Moconews.net has a couple of posts worth reading. One covers an interview by paidContent's Rafat Ali of John Faith, the GM and VP of MySpace Mobile at the Mobile Entertainment Live conference. About MySpace Music Faith said:

It’s launching in the next few weeks. It’s a free ad-supported streaming service, which let’s everyone become their own DJ. In the music space, we want to provide one on mobile, too, and we are aggressively looking into it....You still have a tight control on the distribution and revenue around that. We’ll be working with them to make a compelling MySpace mobile component in the future.

The other post covers a Mobile Entertainment Live panel with Michael Nash, Warner Music Group's EVP of Digital Strategy and Business Development, and Paul Smith, head of major label relations for Nokia. Plenty of commentary on Nokia's Comes With Music service, platitudes offered by both Nash and Smith for the others' companies and a few tidbits about new models. Said Nash, "There’s a philosophical shift that will be required that will be focused on this kind of access model." Very true.

Posted by Glenn at 12:30 PM | Link
|Comes With Music||Digital Music||MySpace|

A day ahead of an Apple announcement (some think a subscription service is on its way), news about updates to Microsoft's Zune are appearing online. Matt Rosoff at Digital Noise knows Microsoft very well and has a good post on the new features: 120GB capacity, ability to access Zune Store via WiFi hot spot, FM song tagging and integrated genre channels.

Nice improvements, but at its best the Zune device depends on the Zune Pass subscription service. Like Rhapsody and Napster, Zune Pass is going to have a hard time finding a large audience.

By the way, I canceled my subscription to Zune Pass a few months ago and I don't miss it (I had either Rhapsody or Zune for about four years). Between free streaming at Lala.com, my regular music purchases, 65 songs a month at eMusic, the occasional bargain album at Amazon.com, a hard drive filled with music and a few thousand CDs in my collection, I already have enough music. Paying for instant access to five million (or whatever) songs isn't worth it. That's a shame for subscription services, because a music junkie like me is a target customer.

Posted by Glenn at 3:07 PM | Link
|Digital Music||Zune|

A profile by the Wall Street Journal's Ethan Smith and a press release in Coolfer's inbox signal the official launch of RCRD LBL, an innovative new label created by Downtown Records and Engadget founder Peter Rojas. The label will offer free, ad-supported music. According to the WSJ, the label has signed up three sponsors thus far: Virgin America, Nikon and Puma.

Here's how RCRD LBL will work: The label will give away free, unprotected downloads of bands it has signed. The label has deals with 40-50 bands to distribute "a handful of songs" from each. Artists get a "modest" advance from the label instead of a share of ad revenues; advances range from $500 for a relatively unknown to around $5,000 for a more established name. The label will split revenue from licensing (TV, commercials) with the artists.

The songs will be downloaded at the RCRD LBL website, which is a basically a souped-up music blog. Though anybody can visit and download music, visitors can create a user account in order to leave comments and create customized RSS feeds. A media player sits in the upper right corner of the site. There are artist pictures and tour dates as well.

RCRD LBL has an "extended family" of labels that will "allow users to download exclusive, promotional and catalogue tracks" from the likes of Ghostly International, Dim Mak, Downtown, Kompakt, Dirty Bird and Warp labels.

In his article, Smith mentioned recent quotes by Pali Research's Richard Greenfield about consumers' belief that music should be free. Yes, some of them do. Now they have a legal alternative to acquire free music -- if they happen to like the music offered by RCRD LBL (read: indie rock and electronic). I believe this new model will be very successful in certain corners of the consumer world. While some people will continue to use terrestrial radio, CMT or NPR to discover music, those who already frequent music blogs for music will give RCRD LBL good traffic. But how much room for growth is there? The key to stardom for this business model is getting middle of the road consumers to visit on a regular basis. I wonder just how much potential traffic exists for music -- even free music -- that lies outside of the mainstream. Revenue from licensing opportunities will be very important.

Posted by Glenn at 9:17 AM | Link
|Digital Music|

Jupiter's David Card is not buying into the post-Radiohead hype that all music is yearning to be free. "Armchair economists, please stay home," he exclaims in reaction to a TechCrunch post about digital music's near-zero marginal cost of production. "By this remarkably oversimplified analysis, software, filmed entertainment, soda at McDonalds, and the classic example, high-end perfume, should all be free."

He's right. People throw around the term marginal cost as if average cost never existed and there is no such thing as a break-even point. (That publicist that was required in order for those computer programmers to ever hear of that artist? She cost a pretty penny. Studio time tends not have a zero marginal cost, either.)

The Zero Marginal Cost crowd insists increased revenue from touring and merchandise can pay for all this free music. But that would create a huge free rider problem in which consumers push onto the most active fans the responsibility of supporting the artist. How about if that zero-marginal-cost music is given away for free at the concert only? Given how seldom the typical American leaves the house to see live music, paying for music would start making a lot more sense. (I won't even get into how this wouldn't even make sense for artists who cannot or choose not to tour.)

Posted by Glenn at 11:18 AM | Link
|Digital Music|

One of today's free Wall Street Journal articles is about digital music and sound quality. Lee Gomes looks at how producers, mixers and engineers approach music in the iPod era. The article's sidebar has audio clips of varying qualities so listeners can try to spot the differences. Gomes points to a possible side effect: Musicians may have less of an incentive to record the perfect take.

"All these engineers tend to be audiophiles, the sort who would fuss over a track to make it perfect. But they're beginning to wonder if they should bother. 'I care about quality, even though the kid on the street might like what he hears on MySpace, which is even worse than an MP3,' said Stuart Brawley, an L.A. engineer who has recorded Cher and Michael Jackson. 'We try to make the best quality sound we can, but we increasingly have to be realistic about how much time we can spend doing it.' Howard Benson, who has done work for Santana and Chris Daughtry, says members of a studio recording crew will sometimes complain after a session, 'I just spent all this time getting the greatest guitar and drums solo, and it ends up as an MP3.'"

This isn't a new topic -- The New York Times had a very similar article earlier this year, with audio clips as well -- but Gomes gives it a nice overview and talks to a number of recording professionals for their thoughts. Definitely worth a read.

Posted by Glenn at 10:39 AM | Link
|Digital Music|

• Album sales were up 5% last week and were 12% lower than the same week last year. For the year, album sales are down 14%. Digital track sales were up 2% last week and were 45% higher than the same week last year For the year, digital tracks are up 48%. High School Musical (Disney) was the only album over 100,000 scans last week. It debuted big with sales of 615,000 (10% digital).

• French ISP Neuf Cegetel will introduce a music subscription service in a partnership with Universal Music Group. Subscribers will get unlimited access to UMG music of only one genre; eight additional genres will cost Euros 4.99. Tracks will contain DRM protection and expire when the consumer's subscription expires. (Mark Mulligan's blog)

• The Rolling Stones catalog will be released in MP3 format first at London-based 7digital. Twenty-four albums will be available at 320 kbps rate. For the first four weeks they will be specially priced at £5.49 ($11.00) each and then will rise to the normal £7.99 ($16.00) rate. (Billboard.biz)

• gBox, which is part of Universal Music Group's MP3 plans, has officially launched. The gBox Gifting Widget allows users to customize a wishlish within a widget that can be placed on blogs, social networks and personal websites. gBox also has a deal with digital distributor IODA. (Press release and a previous Coolfer post)

• Sony BMG chairman Andy Lack is on the board of directors of Building B, which just secured $17.5 million in funding. Building B offers a wireless set-top box and service that competes with Slingbox and Apple TV. (Red Herring)

• PassAlong Networks launched an upgrade to StoreBlocks, its digital music incentive platform. New features include a new marketing platform for incentive marketing firms. StoreBlocks now has 2.1 million songs in the MP3 format. (Press release)

• The worst take on Wal-Mart's MP3 downloads comes from The Motley Fool. "Watch out, Apple," wrote Rick Aristotle Munarriz. If Wal-Mart becomes anything remotely close to a digital force, it will be due to a leveraging of its brand and physical retail strength. Wal-Mart's download store offers such a tepid user experience that it would take free or near-free downloads to steal iTunes shoppers. Side note: Apple closed up 5.35% yesterday. (Motley Fool)

• Not that it will impact sales much, but Pitchfork gave This Is Next, ADA's mass merchant-aimed indie rock collection a 0.0 rating. Matt LeMay called it "predictably lazy and disjointed," "totally dispensible," "a silly and ill-advised compendium of material freely available to anyone with the initiative to seek it out." But the review was a not a critique on the music as much as it was a (weak and uninformed) critique on ADA's marketing strategy. (Pitchfork)

• Universal Music Group's "legal" mixtape, Lethal Squad Mixtapes: Dose #1, has flop written all over it. Take away the cred and you take away the sales -- even with a $5 sticker price. (SOHH)

Posted by Glenn at 7:01 AM | Link
|Digital Music||Online Stores/Services||Sony BMG|

One of the more interesting, and possibly promising, developments in digital music is dynamic pricing. Right now it's the domain of independents. For majors to get involved would require some big changes in how contracts are drawn up and how royalties are calculated.

Billboard ran an article on dynamic pricing (print version only, thanks to reader Eric for sending the article). Part of the article touches upon Amie Street, a download site that uses dynamic pricing. Amie Street will soon sell its 500,000th download.

Here's a blurb about two companies who are rolling out dynamic pricing to a multitude of online services:

"One of the first incarnations of a dynamic pricing model is about the be implemented this month. PassAlong Networks will soon begin selling tracks provided by Nettwerk Music Group for between 29 cents and $1.39 on all 44 of the digital music services using its StoreBlocks platform.

The company is using a pricing engine from Digonex that analyzes a complicated mix of consumer behavior and Internet economics to suggest the optimal cost. Factors include the price of different tracks and albums of the same genre on different services, sales traffic and radio airplay."

Extra credit reading:

• Here's the December 2006 press release about PassAlong's use of Digonex technology.
• From the Harvard Business School's Knowledge @ Wharton, a 2005 article titled "What Consumers -- and Retailers -- Should Know about Dynamic Pricing." "Is this type of pricing, known as dynamic pricing, underhanded or unethical? No, according to faculty members in Wharton's marketing department. They say such pricing -- also called targeted pricing, flexible pricing, tailored pricing or, to use the phrase employed in the Annenberg study, discriminatory pricing -- is customary, an essential tool for companies, and often beneficial to individual customers and society as a whole."
• This 1999 Business Week article pitted Amazon.com and then-upcoming eBay against one another. The winner of the battle between fixed versus dynamic pricing, wrote Robert D. Hof and Linda Himelstein, would set the tone for the future of the Internet.

