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A federal judge has ruled that Yahoo, AOL, and RealNetworks could owe songwriters as much as $100 million over seven years as payment for streaming their songs on the web.
ASCAP has been caught up in a court case with the web giants over a blanket licence to compensate songwriters for the music they have created. More on this story here.
ASCAP has posted a press release of the decision on their site.
A recent WIRED article regarding the dominance of iTunes.
By Eliot Van Buskirk
Since its debut five years ago Monday, Apple’s iTunes Store has sold more than 4 billion songs and accounts for approximately 70 percent of digital music sold worldwide. In the next five years, it may well account for a staggering 28 percent of all music sold worldwide.
By 2012, digital music is projected to account for 40 percent of music sold, according to InStat. If Apple holds onto its current market share, it will account for more than one-quarter of all music sales by its ninth birthday. Not bad for freeware.
“I’m very skeptical about whether iTunes can be unseated, because there’s not a lot of consumer pain there,” said Paul Resnikoff, editor of Digital Music News.
Digital Music News recently found that iTunes is installed on nearly 30 percent of all computers worldwide, making it the most widely installed music store application in the world.
When Apple snapped up a little music program called SoundJam MP back in 2000, no one predicted that the iTunes application it became would lead to a complete restructuring of the music industry.
Like all journeys, iTunes’ reinvention of the music business began with a single inauspicious step. The major labels agreed to license their music only to Apple because the iTunes Store ran exclusively on Macs, representing a “sandbox” in which the labels could test the fledgling online music market.
Of course, once the labels saw Mac users snapping up their songs, the Windows version followed soon after, setting the stage for iTunes’ dominion over the digital music market, which it has held onto ever since.
The key to iTunes’ continued success has clearly been the iPod, but as iPod sales plateau, Apple may need to rethink its iTunes strategy, especially because its partners in the music business are looking for ways to give its competition an unnatural advantage.
“Apple is under pressure from the four major labels to change its pricing model to a tiered pricing structure,” said Susan Kevorkian, an IDC audio analyst. “The way the labels are pressuring Apple is by withholding DRM-free downloads from the service … [while] cultivating other online music services, most notably Amazon’s MP3 downloads store.”
But despite its compatibility with the iPod, Amazon isn’t stealing many customers from iTunes — only 10 percent of Amazon MP3 customers have bought from iTunes in the past.
“They’re playing on the periphery of this dominant iTunes application,” Resnikoff said. “Why would I want to go outside of that?”
Despite the apparent toothlessness of the current Amazon threat, pundits agree that Apple needs to make significant changes to maintain its lead.
Kevorkian thinks Apple should cede to label demands for tiered pricing to stave off a possible migration to stores that lack DRM and offer lower prices. Besides, she says, Apple’s 99-cents-per-song strategy has served its purpose: to put digital music “on the radar” of the music-buying public.
Apple has other ways to grow iTunes without relying on the iPod — even ideas Jobs has pooh-poohed in the past, such as music subscriptions. The most obvious (and least likely) scenario is a PlaysforSure-style subscription service, which would require a new, stronger version of FairPlay DRM and rule out compatibility with older iPods.
A more likely option would be an eMusic-style subscription in which customers get a fixed number of songs per month, receiving a better deal than if they’d purchased the songs individually.
Then there’s the so-called “unlimited music” iPod, which could be on the horizon. “We think the issue holding things up is how much money per iPod the labels get,” Kevorkian said.
If Apple tires of butting heads with the labels, it could eventually cut them out of at least part of the equation by forming its own record label to keep a portion of the estimated 65 cents it currently pays out to the labels for each song sold.
“Digital distribution makes the economics of the industry so different,” Kevorkian said. “That, coupled with Apple’s tremendous brand name and reputation as an online music distributor, could make it a very important point of departure.”
All it would take, she said, is the addition of an A&R department for scouting bands.
Dan Frakes, senior editor of MacWorld, agrees: “I think Apple will eventually work directly with the creators of content, allowing iTunes to sell original content without having to go through the entertainment industry.”
Only Steve Jobs knows which of these paths Apple will take, but in general, iTunes’ prospects for the next five years looks about as bright as they have been for the last five.
“If Apple keeps doing what it’s doing,” Resnikoff said, “I don’t think you’ll see any factors really eroding iTunes’ installation percentage. It’s an application that works so well.”
