Archive for: music
Qtrax will be sued before they even launch if they arent careful. Qtrax is a music P2P service that is supposed to have launched a few days ago, but the site is online and no one can download their software. Plus, it has been reported that Qtrax dont have agreements with WMG and EMI when they have specifically announced that they have. So strange!
The LA Times reported that Qtrax has not signed with EMI or Warner Music Group and they are only close to coming to terms with Universal. So why are they going around saying they already have these contracts? I really think this product could be a lost effort even before it launches.
There has been a lot in the last few days about the announcement by Last.fm about there new business model. Their business model has moved from 30 second clips of songs to full length streams. This however has a restriction of only 3 streams per song per artist. This is a major negative point with the new business model, because once you really get into a song I know I tend to play mine 10 times a day. All these announcements came on the back end of Last.fm signing content agreements will all four major labels.
Artists will be monetized by these streams through the advertising revenue made by the site. I know for a long time Imeem has been attempting to do exactly the same business model and they have had a great deal of success with this. Imeem now has all four major labels signed up and they are making a great deal of money off of the advertising model. Last.fm has also announced that their new revenue model is not exclusive to only the major labels, and anyone on Last.fm can now opt-in and stream their full music for very low royalties.
This all being said I would have really like to see Last.fm slightly change their model. I dont see why there is a limit on the amount of streams per song, unless they have an additional model that allows members to sign up at an additional fee to be able to play the song unlimited times. It is also good to see that Last.fm has partnered with 7digital to offer the music downloads, however a long term solution for Last.fm must be to kill this partnership and enter the download market independently, this might even be a threat to iTunes!
I am still not convinved by Last.fm. The have a great piece of technology in the scrobbler, but I dont think their professionalism on that software has carried over to the site, monetization options and also profile and social network strategy.
Amazon is getting serious about their new Mp3 Download Store. After last weeks announcement that they were adding DRM free tracks from the Warner catalog, they are now adding Sony/BMG to their collection.
That’s right, Amazon has just announced a partnership with Sony/BMG. This means Amazon MP3 Will Be the Only Retailer to Offer Customers DRM-free MP3 Downloads from All Four Major Music Labels. Im very interested to see where this takes the company in terms of their market share. I can see Amazon Mp3 continuing to grow and gaining more market share, but i dont think it will really be a serious contender to iTunes. If anything Amazon Mp3 helps Apple grow, because at the end of the day Apple has a complete package and the Mp3’s sold on Amazon need to go somewhere and most of the time it is on to an iPod.
Here are the views of other sites around the place about Amazons’ new partnership:
What has happened to Trig.com. The site is currently down and they have left the following message on their site, “Trig.com is down since our tech monkeys are moving all the servers to a new and improved location. We’ll be back by the end of the week, and performance will be greatly improved!”.
Well im not to sure if this is a site actually moving or heading towards the dead pool. The site is a very well designed social network that is try to gain traction on the myspace culture. It is quite similar to Virb. According to Compete, Trig is on the downward slide only gaining a little over 14,000 people USA based per month.
I made my prections for 2008 about 2 weeks ago and already Napster seems to have listened to me and they are now more open to DRM free solutions. Napster just announced that they will be abandoning DRM completely in its music download store in the second quarter of this year. Napster will still however apply copyright protection to its subscription service, but when a user purchases an a la carte download the files will no longer be in DRM WMA format, but in Mp3 format.
This is a very positive move for Napster because they are currently in approximately 5th in download store ratings, behind iTunes, eMusic, Amazon and Rhapsody. This move and forward thinking is slowly getting pushed upon online download stores from the major record labels, and it is very refreshing to see Napster is trying to improve their position in the market and jumping on board the DRM free before some of the others.
U.S. music sales dropped another 9.5% last year compared to 2006 despite a 44% increase in digital track sales according to Nielson Soundscan.
500.5 million albums sold in various formats last year down 15% from 2006. Only 10% of album sales were digital. But the drop re-calculates to 9.5% when sales of digital singles are counted as 10-track equivalent albums. 844.2 million digital tracks were sold in 2007 compared to 588.2 million in 2006.
iTunes became the third-largest music retailer in the U.S. in 2007.
