Live Performance of ‘Sound of Music’ Is Big Hit for NBC

Stephen Moyer as Captain von Trapp and Carrie Underwood as Marie in NBC's live performance of "The Sound of Music" Thursday night.

NBC’s gamble of filling an entire night with live musical theater paid off handsomely on Thursday as “The Sound of Music,” with Carrie Underwood in the Julie Andrews role of Maria, posted the network’s best entertainment ratings for a Thursday night since 2009.

In preliminary ratings, the special pulled in 18.5 million viewers, the best number for any entertainment show on NBC this season, and an excellent 4.6 rating in the most important category for advertisers, viewers aged 18 to 49.

Nothing on NBC — other than sports — has done as well on a Thursday night since April 2, 2009, when it aired the finale of “E.R.” In terms of a three-hour average audience, NBC has not done as well since May 13, 2004, a night that included the finale of “Frasier,” which attracted more than 22 million viewers.

The ratings results defied the expectations from many quarters of the television business, where the idea of a live musical on television was considered a grandiose folly. The performance attracted a host of snarky comments on Twitter during its three-hour airing, some from fans of the movie, but mostly from those members of the public who proudly call themselves “hate-watchers.”

The reception from professional reviewers, forced to write after the fact, was also largely negative. But none of that appeared to have an impact on the numbers.

The unexpectedly big success is a coup for Robert Greenblatt, the chairman of entertainment for NBC, who has been the prominent advocate for Broadway-style entertainment on the network. (Mr. Greenblatt has been a Broadway producer himself.)

His first effort in this direction, the drama “Smash,” did not work out as he hoped, but this gamble — live theater on network television, a throwback to earlier eras of the medium and events like “Peter Pan” and “Cinderella” — paid off so well it is almost a certainty that the network will be looking for other musicals to mount live around holidays.

Drugs at Music Festivals Are Threat to Investors as Well as Fans

Since March, at least seven young people attending dance events around the country have died after exhibiting symptoms consistent with overdoses from MDMA and other so-called party drugs, often called ecstasy or molly. This month, the Electric Zoo festival on Randalls Island was shut down at the request of New York City officials after two patrons died, apparently from MDMA overdoses, officials said.

Executives say that deaths like these have the potential to scare off investors and the corporate sponsors that are eager to reach the genre’s young, affluent and technologically connected fans.

The ecstasy-related deaths come just weeks before an expected initial public offering by SFX Entertainment, a new company whose fortunes are predicated on sponsorship and media deals for electronic dance music, or E.D.M. According to its prospectus, SFX wants to raise as much as $300 million through its I.P.O., much of it to acquire promoters like Made Event, the company behind Electric Zoo.

Festivals draw tens of thousands or even hundreds of thousands of fans to see well-known D.J.’s like David Guetta, Tiesto and Deadmau5, with top festivals charging up to $300 for two or three days of music. Defenders of the dance world say they are being singled out by the news media. Drugs and overdoses, they say, have long been associated with popular music. For example, 10 people have died since 2002 at the Bonnaroo festival in Tennessee, many from drug-related causes.

“The scrutiny that this is going to come under because of the stock market deal with SFX, it’s like a magnifying glass that’s unfair,” said Amy Thomson, the manager behind Swedish House Mafia, one of the genre’s most successful acts.

Robert F. X. Sillerman, the chief executive of SFX, said in an interview that his company was committed to providing a safe environment, and that as dance music “has grown from uncontrollable rave parties to professionally run festivals and events, it in fact provides the opportunity to provide health and safety guidance.”

He declined to discuss business details, citing the mandatory “quiet period” before the I.P.O. But TomorrowWorld, a festival near Atlanta this month in which SFX is a majority partner, is working with DanceSafe, a nonprofit group, to provide educational information about the dangers of drug use, said Shawn Kent, one of the executives behind the event.

SFX seemed to anticipate the need for greater medical care when it appointed to its board Dr. Andrew N. Bazos, an orthopedic surgeon with experience in “comprehensive medical coverage for large-capacity venues,” according to its prospectus.

Drugs have been linked to the mythology and slang of dance culture for decades, and the current ecstasy scare reflects an earlier wave in the 1990s when cities around the country cracked down on illegal raves. Today, stars like Miley Cyrus and Kanye West allude to molly in songs, and the term turns up repeatedly at festivals, on T-shirts, banners or body paint.

Among the deaths in recent months is that of Matthew Rybarczyk, a 20-year-old from Staten Island, who collapsed with a 107-degree temperature at a Governors Island rave on July 14.