Posted by Glenn at 2:14 PM | Link
|Digital Music|

Digital Music News has some specifics on the plans for RCRD LBL, an ad-supported digital music label co-founded by blog entrepreneur Peter Rojas (Weblogs, Inc., Engadget).

"The overarching concept, referred to as a 'label for the digital generation,' positions free music alongside contextually relevant advertising. The 30-page PDF, geared towards advertisers and other interested partners, calls for 'free exclusive content from top emerging and marquee artists,' and editorial in the form of "blogs and online niche microcontent." Prospective artists for launch include Gnarls Barkley, DJ Green Lantern, Thom Yorke, and Mark Ronson, according to the document. ...

Meanwhile, the RCRD LBL model calls for a fair amount of content portability in the form of widgets, an approach that will significantly broaden the reach of the digital label. Other executives mentioned in the presentation include Elliot Aronow, Piers Fawkes, Terence Lam, and John Josephson."

The list of prospective artists makes sense. I think an ad-supported label is going to have a hard time breaking new artists, at least at first, and needs established artists to get off to a good start and attract advertisers.

Posted by Glenn at 11:48 AM | Link
|Digital Music|

Here's a follow-up to my post earlier this week that found its way into the online media...people are obviously interested in EMI's digital sales since its digital downloads become available without DRM.

Digital sales Pink Floyd's Dark Side of the Moon dropped 33% last week (CD sales rose 26%) and are 61% below the high mark from the week iTunes Plus was launched. Digital sales of Norah Jones' Come Away With Me, which jumped 62% the week iTunes Plus launched, has been all over the place, dropping 23% and then rising 51% last week (CD sales kept pace with a 54% increase).

Coldplay's A Rush Of Blood To The Head saw its digital sales jump 170% when iTunes Plus launched. Two weeks ago it rose 1% (CD dropped 5%) and last week sales fell 21% (CD rose 11%). OK Go's Oh No, up 173% three weeks ago, rose 3% two weeks ago (CD rose 4%) and dropped 7% last week (CD rose 33%) -- pretty much steady since iTunes Plus launched.

What to think of these numbers? It's very difficult to draw a conclusion given the short term and the natural volatility of some titles. It's clear that digital sales for some titles peaked in the week of the iTunes Plus launch. The coming weeks will offer a clearer picture of any real impact on digital sales. Hopefully the data will indicate whether or not EMI's DRM policy is the cause behind the fluctuations. I predict that no material, across-the-board change in sales will be seen until Amazon.com's digital download store launches. That will definitely move the neede.

Posted by Glenn at 11:05 AM | Link
|DRM||Digital Music||EMI|

Bloomberg News has an article in which an EMI SVP said, "The initial results of DRM-free music are good." Increased sales of Pink Floyd's Dark Side of the Moon were singled out. That's true. Digital sales of Dark Side of the Moon have averaged over 3,600 units since the launch of iTunes Plus and the availability of unprotected AAC files. In the 11 prior weeks, average sales were 830 units per week. That's an increase of 272%. In the week iTunes Plus was released, digital sales of Dark Side of the Moon jumped 350% that week alone. (iTunes Plus, which enables users to upgrade tracks to unprotected AAC from the older, protected AAC versions for $0.30 per track, lauched May 30th.)

Here's the main question: Does an upgrade using iTunes Plus count as a scan? I can't find out. If that's the case, the increase in sales will actually a temporary thing. Once people who want to upgrade their tracks have done so, sales should drop and level off at pre-iTunes Plus levels (or, as EMI is hoping, above pre-launch numbers). My gut tells me SoundScan counts an upgrade as a sale. Those Pink Floyd numbers look to be more indicative of a technology-enabled sales jump than they are a sign of support for DRM-free downloads.

What about other albums? Digital sales in the last two weeks for Smashing Pumpkins' Siamese Dream rose 17% versus the 11 prior weeks' average. Norah Jones' Come Away With Me jumped nearly 24%. OK Go's Oh No increased 77%. Coldplay's A Rush Of Blood To The Head jumped 115%.

Those are just digital album sales I'm talking about. But here's something very interesting: CD sales of four of those five titles dropped sharply over the same period. CD sales of OK Go's Oh No dropped 45%. CD sales of Coldplay's A Rush Of Blood To The Head dropped 24%. Norah Jones' Come Away With Me fell nearly 33%. Pink Floyd's Dark Side of the Moon is down only 12%. Smashing Pumpkins' Siamese Dream increased almost 15% -- probably the result of the band's new single and upcoming album hype.

Normally I wouldn't think much of a two-week drop at the end of a 13-week period. A few more weeks are needed to see the entire story. But in this case there's an obvious pattern. It's not just one title.

Do I have an explanation? Not a good one. The most likely scenario is one in which iTunes Plus -- and the emergence of higher quality, DRM-free downloads -- has somehow accelerated the CD-for-digital substitution that has eroded CD sales.

Posted by Glenn at 9:13 AM | Link
|Digital Music|

• Universal Music Group is beefing up its digital initiatives. Dan Kruchkow and Ezra Doty were both promoted to SVP of Global Digital Initiatives. The two will oversee the growth of UMG's direct-to-consumer platform. (Press release)

• In an Elle magazine interview, Kelly Clarkson said she rejected $10 million from Clive Davis to walk away from five of the songs on her upcoming album My December for more radio-friendly songs. (Kings of A&R)

• According to figures released by the British Phonographic Industry yesterday, U.K. consumers are Europe's biggest mobile downloaders. MusicAlly estimates that U.K. consumers download 1.3 million mobile tracks per month. (BPI)

• In late July, BitTorrent will launch a self-publishing platform that will allows artists to upload their content to the BitTorrent ecommerce platform. Major labels will not be involved in the rollout because the company wants to wait until DRM issues are resolved. (Digital Music News)

• Attendance at this year's CMA Music Festival totaled a record 191,154 people. (MusicRow.com)

• Bad business model gets more money: Blog payola company PayPerPost got another $7 million in funding. (paidContent)

Posted by Glenn at 7:35 AM | Link
|Digital Music||Research||Universal Music Group|

Maybe you saw in today's New York Post that blog entrepreneur and Engadget founder Peter Rojas is going to start a label that offer free, ad- and sponsorship-supported music through its website. Details are scant. One source called it a "curated YouTube or MySpace for music with an editorially driven filter." I couldn't tell you what an editorially driven filter is...turning the word editorial into an adverb just heightens my confusion, frankly.

For quite a while, it seemed only the technorati wanted to go down this path. (Although artist websites are getting quite a few ads these days. Daughtry's official site has more ads than MSN.com.) It's time for somebody to take a good shot at this kind of value proposition, and it makes sense to come out of this camp. Some of the tech community's most visible entities and personalities have insisted this model is a good idea.

Posted by Glenn at 9:15 PM | Link
|Digital Music|

• Tower Records founder Russ Solomon is readying R5 Records in Sacramento for a soft launch in the next few weeks. "There are things that need to be tried. And since I was preaching against a wall the last two years that what Tower was doing and what the industry was doing was misdirected and wrong, I owe it to myself and to the business to do it my way." (Sacramento Bee)

• Digital sales in India are higher than physical sales, a first in the world according to the article. Soundbuzz predicts that by 2009 Indian consumers will purchase nine times more mobile music (in terms of revenue) than any other format. (Deccan Herald)

• Here's an article about EMI's and Sanctuary's difficulties selling British music in America. Seems this article would have had better timing before KT Tunstall, Lily Allen and Corrine Baily Rae, but whatever. Here are some good stats from the article: U.K. artists accounted for 8.2% of U.S. album sales in 2006, up from 7.6% in 2004. That figure was 32% in 1986 and less than 1% in 1999. (International Herald Tribune)

• A profile on Integral, a UK company that offers marketing and financial assistance to independent labels and rights holders. (The Independent)

• Hollywood is getting more frustrated with YouTube and its continued level of infringing material. "Clearly, this is not a resource constraint," said one executive. "This is a function of will." (News.com)

Posted by Glenn at 7:28 AM | Link
|Brick-And-Mortor Retail||Digital Music||EMI||Marketing||YouTube|

A few amendments to my post a few days ago on Amazon.com's initiative to launch some kind of MP3-based music download service...

The LA Times' Jon Healey emailed to point me to a LA Times article (written by Healey and Jeff Leeds) from way back in June of 2003 that mentioned some companies -- Amazon.com being one of them -- that were expected to launch music download stores in the wake of iTunes' arrival. Healey believes it was the first report that Amazon.com was considering a music download store.

When iTunes sprinted out of the gate, other companies were expected to follow its lead. Said Universal Music Group's Doug Morris at the time, "Yahoo has an enormous number of people coming through all the time. Amazon sells a ton of content. MTV certainly is an enormous bull's-eye for people who like music. This is an amazing moment."

So why did AOL, Yahoo, Microsoft and MTV jump in while Amazon.com waited on the sidelines?

After that post, a person intimately familiar with Amazon.com (I can vouch for the level of knowledge) emailed with some thoughts on the company's push for MP3s. The person said since the early part of the decade, Amazon.com has consistently pushed for the MP3 format even though label reps were trying hard to sell them on the protected Windows Media format that is all but dead by now. Talks were about using MP3 for both promotional and eventual sale, the person insisted. This person believes Amazon.com's refusal to sell protected music files is the main reason it has not yet entered the music download market.

Good call, Amazon.com. Waiting was a good strategy. In the meantime, protected Windows Media failed to gain traction and looks to be the big loser in the interoperability quagmire. See what reading market research can do?

Posted by Glenn at 11:43 AM | Link
|Digital Music|

To date, sales of digital tracks are up 41% for the year. That's a positive sign, but the numbers hint that a slowdown will occur in the coming years. Why? A slowdown already exists in the regions of the country that first got into digital music.

See the graph above, which shows the percent increase in digital track purchases for 2007. Red states have a digital track sales growth of 30% of less. Green states have growth of 31% to 40%. (I have grouped the states according to the regions Soundscan uses in its reporting.)

