Free Music?

The music industry continues to grapple with streaming and new subscription models and is generally shrinking and what is a volatile market. The pirates are still here, but so are a growing number of services whose legitimacy is often hard to determine. Free music and file sharing can be traced back to Napster and those that followed such as Kazaa and The Pirate Bay. Free music is not going away and making sense of where we will end up and balance the market is often hard to determine.  

This week we were introduced to a new Android app ‘Music Download Pro’. It looked and behaved like a music download service allowing extensive search against artists, tracks, albums etc and the results were quickly displayed and were quite impressive. You can then sample a track or download it and the result was quite impressive regarding the speed and quality. It also remembered your downloads in the library, so you can replay them at your will. The challenge we found was that there appears to be no pay slot and the app itself was free, so where’s the money?

Spotify continues to lead the streaming music market and has a sizeable audience across Europe and the US. Its Premium subscription service has a growing following with users willing to pay a monthly fee to receive ‘as much as they can eat’ ad free music. The free ad funded model still works in parallel and they do have a model that everyone can see and which importantly pays royalties.

We now read in Lifestyle that 68.6% of Japanese spend no money on music downloads. We can’t substantiate the validity of the claim, or the basis of the sample surveyed, but the Japanese music market is claimed to have narrowed to the big hitters and ‘X Factory’ clones. The alternative revenues from ringtones, concerts and merchandise do offer new or increased revenues and the market mix is obviously in a state of digital flux, but if consumers reject the pay model – where’s the money?

So where could we be heading?

There will be various revenue models that are based on the artists ability to turn their fans into money. It’s not about selling records but selling stuff to fans. Will artists now make more money from product endorsement of a perfume, car, watch etc and their image, than they make from music royalties? We often assume artist will all make money from concerts and merchandise but does the celebrity factor make a bigger contribution in the future and what does that mean to the music produced? Do we now accept the fabricated stars as musicians or merely as celebrities?

Meanwhile we continue to download music for free via the likes of Music Download Pro and think little of who’s paying for it.

Wolfgang's Vault: Streamed music With a Difference

When we spoke to a musical friend Tim Hardy in Sedona, Arizona and mentioned we had just been looking at Spotify and enjoying the streamed music, he suggested www.wolfgangsvault.com. Today we experienced that and were suitably impressed.

Wolfgang's Vault owns one of the world's largest collections of original concert posters; hundreds of rock, political, sports and comedy posters all for sale in mint condition, and many are signed by the headline performer or the graphic artist. These like the promotional and backstage memorabilia, passes , concert tickets, tee shirts, books, magazines date back as far as the 60s and will appeal to many memories of the rock heydays. Read record reviews and in-depth articles about the greatest performers of yesterday and today in their Crawdaddy magazine going back to the sixies and now an online webzine. There are also many concert recordings available and streamed for free within the vault. You will find thousands of legendary live recordings with hundreds available for download and the Vault is also available as a free app on iPhone.


The list of streamed music free to listen to includes live tracks from concerts by the likes John Lennon live at Maddison Square Garden in ’72, or legends at the Fillmore such as the Grateful Dead in ’66, Jimi Hendrix in ’68, Led zeppelin in 69, or Derek and the Dominoes in ’70, or David Bowie at Montreal in ’83, U2 in ’83, right up to the White Stripes today. The list is vast and provides something for everyone.

Where did all this come from? Wolfgang was Bill Graham , a music entrepreneur who commissioned works of art to promote his shows and he overprinted and preserved the exceptional art, photography and recordings that came from these shows. For over 30 years, his company accumulated and stored this material in newly minted condition. The vast majority of material in Wolfgang's Vault comes from the original archives of 'Bill Graham Presents'and music and concert reviews.

So why do we report about it here and does it have any relevance to today’s digital explosion? We believe that it demonstrates that its digital content often needs context to provide a rounded experience. If we look today's musicians they are now signing up to Live Nation and controlling the concert and merchandising and Biil Graham understood this back in the 60s. Wolfgang’s Vault will stream rare concerts for free and sell merchandise and memorabilia today. It was George Martin, who when asked in the 60s where the value was, said ‘the album was the menu and the concert the meal’.

