maandag 29 oktober 2007

Dave Goldberg to Record Labels: No DRM, Please

By now you’ve probably seen the news that Yahoo! Music’s General Manager (that makes him my bossman’s bossman), Dave Goldberg, urged record labels to ease back their insistence on DRM yesterday at the Music 2.0 conference. I was in the audience and quite proud to hear such a statement come from the head of the business unit for which I work as I agree wholeheartedly with him (note my post “On DRM” from last June). You can read about Dave’s statements elsewhere (Slashdot, c|net, Digital Music News, Digital Music Weblog, A VC, etc), but here’s a few interesting points/quotes from my notes:

On-demand (digital downloads and subscriptions) are not the entirety of the “music business” online. The business of buying CDs, cassettes, digital downloads, etc is about $30B globally, while media supported music businesses (radio, music videos with ads, etc) is about a $40B business globally. Yahoo! Music is in both businesses.
Despite tremendous progress of legal, for-pay music services, the mainstream digital media consumer today is still listening to CDs, Internet radio, and using P2P services. 80+ percent of the music on iPods is from ripping and 3% or less is from legal digital services.
The playlist is key to Yahoo! adding value to digital music; it’s a unit of currency for users to create and share music with each other. Dave also gave a nod to Web 2.0 at Music 2.0, pointing to Web services as a way we will go “beyond the media player” with our music offerings this year.
Exploring ways the music industry could help move the pay market forward, Dave asks the labels to lighten the DRM requirements. “DRM is not a consumer value proposition, it’s a consumer cost. It creates a nice barrier of entry for the tech companies, rather than something that’s beneficial to labels, artists, or consumers.” In the Q/A session after his keynote Dave pointed to eMusic as a service which offers MP3 files as part of their subscription, files which are easily burnable and play just fine on the iPod. Due to restrictions from the major labels we aren’t able to offer hit content in a similar fashion with Yahoo! Music Unlimited. He reminds us that the major labels are selling DRM-free content every day in the form of CDs. I agree with Dave. DRM definitely has a cost, and eMusic is showing that consumers are willing to pay a premium price for unfettered access to digital media. What value is DRM providing in our service? What is the cost? Is it worth this cost?
What Dave is really asking the labels to do is to experiment along with us to grow legal music services as a category. Legal services are a very small percentage of the downloading activity on the Web, yet studies tell us people *are* willing to pay for high-value content and services. The larger subtext of the “No DRM” message that got headlines is: help us build great legal services for users, don’t hold us back.
Yahoo! Music served 4 billion videos last year (which, if you believe another figure that 17B videos were served on the Web last year, Yahoo! Music videos were fully 20% of the Internet’s video traffic in 2005).
Ironically, I went from Music 2.0 to UCLA’s Anderson’s school to participate in a panel about DRM, where I talked way too much. Like Jack White said, “Any man with a microphone can tell you what he loves the most.” That was me. Sorry, y’all.

Oh, and, sorry this damn post took so long. I had to fly up to the Yahoo! offices in Sunnyvale for some meetings today which, after the UCLA thing last night, left me no time to post about this. My loss, I missed a whole day of net buzz and maybe even a /.-ing for ymusicblog. That is teh suck. Damn day job.

The day the music industry died

There is no money in recorded music any more, that’s why bands are now giving it awayRobert Sandall
Having waited four years for their heroes to finish another record, Radiohead fans were understandably excited last week to learn that the band’s seventh album, In Rainbows, will finally be released on Wednesday. But what really rocked the fanbase – and heightened the air of gloom enveloping the global record industry – was the news that In Rainbows could be preordered and downloaded perfectly legally for as little as 1p at Radio-head.com.

Currently out of contract and thus entitled to dispose of their recordings as they see fit, one of the most popular bands in the world had decided to let the fans decide how much their latest album was worth. An MP3 file of In Rainbows would have no price tag. Honesty boxes, it seemed, were the new rock’n’roll.

