Vivendi Has Just Launched Zaoza in France

Vivendi (Universal) has launched their own mobile music portal, Zaoza. It has been reported that the music portal also embraces social networking and file-sharing. The current price tag per month is at €3 ($4.40), which includes unlimited downloads of exclusive content from both mobile and PCs. Vivendi has also already signed Sony BMG to provide their content on the service. Zaoza has already launched in France and soon will be found in Germany then the UK. Vivendi are also reporting to estimate the usage of the product at 500,000 by the end of 2008 and 1 million users by the end of 2009.

So Much Music News, So Little Weblogs

I have always struggled to find really good music news sites. Be it either related to digital music or not. Why is this? Why are there so many music magazines out there and millions of people all over the world want to be professional musicians, but there are so few really good quality music news weblogs?

Anyways, here is my list of some of the best music news weblogs on the internet today:

Are there actually any other good sites out there that I am missing?

Myspace Trying To Sell Music Again

We have learnt that News Corp is trying to put together a joint venture for Myspace. This joint venture will be similar to their current video joint venture with NBC Universal. In other words the joint venture will be for content providers to place their music on the service and in return gain an equity share in the company. The companies involved would only consist of the four major labels, Universal, Sony BMG, Warner and EMI.

Im guessing the music will be DRM free but will have some sort of ad support or watermarking to it. Since the Myspace deal with Snocap there has been no real use of the 7 million bands on myspace to sell some music. Im sure if this was done properly there is a chance for the service to become a real challenge to Amazon and hopefully iTunes.

Where Do Musicians Hang Out?

Currently for RouteNote we are in the stage of purchasing advertising for the site, both online and offline. This brings us to the point of asking the question “where do you musicians hangout online?” Im trying to build a list of possibly places in which to advertise our service to musicians who will actually really benefit from what we are trying to achieve.

Currently I have several options, but not sure which resources would be the most appropriate. If anyone has any suggestions it would be greatly appreciated and any feedback on my suggestions would also be great.


Other Websites

Imeem Has Acquired Snocap

It has been reported over at Techcrunch that Imeem has purchased Snocap. Both Imeem and Snocap are partners of ours and for all of our artists nothing will change because of this acquisition. It has not yet been confirmed by Imeem if Snocap will still operate under their brand or whether it the Snocap technology and assets will be placed under the Imeem brand.

Stay tuned for more information as it becomes public.

Of Princes, Pirates and Peer-to-Peer

While Prince is famous for his eccentricities as much as for his music (I never knew how to pronounce that ♂ thing) his latest foray into the news has been more than usually self damaging. He recently launched legal attacks against some of the biggest names on the web, accusing YouTube, eBay, The Pirate Bay and some of his own ‘unofficial’ fansites, of breaching his copyright. These attempts to limit the unlicensed transfer of his material hardly seems compatible with the decision to give his latest album away ‘free’ with the Mail On Sunday back in July. If he is concerned about the level of sales he’s attaining surely giving his new album away to the entire nation for the price of a newspaper wasn’t the smartest move, and attacking your own fans is unlikely to be constructive under any circumstances. I will be watching with interest to see the effect of this giveaway was on physical and digital sales nationally and globally in comparison to Radiohead’s pay-what-you-want excercise with ‘In Rainbows’.

The prospect of success in this aim are debatable; YouTube has previously taken shelter in a ‘safe harbour’ clause of the Digital Millenium Copyright Act protecting service providers from acts committed by their users (inserted presumably to prevent the possibility of me suing BT for allowing that heavy breather to keep calling me), who must be responsible for their own actions. YouTube also apportions an amount of it’s earnings to combating copyright theft, and has a policy of removing any offending material from its site once contacted by it’s owner. The Pirate Bay takes a more impish attitude to these attacks, of which it has parried many, and it’s founders suggest that even if the site is outlawed in their native Sweden they will merely relocate and continue operating.

Whether his or any other lawsuits against sites that host user submitted content are successful or not, I think Prince et al are missing the point. Napster got taken down as the first head of the p2p Hydra back in 2000, and many other sites sprang up to take its place. While I don’t condone copyright theft or piracy in any form, the undeniable truth is that until someone designs and implements a legitimate channel covering the same breadth of catalogue and ease of access as the p2p networks there is no hope of slaying the file sharing dragon.

This said, the Spanish courts illegalised personal peer-to-peer sharing more than a year ago, introducing a small tax on media like CD-R’s and flash memory drives as a means of generating funds to compensate copyright theft victims with. and pay for policing. While I can’t imagine they’ll be able to catch many pirates, or easily calculate the value of damage done to copyright holders it is a piece of lateral thinking that I admire. Like the TV license fee levied by the UK government on behalf of the BBC it generates an income at grass roots level, enabling the enjoyment of a facility by all without specifically victimising individuals (unless they cheat the tax).

The ultimate truth that the internet has freed consumers to get their content however they choose, means that the solution to copyright theft must be to make the legitimate channels so much easier, better and more convenient to use than the illegal ones that everyone shifts over out of preference rather than the remote fear of prosecution. The people that are making efforts in this direction are the ones succeeding in the market and reaping the rewards – of which more in my next post.

