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!
We posted yesterday about EMI’s bleak balance sheet: today they’re in the news with a new Hulu page for Norah Jones, presumably the first of many of their artists that will be featuring on the site. I think this adoption of new channels can only be a good thing for the industry. It might feel like EMI are the first to be making these deals with new service providers because they’re under financial pressure, but from this support and collaboration between big record labels and innovative new channels the next mainstream will be born, and those industry players that adopt early will have a headstart on their competitors in terms of implementation and consumer base. EMI’s cooperation will hopefully encourage the others in the big 4 to follow suit – the ground is being laid as we speak: Spotify is preparing their platform for a US launch, youtube’s collab with the majors ‘Vevo’ will launch within a month, and the big guys are warming to the idea of online streaming services, as this Hulu/EMI deal shows. I’m betting that the record labels will swallow the bitter pill of lower per track fees, the big online channels will fight it out with the rights industries over standard rates, and the dust will settle with most people using ad-supported on demand streaming services, with a smallish percentage of us opting to buy the premium ad free offerings like the one our digital distribution partner Spotify offers.
An interesting article here, because we’ve been saying this for a while: the Guardian basically patting Spotify on the back for having an instrumental part in the decline of illegal filesharing. A great reason to let us do your online distribution for you, as we’re working with Spotify.
While the government and the music industry posture about illegal filesharing, smaller, smarter companies are simply out-competing it.
Stand by for the death of illegal music downloads. It is already gathering pace, being one of the fastest growing – or contracting – activities on the web. It is not happening because of the music industry’s rough justice (such as suing customers); nor because of Lord Mandelson’s variant of “three strikes and you’re out” for people caught downloading illegally – though doubtless they will claim credit.
You can read the rest of this very insightful article at the Guardian. 
Another new survey conducted in the EU argues that music sharers buy less music over the course of a year than those who are classified as online or physical only buyers.
http://www.ifpi.org/content/library/Jupiter_Research_study_on_online_piracy.pdf
Oddly iPod owners aren’t classified as digital music buyers, and it’s not clear how these categories have been delineated or how people have been divided into them, or whether they are mutually exclusive. I wish that when research like this is commissioned it was released in its entirety, to allow us to make our own decisions about it, rather than accepting the opinions of those who publish it based on limited information release. Wishful thinking, perhaps, but it might help us get to the truth if it happened.
The debate on music piracy is a bit like that on global warming; vocal and vehement, and extremely polarised (pardon the pun). Evidence can be produced to support the most extreme opinions, and is wrangled over until those in the middle don’t know what is believable. Consensus seems to be that even though music pirates are active music fans, and likely to be buying music as well as ‘stealing’ it online , piracy is damaging to sales of actual music tracks, although this may be slightly offset by increased gig attendance and other types of premium content purchase – box sets, t-shirts etc.
It also seems to be accepted that legal methods of ad supported, free-to-the-consumer streaming is the best way of combating the rise of piracy – the great user experience that Spotify has been able to offer has seen it expand faster than it can deal with; attracting users to use a great free streaming service isn’t hard, but finding a way of profiting from all those users is, balancing ad revenue against streaming and licensing costs, and Spotify’s launch in the States has had to be delayed while they evolve their model, and figure out how to move people onto their £10 a month premium service.
While they figure this out, MOG is stepping up to the plate in the States with their £5 a month subscription only model, that allows playlisting and file searching in a pretty similar way to Spotify’s interface [see the video at the bottom of this post]. A poll conducted by Demos (a company that sends people out with clipboards) suggests that revenue (income and adoption) would be maximised at the £5 price point:
But this doesn’t account for the costs inherent in delivering the amount of music that people tend to consume through such streaming services; leaving the computer streaming music all day, an individual could incur a lot of charges for their service provider.
So which footpath of digital development is going to turn out to be the music superhighway of the future? In my humble opinion, it’s going to come down to user experience: if we discount piracy as a viable future for the industry (no revenue means no artists) then we’re left with paying per track, either for streams or downloads, or for a month on month subscription service. These will remain as competing options, probably with iTunes still in pole position of the download market, given it’s current market dominance, and the relentless success of the iPod and it’s cousin the iPhone, and for the rest it’ll come down to whoever provides the slinkiest, most versatile service for whatever the music industry decides is the rock bottom price per stream, plus the minimum streaming cost. I for one hope that the big 4 accept thatad-supported music streaming is the best and only real way of putting an end to piracy, that they come to terms with the smaller license fee and infrastructure that will be demanded by this model. Of the options currently available, I think that Spotify has the most user friendly platform, I’m proud that we’re working with them, and I suggest that you upload your music to their service, via RouteNote’s digital music distribution platform right…. Now.
We picked up on Blue Beat’s strange decision to start streaming otherwise unavailable tracks from the Beatles’ back catalogue without the right’s owners permission, but it turns out their infringements are much more widespread. As music business news site Hypebot has just reported, they also claim to have the rights to sell music from AC/DC and Dan The Automator right through to Frank Zappa and ZZ Top. A totally spurious claim, based on this piece of US copyright legislation:
17 U.S.C. § 114(b):
“The exclusive right of the owner of copyright in a sound recording under clause (1) of section 106 is limited to the right to duplicate the sound recording in the form of phonorecords or copies that directly or indirectly recapture the actual sounds fixed in the recording. The exclusive right of the owner of copyright in a sound recording under clause (2) of section 106 is limited to the right to prepare a derivative work in which the actual sounds fixed in the sound recording are rearranged, remixed, or otherwise altered in sequence or quality. The exclusive rights of the owner of copyright in a sound recording under clauses (1) and (2) of section 106 do not extend to the making or duplication of another sound recording that consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate those in the copyrighted sound recording.”