If the Radiohead faithful appeared somewhat nonplussed by this move – “The danger is that people will stop seeing their music as important,” one fan posted in a blog; “I will gladly pay $20 knowing the artist will get the money,” pledged another – the band’s strategy was anything but mad, and not even that revolutionary. Last week the Charlatans announced they would be giving away their new album as a free download. Earlier this year another rock band, the Crimea, did the same.

In July Prince arranged for 2.5m copies of his new album to be cover-mounted on a Sunday newspaper and issued several hundred thousand more free of charge to anybody attending his London concerts in August. The scale of this charitable epidemic can be measured by a quick browse of the Free Albums Galore blog that lists more than 800 albums by a range of artists – from the Beastie Boys to some unsigned metal bands – all of which are free to download.

Related Links
Radiohead: In Rainbows
What looks like commercial suicide is, in today’s reality, sound business sense. Records, CDs or downloads now have all become downgraded to the status of promotional tools – useful to sell concert tickets and fan paraphernalia. While there is still good money to be made in music, and particularly on the concert circuit, the record business – blame it on piracy, too many CD giveaways or the advent of the recordable CD – is a busted flush.

A revealing story doing the rounds in America tells of a young rock band who decided to stop selling their CDs at gigs after they discovered that by offering their CDs for $10 they were cannibalising sales of their $20 T-shirts. The truth now is that a rudimentary cotton garment with a band logo stamped across it that has probably been manufactured for pennies in a Third World sweatshop costs about twice as much as an album recorded in a state-of-the-art western studio. And even at that price, recorded music isn’t selling.

Album sales are currently in freefall all over the world. The 10% drop in the UK over the past year is dwarfed by a 15% slide in the US, 25% in France and a whopping 35% in Canada. The bankruptcy this summer of the CD retail chain Fopp, HMV’s announcement that its profits halved in the first six months of this year and Richard Branson’s recent decision to dump the Virgin Megastores – which have reportedly lost him more than £50m in 2007 – are only the most visible signs of a crisis that has rocked the music industry on its axis.

The point isn’t just that people are buying fewer CDs; they are paying as much as two-thirds less in real terms today for the music they listen to on their iPods than they used to when the compact disc first took over the market. Twenty years ago a chart CD cost about £14. Today you can buy the same in a super-market for £9.

The online market may have grown recently, but not enough to fix the hole. Here, too, margins have shrunk. A download of a single track now costs 79p against the £4 a CD single cost in 1999.

The impact on the bottom line of the record labels has been catastrophic. When EMI’s subsidiary Virgin put out the Spice Girls’ debut album in 1996 the company cleared roughly £5 in profit on each copy sold. That margin has since shrivelled to around £2 – and only then for albums that are significant hits. Industry insiders estimate that only one of the new British acts that has “broken” in 2007 – the pop diva Mika – will actually make his record company any money.

This has not gone unremarked in the City. When the private equity firm Terra Firma bought EMI recently it paid about a third, in real terms, what the company nearly fetched 10 years ago when a sale to its competitor Universal was mooted. That decline mirrors what has happened over the same period to the retail price of new CDs, and it also reflects the scale of the cull of EMI’s workforce, which has shrunk in 10 years from more than 10,000 worldwide to about 4,000 today.

The mood of panic is palpable, and there are no obvious solutions in sight. In America the recently appointed co-chairman of the Columbia label Rick Rubin, formerly a record producer by trade, has spoken of his ambition to turn the company around by refocusing it along the lines of a cable TV business – making Columbia’s entire catalogue downloadable to customers who pay a monthly subscription.

Another senior figure at Columbia has dismissed this plan as “potentially the last nail in the coffin”. The recent establishment of a “word of mouth” department at the label reflects the loss of control felt within a business that has lost a grip on its market.

One – fading – hope of the major labels is that they can somehow grab a share of the profits their artists make elsewhere. When Robbie Williams resigned to EMI in 2002 for a reported £80m this new deal guaranteed the label a piece of the action from Williams’s highly lucrative concert tours. But many young artists since have become wary of such composite arrangements. Some have decided to bypass the major record companies altogether.

