A report from business analysis firm Ovum says they think UK based Internet Service Providers (ISP’s) could bundle a silver bullet with their broadband contracts by adding a digital music service to their offerings. They argue that this would increase customer loyalty (Ovum call it reducing consumer churn), generate additional revenue per customer, reduce online music piracy and increase music industry revenue. They estimate (and they don’t say how they arrived at the figure) that direct revenues from selling music-inclusive deals could be around £103 million by 2013, representing 41% of 2009’s market.
Commenting on the report earlier this week the BPI’s Geoff Taylor said “It’s increasingly clear that it isn’t smart to be a ‘dumb pipe’. This report shows that the revenue potential of digital music services alone makes sound economic sense for ISPs.”
Fair enough. But take note that Universal Music Group sponsored the report, the same UMG that are desperately worried about the collapse of their revenues, and the same UMG that are invested in Spotify, a music service that could very easily sell premium subscriptions bundled with an ISP package. This is by all indications a great idea, and would go a long way to helping the ISP community appease big music – who are accusing it if not of complicity then at least negligence in the article of stopping access to copyright infringing sites and torrent trackers like the infamous Pirate Bay – but an awareness of possible bias might encourage conservatism when looking at Ovum’s estimated numbers. There are a lot of solutions vying for the fast growing digital music dollar, it’s a market in which we’re currently diversity and innovation, and a big move like the one the BPI are advocating could seal the future of music online.
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.
Digital Music News are carrying this story about online ticket scalping – a case in which an LA based company calling themselves ‘Wiseguy Tickets’ employed a ring of Bulgarian computer programmers to buy up all the best tickets to high profile, high demand concerts and resell them online for a huge mark-up. Perhaps parting with more thansix times the face value of the ticket is painful for whoever buys the ticket second hand, but presumably no-one is twisting their arm as they click ‘confirm bid’, and as far as eBay is concerned it’s perfectly legitimate (at least in the UK – some US states have laws against it).
So who is at fault here? Blocking the public from buying tickets wholesale with highly organised, bulk buying and reselling operations seems pretty underhand and unsporting, but the scalpers are taking the risk that people will purchase the inflated tickets, so isn’t it just the normal exercise of a free market? Are the promoters missing a trick in the first place? A staggered ebay auction style release of tickets by the promoter, with say 25% of total tickets released 12, 8, 4 and 2 weeks before the gig, with prices starting at a reasonable face value would surely have the same free-market effect. There’s the strong argument that this competetive model would be a disservice to the less affluent fans, but promoters would have the same chance of selling out a venue at the starting price, and could only benefit from any uplift if the tickets ended up being worth more to a punter than the original price – if they were bid up by competing punters, and this would make it harder for scalpers to get hold of tickets in the first place, as to get them they’d have to compete with Joe Public in the first place, paying the elevated prices themselves. It would also go some way to eliminating their profits – why buy from an unofficial auction when there’s an official one happening, and could potentially make more money for the promoter, venue and artist if the ticket revenue is split out between them.
What do you think, internet people? Is sclaping fair practice, or callous parasitism? Would selling online like this just be a way for promoters to benefit at fans’ expense, or would it be a neat way of cutting scalpers out of the loop and rationalising ticket prices for the rest of us?
Not to be outdone by streaming competitors Spotify, who are rumoured to have gained a new funding partner (and consultant) in the form of Napster/Facebook founder Sean Parker, MOG have announced second round funding of $10,000,000 dollars, which they plan to use to take the platform into Europe, as well as funding Stateside expansion. As things stand, the two competitors are entrenching in their home territories, but the date of their confrontation on one side of the Atlantic must be drawing closer, even though no dates have been mentioned by either team. MOG’s monthly subscription is less than half the price of Spotify’s, but Spotify has major label backing, plus a vocal and passionate fanbase. Pandora are keeping their heads down, and quietly getting on with dominating the internet-radio and car dashboard scene, but the clash between these two will likely define the major player in on-demand streaming. The future of this type of music consumption is far from gilt-edged, however, as Spotify are still struggling to up their paid (£9.99 a month) subscription rates to supplement their ad-funded service, while MOG are operating at about a 17% conversion rate from their free trial to a $5 a month subscription. Whether either of these approaches will be successful enough to fund them in the long term remains to be seen, but given the high level of uptake, there is certainly a market for on-demand. Who gets to service it is currently being decided.
