go unnamed — are trying to take advantage of the negative news in the market in order to secure a more favorable rate,” said Jim Taylor, the publisher of Town & Country, a Hearst magazine.

“It would be a reasonable argument if our costs weren’t going up dramatically, but we’re affected by the same things they’re affected by,” he said. “Paper’s way up, postal’s way up.”

Mr. Taylor said he was expecting smaller brands, in particular, to reduce the number of ads they would run in his magazine.

At Condé Nast Traveler, advertisers are being slow to commit, and financial services and real estate ads are plummeting, the publisher, Lisa Hughes, said.

Michael Rooney, the chief revenue officer of Dow Jones & Company, the News Corporation division that publishes the Wall Street Journal and WSJ., said luxury advertising in the newspaper was about flat. There were 51 advertisers in the premiere issue of WSJ., he said, and 52 so far in the second issue, which comes out in December.

Luxury advertising in The New York Times has been “very stable” this year, said Denise Warren, senior vice president and chief advertising officer at The New York Times Media Group. She said the holiday issue of the fashion publication T Magazine was up by one page of advertising compared with last year. Still, she said, “there is absolutely nervousness in the marketplace.”

And Mr. Ventimiglia of Departures said the January issue was down in ad pages.

“A page here and a page there add up,” Mr. Ventimiglia said, “even though many lost pages are a result of delayed budgets, and we’re taking a hit.”

Though luxury brands are reducing advertising, many continue — quietly — to spend on client dinners and launch parties, which they view as directly affecting sales. But the events may not erase economic concerns.

In October, the Swiss watch brand Vacheron Constantin hosted a party to promote a new line of watches, some costing as much as $60,000. Inside the event, it seemed like precrisis times: waiters passed trays of lobster wrapped in zucchini and beef en croûte, and filled glasses with Moët & Chandon champagne.

“As of today I think it would be wrong to stop everything because of the crisis,” said Julien Tornare, the president of Vacheron Constantin North America, in an interview. “Of course we will adjust if we have to in the future, but right now we don’t want to react.”

Two men in suits, sipping drinks, walked past one of the watches, mounted on a pedestal like a museum piece.

“You see the watch?” one asked.

“Nice little watch,” the other replied.

“Yeah, it is,” the first one said.

But they kept walking.

This article has been revised to reflect the following correction:

Correction: November 26, 2008 
Because of an editing error, an article on Monday about advertising cutbacks by luxury brands misidentified the site of an Orient-Express Hotels project that has been canceled. It is Cartagena, Colombia, not Cartagena, Spain.





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