Latin American Music Business Charts New Territory

Price will be a crucial factor in determining whether these stores can make up the revenue lost to piracy.

Uruguay drops VAT: Uruguay became the first country in Latin America -- and perhaps the world -- to grant an exemption of value-added taxes from the sale of music CDs and DVDs. The law, which went into effect Sept. 1, effectively lowers the price of legitimate music products by eliminating the sales tax for the consumer.

The law was crafted via a joint initiative between the government and Uruguay's local International Federation of the Phonographic Industry (IFPI) office (ACUD), the Association of Uruguayan Authors and the Association of Uruguayan performers. The move doesn't directly affect the bottom line of songwriters, labels or artists themselves -- but in a rare display of solidarity, the rationale behind the law is that by lowering prices and spurring sales, the entire industry benefits.

Uruguay is a small country with a tiny music market; yearly sales do not exceed $4 million, according to IFPI numbers. But the country's initiative is being closely watched as a blueprint for the rest of the region.

Artists take a social stance: From Mana's Selva Negra Foundation to Gloria Estefan's namesake foundation, Latin acts have a history of altruism and social activity -- but 2008 was the year in which Latin artists became instruments of policy-making.

Ricky Martin took his fight against human trafficking to Washington, D.C., and the United Nations in partnership with the Inter-American Development Bank. Juanes staged a massive, nonprofit concert for peace at the Colombia/Venezuela border and was named goodwill ambassador to the United Nations for his efforts to raise awareness on the effects of landmines. Ricardo Montaner partnered with UNICEF to produce a documentary on marginalized children throughout the continent. Through a mass concert in Mexico and Argentina, Shakira spearheaded the launch of ALAS, an organization dedicated to early childhood development.

Mobile music sales thrive: Preloaded phones have quickly become de rigueur for top acts, with some, like Belanova, moving more units on the phone than off. According to IFPI, digital's share of the Latin American music market -- nearly all of it mobile -- hit 12 percent for the first half of 2008, up from 10 percent for the same period in 2007.

After the launch of regional wireless carrier America Movil's Ideas Telcel music store in 2007, competitor Movistar de Telefonica began rolling out its own digital music store this year in several countries, including Mexico and Colombia. Movistar is experimenting with pricing; for example, the company is charging what amounts to 85 cents per track including transmission fees in Colombia.

Price will be a crucial factor in determining whether these stores can make up the revenue lost to piracy. Colombia got its first digital music store in March with America Movil's Ideas Comcel store. Mobile downloads were priced at $3 each, a high price for Colombian consumers. And in Mexico, Movistar's per-track price comes out to about $1.50 U.S. -- still a lot more than free.

Tween music grows up: Jonas Brothers went platinum (80,000 physical copies) and gold (40,000) with their two Disney/Universal albums in Mexico, according to the trade group Amprofon; "High School Musical 3: Senior Year" also topped the charts there. Disney even produced country-specific versions of "High School Musical" in Mexico, Brazil and Argentina, along with the accompanying CDs, DVDs and tours.

In addition to Disney, Nickelodeon Latin America threw its hat into the ring with its first tween telenovela, "Isa TKM," a music-heavy show with a soundtrack to be released by Sony BMG. And Cris Morena (creator of such international hit shows as "Rebelde Way") and her partner RGB Entertainment signed a three-year deal with Televisa for development and international distribution of Morena's programs. Cris Morena Group concepts have spun off successful musical acts, most prominently Mexico's RBD.

Live Nation locks up major international touring: Live Nation's five-year exclusive distribution deal with promoter heavyweights CIE and Time 4 Fun guarantees the touring giant a dominant footprint in Mexico and South America for most international tours. Under the agreement, Live Nation ensures a steady supply of talent to fill venues from Chile and Brazil to Mexico and Argentina, and the local promoters commit their calendars and resources to international acts brought in exclusively by Live Nation.

Ocesa, CIE's live entertainment division in Mexico, promotes 85 percent of concerts there, according to Live Nation. "By having an exclusive relationship with them it really gives us a nice advantage when we're sitting down talking with an artist, that we have this great partner south of the border," Live Nation CEO of North American music Jason Garner told Billboard in August.