Peter Cooper blogs about how mobile devices are hurting music in a way you might not have thought about:
When people talk about the things that are allegedly “killing” music, they usually go on about vocal tuning technology, the demise of physical product, too many cookie cutter acts, etc. Here’s what’s really killing music, though: cell phones.
In Nashville, the problem goes beyond the dunderheads who “forget” to turn off their ringers and wind up interrupting poignant, compelling or otherwise groovy moments with some kind of seemed-clever-at-the-time ring tone. The problem here extends to people who turn their ringers off but who glance at their Blackberry devices every two minutes and actually type email during performances. To all around, this sends the message, “Whatever the performer is doing is not worthy of my attention.” At a regular club show, this is irritating as all get out. At one of the “showcases” where a performer is presumably auditioning for a record contract or publishing contact, it’s heartbreaking.
Check out the rest of this article on Tennessean.com HERE.
Paul Resnikoff in Los Angeles writes about how different platforms are converging and will become nearly indistinguishable from one another and how that will change the patterns of licensing. Check it out at Digital Music News.
One of the more interesting panel discussions of the Leadership Music Digital Summit yesterday was “Digital Retail: What’s The Future?”
On the issue of the future of CD product, UMG Nashville EVP Sales, Marketing & New Media Ben Kline said, “I can’t imagine CD’s ever going away. I can’t imagine Wal-Mart and Target not selling hard product. It’s the ones (retailers) in the middle that will be hurt. I don’t think you’ll be able to walk into a mall and purchase a CD.” Kline went on to comment, ”We still can’t afford to be in the singles business” when asked about the current state of selling digital singles and why labels are not being more singles driven.
One of the major discussions prevailing was how to grow digital sales as CD sales fall. Each panelist had their own ideas including:
- Better devices
- Ubiquitousness
- Multiple product offerings in one bundle
- Player compatibility and coordination between platforms
- Exceed experience of music ownership with consumers
- Stop narrow focusing on subscription based models
On the subject of future business models within retail, the industry vets responded with:
- Ben Kline: “Demand price models (where price is equal to the demand of the music). Not every song should be .99 cents.”
- EMI CMG VP Sales & Marketing Mark Adkinson added, ”Steve Jobs can’t run our business for us or he will run it right into the ground. He wants to sell devices, not music.” Mark also stressed the need for pervasive distribution within the music industry.
Leadership Music Digital Summit is going on today in Nashville. The keynote was delivered by the CEO of iLike, Ali Partovi, who mentioned that it was the first keynote he has given.
With all of the questions, concerns and potential regarding the future of music technology, Ali made a point to say, “What I’m most excited about is the discovery and promotion of music”.
Ali compared traditional broadcast media with new media:
**Traditional media is “untargeted, focused only on hits & singles, while album development suffers”.
**Digital media is “personalized, social, syndicated, targeted and enables artists to pursue their dreams.”
Partovi went on to say that digital media “could replace or solve the problems of traditional broadcasting”.
More highlights from the Digital Summit will be posted this week.
From emarketer.com:
A January 2008 Arbitron-Edison Media Research study found that an estimated 33 million Americans had listened to online radio in the past week.
This represents 13% of the US population ages 12 and older, and is an increase over the previous year when 11% of the population (29 million) had listened to online radio in the past week.
Podcasting use is also rising and now reaches 18% of the US population, up from 13% a year ago. An estimated 23 million, or 9% of Americans had listened to a podcast in the past month.
“Traditional radio and Internet-only radio must realize that they are now part of an even broader world of online information and entertainment options and respond accordingly,” said Pierre Bouvard, president of sales and marketing at Arbitron.
“Advertisers who want to go where the trends are pointing need to be more involved with the new forms of audio media as they continue to expand,” Mr. Bouvard said.
How would you feel about a music site that organizes music according to your moods? What would be your thoughts about a destination where you can legally download MP3’s based on emotions?
Guitarati is conducting this grand sonically visual experience by assigning colors to music.
It is certainly unique and outside the box, but will it resonate?
A short Businessweek.com article on labels trying to play catch up with digital opportunties and the latest music partnership with MySpace. Click this to check it out.
An integration of CBS Radio’s webstreams into Last.FM is underway and includes all formats. This follows last month’s announcement of AOL and CBS Radio joining together for sharing content. Last.FM CEO Felix Miller hopes it will lead to more collaboration.
This type of integration and partnership is essential for the long term relevancy of terrestrial radio. There is still much to do, but it is a step in the right direction.