Digital sales are slowing among the earliest adopters. In the Pacific region, track sales are up only 30% for the year. In the South Central region of the country, on the other hand, the increase is 49%. In the Central region, the increase is 55%.

There's more: Digital track sales are up only 28% in city regions versus 55% in rural areas.

The early adopters, the technologically adept consumers who congregate in West Coast cities, are slowing in their digital purchases. The rest of the country has been catching up. The slower pace at which West Coast city dwellers are purchasing foreshadows a slowdown in other regions. They've already passed the iTunes binging phase that people in rural areas and the middle of the country are currently experiencing.

The geographic differences are nothing new. At this point last year, the Pacific region was up 87% (compared to 30% in 2007). Southern states were up 100% or more. City consumers were up 67% (compared to 28% in 2007). Rural areas were up 104% (compared to 55% in 2007).

What are the implications for the music industry? To maintain digital sales growth, labels need to engage early adopter consumers on both coasts. Innovations will first take hold there, then move to the middle of the country. EMI's decision to sell downloads without DRM is a good first step to engaging the coasts, and it could foster the kind of entrepreneurial spirit that will lead to new products and services.

Posted by Glenn at 12:47 PM | Link
|Digital Music|

Last week I saw a DiscRevolt download card for the first time. (I heard some bands sold them at SXSW, but I didn't run across the cards in Austin.) The band selling the cards was indie pop band Modern Skirts from Athens, Georgia. The card was a credit card-sized piece of plastic (pictured) with a hole punched in it as if it was going to be placed on a lanyard. Each card has artwork on the front -- Modern Skirts' had a band picture -- and download instructions, and a redeemable code, on the back.

For $10 (I believe) the card was good for 15 downloads at the DiscRevolt website. That was a good deal since the band's CD cost the same but has only 11 tracks. Though I chose the CD over the DiscRevolt card, I was pleased to see digital music finally make its way to the merch table.

If you browse around the DiscRevolt website, check out the search-by-zip code function to find participating artists in a specific city.

Posted by Glenn at 1:12 AM | Link
|Digital Music|

• An Enders Analysis report claims the recorded music market "could" stabilize by 2009. Lower CD sales are one reason why music publisher revenue is expected to have a cumulative annual growth rate of only 2.2% through 2012. (Enders Analysis)

• To celebrate his 80th birthday, EMI is offering 11 currently unavailable Rostropovich albums -- two of which have never been issued on CD -- at iTunes. (Playbill)

• The RIAA on its legal battle against P2P company Limewire: "They respond. We respond. They respond, etc. Then discovery. These things take a long time." (Digital Music News)

• The FCC approved Citadel's acquisition of 24 ABC radio stations. Commissioner Copps said the transaction is "narrowly" in the public interest. (Radio Ink)

• Jupiter analyst David Card on album sales: "The industry has to spread artist development risk more efficiently. That means that radio probably does have to pay, or share revenues. And artists have to get paid at the back end, not in advance. It's not just the labels who'll die if this continues." He's right, but as is always the case in a convoluted industry, it's easier said than done. (David Card's Jupiter Blog)

Posted by Glenn at 4:29 PM | Link
|Digital Distribution||Digital Music||EMI||Legal||P2P||Publishing|

• Elton John's back catalog, owned by Universal Music Group and over 30 titles deep, will be available online. (BusinessWeek.com)

• Paul McCartney's next album will be the first released by Starbucks' Hear Music label. (Press release)

• Digital distributor IODA has picked up some dance labels: G-Stone Recordings, Underground Resistance, King Street Sounds and West End Records. (Press release)

• Nielsen has released 2007-to-date Soundscan numbers. Track equivalent albums are down 10% while CD sales are down 20%. CDs accounted for 90% of traditional album sales. Digital album sales are up 100% over last year. Digital tracks are up 54%. (Press release)

• Amoeba Records will release an exclusive, limited edition TV on the Radio concert (recorded at Amoeba Hollywood) at its stores at through its website. Its the first live EP for the retailer's record label. (NME.com)

Posted by Glenn at 9:12 AM | Link
|Digital Music|

• Warner Music Group announced that its head of UK operations, Nick Phillips, has stepped down. A source called it part of the company's "de-layering" effort. (NY Post)

• Ticketmaster has purchased a majority stake in Nashville-based echomusic, an entertainment marketing company. (Billboard.biz)

• Digital Jet International inked a deal to put digital music kiosks in Irish music chain Golden Nuggets, and formet EMI exec Ted Cohen has joined the company's board of directors. (The Post)

• Amazon.com is moving in on the untended classical market left over from Tower Records' closing. To that end, the company has launched its Classical Blowout store, an offering of classical staples at low prices. (New York Times)

• Video site Yebotv, a YouTube imitator that streams online concerts, landed $10 million in funding. (Digital Music News)

• An article, filed from Austin, about the challenges faces by Australian acts in breaking into the U.S. market. The Australian Music Office in Los Angeles works to promote Aussie acts. Said the manager of business development, "Distribution can be considered through television commercials, many channels through the internet, movies or live shows. It's an amazing time because there are not nearly as many gatekeepers." (The Age)

• Vinylmania in New York City has closed its doors. (NY1.com)

Posted by Glenn at 10:48 AM | Link
|Digital Music||Warner Music Group|

Sales of digital tracks are currently 54% ahead of last year's sales. A month ago the year-over-year increase was 60%. It's hard to read much into that drop. Maybe 2007's post-holiday drop was lighter than last year's drop. Maybe its the release schedule. Again, it's hard to say. In any case, digital track sales should realistically end the year up around 50% or greater.

Last week was a relatively light week for digital track sales. Only one big new single hit the Top 10: Mims' "This Is Why I'm Hot" sold over 100,000 tracks last week, putting it well ahead of Fergie's "Glamorous" and Gym Class Heroes' "Cupid Chokehold."

Posted by Glenn at 1:51 PM | Link
|Digital Music|

This feature is at least five months old -- judging from blog posts I just found -- but I first noticed it when a friend emailed me an MP3 the other day. Instead of the usual "open file" or "download file" options, Gmail offered a "listen" option. So I clicked on the "listen" hyperlink and a music player window (pictured) opened up.

The discovery that Gmail makes it easier to share MP3s came on the same day I listened to music executives at the Music 2.0 conference dish out statistics and anxiety over personal sharing. As a means to filling up an iPod, P2P seems to be public enemy number one. Personal sharing, though, is thought to account for more digital music acquisition than P2P, legal purchases and files ripped from CD collections. Should music executives just be happy that somebody is listening to their music? That's a tough argument when sales are plummeting. Now, I don't expect Mitch Bainwol and the RIAA to launch a tirade against Google for facilitating music sharing, but I don't doubt it's on his mind.

Posted by Glenn at 7:23 PM | Link
|Digital Music|

In the January/February issue of The Atlantic Monthly, Michael Hirschorn spoke with optimism on digital music's future, and I wholeheartedly agree. A few failures in 2007 are not as important as the fact that people are trying.

"If past is prologue, SpiralFrog and Kazaa, too, will come up short. But all these failures are in the service of a dynamic evolution. Someone—and that someone is likely already at work on the key advance—will figure this out. One next step could be a move by the labels to make more pay-per-download music available without restriction, meaning that once you’ve purchased a song, you can do anything you want with it, currently a no-go on Zune or iTunes. Unrestricted MP3 sites could play VHS to iTunes’s Betamax. However it occurs, though, the execution of a widely used free and free-flowing music download and sharing system is surely imminent."

Hard to disagree with that prediction, but Hirschorn didn't give an over/under. The "if" is not in question nearly as much as the "when."

Posted by Glenn at 4:13 PM | Link
|Digital Music|

Early January is an important time in digital music. Now we get to see how post-2006 Christmas sales stack up to post-2005 Christmas sales. Digital sales peaked two weeks ago with a weekly total of over 30 million. That was a 108% year-over-year increase.

Last week, digital track sales totaled over 21 million, a 29% drop from the previous week but still 61% higher than the same week in 2006. That 29% drop was an improvement over last year's 33% decline. In other words, sales are higher and are not dropping off the holiday peak as quickly as last year.

Let's look forward to next week. If next week's sales decline mirrors that of last year, which was 26%, the total will be about 16 million -- versus just under 10 million last year. That's 60% higher year-over-year and six million greater in units. In two weeks sales should have levelled off completely and decent forecasts can be made for sales throughout 2007. We'll have a better clue as to whether or not the current sales level is nothing but redeemed gift cards and if it may fall even further once people have to spend their own money.

Posted by Glenn at 2:37 PM | Link
|Digital Music|

CES, the annual electronics convention in Las Vegas, is always a time for companies to reveal new products and announce new partnerships. For the music industry, yesterday's announcements showed that no one company can go it alone. As services and hardware become more integrated, we're going to see palpable shifts in how consumers -- all consumers, not the early adopters who dive head-first into any new gadget -- enjoy music. Here are a few of the key announcements thus far.

• Apple and Cingular. The Wall Street Journal reported Apple is launching a mobile phone service and a phone. Cingular will be the network provider.
• Microsoft and Clear Channel. Clear Channel will supply the HD radio content for Microsoft's MSN Direct service.
• Microsoft and Motorola. Motorola's new mobile phone will use Microsoft's Windows Media DRM to allow users to play music from such services as Rhapsody, Napster, Yahoo! Music and URGE.
• Morotola and Warner Music. The global agreement puts Warner Music content exclusively in Motorola mobile services.
• Rhapsody and TiVo. Later this year, the Rhapsody music service will be integrated with TiVo so three million songs will be accessible on consumers' televisions.
• Rhapsody and iriver. iriver announced two new Rhapsody-enhanced portable music players; one of the devices (pictured) will download music over the air from the Rhapsody music service. Both devices will be available by July 2006.
• Rhapsody and Logitech. Next week, users of Logitech's Squeezebox and Transporter players will be able to access Rhapsody without using a PC. The service will be priced at $9.99 per month.

Posted by Glenn at 9:40 AM | Link
|Apple||Digital Music||Mobile Music||Portable Music Players||RealNetworks||Rhapsody|

Ropeadope Records says it will focus on its digital-only releases in 2007. To that end, Ropeadope will create a digital imprint, Ropeadope Digital (read press release). Artists signed to the digital imprint will retain their masters. The first round of releases will come from artists such as Skip Heller, Electric City, Aunt Jessica and DJ Klock. The label goes through IODA for digital distribution and RED for physical distribution.