One of the hottest new names to emerge here this year, the rave metal band Enter Shikari, refused to sign to anybody and in March released their debut album, Take to the Skies, on their own label Ambush Reality. In the past these tiny, so-called indie labels have usually been funded by majors anxious to covertly purchase credibility for their products with a young audience traditionally distrustful of big music corporations.

But that is not how it is with Ambush Reality. The marketing of Take to the Skies was largely down to the band themselves, who have played nearly 700 gigs since forming in St Albans in 2003. Word of mouth, coupled with a band presence on MySpace, has done the rest.

In November 2006 Enter Shikari became only the second unsigned act after the Darkness to sell out the leading London rock venue the Astoria. Take to the Skies entered the album chart at number four in March. In May they undertook a major tour of America – the first British band to do so without the support of a big record company.

This upending of the music business was neatly predicted back in the 1990s by the guitarist of the American hardcore band Anthrax who described their new album as “the menu; our concert is the meal”. This comment recalled the Beatles’ producer George Martin’s observation about his protégés’ first LP, Please Please Me from 1963. It was, Martin said, “just a memento of a concert”. Now, likewise, bands sell CD recordings of their performances at the end of the night.

The reprioritisation in recent years of live music over the recorded variety has been dramatic. Attendance at arena shows rose here by 11% last year. By the time 2007 bows out, 450 music festivals will have taken place in the UK.

Every week brings news of another frenzied assault on the box office. Last Monday Ticket-master reported that 20,000 tickets for the Spice Girls’ first reunion concert at London’s O2 arena in December sold out in 38 seconds, with 1m fans registering to buy. Three weeks back more than a million clamoured for seats at the forthcoming Led Zeppelin reunion. Glastonbury disposed of its 135,000 weekend passes for this year’s event within two hours – taking more than £21m in the process.

Ticket prices, especially for Alist artists, have soared as the price of CDs has tumbled. You could have bought Madonna’s entire catalogue for less than half what it cost to see her perform at Wembley Arena last summer where the best seats in the house went for £160. With the Rolling Stones at Twickenham a view from the pitch would have set you back £150.

Now that live music rules, nobody bothers to complain about what it costs any more. Euphoria at the news earlier this year that the Police had reformed obliterated all concerns that it cost between £70 and £90 to see them play at Twickenham in September. I spoke to many fans at one of those gigs; not one complained about the ticket price.

In the light of these numbers, the probability is that music fans now are spending more money on their passion than they were in the heyday of the CD. They have rediscovered an ancient truth that music is, at root, a communal experience as much as it is something that goes on between your ears.

Interestingly the band now tolling the death knell of the record industry, Radiohead, seem currently to have mixed feelings about live work.

“They probably will be playing some dates next year,” a spokesman said last week. “But Thom Yorke doesn’t like touring much.”

woensdag 17 oktober 2007

Sony BMG And MySpace Sign Licensing Agreement

October 16, 2007

MySpace and Sony BMG announce a new licensing agreement allowing for music videos, songs and other content from Sony BMG artists on the social networking giant. The deal also allows the label and MySpace to share in sponsorship and ad revenue.

"MySpace has always served as a powerful promotional platform for music and we’re pleased to work with Sony BMG to take it to the next level," said MySpace CEO/co-founder Chris DeWolfe. "We look forward to working with Sony BMG and the rest of the music industry to enable people to share their love of music with one another through the next generation of MySpace music services."

"We are happy to be working with MySpace as we continue to develop new approaches to doing business online," commented Thomas Hesse, President of Global Digital Business & U.S. Sales for Sony BMG Music Entertainment. "This new effort is a great way to build new audiences for our artists, bring value to fans, and offer exciting new opportunities to advertisers. We look forward to working closely with MySpace as we roll out this ambitious new project."