When Mr. Rybarczyk’s grandmother saw him in the hospital the next morning, he was contorted unrecognizably and was bleeding from his nose and mouth; he died 14 hours later. The medical examiner found methylone in his system, an ecstasylike drug sometimes sold as molly.

“It was the saddest thing of all to watch him die,” his grandmother, Peggy Rybarczyk, said. “He went to have a good time and he never came home.”

A growing history of drug-related deaths has not slowed the genre’s popularity. In 2010, a 15-year-old girl died from an overdose of ecstasy at Electric Daisy Carnival in Los Angeles, but the festival has since spread around the country and even to London. This year, Live Nation Entertainment, the world’s biggest concert company, bought half of Insomniac, the company behind the festival, for a reported $50 million.

In an interview, Pasquale Rotella, Insomniac’s founder, defended his company’s security measures, and said that dance promoters, to some degree, “inherit societal problems.”

But he and others in the industry admitted that the negative perceptions had kept away sponsorship money.

“If you look at dance festivals in general, you don’t typically see a ton of branding yet,” said Edward H. Shapiro, a lawyer who works with dance acts. “Part of that has been this notion that it isn’t an environment that is ripe for really big brands to participate in.”

Many of the most prominent branding deals in the electronic dance music world have been tied to artists, including Absolut Vodka with Swedish House Mafia, and Pepsi with the D.J. Calvin Harris. But for even the most popular dance festivals, the sponsor rosters are dwarfed by those of comparable rock and pop events, like Lollapalooza or Coachella.

The sponsors of Electric Zoo this year included Coors Light and Blue Moon beers, owned by Molson Coors; Vita Coco, a coconut water drink; and Hi-Chew, a fruit-flavored snack. Constellation Brands, whose Pacifico beer was also a supporter, said in a statement that its sponsorships “are focused on providing a peaceful, safe and responsible environment for fans 21-and-older to enjoy our product, and are made on a case-by-case basis.” Other sponsors have not commented.

Most major festival promoters have zero-tolerance drug policies, and their sites have security checks, free water stations, first-aid tents and ambulances on call. Such measures are essential for insurance purposes and are often required by state law for any large gathering.

No promoter can prevent all drugs from entering a festival site, nor can do they do anything about drugs consumed before an attendee walks through the gate. Yet many in the dance world think promoters and stars need to do more to discourage it.

“I don’t think we should be scared of saying ‘don’t do drugs,’ ” said A-Trak, a top D.J. “There is this sort of elephant in the room, where people are scared to say, ‘That stuff is dangerous and don’t mess around.’ ”

But Armin van Buuren, another popular D.J., said that Electric Zoo was one of the better-run festivals he had attended, with plenty of security and medical personnel.

“For some reason we have the stamp of drug misuse and I think that it’s unfair,” he said. “It ruins the party for a lot of other people.”

Media Decoder Blog: Bertelsmann Acquires Full Control of BMG Music Company

Carlos Alvarez/Getty Images Will.i.am of the Black Eyed Peas is among the artists in BMG’s million-song music catalog.

8:41 p.m. | Updated

Bertelsmann, the 178-year-old German media giant that has been trying to remake itself for the digital age, announced on Friday that it would take control of BMG Rights Management, the music company it restarted in 2008, in a deal that values BMG at $1.4 billion.

Bertelsmann said it would buy the 51 percent of BMG that it did not own from its partner in the venture, Kohlberg Kravis Roberts. The companies did not disclose financial terms, but a person with direct knowledge of the deal, who spoke on the condition of anonymity, said the purchase price was $700 million to $800 million, including the assumption of debt.

The deal signals a full return to the music business for Bertelsmann, whose other media properties include Random House and the magazine publisher Gruner & Jahr. After building the first incarnation of BMG, which stood for Bertelsmann Music Group, into a global powerhouse in the 1980s and ’90s, Bertelsmann sold most of its music holdings through a series of deals with Sony and Universal in the mid-2000s.

“We are bringing the music home to our group,” Thomas Rabe, Bertelsmann’s chairman and chief executive, said in a statement.

BMG was revived in 2008, and the next year, K.K.R. made the first of its $270 million of investments in the company. BMG has made a string of acquisitions in music publishing, the side of the business that deals with copyrights for songwriting, and built a catalog of more than one million songs by artists like Johnny Cash, Carly Simon and Frank Ocean and Will.i.am of the Black Eyed Peas.

“We saw that music was going to make a comeback,” Philipp Freise, a K.K.R. partner who directs its European media business, said in an interview. “Everybody said music was going to die, but we said music will not die — it will grow.”