Thanks Tim

Warner Rolls over to DRM Free

Until now Warner has been resisting selling music downloads in MP3 format without DRM. However this week they relented and signed a deal with Amazon. This raises the number MP3 files available for download via Amazon to close on 3 million songs. Major music labels Universal, EMI and thousands of independent labels had already signed large portions of their catalogues to Amazon. Only Sony remains in the DRM camp and the odds are they will roll over very soon.

Interestingly the recording industry had argued that DRM itself is not what makes some songs incompatible with some digital players, but the fact that there are different versions of DRM in use. The fact that Apple DRM was proprietary and not licensed to others was a major area of concern.

Amazon only sells MP3s, rather than a mix of protected and unprotected music on offer at stores such as iTunes and Zune.

What does all this tell the book industry?
· Multiple, complex and proprietary DRM doesn’t work and is not acceptable to the consumer.
· The major houses dictate the rules and never work as one so.
· The Audible model on audiobooks is not sustainable and is counter productive to the industry.

The industry needs to quickly establish the middle ground on formats and service before others dictate it to them. However this has been the challenge for the last few years and the reality is this consensus is difficult in an industry that is so fragmented and poor at collaboration.

The Cat is out of the Bag

The music business appears to be switching its business model so fast that it is in danger of really screwing itself. Imeem has now finalized a licensing deal with Universal allow it to position Universal songs and videos for free, on-demand, and interactive streaming.

Imeem has also completed licensing agreements with Warner, Sony BMG, EMI Music. Imeem is now using the catalogues to power an ad-supported business model that shares revenue percentages. Although it is a fresh revenue source for the record companies today it is not a substantial earner.

According to research group eMarketer, networking-based revenues will move from $900 million this year to over $2.5 billion in 2011.

The issue is not whether the model will work but how many will succeed and whether by introducing this the cat is effectively well and truly out the bag and never going back in. Imagine you stream all you want for free and then save the files and repackage them why would you ever buy anything again? The softweare to capture, convert and do this is here and available to today and sitting on a laptop near me. The risk is not that it succeed but that it doesn’t match expectations.

How do we reward the songwriters?

Music continues to loose its way and it looks more and more likely it will go DRM free and be free to consume on an ad paid model. 7digital the London based download store has dropped the price of its 3 million catalogue of MP3 tracks to 50p which way below iTunes 79p. Can you remember the original iTunes price point and do you care? Prices are tumbling, DRM is loosing ground and the record companies are all scrambling to do any deal that generates any money.

It raises the question of royalties and how the creators and performers get paid. The Songwriters Association of Canada (SAC) is proposing to charge Canadian internet and wireless users $5 per month to compensate musicians for revenue losses due to illegal file-sharing. They also propose the radical step of making the sharing of music on peer-to-peer networks legal. So its like a web licence fee you pay irrespective of whether you consume, or don’t, or even if you already pay a service such as iTunes. What next? Lets have a tax on connecting to the web or an extra levy on MP3 devices including PCs. Taxation models don’t work as they create administration which adds a cost and in turn dilutes net revenues and that is without proportioning out the spoils.

Let wake up and smell the coffee, music is changing both its business model and how it is being delivered. Let’s ensure the artists and writers are correctly rewarded through the revenues raised and not sold short by clueless record companies who lurch from one mind-boggling deal to another.

What does this mean to books? Not a lot today but it shows what can happen when the kids take control of the chocolate factory.

DRM is not the People's Choice

U.K. music download store, 7 Digital, reports that its DRM-free music downloads are outselling other formats by a factor of four to one. Given the choice, consumers prefer MP3 DRM-free formats. They claim that 78% of downloads are MP3 with no DRM. They also announced that over 60% of its 3 million strong catalogue is now available DRM free in MP3 format and is expecting this to increase to 100% in the next 18 months. 7 Digital do sell audiobooks and although the range is small they do have MP3 audiobooks.

The shift towards MP3 would appear to show the consumers prefer non proprietary formats that offer true interoperability. The shift towards DRM free clearly demonstrates the direction consumers which to follow and the increased size of the DRM free catalogue is given them the necessary choice.