Ropeadope Digital releases will be sold at Ropadope.com as well as the usual music download stores. Wired's Listening Post blog reports the downloads will be sold in MP3 format at Ropeadope.com.

The list of digital-only labels is sure to grow in 2007. Warner Music Group's Cordless Recordings, launched in November of 2005, is testing a digital-only business model. (Some of its titles may be released on CD, but it is predominantly a digital label.) CBS Records was recently re-launched as a digital label. Another trend will be digital-only releases on all sorts of labels. Look for more and more labels to use the low cost of digital distribution to release fan-focused material while using physical formats for more important releases.

Posted by Glenn at 3:54 PM | Link
|Digital Music|

• The Digital Media Assn released a study conducted by InsightExpress that shows the positive effect of digital music. According to the study, digital music consumers listen to more music, purchase more music and attend more concerts that before they began listening to and purchasing digital music. A quarter of survey participants have discovered "a lot" of new artists. Almost 70% are listening to more musical genres. More than 35% are talking about music more than before going digital. (Read article at Billboard.biz)

• Digital Music News reports "a big four major is now preparing a significant, MP3-based push." The unnamed label is likely to release more information later this week. I don't know which label it will be, but I'd bet against it being from Universal Music Group. Doug Morris experiment with MP3? That would be a shocker. (Read post at Digital Music News)

• The Australian government wants its musicians to crack the U.S. music market. The 2007 Australia Week exhibitions in New York and Los Angeles will feature The Veronicas, Porcelein and Rockstar: INXS contestant Mig Ayesa. (Read article at the Herald Sun)

• Musicrypt, which offers secure digital distribution, finalized a deal that will offer it up to $10 million in financing. The company plans to use the funds to increase its growth in the U.S., expand its Adstream service in Europe and improve its radio and television advertising delivery initiatives. (Read press release)

• Long Beach, CA's VIP Records faces uncertainty after its location changed ownership last week. You may recall VIP as the setting for scenes from Snoop Dogg's "What's My Name" video. (Read article at Long Beach Press-Telegram)

• The Zune Marketplace is not carrying music from CD Baby. I occasionally run across some new releases (on majors and indies) that are not yet in the store. (Read post at Digital Audio Insider)

• RIP Atia Jo, guitarist for Orchestra Super Mazembe. (Read article at Kenyan News Network)

Posted by Glenn at 7:57 AM | Link
|Digital Music||Research||Zune|

Digital music companies want to rid their music of DRM, and a few of them are aggressively pursuing the MP3 format. Reuters reported today that Ted Cohen, former digital chief at EMI Music and now a consultant, has been hired by P2P company Limewire to lobby the major music groups. Limewire, currently in settlement talks with the majors, wants to charge $1 per download but does not want DRM. Cohen's job is to get labels to agree to a six-month trial period.

Yahoo! Music David Goldberg has been very outspoken in his opposition of DRM. His perseverance has paid off twice. To date, Yahoo has scored three major label MP3 releases.

In the article, BigChampagne's Jeff Garland predicts final 2006 results will be so bad that labels will "have a different conversation" with digital music companies. I don't think the final results will be that bad. Gartner's Mike McGuire points to a more likely cause for concern: an expected softening in ringtone growth over the next 18 months.

For majors to embrace MP3, they will need to feel that all other options for growth have been exhausted. It has been such an enemy over the years that the MP3 is probably going to be seen as a last resort. Frankly, I think there's still a lot of room for competition in the digital space. iTunes has not been properly challenged. I have a hard time believing the string of sad iPod opponents and iTunes challengers represent the best in innovation. There's still room for improvement. Labels may want to see how mobile-MP3 player convergence plays out this year before reluctantly asking the MP3 format to bail them out.

Posted by Glenn at 11:53 AM | Link
|DRM||Digital Music|

• Digital Music Group Inc's chief operating officer, Anders Brown, and VP of business development, Richard Rees, are resigning. Brown will "pursue opportunities closer to his home and family in Seattle" and Rees will join an Austin-based investment firm. Though the first nine months of 2006, DMGI had a loss of $1,852,105 on revenue of $2,774,396. (Read press release)

• A profile of Allen Butler, the former president and CEO of Sony Music Nashville and now the head of Hedgewood International-funded indie Montage Music Group. Music Row independents have had a good year. Currently, five out of the Top 15 country songs are from indies. (Read article at The Tennessean)

• Billboard's Dan Ouellette calls 2006 "unadventurous for mainstream jazz." Hard to argue with that. A 2005 Michael Buble album was the top mainstream jazz album of 2006, while Diana Krall had three in the Top 21 albums and Chris Botti had three in the Top 22. (Read article at Hollywood Reporter)

• A change by the Official Charts Company will allow album tracks, older songs and digital-only releases to count toward the UK Top 75 listing. The new chart will present a better picture of overall purchases, and it eliminates the distinction between new single and old standard. The result could be a charting by songs heard in commercials or television shows. Just as likely will be examples of safe and familiar purchasing -- expect to see a lot of Pink Floyd and Coldplay. (Read article at The Guardian)

• An interview with RoyaltyShare chairman and chief executive Bob Kohn. RoyaltyShare is an online royalties processing and accounting service. "If (labels) [drop DRM] today, you will see a tremendous increase in digital download sales, because then you will finally see some good competition to iTunes." (Read article at Forbes.com)

Posted by Glenn at 7:27 AM | Link
|Digital Music||Indies|

The Wall Street Journal's Carl Bialik picks up on the ruckus caused by Forrester Research and The Register's overblown interpretation of a report on iTunes sales by Forrester's Josh Bernoff. "A Research Report on iTunes Sales Becomes Shot Heard 'Round the Net" starts with The Register's poor choice of words, goes to other research companies' claims that iTunes sales are way up in 2006 and then gets into how different analysts approach the numbers differently. Forrester's data set compared June to January. Not a good idea in my opinion. Comscore and NPD use different methodologies and have derived different conclusions than did Forrester.

Bernoff told Bialik that "the problem with a year-by-year comparison is it really doesn't tell you what's happening during 2006." The problem with that logic is that what is happening in 2006 varied from month to month. The reason for the variation is the very nature of the music business. Year-over-year data is the best way to measure trends in music sales -- especially when digital sales are growing at a high annual rate. January, for example, has few new releases but strong post-holiday sales. July, with school out and families on vacation, is a slow month for both sales and new releases. The release schedule picks up in August and September. Come December, labels' heavy hitters are in stores and both album and digital track sales increase rapidly. Comparing any one of those months to any other month will leave holes in one's conclusions.

In addition, each year's release schedule is unique because each new release is basically a unique product that is being introduced for the first time. Some connect with consumers, most do not. One slow quarter is often followed by a much strong quarter. Add it all up and what does it mean? It's easy to find a sales decline within any 12-month period.

As I wrote yesterday, weekly digital track sales have increased 16% since mid-October. There are two more weeks of sales growth left before the post-Holiday slide starts. Where sales level off in mid- to late-January will tell us much about expectations for 2007.

Posted by Glenn at 1:20 PM | Link
|Digital Music||Research|

The digital era is moving beyond music to well-produced and compelling video. How apt will consumers be to pay for exclusive live material? How quickly will they show up on YouTube?

Producer Nigel Godrich, most famous for his work with Radiohead and Beck, has created a music performance series titled From The Basement. Each episode will have live performances from the Maida Vale studios with sound by Godrich. Videos will be available only at two sites: the From The Basement website (through a 7digital.com store, which will offer Windows Media Video files) and iTunes.

The first episode of From The Basement will air (transmit?) today. In it, Thom Yorke will preview two songs, "Videotape" and "Down Is The New Up," from the new Radiohead album. There are three performances by The White Stripes and one from Four Tet's Kieran Hebden and Steve Reid. In total, there are six downloads that can be purchased individually (for £1.89 each, which is $3.69) or in the show's entirity (for £9.48 or $18.53). Stills and a trailer can be seen at the show's MySpace page. The second show will be available in February 2007 and will feature Beck and Jamie Lidell.

The Guardian has an article on the series and comments from Godrich.

Posted by Glenn at 9:42 AM | Link
|Digital Music|

• Bertlesmann confirmed the sale of its BMG Music Publishing to Universal Music Group. The deal must be approved by European Union anti-trust regulators. From where I sit, the two parties seem confident regulators will approve the deal. (Read article at Hollywood Reporter)

• The Canadian Radio-television and Telecommunications Commission ruled to leave radio station's quota for Canadian content at 35%. Associations representing producers, composers and publishers were seeking a new quota of up to 55%. The CRTC also passed on imposing an incentive-based strategy to promote Canadian music. (Read article at Billboard.biz)

• Sony BMG's Zomba Records signed 19-year-old Carli Marino, a singer from New Jersey who won Gospel Dream on the Gospel Music Channel. (Read article at NorthJersey.com)

• Paul Resnikoff follows up on reaction to Forrester's iTunes analysis. The lesson of it all: If you want to comment on iTunes' sales, Soundscan data trumps credit card receipts and music sales' seasonality cannot be ignored. (Read post at Digital Music News)

• The long, long, long awaited Guns N' Roses album, Chinese Democracy, is tentatively set for a March 2007 release according to a post by Axl Rose at the official GNR website. He also had some comments about his former manager Merck Mercuriadis. Sounds like the most recent delay comes for poor planning at the very least. (Read article at Billboard.com)

Posted by Glenn at 7:25 AM | Link
|Digital Music||Publishing||Radio||Sony BMG||iTunes|

Commentary on Forrester's report on iTunes sales is all over the Internet. A much-linked article at The Register is titled "iTunes Sales Collapsing" and says iTunes "has experienced a collapse in sales revenues this year." Compare that to the actual title of the report, "Few iPod Owners Are Big iTunes Buyers." Compare the report title to titles of other articles written about the report: "Sales of iTunes hit low note: study," "Sales Plunge at iTunes Store, Study Says," "Digital Music Sales 'Collapsing'?" Those articles are based on The Register's article, not on the actual findings of the Forrester report.