Smoke without fire, storms in teacups and cries of “Wolf” abound; despite all the discussion of and online about the potential sale of Abbey Road studios to try and help ease EMI’s cash crisis (yes, we squawked [should that be tweeted?] with the rest of the giddy hens), which included such notables as Sir Paul McCartney and the National Trust, there is no truth to the rumour that they are looking to sell the iconic recording venue – in fact they rejected an offer to buy it just last year…
In an interview with the LA Times, the guitar burning rock idol’s stepsister Janie Hendrix said that not only will there be a new album released this year, named “Valleys of Neptune” (based on recordings made in the early months of 1969), but that much more of his back catalogue has been licensed to feature in the next version of the game Rock Band. For some this is enough to suggest a full out branding exercise after the manner in which the Beatles were splashed all over the previous edition.
The game’s creators, Harmonix, were more reserved in their statement to Joystiq;
“While we have not made any official announcements regarding Jimi Hendrix and Rock Band, we are excited to say that we are in discussions to bring more of his music to our platform,”
Seth Godin is a marketing guru and a regular feature on the panels at music industry exhibitions. In this in-depth interview he chats to Music Marketing’s David Hooper about the seismic changes that are happening in the music industry, and how you as a musician can best place yourself in the digital market.
Marketing statisticians Neilsen have released the results of a new survey concerning the consumption of online media. Asking 27,000 consumers across 52 countries revealed what we already knew; that most people don’t pay for their content online – Nearly eight out of every ten (79%) would no longer use a web site that charges them, presuming they can find the same information at no cost. Respondents were far more united (62%) in their conviction that once they purchase content, it should be theirs to copy or share with whomever they want. Less than 5% of people pay for blogs or radio online, 10% pay for magazine or newspaper content, and less than a third would consider doing so. Music and games do better, with around 15% of people confessing to have bought content online, and slightly more than half saying that they would do so.
Of course, this leaves a whole slew of other options, like buying physical products, or using ad-supported services, but it’s still a fearful prospect for the music industry, as well as othersand it doesn’t take into account the fact that people might not classify themselves as music buyers in any case, – if only half your potential market would consider buying online, and your physical sales are dropping then it’s easy to see why you might start thinking about selling off the family jewels.
As Apple are set to announce their iSlate, or whatever their tablet computer is going to be called, and we all contemplate the future of the ‘cloud’ of online applications and file storage that we’ll doubtless be accessing from our Dick Tracy watches and optical implants in a few short years, here is a neat little online music editing package that lets you save your projects online, and share them with other users. It’s by no means as sophisticated as desktop based programs like Cubase or Pro Tools, but as a means of roughing out a track with remote collaborators, Aviary’s ‘Myna’ is an excellent free web app.
As well as being able to upload your own tracks and samples to their server, you can import material from Soundcloud, pick and choose from their online libraries of loops and samples, and browse other people’s uploads for stuff to use in your project. You can then insert these clips into tracks just by dragging, and then use all the standard tools you’d expect from an audio editor; gain, fade, stereo balance, clip trim and loop, as well as a bank of simple effects like delay, reverb, filters and phasers. Once you’ve sketched out your track you can mix it down and export it as a .wav, or you can leave it up there to be edited by other users. It might not give you access to your favourite plugins, but this is a hell of a lot of music processing power for free.
Seemingly, being an internationally famous rockstar isn’t fulfilling all of Jack White’s ambitions, as he’s started running a record shop. Perhaps he’s jealous of John Cusack in High Fidelity or something… Man that guy gets all the too-quirky-to-be-called-good-looking-but-you-still-would 30 something actresses… [Cross film confusion here, I know]
The Fact Blog reports “On Friday 30 and Saturday 31 October, Third Man Records And Novelties will operate out of Shoreditch Church. The store will be selling “releases and miscellany” from The Dead Weather, The White Stripes and The Raconteurs, together with Third Man 45s, T-shirts and other rarities and collectibles. The store will be open 11am-6pm on the Friday, and 11am-9pm on the Saturday.”
A report from business analysis firm Ovum says they think UK based Internet Service Providers (ISP’s) could bundle a silver bullet with their broadband contracts by adding a digital music service to their offerings. They argue that this would increase customer loyalty (Ovum call it reducing consumer churn), generate additional revenue per customer, reduce online music piracy and increase music industry revenue. They estimate (and they don’t say how they arrived at the figure) that direct revenues from selling music-inclusive deals could be around £103 million by 2013, representing 41% of 2009’s market.
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