K.K.R.’s exit after four years was not unusual for it as an investor. But some analysts said they believed that the sale could have been precipitated by BMG’s losing out on some of the biggest music auctions of the last couple of years, including Warner Music, EMI and, most recently, the Parlophone Label Group, a part of EMI that it divested itself of. (BMG has also bought some recorded music assets.)

Stressing efficient administration and the licensing opportunities of a largely digital business, BMG has been a bright spot for Bertelsmann. Mr. Rabe has said that he expects BMG’s annual revenue to grow to more than $640 million in the next four to five years, up from about $390 million in 2012.

Bertelsmann is also in the process of merging its Random House publishing unit with Penguin, a division of Pearson, creating the world’s largest book publisher. And in January, Bertelsmann said it wanted to sell part of its stake in the broadcasting subsidiary RTL to help finance more digital expansion.

“Like any traditional media company, they need to find a digital story for the future,” said Alice Enders, a media analyst at the research firm Enders Analysis in London. “In music, once you scrap out the cost of physically producing and distributing content, what you have is a pure copyright exploitation model. That’s what BMG Rights Management is all about.”

Hartwig Masuch, BMG’s chief executive, said in an interview that with Bertelsmann as its sole owner, the company could be “more aggressive moving forward” in developing its business, particularly with more recorded music rights.

“What we initially envisioned for BMG was an integrated rights company based on nontraditional models,” he said. “The old world was about complex distribution structures. Now you can license multiple users and distributors. The key is not infrastructure but how good are you at monetizing and accounting for those rights.”

French Music Streaming Service Takes on the World, Sans America

The company, Deezer, is one of the biggest players in digital music streaming, trailing only the market leader, Spotify, in the number of paying customers it has attracted globally. Like Spotify, which is based in London, Deezer, with headquarters in Paris, offers subscribers unlimited access to millions of songs on demand, via PCs, mobile phones and other devices.

Deezer just got a big endorsement for its approach. Access Industries, the owner of Warner Music Group, pumped 100 million euros, or about $130 million, into Deezer this month, in what analysts described as one of the biggest investments ever in a French start-up.

“This shows that they think the music market is beginning to turn around,” Axel Dauchez, chief executive of Deezer, said in an interview.

Deezer, which started in 2007, has just moved into a slick new headquarters, where employees conduct business meetings on lawn chairs and on sofas disguised as musical keyboards. “Paint it black,” reads a neon sign on the somber-toned wall behind Mr. Dauchez. Like the Rolling Stones, Deezer is on a mission to blot out the color red — in this case, from the ailing music industry’s ledgers.

After a battle with piracy that has cut its sales in half in just over a decade, the music industry has high hopes for streaming, which is growing faster than digital purchases, as many listeners decide that ownership makes less sense than in the days of plastic and vinyl.

While Deezer and Spotify are still losing money, their sales are growing rapidly. Deezer generated about 50 million euros in revenue last year, and Mr. Dauchez has set a goal of 1 billion euros in sales in 2016.

With more than two million paying customers, Deezer trails Spotify, which has more than four million. Spotify introduced an American version last year, and it has been growing quickly. But Deezer has turned its back on the United States and plans to use its new money to finance an expansion into more than 160 other countries.

“Like a canny general who decides to march around a heavily fortified stronghold and thus effectively leave it stranded behind enemy lines, so Deezer expects the streaming war to be waged on different shores,” Mark Mulligan, a music industry analyst, wrote on his Web site. “They are both right and wrong.”

Analysts say Deezer is right to worry about competition in the United States, where Spotify competes with services like Rhapsody, Pandora and Rdio, even though their business models all vary slightly.

Mr. Mulligan says there is room for growth in the United States, because premium streaming services remain too expensive for most consumers. But the field is less crowded outside the United States, where Spotify is the clear leader in streaming in many of the markets it has entered — except France, where Deezer reigns.

Spotify, too, is planning for the battles ahead. Several people briefed on the company’s plans said it had begun a new round of fund-raising, seeking to secure several hundred million dollars in new investment.

New financing is essential for Deezer and Spotify because they are burning through significant amounts of cash. To attract new listeners, both companies offer free versions of their services, subject to certain restrictions. Yet both companies must pay a royalty to a recording company every time someone listens to one of their tracks.

While streaming services sell advertising to cover some of the costs of free listening, Mr. Dauchez said raising revenue in this way had proved to be more challenging than expected. So Deezer now sees its free service primarily as a way to entice listeners into paying for its premium offerings, which include things like unlimited streaming and special content and recommendations, along with no ads.