A piece of law designed to allow people to make different tracks using parts of the original piece – sampling the Amen break [1:45], or nicking a riff off Labi Siffre [2:10], but not intended to cover what Blue Beat have done, which is to re-record the song pretty much wholesale. Their defence [via Ben Sheffner's blog] is pinned on their hopes that their copyrighted PsychoAcoustic process creates a new piece of intellectual property, that they own… basically they contend that some hocus-pocus like changing the file from a WAV to an MP3, playing it on a My First Boombox and re-recording through a microphone in a glass of milk, or some other magical process of transformation that ends up with the same noise at the end, will be enough to transform their ‘version’ into a derivative work rather than just a rip off. Unlikely. If anyone out there was thinking of it, we’d ask you not to try and upload anything similar to our digital music distribution service. The precise details of why BlueBeat consider their process to constitute a method of creating a new artefact aren’t online yet, but I’m looking forward to seeing what they say in their next filing on the 10th of Nov.
It’s been a while since we reiterated this: RouteNote is here to help YOU get your music online and selling. There are a lot of other players in the digital distribution market, all offering different models of payment and return, different combinations of stores, different packages and percentages, but we think we have the simplest, most efficient and cheapest service on the net.
We don’t charge any upfront or subscription fees, and only charge a 10% fee out of any revenue that you get once you start selling music. Other sites either expect you to shell out fees that can end up totalling hundreds of dollars before you even sell a single track, or take big chunks out of your back end in return for their services (The Orchard will take a flat rate of 30%). Other places will charge you depending on how many stores you want to sell through (Tunecore, Musicadium) – we don’t do any of this stuff. We just want you to confirm that you can license us the rights to distribute the music you upload, tell us the email address attached to the paypal account you want us to send revenues to and then upload your music. Our contract doesn’t make any claims on the music’s copyright, just enables us to make, store and send copies of your files, and it has a break clause of 60 days, so if you get fed up with us, or suddenly get signed by Warner you’ve only got a couple of months maximum wait before you can make a move. Once you pass our moderation (we need to check you’ve not just uploaded a Spice Girls album, or some hateful tirade against Guinea Pig owners) we’ll turn it around within 4 weeks and get your music to iTunes, eMusic, Spotify, Amazon MP3, Snocap, and other online digital stores that cover more than 95% of the online market.
You can check out our agreement once you’ve input your details in the Register page – don’t worry, you don’t need to sign your life away to look at the agreement – you have to specifically agree before we’re in business! We hope you’ll think it’s equitable (feedback on what you’d change is always welcome), and we look forward to having you join the 1,500 artists and labels who are already working with us to make their music make money.
Music streaming service Spotify is trying to build a viable strategy for US entry. Currently the ‘freemium’ phenomenon is active in Europe only, and is trying to tinker it’s platform into a fully balanced, financially viable form before allowing it’s user base to expand at the incredible rate they saw before they limited sign-ups to invitation only. In the brief period between the end of ’08 and September of this year during which they opened the floodgates, they upped their roster to 5 million users, roughly 2% of which have signed up to the premium service, happily shelling out £9.99 a month for ad-free streaming, access to tracks offline and on hand-held devices (synching with desktops/laptops rather than streaming live on mobile broadband). Their costs can currently be estimated to outstrip their revenue, so they’ve got to find a way of enticing more of their free users onto the paid for platform, which they can principally do by adding value to the paid for package, reducing the price (which they may consider to be a mistake, given the huge amount of music that people will still stream), or just waiting for loyalty to induce a purchase (we all love them here in the RN office). An interesting point to consider is that the major labels that have signed deals with Spotify have also been given equity equal to roughly 18% of the company, so a win for Spotify is worth more to them than building on Apple/iTunes success in the long run. From a consumer’s point of view, I don’t think a better deal could possibly come along; all the music in the world for the price of a single CD purchase a month, available to put in your pocket on your phone (for which you’re probably paying £30 a month already), seems like a silver bullet to me, generating revenue for the industry and keeping costs down for the user while cutting the pirates out of the loop. I know free is very tempting, but as most music pirates are supposedly music lovers (I enjoyed the contradiction between the IFPI and the Daily Mail’s bubblegum reading of this survey), I’m hoping that the majority will see the light. Take the money you would have spent on the terabyte hard-drive to fill up with stolen music this year, and use the money to pay the premium subscription fees and fill your ears with lovely legal music instead. There’s also the possibility of Spotify expanding into video; I for one would throw the TV out, and stop paying the license fee if I could cache music TV and film in a Steam type model. We’re one of only a handful of distributors giving our artists the opportunity to get music onto Spotify, so we really hope they can balance the model and expand their user base, making more moeny for our contributors. I’m hopeful; their advertising team is still fresh and new to the problem, and bound to increase revenues as time passes, and further innovation and the addition of bells and whistles to the premium service will only become more enticing.
Our digital music streaming partner Spotify is going from strength to strength; they’re being taken really seriously as the future platform of choice by the biggest players in the industry. Robbie Williams (and his marketing team) have made the decision to have an exclusive UK pre-release through Spotify for his new album “Reality Killed The Video Star”, so if you feel like listening to it for free, head on over and sign up. While I’m not the biggest fan of Robbie’s music, there’s not room in my mind for anything but respect and admiration for the way he’s created his success, despite falling off the wagon once or twice. There are also a couple of playlists that RW has set up on Spotify, one of his own material and another of songs that have influenced him, which is pleasantly full of soothing crooners, just the thing for a wet Wednesday…
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.
