TechCrunch reports an offer from Dimensional to buy all outstanding stock of our digital music distribution competitor The Orchard, whose operation currently has offices in 25 countries, and is losing $17.5 million dollars a year. The purchase offer is for $2.05 per share of common stock, valuing the company at $12.8 million, about 28% of their annual revenue of $45 million. Rumours also abound of a merger between The Orchard and eMusic, which would see the vertical value chain completed, from artist to store – seemingly a simple and sensible synergy, but since eMusic is also rumoured to be for sale predicting where the chips will fall may be difficult. Private owners of The Orchard will have a lot of cost cutting to do whatever the case, so look to see a lot of those international offices closed down, and a consolidation of revenue streams and staffing before long.
The RIAA have loosed another volley against the filesharing contingent that they believe are bleeding the profitability out of the music industry. The arguments are pretty solid: those who choose to download music illegally instead of paying for it through legal physical and digital channels are not enjoying the fruits of the people working in the industry without contributing to their livelihood. Bad people, right? Not proper music fans, right? Theft is insupportable, but there are questions of degree to be considered… From the RIAA’s press release:
According to SoundScan, the top 10 albums in 2009 sold a total of 21 million copies, and the top 10 tracks totaled 36 million paid downloads. But the top 10 albums in 1999 totaled 55 million in sales. Even with digital track sales factored in, those top sellers fell by more than 50%. In the last 10 years, the major record labels’ direct employment in the United States fell from about 25,000 people in 1999 to less than 10,000 today – a drastic reduction of over 60% in people who enable the creation and development of new music.
In the music industry, it takes the investment of many peoples’ money, effort, and time to create the songs and albums we all get to choose from and enjoy. Since most acts never even reach the breakeven point in sales, music labels need to operate like venture capitalists and count on the successes to subsidize the continued development of many artists and releases that may never break out of the red. And it’s easy to ignore the harm being done when you’re only stealing one copy.
Stealing music is wrong. This is undeniable, but there is something about what the RIAA say – it’s easy for a punter to ignore the criminality of nicking one album at a time ‘just to hear it’, and so the solution to the problem has to be slightly more nuanced than cutting off the consumer’s internet connection, or suing individuals for vast damages in high profile cases. Legal, profitable channels of consumption have got to compete directly with the illegal, risky, but free-to-consume-unless-you-get-caught methods like filesharing and illegal streaming.
Picking on individuals makes the recording industry look like the aggressor rather than the victim, which they are not; they’re just trying to safeguard their sources of income, and their jobs. It’s hard to think of Edgar Bronfman’s kids going hungry, or Puff Daddy having to sell his jet to make the mortgage payments, but there are real people doing good work whose livelihoods are on the line. That said, progress is inevitable (see the video at the tail of the post), and the music industry has got to roll with the punches and capitalise on the massive innovation that’s happening in the digital sector if it is to thrive as it has in the past.
Another thing to consider is how much this piracy actually costs the industry. If the pirates couldn’t get hold of the music easily and for free, would they bother getting hold of it at all? Does the money not spent on records all get spent on eyepatches, stuffed parrots and WOW subscriptions, or does some of it come back to the music industry in other ways? Concert revenues are certainly up over the last few years, and some artists are making money against the trend of decline by using clever andnon-traditionalmarketing methods, selling coolphysicalproducts, and using new outlets like Spotify and eMusic (to whom RouteNote will happily distribute your music, by the way) to boost waning physical revenues. Is it better then, for the industry to put a death-grip on sometime pirates who may also be gig-goers and box-set-buyers, and look backwards at the fantastic success they had with physical formats, or to look forward to an era when everything is digital and try to maximise it’s readiness and thus it’s profitability? Perhaps we’ll see things go full circle, and recorded music sales will tail off completely as we all go back to being regular concert goers, just like in the 1800’s…
The Orchard’s majority stock owners, Dimensional Associates, are considering a bid from music streaming service eMusic’s owners, JDS Capital. JDS have been angling for a majority in The Orchard for a while, and this is the third time they’ve come to the table with a new bid, this time of $2, up from their original price of $1.68.
The period between the announcement of the initial bid and this last news has seen the Orchard’s stock prices climb out of the trough they were in last October (a $1.05 low point). The advantages to the tie in of a music distributor and a music streaming service are obvious, as eMusic would gain unlimited access to The Orchard’s catalogue, and take advantage of the entire chain of profit between musician and consumer, using their own services to promote artists they think will sell.
Emusic has just announced that they’ve licensed not only Warner Music’s catalogue, but that of every one of their associated sub-labels. From their blog:
So — quite a few new arrivals today, eh US members?
Over 10,000 albums, to be precise, a dizzying avalanche of stuff from the Warner Music Group. No matter your taste in music, there’s sure to be something here that appeals to you.
The increased catalogue will hopefully mean more subscribers, which in turn will mean more pairs of ears that can access all the music that RouteNote distributes to them… A small trickle down perhaps, but positive news none the less.
In order to encourage people to get their music online with us, and introduce new potential customers to our service, we thought we’d run a little competition. If you’re a solo musician or you’re in a band that has new music that needs to get out there and selling, all you need to do is add a comment to this blog post with the name of the band or artist and a link to the track that you think is their (or your) best. We’ll keep entries open until the 14th of December, and then we’ll judge all the tracks that have been entered. The top 3 according to our judges will be given completely free distribution to all of our partners stores during 2010 on any new releases they upload to RouteNote. No fees, no subscriptions, no back end cut, no strings – just access to our service completely free until 2011. The top 5 will get a feature and review on our blog, and we’re promoting this competition in collaboration with www.music-news.com, so you can expect to get their attention too. This competition is open only to artists and bands and music not already signed up to RouteNote.