Update: Warner Music Chairman echoes this sentiment.

13 Nov ’07 – Edgar Bronfman, Chairman and CEO of Warner Music Group speaks to the GSMA Mobile Asia congress: “We used to fool ourselves… we used to think our business would remain blissfully unaffected as the world of file sharing was exploding. We were wrong… By standing still or moving at a glacial pace, we inadvertently went to war with consumers by denying them what they wanted and could otherwise find… and as a result of course, consumers won. “

Fallout Again?

Excuse the pun, but the fallout from Radiohead’s decision to release their latest album on a pay-what-you-want download basis from their website has been widespread. As an exercise in self-promotion, it’s hard to imagine a better stunt, as they made headlines across the national media, and even weeks afterwards are still featuring heavily in the big music blogs. I’m listening to the album for the first time as I write, being among the reported 62% of people who opted to pay nothing for the download. Radiohead haven’t released official figures for the revenue from their experiment, and XL Recordings will have to wait and see what effect the free download has on the sale of CD’s and Vinyl when they are released in January. There will undoubtedly be more lessons learnt and surprises reported on this story. What is sure is that all eyes, and ears are tuned into the radio(head).

Update: The original Comscore report  claims an average per download purchase price of $2.26 – if we assume that half of the visitors to downloaded, and (Comscore reports 1.2 million of these users so far), that’s 1.35 million USD straight into the band’s coffers. Consider that their setup costs on the website are likely to be in the four figure arena, and that they’re (hopefully) retaining all of this revenue and you can see that for the big players, self promotion makes sense.

Digital Music Consumption Patterns

There has been a lot of melodramatic news coverage recently about the decline of the music industry. But as previously mentioned in this blog, those areas like CD sales in which we have seen declining sales are compensated for by massive growth in newer sectors.

According to the Neilsen Soundscan figures (a measure of sales across all platforms) the total number of ‘music units’ sold is up from 814.6 million tracks in the first three quarters of 2006 to 951.3 million in the first three quarters of 2007. They also report that digital sales are up 46.3% on last year, at 612.2 million, a staggering 64.3% of total music sales this year.

Consider also that a record company’s costs are far lower when selling a download than a physical recording. Manufacturing costs, warehousing, distribution, and the expense of supporting a physical retail outlet are all removed from the equation, meaning more of the purchase price ends up in the label’s bank account, especially if the track sells from a site they own rather than iTunes or another reseller, when 100% of the money goes straight to them. An increase in total track sales and an increase in the percentage of the sale value retained by the label doesn’t sound like decline, but like overall growth, and rewards for those who are bold enough to embrace new, online sales platforms.

Another thing this rise in digital sales seems to highlight is that record company’s fears about the unregulated ease with which files are shared over the internet will damage their profitability. The industry is right in fearing that music piracy is now easier to perpetrate than it has ever been, with torrent trackers like The Pirate Bay and Demonoid under heavy attack from corporations worldwide for facilitating the peer-to-peer sharing of files for which no-one pays. Torrent tracking sites make obvious scapegoats, but people have always copied music illegally; remember the outrage that cheap audio tapes caused among the record labels in the 80’s by suddenly allowing people to share music with each other in a way then unprecedented in it’s convenience.

The big labels seem to be overlooking the fact that it is precisely this convenience and availability that are attractive to consumers. This is not to condone music Piracy, but to point out that those that ‘steal’ music have done so and will continue to do so whatever efforts the industry makes. Their knee jerk reaction to the rise of piracy since Napster’s inception in ’99 was to create a system of Digital Rights Management limiting the ways in which a downloaded file can be played. This was fighting fire with gasoline; trying to combat a new media format which owed its enormous growth to its ease of use, by making their music more restricted and difficult to use. Adding to this futility is the fact that even if every download sold was DRM protected, someone would crack the protection and keep on sharing music with those people that are not concerned about paying for copyright, just as happens in the software industry. As it stands, each one of the CD’s that the big labels are still so keen to see sales of has no rights protection on it at all (as Steve Jobs’ famous open letter points out), meaning that the least technically able of pirates can rip, upload, and share it very easily.

This is a key fact to understand when trying to predict the shape of the future music market. When a consumer wants to obtain a track, they want to do so as easily as possible, in a form that they can use wherever they want. They no longer need to go to the high street, if they can sit down at their PC or pick up their iPhone and search the web for it. Piracy is attractive because consumers needn’t pay or go through the rigmarole of registering an account and putting their bank card details online every time they want to get a song. iTunes retains a huge market share because of the massive investment in very well packaged and resultantly popular consumer technology they’ve designed to link directly into their site, and the perfect matchup of their existing loyal, tech-savvy, professional and affluent user base with the ideal digital music buyer. Other companies like eMusic and Rhapsody win market share because their tracks are cheap, and their subscription models reward consumers stay faithful to them rather than register elsewhere, but no one reseller can yet match the pirates for size of catalogue.

