Archive for: Music Stores
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.
Can music streaming ever be a viable alternative to hard copy and download music sales? WMG’s Edgar Bronfman has his doubts, and looking at some of the figures being published in the media they might seem reasonable. Increases in the number of users on services that provide on-demand music streaming (where you pick the track you want to hear like MOG, Spotify, and Grooveshark) correspond to decreases in music sales, while increases in use of radio’ streaming services [Last.fm, Pandora] seemed to drive more sales. There doesn’t seem to be any mystery as to why this might be; Spotify’s and MOG’s users no longer have any reason to buy music from other sources once they’re signed up (particularly as they can put their playlists on their iPods and other mobile devices if they buy a premium account), while Pandora and Last.fm’s customers have no guarantee of getting a particular track on their playlist again, so they have to buy it to hear it whenever they want. This might seem to be an open and shut case for the record labels; one service drives sales, while another cuts revenue – but it’s not quite as simple as that. Spotify has massive customer appeal, as the hordes that try and sign up every time they re-open user registration prove, and it also drives a lot of interaction with listeners; according to Spotify’s own figures the average use playlists around 15,000 tracks. The vast majority of Spotify’s users might be on the free-to-listen ad supported plan, with only single figure percentages signed up to their £10 a month premium package, but it’s clear that the proposition is incredibly attractive to consumers. The premium users represent a healthy annual income for the record labels to share with the platform; £120 a year is not an insignificant spend, and the potential for fledgling on demand platforms to increase their advertising revenue so that even the non-paying customers are generating profits for the record labels is proportional to the platforms’ desirability and popularity,
On demand services are what the consumer wants, and are proven to reduce the incidence of file sharing and online music piracy, something that unequivocally costs the music industry. Cutting off support for such services would surely drive a proportion of users back to illegal, non-revenue-generating, methods of consumption. Assessing the profitability of on demand against radio streaming will have to be done over the coming years as the platforms mature and adjust their business models, but it seems unlikely that killing off the most eagerly recieved of the net’s music biz babies just as they’re getting established would be a rational strategy for the industry.
For our part, we’re seeing tangible revenues come back for our artists from on demand services, and we’re happy to be able to help independent artists get music up on Spotify and in other online stores.
Speaking at the World Mobile Confgress in Barcelona, Daniel Ek said that the average Spotify user has 15,000 tracks lined up across all their playlists – a huge number, showing a really deep engagement with the platform from its users. OK, adding tracks to playlists doesn’t cost anything, but it takes time and effort to build them… Spotify hasn’t had any problems gaining users, or with the enjoyment those users get out of the service, but they’re still struggling to get more of their users signed up to the premum subscription service. As it stands, their users aren’t making them enough money per head to make a fully open launch an option, and Spotify has had to limit their intake of new customers to stop their streaming and royalty costs down. Advertising revenues are rising though, and as revenues and subscription customers increase so will the long term viability of the platform. They must be champing at the bit to launch in the US, as their competitor MOG is making good inroads into the American market.
Just as consumers are increasingly purchasing their music in digital form, from online music stores like iTunes, Amazon and eMusic (a trend digital music distributors like us rely on for the future of our business), radio audiences are moving online. A study published recently by Bridge Rating, company that:
“provides guidance services to media companies and investment firms seeking immediate and timely behavioral data related to media use.”
covering consumer use of satellite radio, Internet radio, MP3 players, Podcasting and mobile media consumption. They forecast that online ‘radio’ audience will grow to 77m by 2015. Their figures draw from both online only stations like Pandora and Yahoo Music, and simulcast stations (those that also broadcast over the airwaves) – see their graph for comparative growth rates.
So why are users migrating? The cost of a radio is minimal, compared to the cost of a computer, or even to a broadband subscription, and anywhere you can pick up the internet, you can pick up an FM signal. If it were the case that people were just using their computers as a convenient method of accessing the radio content, because their speakers are hooked up to it, signal is poor or they’re out of range, then simulcast stations wouldn’t be seeing a stagnation of or negative growth. Instead it seems likely that users are usign alternative music streaming services becaused of the greater interactivity and enhaned services like forums and playlist sharing that surround the musical core of the online channels, just as they surround music stores like Spotify (which runs it’s own nascent radio platform). If it is this rather than the inherent quality of the radio content itself that is drawing users online, then what does the future hold for premium airwave radio providers like Sirius XM? Will their hold on the car dashboard be enough to save them from their competitors? Not if Pandora have anything to do with it, as their contract with Ford to build in-dash controls to interact with their service shows. The increasing prevalence of smart phones and mobile internet devices also means that anyone with a stereo jack cable can use their existing car stereo to access their own music collection and playlists.
HMV is increasing it’s investments in the live music business. Having entered into partnership with Luminar to cross promote between live venues and their music store, and having operated a joint venture with MAMA in the same manner for just over a year, they have succeeded in obtaining just over 56% of shares in MAMA, giving them a controlling stake, and another place to promote their own artists and keep an eye on up and coming artists.