One potentially troubling aspect of the report is data that shows since January the monthly revenue has fallen by 65 per cent. I have not read the report and am quoting The Register. What's the problem? Music sales are seasonal. Digital track sales peaked sharply in the last week of 2005, dropped over the next two weeks and then leveled off. It makes sense that January sales are not representative of a typical month's sales. Because of these predictable fluctuations, only year-over-year comparisons should be made. Comparing October to January ignores music's seasonality and gives a distorted view of sales trends.

Have digital sales collapsed? Hardly -- though the days of irrational exuberance are long gone. Week in and week out, between roughly 16 million and 20 million digital tracks are sold. A rate of 18 million per week results in 936 million per year. Sales were flat to down in the second and third quarters (compared with the first quarter) but track sales are trending upward over the last seven weeks. One has to assume that Apple, the dominant player in digital music, goes as the market goes.

Posted by Glenn at 2:06 PM | Link
|Digital Music||Online Stores/Services||iTunes|

Other major labels have done small experiments with the MP3 formats and now EMI's Blue Note joins the small fraternity by selling a new Norah Jones single in the MP3 format. Immediately, a chorus of journalists proclaimed, "It's about time." After reading yesterday's articles and blog posts, you would get the impression that the MP3 format will usher in unparalled growth in digital music sales. Hold on. Sales growth will require more than a format change. Consumer's motivations involve price and convenience, too.

Why sell MP3s? The popular explanation is that consumers dislike DRM and are better off without DRM. The two real reasons are iTunes' dominance and digital sales' lack of growth in the middle of 2006. Blue Note's consideration of the MP3 format has nothing to do with the benefit of consumers and everything to do with making money. Consumers may end up benefitting from the MP3's greater freedom, but this is not an excercise in corporate social responsibility. EMI wants to increase sales of digital music. One possible way of doing this is to allow the sale of MP3s, which the majors have not done only with isolated experiments.

The main sales driver in the case is the degree to which people value the MP3 enough to shop around. Apple will be the first to brag about its digital sales record, but has success come simply in spite of DRM? Coolfer believes the average consumer does not mind DRM -- and doesn't even know exactly what it is. Today at Digital Music News, Paul Resnikof expressed the same opinion.

"Protection schemes have been blamed for dampening overall download purchases, though pricing lurks as a potentially bigger culprit. Remember that Apple sells an overwhelming percentage of paid downloads, all wrapped with its FairPlay protection system. Yes, FairPlay is a DRM system like any other, but do users really care? Probably not, especially since tracks rarely trip a usability wire within the iTunes+iPod circle."

There is, however, a (possibly small) market to be tapped. Call it the disgruntled techie segment. These consumers are knowledgeable about file formats and stubborn enough change their purchasing habits. Offer them MP3s and the segment will return to buying major label music.

Since labels do not have variable pricing, and therefore cannot price discriminate (although subscription services fill that void a bit), an option is to segment the market by desired file format. Selling MP3s fits in that strategy. Imagine a website that licenses music to sell only the Ogg Vorbis format. It would contrast nicely and probably overlap very little with consumers who won't leave iTunes regardless of the DRM.

We can look at this from a plain old distrubution standpoint. If iTunes only works with the iPod, and labels want alternate routes to the iPod, and labels are unhappy with iTunes' Rockafellerian market share, then they need to try selling MP3s at other online stores. The best way to diminish the power of one retailer is to prop up other retailers.

Just how much can MP3 offerings at a store not named iTunes succeed? Let's look at the two biggest MP3 experiments to date. Jessica Simpson's "A Public Affair" single and Jesse McCartney's Right Where You Want Me don't appear to have changed the status quo. I don't know what Yahoo has sold, but McCartney's album has sold an overall 4% at digital stores (nothing out of the ordinary). There were over 530 different, customized versions of the Jessica Simpson single, and Yahoo! sold a total of 7,636 tracks, according to Soundscan. In contrast, the regular "A Public Affair" single has sold over 414,000 units. Almost all most certainly came from iTunes. If iTunes is responsible for 80% of "A Public Affair" sales, then sales of the Yahoo! MP3 version are only 2.3% of iTunes' sales of the regular single.

If consumers really want MP3s -- and the jury is out on the lengths they will go to get them -- more experiments will be needed to know for sure. Not one very six weeks, but large-scale experiments that will lead to entire catalogs being sold in the MP3 format.

Posted by Glenn at 12:06 PM | Link
|Digital Distribution||Digital Music||EMI|

• Hits reports that EMI executives are "being summoned back to London and staffers being told to cut back dramatically on expenditures of all kinds." As goes the ol' rule of thumb, when you're told to ration paper clips, something is afoot. In addition, whatever is going on has caused talks with Jermaine Dupri to come to a halt. (Read article at Hits)

• Yesterday PassAlong Networks announced the beta of freedomMP3, a technology that "establishes rules-based systems to allow consumers to conveniently transfer the music to any of their other PCs and play the songs on portable digital music players, including iPods and MP3-enabled cell phones." freedomMP3 works on PCs running Windows 2000 or higher. (Read press release)

• The awaited Andrew Gowers review on U.K. copyright terms was unveiled yesterday. His recommendation, which was leaked last week, is that "the European Commission does not change the status quo and retains the 50 year term of copyright protection for sound recordings and related performers' rights." (Read article at Billboard.biz)

• Gracenote has hit for the cycle -- deals with the five major publishers and some major indies -- by inking deals with Warner/Chappel and EMI. The deals add the lyrics of those companies to the Gracenote Lyric catalog. It expects to have the first publicly-available lyric service in early 2007. Online music stores, mobiles providers, search engines and consumer electronics manufacturers will have legal access to the catalog of lyrics. (Read press release)

• Qtrax nears and Brilliant hires another exec, Rick Riccobono as Executive Vice President Digital Rights Management. (Read press release)

• Virgin Records puts on a concert for tweeners at Whyville.com. (Read article at Clickz.com)

• A profile of record label Stones Throw, home to Peanut Butter Wolf, Madlib, Aloe Blacc and many others. (Read article at LA Weekly)

Posted by Glenn at 8:38 AM | Link
|Digital Music||EMI||Indies||Publishing|

Good Morning Silicon Alley reports that Microsoft has applied for a patent that will enable a users to get receive incentives for when shared music files are purchased by others. If this sounds like Weedshare technology, you're on the right path.

"Patent application No. 10/326678: "'Redistribution of Rights-Managed Content and Technique for Encouraging Same' -- which, incidentally, figures prominently in a Microsoft Research whitepaper on digital media sharing commissions -- describes a system that adds tracking data to DRM-protected media files when they are purchased and uses that data to assign incentives, such as commission payments, when the files are shared with and re-purchased by others. It was originally developed by John Beezer, president of Shared Media Licensing, Weedshare's parent company. But Beezer later assigned his rights to it to Microsoft, which has since applied for its own patent on it."

(via paidContent)

Posted by Glenn at 4:35 PM | Link
|Digital Music||Zune|

Fortune writer Tim Arango got everybody's attention earlier today when his article "Beatles: only on iPod?" claimed Apple is "close to a deal to bring the Beatles catalog online." There's a great subtext here: Apple Corp, owner of the Beatles' catalog, has been a legal thorn in the side of Apple Computer for many years.

EMI's David Munns recently said the Beatles would be online "soon." Presumably he was not referring to Love, a George Martin-produced Beatles mashup that was released last week (and is not yet online).

Is there any other way to debut online than with the help of Steve Jobs? Apple Corp would be crazy to give an exclusive to any other download store. "It's not a surprise the Apple Corporation, which owns the rights to the Fab Four's songs, would ink a deal with Apple Computer, owner of the hottest music player in the world," said Forrester's Ted Schadler.

And it would be best to go online with a splash so everybody knows about it. Not everybody knows the Beatles aren't currently on iTunes. Wrote Melly Alazraki at Blogging Stocks: "Until I read this article, I had no idea one couldn't download Beatles songs from iTunes."

Sales at iTunes are slowing and could use a shot in the arm right before prepaid gift card season. The Beatles' arrival at iTunes would be more than a big media event. It would be an important, symbolic event that shows a handshake between technology and music industries. They have often acted like cold war foes. The Beatles at iTunes would be glasnost all over again.

Posted by Glenn at 5:37 PM | Link
|Digital Music||EMI||iTunes|

Peter Jenner, respected (and outspoken) artist manager and secretary-general of the International Music Managers’ Forum, wrote the European Union seeking a monthly charge -- suggested amount is £2.67 a month -- on broadband and mobile-phone companies to make up for the loss from falling CD sales.

"Consumers feel that music delivered online is more like radio than buying a record, and prices need to reflect that,” he said. “Like radio, music consumption online should feel free. If not, illegal or semi-legal music services will grow exponentially and there will be no income for the creators.” What underpins this argument is the assumption that illegal downloading, not legal downloads of single tracks, is responsible for the reduction in CD sales. It's not an easy argument to win. He's dead-on when he says consumers should feel as if music is free even if it is being taxed at the network level. That's the best way to capture the value in the Internet's gray music market.

Read the article at Times Online.

In a recent, lengthy interview with The Register, Jenner talked about his proposal. About the transition away from the album he said ..."because they've replaced an album with a single they've helped destroy the retail industry, they're now in a position where they're completely fucked."

Posted by Glenn at 7:25 PM | Link
|Digital Music|

• The Economist tells us U.S. consumers are fourth in per-person spending on recorded music. As Digital Audio Insider points out, The Economist may have been wrong when it wrote consumers in Britain, Japan and Norway "buy more music per person." Given higher prices in those countries, it could be that they're just paying more for an equal or lesser amount of music. Though they complain album prices are too high, Americans pay less than other Western nations for CDs and digital downloads. (Read article at The Economist, via Digital Audio Insider)

• In an article at The Guardian on alliances between indies and majors -- which isn't a new occurrance in America -- there's a section that describes the waning role of teen spending: "In Britain, one of the music industry's prime concerns is the fading role of the young spender. Once the main driver of record sales, teenagers' spending on singles has more than halved since 2001 to less than £10 a year. They also account for a smaller proportion of the market every year, now making up just 16% of singles sales compared with 46% in 2001, according to the British industry body BPI and TNS market research." That would explain those Rod Stewart and Barry Manilow albums. From the looks of it, those figures do not include ringtones and over-the-air downloads. Can't forget about those. (Read article at The Guardian)

• Napster rolls out its Free Download of the Day. Best part: They'll be MP3s. It requires a fairly painless registration process if you haven't already done so. And if you haven't registered at Napster, you should sign up for the free, ad-based service. It's good for checking out an album on a whim.

