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.
Here at Routenote we are always pleased to announce the success of unsigned or independent artists who, against all odds, disprove the common assumption: the only career in music is with a major label.
Vishal J – a composer/producer/ programmer from Hesperia, California, US has smashed into the iTunes Store Charts Top 10 Electronic Songs for the US this week with his dancefloor masterpiece ‘Odyssey’. ‘Odyssey’ currently stands 5th in the charts above the likes of Daft Punk!
The ‘Odyssey’ Ringtone by Vishal J is currently one of the most popular ringtones in America. Along side tons of radio airplay the track has reached the top 50 of the iTunes Songs Chart and the US Billboard Hot 100 Singles Chart. Odyssey has the chance of becoming one of the most popular songs of the year.
Rumour has it, Vishal J is currently working on an album release so stay tuned!
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.
There has been a huge amount of press for Spotify in the UK of late. However, Hitwise has released their figures and it seems that We7 is the fastest growing music service in the UK. We7 is now the ninth most prominent music site according to Hitwise data.
Here are RouteNote we have been very open about our statistics and offering from the beginning. Today I just wanted to run through how RouteNote is progressing and what you can expect for the future moving forward.
RouteNote Growth:
As most startups in the current economic climate RouteNote is no different, we have a very limited advertising and marketing budget which of course means growth doesnt have the possibilities as it would otherwise. However, we have been seeing an increase in traffic every month which is quite positive. I think this increase in traffic has a lot to do with the great press we have been receiving from all over the web (Rev2, Techcrunch UK, CNet, and more).
Additionally, we have been keeping track of how long it has taken RouteNote to reach goals of 1000 track intervals. It took RouteNote 199 days to reach 1000 tracks online, but the next 1000 tracks only took 109 days, and this last 1000 tracks which now brings us to over 3000 tracks online took 76 days to reach. The site is rising and our service is increase and becoming more efficient everyday.
Partners:
RouteNote has been developing new partnerships will all different types of companies in a variety of areas. Here at RouteNote we believe that diversity in digital music distribution is key. With download stores there are really only three main players at the moment, iTunes, eMusic and Amazon, and RouteNote has partnership argeements with all of these stores. Soon we will be adding more partnerships to help our musician push their music across the entire internet with the aim of allowing them to reach the mass market, while at the same time offering them top royalty and revenue schemes that are the best in the industry. Watch out for RouteNote partnering with some of the biggest growing music services on the web.
New Features Coming Soon:
Here at RouteNote we launched in the same way as many other startups. First you have private beta, then beta, then launch the site with a full service. Here at RouteNote we followed the same kind of structure but for us the beta tag is only there because we were yet to release our desktop upload tool. This tool and the beta tag should be completed in the coming months. Additionally, we are looking to add more services in our tools section which aims to help artists find great deals and provide them with the right tools to help self-promotion.
Overall:
RouteNote is still growing at a steady pace and we are aiming over this time to increase our offering as much as possible. As a RouteNote user you will see added partners in terms of stores, mobile, streaming, licensing and others, as well as a much more rounded product offering.
7Digital and Spotify have announced a new partnership that will see 7Digital purchasing links in the Spotify platform. This partnership is aimed to help Spotify increase revenues in this very difficult economic situation that is heavily affecting online advertising revenues.
Beginning with the UK, France, Spain and Germany, the deal enables Spotify users to purchase 320kbps MP3 downloads from 7Digital’s 6M track catalog along with a selection of FLAC downloads. Sweden, Norway and Finland will follow in a few weeks. In the future, users will be able to purchase playlists that have been created within Spotify at a discounted price. Future improvements will include closer integration including one click downloads.
The Spotify deal follows a similar 7Digital partnership with open source media player Songbird using 7digital’s API which allows integration with 7digital’s catalog and commissions on sales.
Music Ally has reported that over 445,000 people illegally downloaded the new U2 album. All these downloaded were alleged to happen between the 18th of February till the 3rd of March from BitTorrent sites.