From portfolio.com:
Warner Music Group CEO Edgar Bronfman, Jr., is considering one of the boldest plans to combat illegal downloading and peer to peer file sharing networks. The idea? To charge everyone using the internet.
Consumers would pay a monthly fee, bundled into an internet-service bill in exchange for unlimited access to a database of all known music.
Read the entire article here and decide if this is an innovative idea or another desperate attempt to “fix” a broken business model.
If not, why not? Radio will need to embrace aggressive podcasting and video strategies to compete for the attention of future listeners. The age of P1 demo of many country radio stations is rising because they are losing younger generations of consumers. These tech savvy “self broadcasting” demos are getting what they want when they want it. They aren’t waiting around through ad spots and countless other songs to hear their new favorite.
Creative and innovative use of podcasts, video, web sites, and mobile based activity will not only enable radio to stay in the game, but be active in the lives of listeners. This could also answer the concerns of being local and developing engaging personalities, but radio companies need to make a commitment in making it happen. Will they?
These new media outlets will not only expand the brand of the station, but also be more easily monitored and accurately measured for advertising purposes. For example, YouTube users can now better analyze the viewing patterns of videos far more easily according to this story from Media Week.
The bottom line is creating entertaining content value and connecting to the listener and consumer. The more ways radio can do that the better chance they have to compete and win in a quickly changing landscape.
I was very glad to hear from the founder of the Dewey Foundation and The Victory Project, Mike Dewey, who made these comments:
Thanks for the kind words. It is already working! We are already receiving submissions, and the response has been amazing and emotional.
Clearly, people are frustrated with what everyone has been doing, and are happy to hear about a whole new approach.
We are going to have a world wide vote on the http://www.deweyfoundation.org website about what the 5th problem will be. So, you will have an opportunity to affect our list and get one of your pet projects noticed.
Thanks, Mike
Thank you Mr. Dewey for the information and what you are inspiring!
I love this. The Victory Project out of Austin, TX is offering the amount of $1,000,000,000 to whoever can find a solution to problems in our society which need innovation and determination. Our fame addicted culture has watered down what it really means to inspire and be successful. Whatever happened to the days when making real contributions to life and science was what a child wanted to do when they grew up?
There is still time.
One billion dollars to the first person(s) that solves any of these Problems:
- Develop a cure for breast cancer.
- Develop a cure for diabetes.
- Reduce greenhouse emissions from petroleum powered automobiles by 95% without increasing the cost of a normal car more than 5%.
- Achieve 150 miles per gallon of gasoline in a 3,000 lb. car, using EPA standards; without increasing the cost of a normal car more than 10%.
I personally could think of several more which should be on this list, but it is a great start.
From www.ft.com by Andrew Edgecliffe-Johnson
Apple is in discussions with the big music companies about a radical new business model that would give customers free access to its entire iTunes music library in exchange for paying a premium for its iPod and iPhone devices.
The “all you can eat” model, a replica of Nokia’s “comes with music” deal with Universal Music last December, could provide the struggling recorded music industry with a much-needed fillip, and drive demand for a new generation of Apple’s hardware. Apple would not comment on the plan, but executives familiar with the negotiations said they hinged on a dispute over the price the computer maker would be willing to pay for access to the labels’ libraries.
Nokia is understood to be offering almost $80 per handset to music industry partners, to be divided according to their share of the market. However, Apple has so far offered only about $20 per device, two executives said. “It’s who blinks first, and whether or not anyone does blink,” one executive said.
Detailed market research has shown strong appetite among consumers for deals bundling music in with the cost of the device, or in exchange for a monthly subscription, executives said. One executive said the research had shown that consumers would pay a premium of up to $100 for unlimited access to music for the lifetime of the device, or a monthly fee of $7-$8 for a subscription model.
Apple, which is thought to make relatively little money from the iTunes store compared with its hardware sales, is also understood to be examining a subscription model.
Subscriptions would work only for its iPhone devices, where it has a monthly billing relationship with customers through the mobile phone operators offering the device, while the “comes with music” model would work with iPhones and with iPods.
The subscription models under discussion in the music industry include the provision for customers to keep up to 40 or 50 tracks a year, which they would retain even if they changed their device or their subscription lapses.
Other music groups are understood to be in talks with Nokia, which is keen to sign up as many of the major labels as possible before launching its first “comes with music” devices in the second half of this year.
I attended several tech panels today, which I am glad to see on the schedule. One in particular was a panel that had Sean Ross from Edison Research, Dean Ernst from Play MPE and Jim Kerr from Pollack Media Group.