Posted by Glenn at 2:27 PM | Link
|Digital Music|

As mentioned here earlier today, EMI's Alain Levy gave a keynote speech to the London Business School at a conference called "Compelling Content: A Driver for Change." Levy's speech mentioned "the cosumer" 49 times. (Read the entire speech after the jump.) Yes, the RIAA and IFPI sue consumers, but EMI is focused on how it reaches and interacts with consumers.

After reading this, it's clear to me that Levy & Company understand the changes afoot. They have understood for years. But here's the thing: It came off like a campaign speech. There are a lot of generalities, and a good deal of self-promotiion. But, it's short on worthwhile details. Everybody knows the industry has changed. Everybody knows it's a new ballgame. Everybody knows the general path to take. Which direction to head. But nobody knows what vehicle will get them where they want to go. After reading the speech, I'm no more sure than I was yesterday that EMI has climbed into the right vehicle.

One aspect of the speech I did like: Levy has not wavered from the belief that EMI will continue to be a viable media company. He dismissed the idea that its position will be harmed by a wave of self-made stars. "We are now 18 months into the surge in user generated content, and a technology base that eases distribution of music," he said. " And how many self made stars have we actually seen? Hardly any." I couldn't have said it better myself. For every Clap Your Hands Say Yeah there are 20,000 bands that are barely better off than they would have been in the age of photocopied 'zines.

A few quotes:

• "Power is shifting everywhere from manufacturers, content providers and retailers to consumers. In the age of empowerment the consumer is king."
• "Less formally packaged content, and more people getting involved in the creation process - does that mean the demise of the media company? I don’t think so. There will always be demand for compelling content, whatever its source."
• "The new digital consumer has impacted every area of our creative process – they have changed the way we source, present and market our content in every way."
• "Over 10% of music revenue worldwide is now in the digital format and we predict digital will account for around 25% of EMI’s revenue by 2010."
• "We know from research that consumers today are overwhelmed. I challenge you to spend a day on YouTube or MySpace and find a relatively unknown band that you really like – it’s difficult to sort through."

Continue reading "EMI Says "Consumer Is King," Describes Vision Of Future" »

Posted by Glenn at 1:30 PM | Link
|Digital Music||EMI||Marketing|

• Trans World had bid on troubled retailer Tower Records. Other bidders include Great American Group and real estate development firms. A court-supervised auction will be held this Thursday. (Read article at The Business Review)

• Tower Records founder Russ Solomon did not make a bid on the company before the deadline. (Read article at Los Angeles Business)

• As mentioned here yesterday, a report says Warner Music Group is going back to the DVD album format it attemped with a release by The Sun. The article claims WMG will release multiple DVD albums in 2007. (Read article at Video Business News)

• Jeff Leeds on Clear Channel's Mediabase airplay monitoring service, its chart-oriented advertisements in USA Today and criticism that the ads appear to imply an endorsement by the newspaper. (Read article at NY Times)

• The University of Washington has switched to Cdigix from Napster. Cdigix says it now supplies its online music service to 60 universities, is on pace to have 100 universities by the end of the year, and currently has 100 employees. Chairman and Chief Executive Larry Jacobson says the company plans to compete with MySpace and Facebook. (Read article at Seattle Post-Intelligencer)

• Music retailer Plan 9 plans to open a store in Roanoke. Earlier this year the company purchased five Record Exhange stores. (Read article at Roanoke Times)

• Ministry of Sound, which operates dance clubs in the UK as well as a dance music label, will sell 60,000 DRM-free tracks at its download store. It will not carry major label downloads unless they are sold without restrictions. (Read article at The Times Online)

Posted by Glenn at 7:55 AM | Link
|Brick-And-Mortor Retail||Digital Music||Online Stores/Services||Tower||Warner Music Group|

There are a few reasons why reports of the Philadelphia Orchestra's distributor-free digital strategy caught my attention. First, this article was in Stereophile Magazine, a publication that seems at odds with the audio quality of compressed digital files. This orchestra's downloads are available in MP3 as well as the high-quality FLAC format -- both DRM-free formats. Stereophile seemed happy about the availability of FLAC.

Second, the orchestra is circumventing distributors and selling directly to consumers. It's not even taking the 80% that Musicane would give it. If 100% of its own sales is better than 80% of what greater distribution could offer, then it should sell its own music (assuming start-up costs aren't a problem).

Another issue is DRM. By choosing to sell its own downloads, the orchestra taps into the consumer demand for DRM-free music. (It's more and more an issue these days. People don't seem as contanet with Apple's walled garden as they used to be.) That could easily generate enough goodwill and additional sales to make up for missing out on iTunes huge customer base.

Posted by Glenn at 11:17 AM | Link
|Digital Music|

• UK record labels are asked their government for tax breaks to encourage investment in new artists. Seventeen percent of annual revenues are spent on "R&D," claims the BPI, more than the aerospace, defense and automotive industries. (Read article at The Independent)

• Last week, K-Tel Entertainment, Inc. reported an ammended 10-Q report to the SEC. The notes explained that the former CFO of its UK subsidiary was discovered to have missappropriated $924,000 from the subsidiary and another $344,000 from a customer. Almost $1.5 million was been recovered from the "former employee." The results of the misappropriations were overstated product and SG&A costs in 2003 and 2004. (View ammended 10K at SEC.gov)

• Rap legend Kurtis Blow is teaming up with Holy Hip-Hop and EMI Gospel to launch a Christian hip hop label, Music Ministry Recordings. (Read article at UPI)

• Black Eyed Peas' will.i.am has joined Musicane as the digital services company's head of marketing. (Read post at Digital Music News)

• A profile on Louisville-based Resonant Vibes, a digital download store that specializes in electronic and dance music. (Read article at The Courier-Journal)

• RIP Raymond Burrell, former bass player for Bad Company. (Read press release)

Posted by Glenn at 7:59 AM | Link
|Digital Distribution||Digital Music||Indies||Online Stores/Services|

Back in July, Sony BMG released the Jessica Simpson single "A Public Affair" in the unprotected MP3 format. The story clogged up Google News for days. Granted, the track retailed for $2 -- it was customized to include the name of the purchaser -- but it was seen by all as a victory against DRM. And let's face it: Nobody other than the RIAA's Cary Sherman and Mitch Bainwol like DRM (at least publicly).

Hollywood Records has made waves with its commerciall release an MP3 (many give away promotional MP3s). Yahoo! Music scored an impressive MP3 version of the entire Jesse McCartney album, Right Where You Want Me. The album is priced the same for both the MP3 and WMA versions.

In the ultimate if-you-can't-fight-them-join-them statement, Hollywood senior VP of marketing Ken Bunt said, "Piracy happens regardless of what we do. So we're going to see how Jesse's album goes (as an MP3) and then decide on others going forward."

The report card on Jessica Simpson's full-length: In three weeks, A Public Affair started out at 100,000 in its first week, dropped 41% in its second week, and dropped another 55% in its third week. Should Sony BMG executives worry about MP3s hurting sales of A Public Affair? No, no need for worry. Unprotected MP3s floating around the Internet aren't ruining sales of the album. The reason the album has dropped so far since its release is the single peaked at only #38 on the Hot 100 chart.

Posted by Glenn at 2:16 PM | Link
|Digital Music||Universal Music Group|

Last week, at the invitation of Microsoft, I was one of a handful of bloggers who had a chance to see Microsoft's Zune media player and music store. (Disclosure: Microsoft paid for all travel expenses to Seattle.) Part of the afternoon was spent talking to key employees who work on the Zune project. The other part was spent hands-on with the device and watching a Flash presentation of the Zune's interaction with the software and online store. (The device I saw was not the final version and did not have wireless capabilities.)

Here I'll talk about the Zune device, its user interface and a bit about the software. Tomorrow I'll post about its wireless capabilities that allow Zune users to share content. Also, I'll post separately about the company's marketing strategies and my thoughts on its overall vision.

What were my initial impressions of the Zune? It's a sleek piece of craftsmanship that's simple and functional. It doesn't have the sexiness of the iPod, but it does have a graceful utilitarianism. It comes in three colors: brown, black and white. The brown is an attractive, earthy shade and was my favorite of the three. (It looks much better in person that what is represented by the stock image seen above. No pictures of the Zune were allowed during my visit.) The black is more like a gray, actually, and the white has a full color to it. Each comes with what is called a "doubleshot," or a combination of a main color with a complementing trim. For example, when the power is on, the brown Zune sports a just-perceptible green trim. The device is heavier than I expected it to be. That could be a negative, but there's feeling of craftsmanship that goes along with the weight.

The Zune device and store will be a closed system, which Microsoft feels was the way to create the best total product and user experience. Tracks purchased at the Zune store can be played only on the Zune device. Those files will be 192kbps protected with WM-DRM. Supported audio formats will be MP3, unprotected WMA and unprotected AAC. Supported video formats will be MPEG-4, WMV and H.264 (Apple's video codec). In the Zune softare, tracks can be burned to CD. Content owners may place restrictions on the protected Zune files, though. Details on that are loose at this point.

Continue reading "Microsoft's Zune: In Person" »

Posted by Glenn at 11:45 AM | Link
|Digital Music||Portable Music Players||Zune|

• A little back and forth about the health of Koch. Some say its about to go through major changes, others say it's in good health. (The Velvet Rope)

• Billboard's Brian Garrity created a timeline that tracks OK Go's last album, Oh No, from recording to pre-VMA buzz. It leaves out some recent items, though. There are two important items that are not in the article. First, the album sold over 8,200 last week, almost twice as much as the last week of sales mentioned in the article. Second, over half of last week's Oh No sales were in the digital format. That's incredible, and it was good enough for #9 on the Digital Album chart. That abnormally high digital share may point to a demand that Capitol is not fulfilling at bricks-and-mortar retail. (Billboard)

• Something for the RIAA's files: Sweden's Pirate Party released a manifesto (read here). Music attorney Chris Castle thinks "it's fair to say they cribbed it" from the Marxist manifesto and calls it "either an extraordinary example of political naivete, or the kind of brain rot that sets in when one makes a life of being "neutral." (Music•Technology•Policy)

• The Arab Strap are going to break up after ten years together. Ten Years of Tears, a compilation of b-sides, demos, remixes and new recordings that will be out in early 2007, will signal the end of the Scottish band's time together.

