Archive for the ‘Music Stores’ Category

Win a $10,000 Gift Certificate at iTunes

iTunes is heading for it’s 10 billionth track sold, and has launched a promotion to encourage people to get their credit cards out. If you’re the purchaser of the 10,000,000,000th track, then that nice Mr. Jobs will post you a gift card worth $10,000 to spend in the iTunes store. Interestingly, you don’t actually need to buy any music to be eligible to win the ten thousand dollar prize; you can get a free sweepstake entry by filling out a form here, which should count the same as a song purchase if your entry gets processed immediately after the 99,999,999,999th track is sold. You can keep an eye on the track sales ticker on the iTunes homepage, and put in up to 25 free entries a day, or just log in and buy a huge pile of songs near the time. I’ll be entering, but unfortunately they don’t sell hardware on the iTunes store, so my iPad will have to wait until Christmas. Oh, and if you happened to buy from one of the artists that RouteNote has distributed music to iTunes for, then we’d be really pleased.

HP Launches Proprietory Music Service

Hewlett Packard, one of the biggest desktop manufacturers, has announced its plans to operate a music download and streaming supscription service called MusicStation, operated in conjunction with a company called Omnifone and installed by default on all of their new PC’s, desktops and laptops alike. This service looks set to enter the market and compete directly with services like Emusic and Spotify, charging a monthly subscription, variable by territory, but coming in at around $14.50 USD. The service will allow subscribers to stream and listen to as many songs as they like, and keep 10 DRM free downloads forever, even after they cancel their subscription.

The User Interface will have to be good to justify the premuim over Spotify’s sub price, although the ability to keep downloads is an incentive. The service seems a sort of halfway house between the bigger success stories of the nascent digital music market, iTunes, Emusic, Spotify… Even though it’s not a particularly innovative product, HP have a similar advantage in that they can build hardware that interfaces smoothly with their software, and get their product in the hands of anyone who buys their machines, just as Apple do with their desktops. That said, Microsoft’s Zune failed to make the impact they’d hoped, despite the fact that it had some nice functional advantages over the iPod and their software runs on the vast majority of PC’s worldwide. Given the facility with which software can be obtained, I think HP’s project will live or die by the quality of its interface, and keeping up with Spotify on that front will be a hard task.

Digital Music Distributors Compared (again)

It’s been a while since we last ran through the comparison between our digital distribution service and those of our competitors. Let’s open with a table looking at the USD$ price of signing up various types of release to a few of the major digital distributors out there on the net, which we’ll follow with links to the information pages from which these figures were derived, and a brief look at the pros and cons of each service. [A UPC is a barcode, necessary for most online stores to identify your release as a unique product.]

CD Baby – First thing to note is that signing up to CD Baby’s digital service means you also have to sign up to their physical program, and send them at least 5 physical CD’s (click and see step 2 of this page). [You can get physical distribution through RouteNote via Amazon's on demand service] On top of the signup fee, you’ll also need to pay them $20 to set up a UPC for you [we do this for free], then they’ll take 9% of the revenue that comes back from their online retail partners [slightly less than our 10%, but we're not charging you any upfront fees]. Their signup fee is a flat, per release deal, although they say that single pricing is “coming soon”.

Ditto Music – To err on the side of caution we’ve chosen the cheapest of Ditto’s package deals and options; they’ve got a whole raft of them, from £24 a year for single store distribution (only to iTunes and Spotify) up to £50 for premium or dance store distribution, with add ons like chart registration (£55) and iTunes fast-tracking (£70) and pre-releases (£25) that could end up costing a lot more. All their packages come with a £24 per year administration fee on top of the signup costs. Their payments system is based on RoyaltyShare’s platform, which is a reassurance in terms of their legitimacy, but it does bite into your revenues, as RS take a slice of the back end, of course, whoever you get paid by there will always be transaction charges (we use PayPal and do our own accounting).

DigitalMusicDistribution.co.uk (DMD) – This deal information document makes us feel very nervous. The company doesn’t seem to have seen fit to run their deal memo through a spellchecker, so it seems unlikely they will have run it past a lawyer. Their flat fee service involves you paying £100 [!] upfront for a 6 month release, after which your music will be removed from any services they uploaded it to, so our table has them in for double to make up the year. It gets even more worrying – they ask that you send the money directly to them by PayPal with a payment tag attached explaining what you want to buy from them, and then they’ll contact you… I’m sure you can email them first and open a dialogue, but I’d need some pretty serious assurance that my money was safe before I sent it. This can’t ever be an issue with us, as money only ever flows one way. From us, to you.

Emubands – UK based, with a flat fee up front model, their lack of an annual subscription fee makes them the most efficient of our competitors, but their admin process is offline; meaning you have to send them a CD and a cheque and co-ordinate the upload and distribution remotely. With us, you can do it all from your computer, and monitor your release, your sales data, and what payments are owed at any time. You’d also have to make more than $1,400 worth of sales through iTunes before you had spent the equivalent of an album’s sign up fee with Emubands on our back end percentage (a dollar on iTunes means about 58c in your pocket with us).