Hypebot have revealed in a blog post that We7 are set to launch a paid-for premium plus service, over and above their £3.99 ad-free service, that will compete more directly with services like Spotify and Napster. No more information has yet been released either on Hypebot or on We7’s own site, so the rumour that the service will launch on the 1st of Feb may be overstated. We’ll keep an eye out.
Good news for all you RouteNote artists out there: today we go live with music distribution to three new music stores – Deezer, Napster and Thumbplay Mobile.
Deezer is a French business, but has agreements with all 4 major labels to stream ad-supported music to their 9 million registered users across 35 different countries. In the three years since its launch, Deezer has been voted the most innovative website of 2007 by readers of 01Net, ahead of both Facebook and Dailymotion. Deezer also won the 2008 Red Herring award, for Europe’s most innovative web companies, among various other awards. The proof of their success is really in the number of people listening to music through their service, which keeps on growing. In addition to their music streaming service, Deezer also offers:
- Access to radio channels: Hip Hop, Rock, Electro, Jazz, Live, French Scene, Disco etc.
- Surfing intelligent online radio
- Information about artists, albums, tracks, introducing subscribers to new music
- Sharing playlists, chat and musical tastes with friends via the community of ‘Deezernautes’
- Watch videos
Napster was the first cat among the digital pigeons with it’s peer to peer service, but they’ve come a long way since their rebellious beginnings, and now their subscription service offers both unlimited streaming and a number of DRM free downloads per month, available online and on smartphones in Europe and the USA.
Thumbplay is the largest mobile content provider in the U.S. Operating both web based and mobile services, including licensed music, video and games. They have deals with all the majors, and several independent labels and artists, and now you can get access to their services through RouteNote. Hundreds of millions of cellphones in the US are waiting to download your music.
To get your music live with these music stores and all our other online music partners, sign up for our music distribution service, and get our new music upload tool. You can have your tracks online in minutes, and earning you money in a matter of weeks.
As you may have read here on our blog Terra Firma are suing their advisors/lenders Citibank for perpetrating a fraud against them – essentially Terra are saying that Citibank mislead them about the amount of competition there was for the record label’s purchase, the benefit to Citibank being more than £92 million in fees and lending them £2.5 billion that they claim they didn’t need to borrow. The plot thickens when you realise that EMI was in a huge amount of debt to Citibank, among others and that it was in danger of defaulting on the debt if it wasn’t rescued by a purchaser. The specific accusation is that a Mr. David Wormsley, a Citi employee who was advising Terra Firma told a rather significant pork-pie in an attempt to prevent Terra from dropping out of the bidding for EMI, precipitating a ‘busted auction’ – something that would have massively decreased EMI’s stock price, and thus the value of Citi’s asset, as well as EMI’s ability to repay any value that was still outstanding in their loan from Citi.
These accusations may be coming from a party that is desperately trying to shore up a huge investment in a failing company (look at EMI’s previous 10-K’s for an idea of their year on year losses), but they are pretty frightening for the big 4 labels – file sharing may finally be on the wane, with big torrent trackers like Mininova and The Pirate Bay being forced to go legit, but costs at labels are still outstripping income, and copyrights on some of their biggest selling artists are going to begin running out over the decades to come: the first Beatles song will come out of copyright in the EU in 2012 (unless there’s a change in the law).
Apple, eMusic and some other download stores are breaking ground in making online music profitable, but there are indications that even iTunes market share is dropping – innovation is happening with streaming services like Spotify entering the fray with big-label backing, but the true form of digital music in the decades to come is as yet undecided. I wonder if EMI will be there to see the changes happen.
We’ve just launched our new upload tool, designed to make adding your music to our service quick and straightforward. You’ll need to sign in to your RouteNote account, and then you’ll find a link to download the new tool on the ‘Upload’ page. The program is available for all operating systems, and will install onto your desktop. From there you can add in all the music and image files, as well as the metadata (track, artist and album information) necessary to put an upload together. The program will then let you know about any errors in file format or album info before you send it to us, so you won’t need to wait for our admin dept. to get back to you with any issues, you can save the data entry process at any point before you send it, so that you can come back to a session later, without the risk of losing your progress, and uploads can be queued and sent while you’re not using the computer for other stuff online. Using the upload tool means that won’t lose your progress if the computer crashes during the upload, you can just restart the process once you’re up again. We’ve also streamlined the data entry process so that you don’t need to put the same information in multiple times for multiple tracks, releases are grouped by album, so the program knows which track is attached to which release.
We’ve put the tool together to make things easier and quicker for you while uploading, and to try and eliminate common errors from the upload process, and we hope that you think we’ve succeeded. Any feedback or comments on the tool once you’ve had a go at using it would be very welcome. You can comment on this post, or send email to support@routenote.com.
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.
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