Audiobooks may continue with a DRM proprietary format from Audible but if music continues to move it is hard to see this as sustainable. The question is whether Audible will move or entrench. What is becoming clear is that DRM as we know it today is transient technology and may well be replaced by an open ‘honesty box’ approach potentially supported by less restrictive technology such as watermarking.

One More Cup of Coffee Before I go

So where is the money in the music business? Where do artists make their bucks?
Yesterday the channel was clearly defined and the money came through selling records and although the model still holds water times are clearly changing. On the artist side we have seen Paul McCartney turn his back on EMI and sell his latest album through Starbucks, Prince gave further sign of the times with his Mail on Sunday giveaway of his latest album and now we hear that Madonna wants to get out of her Warner deal, even if it costs 50 million, and line up with her tour promoters. For the major acts bums on seats and merchandising make money adding music to this make better sense that leaving with the ailing record producers.

We have also raised the question on free ad paid downloads from Sprial Frog and the growing no DRM movement. Times certainly look bleak in the traditional music houses!
Now Starbucks plan to give away 50 million free digital songs to customers in all of its domestic coffee houses to promote a new wireless iTunes music service that's about to be launched in the US. Between October 2nd and November 7th their 10,000 U.S. stores will hand out about 1.5 million "Song of the Day" cards each day. The cards can be redeemed at Apple Inc.'s online iTunes Store for 37 artists which feature songs from the first two to sign on with Starbucks' Hear Music label Paul McCartney and Joni Mitchell along with Joss Stone, Dave Matthews, Annie Lennox and Band of Horses. The first song will be Bob Dylan's "Joker Man."

Starbucks will also start selling iTunes digital release cards that allow the download of a full album and bonus material. KT Tunstall's "Drastic Fantastic" will be one of the first two featured albums to be retailed this way. Starbucks also will offer a limited-edition re loadable purchasing card that includes two free iTunes downloads when customers register their cards online.

The from October Starbuck’s icon will also light up on the Apple iPhone whenever a user is within range of a Starbucks shop's Wi-Fi signal and consumers with the devices or a laptop with iTunes software will also be able to use the signal for free to browse and buy other iTunes music. This service will be launched in Starbucks 600 shops in Seattle and New York and in San Francisco in early November with plans for it to be in a quarter of its US stores by the end of 2009.

So what does this mean to the booktrade? We may see what many believe is the inevitable – STARBOOKS. In a crowded coffee market it is obvious that these savy retailers need to broaden their offer, build further loyalty and use their muscle to offer new innovative services. Do we think books are different? Today they may be but as digital options increase then so does the threat of the new entrant. As for the artist versus the author, who would have thought Stabucks would woo artists such as McCartney and Mitchell.

http://www.starbucks.com/aboutus/pressdesc.asp?id=790

Sign of the Times

On 1st July we wrote about the new Prince album being made free with the mail on Sunday and yesterday it happened. I managed to get the last copy at my supermarket and the album was certainly worth the cost of the paper. It’s a pity I can’t say the same about the paper but it was a great move.

Later in the day friends told me that they could get a copy so not only did the Mail sell more copy but no doubt they also had fewer returns.

For a Princely Sum

Do artists need traditional channels to market? Do they even need to play by the traditional rules?

We have already written about Stephen King who broke the rules with “Riding the Bullet’ and is now bringing his latest work out in Esquire. There are others such as Paul McCartney whose latest album is available from Starbucks. Now comes the latest artist to do they own thing, Prince.

Prince has been paid a reputed £500K to let the Mail on Sunday to freely distribute his new album ‘Planet Earth’ with every newspaper! Never before has an artist released their new album as a giveaway. Already HMV CEO Simon Fox has referred to it as ‘absolutely nuts’ and fears the move will further devalue its product.

The result is that the UK arm of Sony BMG’s Columbia records has now withdrawn from its global deal to distribute the 10-track album.

The move is brave, but now artists are not longer restricted by yesterday’s rules. The trick is to work with artists, not deride them and ignore them. After, Napster, Kazza, MySpace etc you expect the music industry to have learnt something by now.