Musicadium – Musicadium have a flat fee system, outlined in this document [pg.4] and based on how many stores you want your music to end up in, rather than how many tracks your release is. You have to pay Aussie sales tax on their fees, which you can claim back from the Australian government if you send them the receipt, and they have a AUD$20 annual renewal fee on top of this, if you want to stay with them after the 1st year.

RouteNote – This is us. We don’t charge you anything for uploading, subscription, hosting or anything else. We just take a straightforward 10% from the retail revenue of your tracks. This means that we want you to succeed, and we don’t ask you to pay us for the privilege of being a part of your success. If you’re selling millions of dollars worth of music, then you aren’t going to sign up with us, as the 10% gets big, but then, you’re probably signed to one of the big 4 anyway, and things get a lot more complicated in that case. We’re here for independent artists looking to self-release music without having to cross someone’s palm with silver to get their music up online – hopefully this is you!

The Gene Pool – Charge exactly the same back end rate as we do, but with an added fee on top, and distributing to less stores. This should be an easy decision for you to make.

Tunecore – They have headline package prices for singles and albums, but once you start getting into the nitty gritty of their pricing, things get a bit more expensive. The numbers above are based on their $0.99 per upload per track to a release, and then $0.99 per online store you want that release to go into. They also make a $19.98 a year maintenance charge per release, so your costs can start adding up once you’ve got a few different releases online.

A lot of these stores cry up the huge number of retail partners that they’ve got [Ditto claim 700!], but a lot of these are duplications, counting the iTunes stores in different territories as separate entities, that kind of thing. We try and keep it simpler than that, deal with the major retailers, and only count them all once. It is important to keep in mind just how small a share of the market the minority stores have; iTunes represented about 88% of the American market way back in ‘06 and has been growing since; we’ve done more analysis of their market share in this previous post. This means that once you get past the top 3 retailers, the additional revenue streams from the rest of the market are comparatively very small.

There are a few other distribution houses out there that don’t deign to put their deals out on the net for people to see – if you’ve got experience of working with The Orchard, Ingrooves, IODA or anyone else and would like to contribute to this discussion, please comment and let us know what you think of their services. You can also check out our previous post comparing digital distribution services that goes through some different scenarios to this one – read it by clicking here.

[EDIT: - I neglected to mention Zimbalam, another of our competitors based in France. They have a slightly bigger store list than us, take the same back end percentage (10%) and charge a £20 fee for singles, £30 for albums)]

Myspace to acquire imeem – what fate for 16 million users?

Ailing social giant Myspace is in acquisitive mood. Having just purchased iLike (the same service that just did the music search deal with Google), they’re now in talks to make a deal to buy imeem, the music streaming service that bought SNOCAP, and that is reported to have around 16 million users. Currently imeem is suffering the same difficulties as other free music streaming services like Spotify – balancing the ad income they receive against the licensing and bandwidth costs of streaming tracks.

This deal would provide Myspace with some fresh blood in it’s music department, along with some experience in solving the problems of a high-traffic music streaming service – something which they’re looking hard for at the moment, as a Myspace Music that has to be paid for will inevitably lose a lot of traffic. They’ll also be losing their Google ad revenue, unless they renegotiate the deal, and with dropping traffic and dropping revenue, they are going to have to innovate or die. The deal isn’t closed yet, and there’s been no indication of how the sites and services might be integrated. Rest assured, if it starts looking profitable, we’ll strike a deal to distribute music to them so you don’t miss out.

Click here to read TechCrunch’s article about the acquisition.

Dr. Dre, Monster and Best Buy buck the Digital Trend

At a time when digital music sales are fast overtaking physical as the medium of choice for consumers, and the most valuable sector of the international music market, traditional physical retailers are looking for ways to enchance the high street (US = Mall) experience. Best Buy have launched a new ‘destination’ music section instore in partnership with cable, audio and accessory manufacturer Monster and Dr. Dre (in corporate guise) called Club Beats. Whether the rap star’s endorsement of this window dressing will have any real effect on sales is dubious, but it does mean that the lugubrious dinosaur that is the US retail market has finally noticed that someone has kicked it’s tail and is trying to overcome it’s inertia. In any case, the Club Beats section will provide a lovely, distributed physical platform to launch the Dr.’s new album ‘Detox’ if and when it finally reaches shelves (release is scheduled for 2010). Just don’t spill your soda on any of the records while you’re in there…

Blue Beat being Sued for Streaming Beatles Music for Free

Given how fiercely the Beatles’ back catalogue is resisting full online availability (they’re still not on iTunes), I can’t understand how Blue Beat thought it could possibly be a good idea to offer free streaming on their back catalogue. Inevitably, they’re being sued to remove it, but haven’t yet (3pm Nov 5th) removed it from their site. I wouldn’t like to be looking down the barrel of EMI’s revolver on this one.

Investment and Innovation Imperative for the future of Digital Online

Interesting post over at MidemNet about why Deezer (a French streaming service) feel they are now coming in second place to Spotify: the author basically concludes that investment and innovation in the next wave of technology is essential if we’re going to move away from both the lugubrious bricks and mortar retail system of yesteryear, and the increasingly piratical, file sharing future that looms threateningly ahead of the online music industry.