Source: FMQB.com

Report: Apple To Cut Price On DRM-Free Tracks

October 16, 2007 - Digital and Mobile

By Antony Bruno, Denver

Apple confirmed it will indeed lower the price on its DRM-free tracks to 99 cents, from $1.29, on all iTunes Plus music. Apple CEO Steve Jobs confirmed the move in an interview with the Wall Street Journal.

Jobs told the WSJ that the iTunes Plus option, which offers unprotected tracks at a higher-quality bitrate than other tracks on the iTunes service, has proven “very popular,” but gave no specific reason for the price cut.

The leading speculation is that the move comes in the face of Amazon.com launching its DRM-free music service with prices as low as 89 cents a song, and albums for as low as $5.

Source: Billboard.biz

Report: iTunes To Expand DRM-Free Offering

October 16, 2007 - Digital and Mobile

By Antony Bruno, Denver

Apple continues to dip its toe with variable pricing. Citing sources close to Apple, tech blog Ars Technica reports that iTunes will expand its DRM-free music plan, iTunes Plus, with additional tracks from a variety of independent labels. However, unlike the DRM-free music provided by EMI Music Group, these tracks will remain 99 cents. The announcement is expected sometime this week.

EMI's DRM-free tracks currently cost $1.29, in part because they lack protection but also because the files are of a higher sound quality than other tracks sold on iTunes. However Arts Technica reports that Apple has plans to lower EMI's music down to 99 cents as well, although it is unclear whether that move is expected.

It's also unclear at this time whether the price drop will be a result of a new wholesale deal between EMI and Apple, or if Apple is simply sacrificing it's profit margin on the iTunes Plus tracks to get costs in line with DRM-free competitors like eMusic or Amazon.com. Stay tuned to Billboard.biz for more details as they emerge.

Source: Billboard.biz

woensdag 10 oktober 2007

Digital Music Direct to the Customer

Mark Cuban is a smart guy. He dashed off a couple of ideas here that make a lot of sense. I completely agree with him that the big copyright holders (labels and publishers) can act as "networks" and bring their music to market. It is interesting that none of them are thinking this way at the moment, and the old way of thinking is guiding the day. Namely, why do they need aggregators like Apple's iTunes to replace the failing Tower Records of the past? Why can't the labels go direct to the customer with their product.

I have often said that when Napster 1.0 first emerged, the labels realized that they actually had customers. And those weren't Wall Mart and Target, but people like you and me. And instead of embracing these consumers, communicating with them, drawing 'em into the fold, marketing to them - they decided to sue the people. The legal people overran the marketing folks, and the chance for creating a direct to consumer business slipped through their lawyers hands.

It has taken a while to grasp the totality of all this, but perhaps someday soon, a large music content company will decide to get into the business of marketing to consumers, and creating an infrastructure to support and make it happen in the digital age. Can't wait to see that happen.

Digital Music Rules of the Road for Artists

Here is an useful list for success in the immediate future:

- Utilize MySpace and other websites to its full potential and don’t be afraid to “give your music away for free”. If one million people listen to your songs online, don’t see it as you just lost 1 million dollars in potential sales. See it as you just got radioplay in 100 markets.

- You have to learn new ways of viral marketing, including widgets and blog search engines and don’t be afraid to experiment with putting your music in new places and contexts.

- Look at what the most progressive record labels are doing with their artists, like Canadian Nettwerk and Barenaked Ladies and try to copy it.

- If you play a live gig, make sure people know about it. It may seem like a no-brainer, but it isn’t always. I don’t know how many good shows I have missed just because I didn’t know about it. Do all you can to get in Flavorpill and other online publications. Send emails to everyone you know and make sure everyone that shows up signs your email list.

- Press vinyl copies. This might be the last thing you think about doing, but DJs love vinyl and so do music lovers. Press a few copies and distribute them to your favorite DJs, clubs and critics.

- Don’t sign a record deal. This may seem like a weird suggestion, but stay indie as long as possible. You want to make sure the odds are in your favor when you finally sign with a big label or it can be a blessing in disguise.