They each debated and rated the hottest tech trends as “Boom” or “Bust”. Here’s a quick rundown on how they voted:
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HD Radio: Majority BUST
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iPhone: Majority BOOM (shows you how fast technology moves because this has been an obvious boom for a while now)
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Internet Radio: Majority BOOM (although they said it would take a while to get up to speed)
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Podcasting: Majority BOOM
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360 Label Deals: Mostly BUST (in my opinion this is relative to which artists and managers)
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User Generated Content: Majority BOOM
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Mobile Content Distribution Channel: Majority BOOM
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DRM-Free Music: Majority BOOM
Chris Anderson & economist Jacques Attali speaking at the 2007 Midemnet Forum about the future of the music business. The revolution is happening……
Chris Anderson, Editor In Chief of Wired, is currently writing a follow up to his incredible book “The Long Tail”. The subject is the interesting phenomenon of FREE. In the spirit of the subject, a free 6,000 word preview and relating video can be found here.
You can also get a FREE copy of Wired featuring a preview of the much anticipated book here.
Finally, go to trendwatching.com for another informative article on brands making the most of FREE.
For 20 years Bob Lefsetz has published the Lefsetz Letter. Bob has had stints as an entertainment business attorney, head of Sanctuary Music’s American division and consultancies to major labels.
In a recent post on his blog, he laments the future of labels and radio. Agree or not, Bob raises a lot of interesting questions on subjects we should be thinking about and discussing as an industry………
Last week I spoke at something called CIC, which stands for “Concert Industry Consortium”, Pollstar’s annual gathering of the concert geeks. And what a gathering it is, this ain’t no usual conference, EVERYBODY in the touring industry shows up.
And hanging in the lobby after I was done, I was bullshitting with Lewi, Strasburg and the assembled multitude, and Jim suddenly looked at his watch and said there was a panel he wanted to attend, about money. I’ll follow Lewi anywhere, so I followed him through the hotel, to hear what I figured was a discussion about getting paid at the gig. Boy was I wrong. This panel, entitled “Money Talks”, although chaired by Adam Friedman of Nederlander, was made up of VC’s, “venture capitalists” for the uninitiated. They were talking about the business BEHIND the business.
One had invested in HOB (House of Blues for those not up to speed on acronyms). There were issues of scale. Which they tried to address by purchasing Universal Concerts. But this didn’t do the trick and they ultimately sold out to Live Nation. Why did they make money? Because of the great real estate deals they’d made. Developers had cut them a break on rent because of the foot traffic the clubs generated. I’m sitting there listening to these guys thinking that I need an MBA, they’re talking about stuff I don’t know about. Oh sure, I’m aware of ROI (return on investment), but it went deeper than that. They talked about going public in just a few years, to get their money back, that was the PLAN! Then one said…in five years he expected there to be no music on terrestrial radio.
Boston Business Journal published a new report by Forrester Research Inc. that shows that half of all music sold in the U.S. will be digital in 2011 and sales of digitally downloaded music will surpass physical CD sales in 2012.
The report also claims that digital music sales will grow at a compound annual growth rate of 23 percent over the next five years, reaching $4.8 billion in revenue by 2012. In contrast, by 2012, CD sales will be reduced to $3.8 billion.
“This is the end of the music industry as we know it,” said James McQuivey, vice president and principal analyst at Forrester Research, in a statement. “Media executives eager to stay afloat in this receding tide must clear the path of discovery and purchase, but only hardware and software providers can ultimately make listening to music as easy as turning on the radio.”
McQuivey, a former professor at Boston University, tells record executives to cheer up because there are ways to rise from the ashes. He says first, the industry should quit fooling around with music subscriptions and ad-supported models. People want to own their music and downloads have won. Only 7 percent of adults on the Web say they have ever tried a subscription service, according to the report.
In a final note, McQuivey suggests that music artists, who have historically looked down their noses at advertising, had better change. He says the industry should rip a page out of NASCAR’s playbook.
“Artists who used to pretend that their platinum album success was really about their “art” will no longer have that luxurious pretense because labels won’t sign them unless they agree to a barrage of sponsorship opportunities,” McQuivey wrote. “There will eventually come a day when Chips Ahoy will contend with the Keebler Elves over who can be the official cookie of the Taylor Swift world tour.”
Yet another lawsuit is pending in the continuing saga of major labels and the RIAA focusing their resources on the wrong fight. It appears they think, for whatever reason, it will get them somewhere, but is it the wrong direction from where they should be traveling?