Apple’s Latest 10K Filing, iTunes Store Continues to Grow

Apple (NSDQ: AAPL) filed it’s latest 10K with the SEC last week (if you click that link, put the kettle on and make yourself a cup of tea before the file opens, you’re in for a long read, tl;dr Page 42 for a summary) and their figures are still awe-inspiring: more than 54 million iPods sold this year, which is actually a drop of 500,000 on last year, probably caused by people choosing to buy an iPhone instead, seeing as Apple sold over 20 million of them! (Something I was surprised PaidContent’s little precis of the report failed to take into account). This is good news for RouteNote’s uploaders, as it means more potential iTunes customers, and the direct growth of iTunes’ sales is even better news; up 20% year on year, even more reason to get your music on iTunes with RouteNote.

Digital Music Downloads – Is the subscription model valid?

Digital Music News posted an article analysing Real Network’s/Rhapsody’s Q3 figures and pointed out that while subscribers are dropping, profitability is rising. Rhapsody has lost 100,000 of it’s 800,000 subscribers since the beginning of the year, but has so far turned it’s bottom-of-the-page figure from a net loss of $4.5 million recorded last year to a $1.52 million profit. This might seem like a pretty significant achievement given the loss of customers, but when you consider that Real Networks have got an R&D bill of $30 million it’s obvious that they’re taking a lot of money out of their subscription services (they run games and other media services too) before the bottom line.

Even if it is a little hard to make a sensible judgement about the success of the different arms of their business from such bald top line figures, it is at least a glimmer of hope that online music services are moving into their maturity as a viable, profitable future for the music industry, a glimmer brightened by the Guardian’s little back -of the-cigarette-packet analysis of Spotify’s rapidly growing business. Even though it looks as if Spotify is spending a lot of money in the short term if they’re paying the normal industry license rate per stream, they likely are either being given favourable rates by the big 4, who have all taken equity in the company as part of their content provision deal, or they’re being allowed to run a comfortable line of debt with the big boys while they prove their business and gather deliciously profitable premium subscribers.

Whatever the case, it’s in the music industry’s interests to support the different ligitimate online players in their quest to design the ultimate online music provision platform, becuase the alternative is all too readily available from less scrupulous providers like the Pirate Bay and SeeqPod, who provide music for free, with no revenue stream back to the creators of the music.

UK Digital Music Market Trends

The UK has seen record levels of digital sales in 2009, with 10 trading weeks and the Christmas period still to come. 117 million singles have been sold so far, with 98.6% of these sales in digital formats.

Not only has the singles market more than doubled in the number of units sold sine ‘02, but it’s almost entirely divested itself of the physical media. This growth is not reproduced in the album market (old figures here), which in 2008 saw a shallow (compared to predictions) decline of between 3.2% and 6% depending on who you listen to, despite 68% year on year growth in digital (read people shifting over to buy digital formats rather than physical).

This is encouraging news for the music industry in the UK – despite the panic that filesharing and online piracy keeps sending through the motley ranks of the big execs, there’s not that big a downturn in sales. Music piracy is a massive phenomenon; according to the IFPI, 95% of music downloads are illegal, but is it really hurting the industry if sales are staying firm in the face of this explosion in Piracy. The BPI’s Chief Exec Geoff Taylor stated “That singles have hit these heights while there are still more than a billion illegal downloads every year in the UK is testimony to the quality of releases this year and the vibrancy of the UK download market.  Consumers are responding to the value and innovation offered by the legal services and these new figures show how the market could explode if Government acts to tackle illegal peer-to-peer filesharing.” His implication is clearly that all the pirates out there would be forced to buy their music instead of getting it free  – but I think this is something of a false premise: just because people like getting something for free, doesn’t mean they would be prepared to pay for it. I’ve been introduced to a lot of bands by people burning me CD’s or sending me tracks over the net, even way back when my teenage girlfriends used to make me mix tapes it was the same sort of piracy, but the upshot of that was that I’ve discovered more bands, been to more gigs and bought more CD’s, vinyl and downloads than I ever would have if I’d not been so freely able to share music. I strongly feel that bands should profit from people’s enjoyment and sharing of the great music they make, but it should be directly related to the cost of time effort and money involved in getting that particular piece of music to that particular person.

I would pay more for an LP than for a download because I’m getting more. Not just intangible 1’s and 0’s but a real lump of plastic and paper and design as well as the music. MP3 stores cost money to run, tech guys, ISP’s, designers and even marketing people (sadly) have to be paid, but those costs aren’t there with file sharing networks, or at least they’re not paid for by the guys in the music industry. If the site makes money, that should be shared equitably with the artists whose work they exploit, but artists should take into account that they’re not just losing download sales, they’re also gaining fans through these channels, fans that will buy tickets and albums and merchandise and write about you on their blogs and tell their friends about you, if you’re good enough, and you give them a reason to buy. *deep breath* Sorry. Rant over.

What will always be true is that supply must follow demand; if people want new ways of getting music cheaply online, the traditional market and online music stores must adapt to provide them, or fail in the competition with less legitimate routes of supply.