Insound.com has been acquired by Warner Music Group. Well the site was actually acquired by The Alternative Distribution Alliance, which is an independent distributor owned by Warner. This is quite a good acquisition for the ADA because Insound has a very good back end infrastructure that can be exploited by ADA to provide their own digital store. The site itself will continue to be operated by co-founder Matt Wishnow, hence a good deal for both parties involved.
Napster in a very interesting move has raised their monthly subscription fees. In true Napster style this was done in an email sent to subcriber, which stated the non-portable subscription rate will increase from $10 per month to $13. A 30% increase! Although this price change is Napsters first in four years, I really cant see this doing them any favours in the market that they are drastically behind in at the moment. These prices changes will take affect on January 30. I made a very bold prediction and said that they will be heading towards the dead pool by the end of 2008, so im very keen to see how much of an affect this price increase will have on the company.
In the last few days I have been reading some great articles over at RWW on the music industry, where it is headed and how Apple could potentially lose its dominance. These articles have fueled great debates on the RWW site and here is my take on the whole music industry.
Having the Complete Package
Josh wrote a great article at RWW that basically talked about Apple and how they are slowly coming under fire from Amazon and Zune. I think the situation is very straight forward until someone really tries to shake up the market!
Apple currently has 70% of the portable music player market and approx 85% of the music download market. Apple additionally has a very strong brand awareness and loyalty. Apple are very smart at what they do and for companies who only offer part of their package, it will be very difficult for them to compete and actually grab any market presence. Im sure we will see companies like Amazon attempt to attack parts of the music market but if they succeed in any particular area (such as cut pricing of downloads and DRM free downloads), then Apple will just calculate the right times to cover the advances and offer equal services. At the end of the day Apple knows that they have brand loyalty like no other and services such as Amazon Mp3 in the long run will only help them sell more iPods or Macs, because these people who download have to put their music somewhere.
In terms of Zune they have been receiving some good reviews for their new product, however this is Microsoft we are talking about. Microsoft has long been serial monopolists and Zune is not going to change that fact. Apple have of course AAC files that can only be played on iPods and Microsoft have exactly the same with the Zune.
At present no one can challenge Apples dominance and I dont think anyone will challenge them for at least another 5 years. Microsoft with Zune have just launched a product and service exactly the same as Apple did years ago with the iPod and iTunes, there is no difference to me. Amazon however, have launched a service that was need, a service that offers DRM free music not via subscription and via a cut price. Amazon hit a small gap in the market that was needed, but does this mean they will get any where near iTunes? No chance in hell!!
Future of DRM
I predict that 2008 will be the year that all the big 4 (Sony BMG, Universal, Warner and EMI) start selling DRM free music more openly. Amazon has Warner on the books and iTunes has EMI already signed up with Warner to come on board very soon.
In 2007 there have been lots of experiments with the music business model, such as Radiohead and also Amie Street, but have they proved anything? Yes I think they have. The Amie Street business model of offering music low and then prices increase when the track becomes popular has proved so successful that Amazon has bought into the company. Radiohead proved that selling digitally on a website can be just as popular as selling on the huge iTunes.
Conclusions. Overall, I really think customers are willing to pay for good quality music, especially DRM free music that can be transported to any portable music player, but only at the right price! Im still not too sure if we have found the right price yet. This is mainly due to the big 4 wanting to make a good margin on their sales on iTunes, thus prices are currently high. I cant wait to see a service that skips all of the hassels and just offers a simple service that sells good quality mp3s DRM free at a price such as $0.50 per download.
What Needs to Happen to Break the Music Industry
Currently, I am CEO of a company which is entering the music space but focusing on music licensing and distribution. Hypothetically, if I had the resources and money to launch a product in the music industry that would compete with iTunes and Apple, I would do the following.
- Digital music downloads need to have a copyright system in place that actually tracks who the music is sold to and if the music is transported between computers or players it just needs to be unlocked via a password or something similar.
- Offer a DRM free music store in which the music can be transfered to any portable music player
- Offer a reasonable price and optimize the transaction fee the third party takes.