Our music retail partner Emusic has been running a countdown of their favorite albums on their blog. They’re most of the way through now, releasing ten per day, with 3 days left to go. It’s obviously a very personal list, obviously, but it might introduce you to a few things you’ve missed over the last 10 years!
RouteNote launched back in April 16th 2008 and since that time we have we have been focused on providing the masses with the same opportunities as was only previously given to the major label artists. RouteNote is the leading online music distribution service that has no upfront fees or costs and that is where we are hoping to stay.
RouteNote was launched with some major online retailers already on board, such as iTunes and eMusic. RouteNote works on the basis that we offer free distribution services to artists from all over the world. Artists head to RouteNote and can choose to upload their music to any of our partners (iTunes, Emusic, Amazon Mp3, Last.fm and more). Artists then receive 90% of all revenues derived from these partners in which is paid monthly.
So why choose RouteNote over our competitors?
No upfront fees
No monthly costs
Artists keep 100% ownership of their music
Artists receive 90% of all net revenues
Free UPC and ISRC codes
Artists from Anywhere in the world are accepted
RouteNote is a very service orientated business and customer service is what we pride ourselves on, because working closely with our artists means that we have the opportunity to really push and drive their sales which of course is our aim. RouteNote makes sure that artists have their music in all of the relevant places, and knows that the contemporaneous placement of music within these all these services is important, so we provide a speedy 3-4 week service to get your tracks from uploaded to live.
Providing great customer service has really help our artists get on to the service fast and more efficiently, which has really helped them to focus on driving sales. Our best example recently is that Megassus (a RouteNote contributor) held the number 1, 4 and 8th positions in the New age genre within eMusic.
Here at RouteNote we have been trying to improve our service so that artists from all over the world now have access to selling their music online via the worlds largest download stores. Previously we talked about how with RouteNote artists can get their music onto iTunes, but I just wanted to let everyone know that we also distribute to eMusic and Amazon Mp3.
I know that iTunes has over 80% of the digital music download market at the moment, but very slowly eMusic and Amazon Mp3 are closing the gap. eMusic is known for having the worlds largest independent catalogue, while Amazon Mp3 are the new players on the block who are making great strides in a short period of time.
So if you want to get your music onto eMusic and Amazon Mp3 for free then head over to our registration page and signup.
A few days ago it was reported that eMusic has come to a deal with Sony to add their catalogue. However, there has been a lot of reaction from this new deal for eMusic, because this is the first major record label eMusic has added. Hypebot has a great preview of the service and then some interesting reactions that have been voiced on the eMusic message boards.
Jellybones: Thank you eMusic. Its been a good run here for me. I love emusic, been here over 5 years. But I can’t afford my tracks to be cut by 2/3 for the same price.
90 downloads will become 35. Sorry, not worth it for the selection. I can go buy a couple albums (maybe only 2 instead of 3) but I can get exactly what I want.
Kez RE: I feel sold out. It seems eMusic is enraptured with the dazzle of their future customer-trolls and have cast aside their loyal member base.
From the UK xtrev: As noted down in the bowels of the ‘Major label…’ thread, the new more expensive price plans have appeared on site today. Including Booster prices. Damn.
Don’t think I’ll be buying many more 50 track boosters at 20.99 UK pounds. That’s a HUGE increase over the previous 14.99. If this is an example of what it means to have major label content here, then frankly they can shove it.
btx: Except for very rare circumstances, I’m not particularly interested in giving my cash to the major labels, that’s why I come here. If it is going to cost me more for their presence [even if I should choose not to download their stuff], that may be the end for me.
d.w.: “Effective Jul 6, 2009, your plan will change to the new eMusic Plus plan which gives you 37 downloads for $14.99 every 30 days.
We’re sorry that we’ve had to retire your current plan, but we’re confident that you’ll find even more music to love among the many new additions to the music catalog. And of course, you can always choose a different plan by visiting the Plan Options page within Your Account.”
My current plan is (grandfathered) 65 tracks per month for $14.99. This means that your Sony deal results in a 100% per track price increase over what I’m paying currently.
I appreciate(?) that you’ll be adding a lot of music from major labels that I could frankly not give a crap about (Alicia Keys — really?), but literally halving the amount of tracks I get on my current plan is a bit much to take. I’ve been a subscriber since 2000, but I am seriously considering canceling at this point.
eMusic is one of our great partners here at RouteNote and I would have rather seen the service stay with the indie industry and not attach themselves to the major labels, but now it seems like there is a new opportunity in the market for another indie service.
TechCrunch reports an offer from Dimensional to buy all outstanding stock of our digital music distribution competitor The Orchard, whose operation currently has offices in 25 countries, and is losing $17.5 million dollars a year. The purchase offer is for $2.05 per share of common stock, valuing the company at $12.8 million, about 28% of their annual revenue of $45 million. Rumours also abound of a merger between The Orchard and eMusic, which would see the vertical value chain completed, from artist to store – seemingly a simple and sensible synergy, but since eMusic is also rumoured to be for sale predicting where the chips will fall may be difficult. Private owners of The Orchard will have a lot of cost cutting to do whatever the case, so look to see a lot of those international offices closed down, and a consolidation of revenue streams and staffing before long.
Here at RouteNote we have been trying to improve our service so that artists from all over the world now have access to selling their music online via the worlds largest download stores. Previously we talked about how with RouteNote 
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