Posted by Glenn at 8:55 PM | Link
|Digital Music||Distribution||OK Go||P2P|

The NY Times' Jeff Leeds has an article today about "how technology is shaking up the hierarchy of tastemakers across popular culture." It's been written before, but Leeds concentrates on music recommendation services, playlists and online radio -- not blogs and Pitchfork.

The beginning of the article reminds me of a similar article about Epitonic.com in the late '90s as the company was burning through money. The company employed music buffs to input data about each band into the download service's database. (It was a kind of "Revenge of the Nerds" article that was so popular before the bubble broke.) Here, Pandora, which is not yet profitable, is using professional musicians to categorize music by their characteristics.

Most interesting yet unsubstantiated item in the article: Pandora founder Tim Westergren claims ten percent of the time Pandora users click through to buy a song or album on iTunes or Amazon.com. That's a heck of a conversion rate.

Posted by Glenn at 11:58 AM | Link
|Digital Music||Music Industry|

The Wall Street Journal has reported that Snocap, the digital services company founded by Napster creator Shawn Fanning, has partnered with social networking site MySpace. Though the nature of the deal isn't clear, sources told the WSJ that MySpace could get a minority position in Snocap.

More details were given in the LA Times' article about the Snocap/MySpace deal. The download store will be called MyStore and will be out later this year. (A side note: www.mystore.com has been registered by "leading domain name attorney" Ari Goldberger.) Fans will be able to sell bands' music to other fans. Also, some economics of the deal were given. The two companies "will split the processing fee of about 45 cents per track," which implies the artist should set a track's price well above $0.45.

Jupiter Research's David Card has doubts about MyStore's ability to make much money. "I believe in a 'long tail,'" he said, "but I have yet to find a media company make a living delivering only the long tail without delivering any of the hits."

Coolfer had previously posted on Snocap's Linx, the widget that enables download sales on MySpace.

Continue reading "MySpace Forms Partnership With Snocap" »

Posted by Glenn at 7:36 PM | Link
|Digital Music||MySpace||Snocap|

• Is the slowdown of digital sales growth in Japan a worry for countries like the U.S. that are years behind in technological adoption? Internet downloads were barely higher than in the preceding quarter, and mobile downloads increased by about 3% over the previous quarter (but was about 50% higher than the previous year.) (Billboard.biz)

• Tower's woes in the Bay Area contrast with the success of Amoeba Music and smaller indie retailers. Seems the two strategies for survival in music retail in the '00s are (1) sell at a loss or (2) sell used CDs. (SF Chronicle)

• For you jazz fans: A nice post on Jan Johansson, a jazz musician from Sweden who is "virtually unknown outside Scandinavia," with a few MPU streaming audio links to song clips. Somebody should really get to work on his Wikipedia page. (The Overgrown Path)

Posted by Glenn at 8:13 PM | Link
|Digital Music||Tower|

• One thing that's all over the news today -- on the Internet, at least -- is MP3tunes' Oboe Free. Oboe is the company's online music locker that allows users to listen their files from anywhere. Oboe Free is a free version of Oboe, which costs $19.95 a year for 2,000 songs or $39.95 for unlimited songs. Users can store up to 1,000 songs at no cost with Oboe Free. If you're interested in signing up, go to the Oboe registration page and select the free version. Using Obie requires downloading a program that will sync up the music on your computer to your Oboe locker. It's a process that takes one hour for every 100 songs.

• David from Digital Audio Insider moderated a panel at the Bandwidth Conference and wrote about the long tail discussion at this blog. He asks the important question: "Is the pie getting bigger?" Much of the long tail discussion I've read assumes a zero-sum game in which the outer-laying artist takes from the superstar. What I'm waiting for is the new digital technology that will increase the size of the pie. Until then new technology will simply allow people to replace one behavior with another without increasing the overall value of the market. (Digital Audio Insider)

Posted by Glenn at 5:21 PM | Link
|Digital Music||Long Tail||Music 2.0|

There's nothing terribly wrong with an artist's refusal to sell a la carte downloads at online stores like iTunes. An artist really should be able to dictate how his/her music is sold. If songs were recorded as an album some artists feel they should be heard as an album, in their entirity, from start to finish. If that's an ideal that an artist wants, then the artist should live with that. Heck, an artist has the right to only commercially release an album on a four-part, multi-color vinyl set. It may be commercial suicide, but that's the artist's problem.

But should a holdout be based upon a hope that the album format will return to glory? In an AP article about digital holdouts, Ed "Punch" Andrews, the manager of Bob Seger and Kid Rock, said he and his artists are waiting for just that. "We've always thought certain artists put out albums that aren't meant to be compilations with 50 other artists," he said. "We're hoping at some point albums become important again like they were in the past 30 years."

Seger is considering re-releasing his 1976 classis Night Moves but wants it to be available only in album forat at online stores. "We're hoping albums work there," he said.

You know what would help digital sales of older albums? A lower price point. (Steve Jobs, though, doesn't want to stray from $9.99 for old or new titles.) Rather than being shackled with a $9.99 price, an older album should be closer to $6.99 -- maybe higher if it was just remastered and/or expanded.

Then again, with digital royalties not providing what some artists want (see Cheap Trick vs. Sony BMG) there may not be enough incentive to lower prices.

One thing is almost certain: The album format is not due for a renaissance. The younger generation has spoken. It wants single tracks, playlist and NOW compilations. The album, while still formidable, will continue to decline.

Posted by Glenn at 4:13 PM | Link
|Digital Music||Online Stores/Services|

An follow-up to Coolfer's post on The Format's use of Linx, a sales-enabling widget created by Snocap: Brooklyn Vegan sent a link to the Wikipedia page for the album Dog Problems that has been updated with news about the album's digital sales:

"On May 19, 2006; an MP3 version of Dog Problems leaked to the internet. In response, The Format immediately made the entire album available digitally for only $7.99, through their online music store. This led to the sale of almost 3,000 digital copies, before it was officially available in stores on July 11."

The band's online music store is actually the download store of the band's label, Nettwerk. The album was also available via a Linx widget on the band's MySpace page.

Posted by Glenn at 2:12 PM | Link
|Digital Music||Snocap|

DRM is taking hits left and right. Days before the annual meeting of the National Association of Recording Merchandisers (NARM), which runs through tomorrow in Orlando, retailers emphasized to labels and hardware makers the need for download standards. The NARM retailers issued a statement that urges "the adoption of compatible DRM systems and standards to administer intellectual property rights, combat piracy and ensure interoperability." DRM systems, it says, "erode the very consumer confidence that is essential to achieving the full potential of digital delivery."

Additional reading:

• The Hollywood Reporter on nervous retailers and their uncertain future.
• Read Jim Donio's Address To NARM Attendees During Opening Session.

Posted by Glenn at 10:41 AM | Link
|Brick-And-Mortor Retail||Digital Distribution||Digital Music|

It had been quite some time since Coolfer had heard any mention of Snocap, the digital solution company founded by Napster creator Shawn Fanning. Via a post at Hypebot, Coolfer saw an example of how Snocap has enabled bands to sell downloads at their MySpace pages.

Snocap calls it Linx ("a flexible solution for those who wish to seamlessly integrate content sales into a website") and an example here is the MySpace page of The Format. The files are offered in the MP3 format, so they'll work with all media players, and cost $0.79 each. (There is no price for an entire album.) The purchaser needs to complete a Paypal billing agreement with Snocap. The process is very simple and need only be done once, then all Snocap purchases are automatically deducted from the purchaser's Paypal account.

(Options may vary. Snocap's "Sell Your Music" page says the artist has full control of pricing, format and DRM.)

All in all, the Linx is an impressive new way to purchase music, and like MySpace is a powerful new tool that quickly and easily raises the bar for independent artists. (The Linx can be used at any website, though, not just MySpace. And code is given for anybody to place the Linx at their own page. ) It enables further monetation of those artists who are, for one reason or another, located at the shallow end of the long tail.

View the purchase process after the jump:

Continue reading "Snocap's Linx (Beta)" »

Posted by Glenn at 11:47 AM | Link
|Digital Music|

News.com's John Borland wrote an article called "Apple's music: Evolution, not revolution" about the unveiling of iTunes in April of 2003, calling it "a solid, but hardly revolutionary, addition to the market." At the time its main competitors were Listen.com's Rhapsody, Pressplay (a joint venture between Universal Music Group and Sony Music that become the foundation for Napster) and MusicNet (a joint venture between EMI, AOL/Time Warner and BMG).

What Apple stressed at the time was the simplicity and the a la carte downloading, the two aspects that have made Apple the digital music leader.

"Label executives privately say the Apple service is an experiment, which could be expanded if it proves successful. Apple's small market share means that the stakes are relatively low... Apple essentially used two features to persuade the labels to give the company the benefit of the doubt. The ease of purchasing music was a draw. So was the light, almost invisible layer of digital rights management software that Apple built in-house and applied to the songs."

This didn't come to pass, did it?

"Rivals weren't convinced Apple's pay-per-song model marked any improvements in music distribution. Some noted that a mix of services would likely be more successful and that Apple might ultimately be overshadowed by other companies with more music retail experience.

'A lot of people are going to fight not only to keep up with Apple, but to surpass them,' said Zack Zalon, general manager of Radio Free Virgin, the online radio service of music retailer Virgin Entertainment. 'They're an excellent software company, not a music retailer.'"

Posted by Glenn at 5:50 PM | Link
|Apple||Digital Music||Online Stores/Services||iTunes|

paidContent has some notes on the recent Music Alley gathering in London that had a few panels that talked about digital media and music.

eMusic's David Pakman compared iTunes and eMusic. Apple gets very few downloads from each iPod owner (1 billion songs divided by 50 million iPods over three years). eMusic, he said, pays out an average of $5.62 per subscriber per month, or "2,858% more than Apple" according to his math.

It was Ted Cohen, though, and not Pakman who predicted a great rise for subscription services. Cohen thinks it will dominate the market while Pakman thinks subscriptions will be a niche player.