- Then offer other vertical services such as videos, games, ebooks and more.
- Finally, move into horizontal integration, such as a revolutionary portable music player, online and satellite radio stations and many more ideas.
This is the only way I can see someone breaking the Apple dominance and taking at least some share of the music market. If you are a VC and would like to fund my idea, please get in touch with me! haha. I love a challenge!
The music industry is currently very close to my heart, especially on the internet. This is mostly due to the new project our company will be launching very soon, RouteNote.
With all the recent talk about the music industry and how it is suffering, there has been a few companies trying to push the envelope and develop a new model by which the industry will adopt. These models are ad supported and they come in different sizes and shapes. Within this post I will discuss these companies and there endeavors to change the industry their own way.
Imeem: Imeem is a social network that focuses on providing services and platforms that are fully supported by the advertising generate throughout the site. They are currently based in San Francisco right across the road from Snocap. Imeem is primarily focused around the music industry and they have been signing a lot of distribution deals with companies such as EMI. Imeem has also joined the new Open Social platform from Google, which is a big step forward for developers. Imeem doesnt allow users to download all the songs on the site, but it does pay artists for the amount of streams they receive compared to the overall streams on the site.
Qtrax: Qtrax is still yet to launch and is based on a innovative p2p file sharing platform. Qtrax has already signed deals with Universal, Sony/ATV, Warner Music Group, The Orchard, EMI Music Publishing and EMI Music, TVT Records, Go Digital, ASCAP and BMI. The Company is based in New York, New York and Melbourne, Australia. This platform pays artists royalties based on advertising, but they dont disclose much information at present.
Ruckus: Ruckus, the premier digital entertainment service for colleges and universities offers a myriad of ways for college students to connect with one another. Currently Ruckus has over 3.2 million tracks licensed in its catalog, from a mixture of indies and major labels. Ruckus dont really talk to much on their website about how they pay artists but im guessing it must be from streams on their player. Im not even too sure if you can download any of the songs from their catalog and be able to place them on your iPod!
These are just some of the major players in the ad supported music space at present, but there are several other notables, such as Spiral Frog, Slacker, RCRD LBL and We7.
I have been reading various articles this week about CDBaby and how they broke their deal with Snocap. I have actually seen all of the CDBaby figures on how much their artist were selling on Snocap and the figures weren’t too bad. However if you are a music aggregator and trying to work with Snocap it is a little more difficult than just providing distribution to online stores. The issues with Snocap is the amount of time it takes to implement a widget store and which songs will need to be selected.
CDBaby is now offering for their artists to sign up with Snocap individually and receive the first year free. If however this doesn’t work for you then make sure you head over to RouteNote which will be launching in a few months and already has Snocap signed as a founding partner. RouteNote will also not charge any signup fees and can license your music for TV, Radio and Advertising at the same time.
RouteNote has just signed a deal to provide our content on Audio Lunchbox. Audio Lunchbox will sell our content on their sites and services for the next three years. Audio Lunchbox has a licensed catalog of over 2 million songs in 79 sub-genres. Audio Lunchbox is the only service on the web to offer both a la carte and permanent subscription downloads side by side. Well thats what they claim.
There has been a buzz around the blogosphere in the last day or so about Pump Audio and how they have finally been intergrated with Getty Images. As most of us know Pump Audio was purchase by Getty Images for about $42 million. Pump has a catalog of approx 20,000 independent artists in which their music is licensed for use on the Web, TV or Radio. Pump’s customers range from major TV shows like The Colbert Report to advertising agencies and podcasters.
Getty yesterday announced that they have re-launched Pump Audio under the name Soundtrack on the Getty site. This must be the most over-hyped event from Getty in a very long time and I cant believe the blogosphere (Techcrunch, Mashable) has jumped onboard. It is as if Soundtrack was a completely new product and it has just be released, but that is the complete opposite to what has really happened. Soundtrack is a tool designed by Pump Audio most before the purchase and I have been using Soundtrack for the last six months or so. All Getty has done is place a link on their site to the Soundtrack tool. So why the hell is this getting blog and press coverage??