This makes expanding into new markets expensive. While Deezer says it was profitable last year, it expects to lose money until 2014 as it enters new markets. The company set up sites in several other European countries in 2011 and accelerated its global expansion this month.

Fender Aims to Stay Plugged In Amid Changing Music Trends

You know the rest, even if you don’t know you know the rest.

You’ve heard it — in the guitar riffs of Buddy Holly, Jimi Hendrix, George Harrison, Keith Richards, Eric Clapton, Pete Townshend, Bruce Springsteen, Mark Knopfler, Kurt Cobain and on and on.

It’s the sound of a Fender electric guitar. Mr. Fender’s company, now known as the Fender Musical Instruments Corporation, is the world’s largest maker of guitars. Its Stratocaster, which made its debut in 1954, is still a top seller. For many, the Strat’s cutting tone and sexy, double-cutaway curves mean rock ’n’ roll.

But this heart of rock isn’t beating quite the way it once did. Like many other American manufacturers, Fender is struggling to hold on to what it’s got in a tight economy. Sales and profits are down this year. A Strat, after all, is what economists call a consumer discretionary item — a nonessential.

More than macroeconomics, however, is at work here. Fender, based in Scottsdale, Ariz., is also being buffeted by powerful forces on Wall Street.

A private investment firm, Weston Presidio, controls nearly half of the company and has been looking for an exit. It pushed to take Fender public in March, to howls in the guitar-o-sphere that Fender was selling out. But, to Fender’s embarrassment, investors balked. They were worried about the lofty price and, even more, about how Fender can keep growing.

And that, really, is the crux of the matter. Times have changed, and so has music. In the 1950s, ’60s and ’70s, electric guitars powered rock and pop. Today, turntable rigs, drum machines and sampler synthesizers drive music like hip-hop. Electric guitars, huge as they are, have lost some of their old magic in this era of Jay-Z, Kanye West and “The Voice.”

Games like Guitar Hero have helped underpin sales, but teenagers who once might have hankered after guitars now get by making music on laptops. It’s worth remembering that the accordion was once the most popular instrument in America.

Granted, Fender is such a powerful brand that it can ride out the lean times. But sales of all kinds of musical instruments plunged during the recession, and they still haven’t recovered fully. Sales of all instruments in the United States totaled $6.5 billion last year, down roughly 13 percent from their peak in 2005, according to Music Trades, which tracks the industry.

Many of the guitars that are selling these days are cheap ones made in places like China — ones that cost a small fraction of, say, a $1,599 Fender Artist “Eric Clapton” Strat. Fender has been making its own lines of inexpensive guitars overseas for years, but the question is how the company can keep growing and compete profitably in a fast-moving, global marketplace. Its margins are already under pressure.

“What possible niche is left unexploited by Fender?” asks Jeffrey Bronchick, founder of Cove Street Capital, an investment advisory firm in El Segundo, Calif., and the owner of some 40 guitars, including four Fenders.

Another big player on the American music scene, Guitar Center, has already had financial strains. Like Fender, Guitar Center, the world’s largest chain of instrument retailers, is also involved with private equity. It’s controlled by Bain Capital, Mitt Romney’s old firm.

Analysts say Guitar Center is crucial to Fender, accounting for roughly a sixth of Fender’s sales — and the ties between the two run deep. Fender’s chief executive, Larry Thomas, used to be the chief of Guitar Center. He sold the company to Bain at the top of the market in 2007 for $2.1 billion, including debt.

Guitar Center has been losing money since. Moody’s issued a junk rating of B2 on Guitar Center’s debt in October 2007, and has since downgraded the company two more times, most recently in November 2010, to Caa1.

THE change in American music is evident on West 48th Street — the “Music Row” of Manhattan. The block just east of Times Square was once home to dozens of music stores, practice studios and instrument repair shops. It was the place to go to buy a Fender in New York.

Now Music Row is being hollowed out by high rents and competition on the Web. Even Sam Ash, which has been there since the 1920s, is moving to West 34th Street.

Fender, too, has had to contend with changing tastes and markets. Once it looked like the Pan Am of guitars, a storied name that might simply vanish. Leo Fender sold his company to CBS for $13 million in 1965, but Fender struggled in the ensuing years to maintain its identity inside a big corporation. Analysts said that Fender, under pressure to meet quarterly earnings numbers, made a series of cost cuts that caused quality to suffer and sales to nosedive.

Yamaha of Japan, meanwhile, began grabbing market share with inexpensive, high-quality guitars. In 1980, the problems came to a head when Fender posted a $10 million loss on only $40 million in sales.