Warner Music Group is the latest to file a lawsuit, this time against the playable music search company SeeqPod.
Wired columnist Eliot Von Buskirk writes in a recent article:
“Rather than attacking SeeqPod, the labels should view it as a template for how to make money on the internet, which isn’t going away any time soon.
The labels could even harness SeeqPod’s search technology to offer music services far more comprehensive than the ones licensed today.
The music industry would become “Google-ized,” deriving revenue from other products associated with music, rather than music itself.
With music sales continuing to decline, SeeqPod’s attempt to Google-ize the industry could be a perfect fit for the labels’ much-vaunted 360-degree deals, which emphasize merchandise, ticket sales and other revenue streams.
The question now, as it has been since the early days of Napster, is whether the labels are flexible enough to survive the free-music age.
Seeqpod may be more of a publishing/performance rights issue, but Eliot’s viewpoint makes sense. Rather than trying to protect a system that is becoming outdated, we should be embracing cutting edge solutions to cutting edge technology. Check out the full article here.
……without reading about the dilemmas of the music industry. On two separate flights (American & Northwest), in two different flight magazines. The first is an American Way article on the problematic future of the music business. The second is from NEA World Travler on how former artists are taking their personal experience into the ever changing music business world. Both good reads. Without the peanuts though.
Arbitron and Edison Media completed a study that noted a nearly even gender split between male and female US podcast listeners, with 25- to 34-year-olds making up the largest single age bloc with 24% representation in the study.
Podcasts are becoming more of a tool in reaching those “self broadcasters” of content and this particular research shows that the podcasters aren’t as young as most thought.
Go here to check out the study and charts.
I went to see the IMAX U2 3D last night. It was completely amazing! The hour and a half film was shot at a stadium show in South America. It was as moving as their live show and the energy was authentically powerful.
Obviously, being able to attend one of U2’s concerts would be preferred, but this explosive multisensory experience is the closest you can get. I hope this is a trend in film making, because I would have no problem handing over $15 to see another show like this from a multitude of acts. If you like U2 at all you must check it out!
The only thing I would have changed is to have the surround sound louder. Maybe one day soon we’ll be able to bring our own headphones to plug in or they will install controllable speakers in each seat back. Regardless though, it was fantastic! I will see it again.
Here is the official web site: www.u23dmovie.com
Chris Anderson at The Long Tail has written a piece about how he has moved from listening to the radio to customizing his listening via podcasts on his iphone. He writes about NPR specifically, but then makes it an industry wide subject. Do you agree with his predictions? Why or why not? If you do, how do you challenge or utilize the rise of “personal broadcasting”?
“Now that I get my radio via podcast, I don’t have to take the bad shows with the good. I’ve got an a la carte menu, and I assemble my own schedule with what I want and when I want it”
“But look at the arc of history here. The podcast model is getting cheaper and more ubiquitously available (who doesn’t have a cellphone?), and it serves individual needs and taste better. Meanwhile the broadcast model, which is all about one-size-fits-all taste, is based on human labor costs and costly transmission equipment and is only getting more expensive. You can see how this story ends.”
“My shifting of funding from the general (radio station) to the specific (show) tells me that radio is going to get microchunked, just like the rest of media. The more granular, the better. We’re about to find out where people’s loyalties really lie.”
The entire post is here.
HD Radio is a topic I want to discuss a great deal on this blog as we move along. What are the implications of HD Radio? Is it a viable medium that can compete? Will it make a significant impact in the marketplace? What are stations doing in its development? Many questions are arising as the debate continues. Following is an article tackling some of these questions by Larry Rosin from The Infinite Dial.
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“I Want My MTV.” Probably no message could have been more powerful in the adoption of cable television. It got millions of teenagers and others to know that they just had to get cable television.
What can the radio industry do to get people to “want their HD?” Read the rest of this entry »
Ever stop to think about the newest generation and what their reality of the world is and how it will impact them as they grow up? An interesting article from Media Week on what the implications could be as it relates to media and entertainment. Check it out here.
U2 manager Paul McGuinness recently raised a lot of music industry eyebrows with a speech in which he pushed for greater regulation on access providers. McGuinness, speaking in Cannes, pointed the finger at tech manufactureres and ISP’s when he said, “Network operators, in particular, have for too long had a free ride on music — on our clients’ content………..It’s time for a new approach — time for ISPs to start taking responsibility for the content they’ve profited from for years.”
The speech full speech is here.