The chart supplied by the company shows the spike in downloads following the album’s leak in February, apparently due to it being accidentally made available for sale on an Australian digital music store ahead of its official release on 2nd March.
The debate is always would these people have purchased the album if it wasn’t leaked on BitTorrent clients? No one can really answer that question, but I’m sure that certain sales would have happened because of this.
Overall this does make me think that the claims of the Pirate Bay in the last couple weeks that “80 percent of all their torrents are legal”, cant be true.
A lot of people get in touch with us to ask how many digital stores we distribute music to, and what proportion of the digital music market they represent. We also hear comments on the relatively small number of people we deal with in comparison to the huge lists of partners at some of our competitors, e.g. CDbaby,Emubands, IODA…(without mentioning the duplication in the last two).
The simple truth is that while a long list of digital music stores might look good, beyond the top 3 or 4 retailers it makes very little difference to overall sales how many your music’s in. It’s fairly common knowledge that iTunes is the biggest player in the market, but the scale of their dominance is pretty staggering. Neilsen (the ratings and market reporting firm) reports total US music sales of 1,513 million units in 2008, with 1070 million of those sales being digital downloads. That’s a billion digital music downloads across the entire US.
In 2008, across all territories, iTunes sold more than Two Billion tracks.
Apple iTunes Store Music Sales
Date
Tracks Sold (Millions)
01/08/2004
100
16/12/2004
200
02/03/2005
300
10/05/2005
400
18/07/2005
500
10/01/2006
850
23/02/2006
1,000
12/09/2006
1,500
10/01/2007
2,000
09/04/2007
2,500
31/07/2007
3,000
15/01/2008
4,000
19/06/2008
5,000
06/01/2009
6,000
Excuse the horrid old excel graph, I’m still running Office ‘03…
It’s difficult to get a believable estimate for the size of the global digital music market, but given that the USA is the biggest single economy by a long way (the whole of the EU only just beats it in the CIA factbook at $14.98 trillion to $14.58 trillion), you begin to get a picture of how much of a monopoly iTunes has. Their competitors are of a different order: Amazon weighed in at 27 million digital tracks sold in the first six months of 2008, and the CEO of eMusic (David Pakman) estimated that Amazon have got about 4%-5% of the US music market, which going from Neilsen’s estimates puts them at about 48,150,000 tracks annually. Pakman also claims an approx. 10%-15% market share for eMusic, with 7 million downloads sold monthly (7*12 = 84).
By browsing eMusic’s sales milestone press releases, you can plot a rough course for their sales:
eMusic Digital Music Sales
Date
Tracks Sold (Millions)
01/09/2004
0
01/12/2004
3
01/12/2006
100
25/09/2007
160
14/04/2008
200
20/11/2008
250
I’ll spare you another ugly graph. eMusic has sold 250 million tracks since it’s relaunch in 2004, and Amazon’s only been going for about a year now, 300 million tracks let’s say, which pales beside iTunes’ 6 billion total sales.
One can argue with the estimates, but the main thrust of my argument is hopefully becoming clear. A conservative 15% market share between Amazon and eMusic, along with iTunes’ >80% doesn’t leave more than 5% for any other players in the USA: with just those three selling your music for you online, you’ve got 95% of the market covered. It’s not that the remaining 5% isn’t worth catering to, but the law of diminishing returns kicks in, and customers in the last few percentiles get harder and harder to chase down, especially given the plethora of blossoming and failing little music shops that appear and dissappear. We concentrate our efforts on the vendors that matter.
P.S.
The controversial bulk of music discovery and consumption in the electronic wilderness, outside the paid-for enclosure, is happening on torrent sites like the embattled Pirate Bay, and the more respectable Limewire and Mininova, and promoting RouteNote artists on these channels is something we’re looking into. Ubiquitous innovator Trent Reznor or NIN positively encourages people to download his music from P2P networks, in order to drive sales of his ‘premium’ paid for content.
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,
Loading ...
