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…
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.
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.
Luxembourg’s biggest media star, Spotify has admitted a new investor to the fold, at least according to TechCrunch. Sean Parker was one of the founders of both Napster and Facebook, and would be Spotify’s first and only US investor. If the rumour is true, then it would not only help Spotify’s cash situation (always helpful), but also give them the inside track on running a music service in the States, and might give an indication that the launch of Spotify in the US is approaching.
The absolute best/worst of stadium and dad rock for you this week. It’s probably best to listen to this over your headphones, unless your co-workers have a good sense of humour, or are fans of falsetto, hair dye, facepaint and massive, massive guitars. The worst thing about it is that it’s brilliant:
Ad-supported music and digital content service Guvera has set the date for going live in the States as 30th March. The service, named for the bloody-handed revolutionary icon Ernesto ‘Che’ Guevara [wiki here, tl;dr we should all strive for personal fulfilment and be nice communists, but sometimes it's ok to shoot people in the head if they betray you] – aims to instigate a ‘revolution’ in the media industry by getting advertisers to pay for content delivered to consumers, who have chosen the advertiser whose branding they find least offensive/interruptive. This may not be quite the paradigm shift that they seem to think, but their beta service has been up and running for a couple of months in Australia now, and has been successful enough for them to roll out the full scale launch. They have deals in place with Universal Music Group, EMI Music and IODA offering consumers ‘free but paid for’ legal downloads from their full music libraries, but concerns abound as to whether they’ll be able to pay for them in the long term and on the grand scale that they hope for. Another streaming service in the States means that Spotify, bogged down making their platform profitable in Europe, will find the marketplace that bit more crowded if and when they finally get their stall laid out in the US, but they will have had the headstart in refining the user experience and gathering advertisers to their service. There is a future for online ad-supported music streaming, the appetite is strongly apparent, but it will be a hotly contested race to become the dominant provider, and Guvera have yet to prove themselves against the competition.
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.
Here at RouteNote we are always trying to improve our digital music distribution service. On Friday we announced the launch of three new partners, Napster, Deezer and Thumbplay. If you are a new artist to RouteNote then you can easily signup to take advantage of these new partners straight away. However, if you are an existing RouteNote artist you need to do the following steps:
Login and Head to your My Content section
Select the Edit button for each track you want to add to the new partners (Thumbplay, Napster and Deezer).
Select the new partners via the Tick boxes (or select all button)
Hit Save Changes and your Done!!
Here at RouteNote we are always looking to add new partners for all our artists. Stay tuned for even more coming soon!
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:
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