The first company to provide a service with as much available content as the file sharing networks, with the faster download times of hosted files versus p2p sharing, and the advantage that the RIAA won’t be after a consumer’s blood for using it, will dominate the market. If iTunes can rid themselves of the DRM problems that their contracts the record labels impose on them, they will be that company. However, allowing a third party to accumulate a universal catalogue of DRM free music is not in the interests of the big record companies: a sale through iTunes is one from which Apple take a percentage of the price, and the millions of dollars that this percentage adds up to are more than enough incentive for them to develop their own online stores, attempting to attract the rogue customers who are not committed to a relationship with one of the major resellers (perhaps they could even sell the same track at lower prices…) For independent artists this is not quite the case. They can still develop their own websites selling their product, but without a marketing budget it is difficult for them to get their music in front of the same number of purchasers (something RouteNote aims to help with by giving access to the major online outlets).

Another key point is the way that high quality content spreads virally across the internet, especially if it arrives through the right channels. The kind of new-geek Internet users that perpetrate this viral spread strongly object to corporations trying to limit the freedom the web gives them, but if approached right will adopt new things early and promote them extensively through tight knit communities, along with what amounts to a personal and trusted recommendation in that circle. Traditional marketing could never hope to be so focussed on a market, and often comes over more as an intrusion and an affront rather than the attractive recommendation of a product. This calls for a change in tactics from heavy spending on the most generally acceptable and inoffensive artists to lower key, more subtle and consumer-interactive marketing of diverse, high quality acts, and gives niche artists much greater scope to market themselves, rather than depending on a label to swoop in with a big advance and buy the rights to exploit their music.

Some other events that have unsettled the industry establishment over the past few months are the decisions by major artists like Prince to give their music away and focus on getting revenue from live performances and merchandising, an attitude Madonna shares, as evidenced by her switch from working with a record distribution label to one with a live promoter. The closure of retail flagship store Tower Records, the failure of Fopp (a big music and dvd retail chain in the UK), and Virgin’s sale of their US Megastores to a new operator are all indications of the massive tectonic shifts occurring throughout the music retail industry towards digital, online consumption.

The particular effects of these events cannot be precisely predicted, but the general trend seems to be towards musicians moving away from record labels and toward live promoters to raise their profile, selling their music digitally and finding ways to retain a much greater percentage of each track’s sale price. We will also see a further decline in CD sales, but not a total death – people love having an artefact, as the resurgence in the vinyl record market shows, and artists and manufacturers alike will profit from making beautifully packaged records available, as Radiohead have made a box set available alongside their free download.

While we at RouteNote won’t be pressing any limited edition LP’s in the near future we can offer artists a tool that allows them total freedom to deal with their own promotion and marketing while retaining easy access to the biggest established online retailers, helping maximise their market reach and the profit share they retain from their own work.

The Music Industry is Growing, Believe It Or Not!

Chris Anderson over at The Long Tail has compiled stats showing that the music industry as a whole is still growing!

Overall a lot has been happening in the music industry in the last few weeks, Radiohead, Madonna (leaving her label and signing with LiveNation), Prince, NIN, etc. The results of these have fueled great discussion about the industry and where it is headed.

Chris mentions it is a big mistake to equate the major labels and their plastic disc business with the industry as a whole, and when you stand back and look at all of music, things dont look so bad.

Stats are as follows:

  • Concerts and merchandise: UP (+4%)
  • Digital tracks: UP (+46%)
  • Ringtones: UP (+86% last year, but probably just single-digit percent this year)
  • Licensing for commercials, TV shows, movies and videogames: UP (Warner Music saw licensing grow by about $20 million over the past year)
  • Even vinyl singles (think DJs): UP (more than doubled in the UK)
  • And, if you include the iPod in the music industry, as I’d argue a fair-minded analysis would: UP, UP, UP! (+31% this year)

Only CDs are down (-18%). They’re around 60% of the industry not including the MP3 players, but just around 25% if you do include them.

So the problem with the music labels is not that music is an industry in decline, but that they have a too-narrow view of what business they’re in. Madonna’s switch from a label to a concert promoter should be a clue.

I am not too sure if I agree with Chris that portable music players should be part of the music industry, but  the remaining facts show the true story.

I see the entire industry moving close together and the majors are slowly losing market share and overall industry dominance. The huge majority of new releases are from the independents and I can see the industry becoming a lot more cut throat thus giving greater opportunities to unsigned and independent bands and labels to make a healthy living without losing huge royalties to the major labels.

eMusic Has Joined the Fray

It is now official the world’s largest retailer of independent music and the world’s second largest digital music retailer overall, with over 2 million tracks from more than 13,000 independent labels, has joined forces with RouteNote. Once RouteNote is launched all artists signed up will be able to opt-in to sell their music on eMusic. This is a great opportunity for our artists to distribute to a huge audience that loves to purchase all types of music.

eMusic is a subscription-based service that allows consumers to own, not rent their music, eMusic is the largest service to sell tracks in the popular MP3 format—the only digital music format that is compatible with all digital music devices, including the iPod®. eMusic targets and successfully direct-markets to consumers who are interested in music outside the commercial mainstream, dramatically expanding the sale of catalogue typically known as “the long tail.” Since Dimensional Associates acquired eMusic in 2003, the company has more than tripled its subscriber base.