There was some talk of MySpace, of course. MySpace VP for European marketing and content Jamie Kantrowitz played down the controversies surrounding the site's use of music and the fact that it doesn't compensate labels or artists for audio streams. MySpace hasn't run into serious trouble, he says, because artists choose to upload their music (Beggars Group's Martin Mills agreed) and said, "MySpace is only 2.5 years old and down the line there may be other revenue models."

Posted by Glenn at 1:14 PM | Link
|Digital Music||MySpace||eMusic||iTunes|

(Above: Market shares by genre. Overall market in green, digital market share in purple.)

The press and investors want to see one thing from a music company: strength in digital sales. One way to look at it would be to compare a music group's U.S. digital sales as a percentage of overall sales. That's a quick and easy measure, but given that digital music's early adopters are heavily skewed toward certain music genres, such a measure can give a misleading view of a music group's success with its digital strategy.

Paul Sloan of Business 2.0 wrote an article titled "Why Warner Doesn't Need EMI" that rationalized a solo WMG because, in part, WMG's "digital sales that far outpace (those of) its rival." Sloan gave no numbers to back up the statement, and mentioned that "Warner is a leader in selling so-called bundled albums on Apple's digital music store." The only applicable stats he gave were WMG's digital revenue share versus that of EMI: 9% to 6%, respectively.

As Coolfer mentioned last week, WMG's higher digital market share can be partly explained by the very nature of its catalog. The company's two strongest labels, Atlantic and Warner Bros, are particularly strong in pop/rock and hard music. Year to date, WMG has 19.1% share of the album market, but 32.7% of the alternative album market and 25.9% of the hard music album market.

Continue reading "Behind Digital Market Shares: Some Of It Is Just Math" »

Posted by Glenn at 4:45 PM | Link
|Digital Music|

Lost in the discussion about Jessican Simpson's customized download (mentioned yesterday at Coolfer) is the fact that the file comes in MP3 format. For $2 the buyer gets a song with his/her name in the lyrics and gets freedoms not available with any other major label download. From a post at the Yahoo! Music Blog:

Sometimes it's good to go back a bit in time and see what people were saying about CDs and digital music, and see what has happended since then. A February, 2005 article by Sean Daly of the Washington Post is a good time capsule of the mood of the day. Just the title, "10 Million iPods, Previewing the CD's End," shows how the death of the CD was on just about everybody's mind.

But at the time, people weren't so down on the CD. The prior year had been a good one for the CD, as Usher pushed CD sales up 2.3% over 2003. The theme of the article showed suprising balance: CDs will be around, but in the coming decade digital will surpass it.

Or Music's Larry Miller had a prediction that looks like it will be pretty close: "When I look three to five years in the future, I believe that 20 to 25 percent of music purchased will be downloaded." About the CD format he said, "Five years from now, absolutely there will be CDs. Ten years from now, though, there will be fewer."

Continue reading "Flashback: February, 2005" »

Posted by Glenn at 3:25 PM | Link
|Digital Music|

National Geographic has added itself to the short list of niche-oriented music download stores by launching a world music section at the National Geographic website. It is a collaboration with world music download site Calabash Music, Link TV, Afropop Worldwide and Global Rhythm magazine.

At 99 cents a track, National Geographic has adopted the standard price point for a la carte downloads. There is no price point for an album, however, so consumers lose out on the savings that can be found in the standard $9.99 album price point. Like Calabash, the files are available in MP3 format.

Content is organized by artist, region and genre, and guest DJs (such as Chris Blackwell) offer recommendations. There are video clips and a news page with, sadly, infrequent news links. In all, the browsing experience is adequate. It is highly focused on just a few artists per page, so the act of discovery isn't as rich as it is at a site like Calabash.

The site has much of the same content as eMusic, which also offers MP3 files and a good (and always improving) selection of world music. In a random sample of 20 albums, Coolfer found that 12 out of 20 were also available at eMusic (with more overlap in African music than Asian titles). For frequent downloaders, eMusic's subscription model offers a far better deal. For infrequent downloaders -- say five to ten tracks a month -- National Geographic is a good source for music.

Posted by Glenn at 1:44 PM | Link
|Digital Music||Online Stores/Services|

Digital Music News has four posts (read one, two, three and four) that take from talks with inside sources and present a rather comprehensive picture on Microsoft's plans to battle Apple for market share in the hardware and music download markets.

What really stands out is Microsoft's alleged format, which calls for a closed system, a la iTunes/iPod, that will not be compatible with Microsoft's PlaysForSure DRM system. Also, the company plans on a multi-faceted pricing structure that will have "bundling, variable pricing, and subscription," though the subscription aspect will take a backseat to paid downloads.

Posted by Glenn at 6:32 AM | Link
|Digital Music||Online Stores/Services|

Soundscan data through late June show how each of the majors is doing with digital sales relative to its CD sales. The company that is strong at the digital music game has a great digital market share than it does CD market share. It should also have a relatively large market share for digital tracks (single song downloads).

Going by that logic, only only one company excels at digital music. Warner Music Group has a greater digital album market share than it does CD market share, 17.2% to 16.6%. At 18.7%, its digital tracks market share is greater than both its digital album and CD share.

Two of the three other majors have lower digital album shares but higher digital tracks shares. Sony BMG's digital album share is 4.1 points lower than its CD share (19.8 vs. 23.9), and its digital tracks share is 1.1 points higher than its CD share (25.0 vs. 23.9). Universal Music Group has a similar spread of 4.9 points lower for digital albums (27.2 vs. 32.1) and 0.9 points higher for digital tracks (33.0 vs. 32.1).

EMI's digital album and digital tracks share are both lower than its CD share. Its CD share is 8.7% At 7.7%, its digital album share is 1.1 points lower, and at 7.2% its digital tracks share is 1.5 points lower.

Of course, the type of music being sold impacts these numbers. Certain genres have more digital success than do others. If a label is strong in pop/rock and hard rock -- which Warner Music Group certainly is -- it is more likely to have greater market shares for digital albums and digital tracks. Label rosters that are heavy in R&B, soul, country and hip hop are less likely to have greater digital market shares because those genres historically have not had strong digital sales.

In theory, indie labels should have a great digital album share than a CD share. In the physical world, limited shelf space and challenges with distribution can hamper access to the consumers. It turns out this is exactly the case. Indies have a 28% share of digital album sales, far higher than the 18.8% share they have of CDs.

But indies don't sell single digital tracks as well as they sell digital albums, and not even as well as they sell CDs. The indies' digital track share is only 15.8% There could be a number of reasons for this. The most rational explantion is that indies tend to market their artists around an entire album, not a single. Singles, and the singles chart, is largely the domain of major labels with the resources to make the kind of elaborate videos get considerable airplay, and the means to promote a single to commercial radio. In promoting an album through a single, a label is often promoting just that song, not the artist or the artist's album.

Posted by Glenn at 3:13 PM | Link
|Digital Music|

JMP Securities is now covering digital music stocks and offered praise for Apple but caution for Napster and RealNetworks, reports the AP.

Not that digital music can really be called a killer app, but JMP Securities' Ingrid Ebeling said, "We believe digital music will be the killer app in 2006 and 2007."

Later she wrote about the growth of subscription services. "The market for subscription services will likely accelerate at a slower pace than the pay-per download market as consumers will likely chose the own rather than rent model, but over time we believe subscription customers will grow as they migrate to the portable subscription services."

She was cautious about Napster, which she believes will break even at two million subscribers (way up from the current 550,000), and RealNetworks, which she thinks "won't attain operating leverage until 2007, and even then the operating leverage is not expected to be significant."

Posted by Glenn at 3:25 PM | Link
|Digital Music|

Who will be the first band so independently sell a million units through the Internet? The Chicago Sun-Times' Jim DeRogatis thinks it could be Radiohead, the superstar band that has been public in its distaste for re-signing with EMI or any other major music group.

"In recent interviews, its members have indicated that they're seriously considering whether they need to re-up with Capitol/EMI or any other label. Among what they see as the cons of self-releasing their music are their fondness for old-school vinyl LPs and their worry that some (mostly likely very small) number of their fans may not have Internet access. ...

The musicians also wonder if such a plan would distract them from their craft, making them businessmen instead of artists. But face it: A group like Radiohead is already a sizable enterprise, with a dozen or more people -- roadies, managers, sound technicians and publicists -- in its employ."

Running a website, argues DeRogatis, is much easier than the coordinating a tour or setting up a private recording studio. Why not just put it on the website and let people buy it?

If only it were that easy, but it's a lot easier to cut out the record label than it is to cut out the retailers. Would a million people give Radiohead their credit card information for only one purchase? Probably not. Why not use iTunes and other online stores, which is where people go to buy music online? Part of selling music is getting the music to those places -- online and physical -- where people shop.

Jim's right, the first DIY digital platinum award could very well go to Radiohead. It would be a global million, though, which doesn't seem impossible since the band would take credit card orders from customers around the world. The UK alone could do a big chunk...if it's done right. Sure, it's possible.

Posted by Glenn at 5:02 PM | Link
|Digital Music||Distribution|

For a change, The Motley Fool, in its article "Downloads: Music To Labels' Ears," gets some things correct (in bold) about the changing mix of physical and digital music sales.

"...some people are complaining about falling CD sales and the impending death of the music industry as a whole. That might be true for businesses such as Trans World Entertainment (Nasdaq: TWMC), which largely depend on nothing but traditional hard plastic discs for their livelihood, but not for the music labels themselves. Add up traditional and digital sales, and this year's first six months saw slightly higher sales than last year.

Very true. Digital growth spells trouble for brick-and-mortar retail, who are being left out of the digital revolution. They're trying, though: Tower Records launched a digital store, and retailers are trying to find a way to sell downloads through kiosks.

Unfortunately, the article has its errors, too (in bold).

Word on the street has it that $0.07 out of every $0.99 iTunes download makes it into Apple's coffers. The rest is handed over to the labels, which pass on some paltry sum to the artists and writers who haven't yet learned to negotiate decent online rights to their work. The difference is pure profit.

Apple takes about 35% of each sale, which means the label's take about 65%, not 93%. What ends up in Apple's coffers depends on its costs. And it's sad to see the "pure profit" myth make its way into another article. The cost of developing, recording and marketing an album is far from free.

Posted by Glenn at 1:15 PM | Link
|Digital Music|

Chris Anderson, editor of Wired magazine, popularized the long tail, a new, digitally-enabled business model, with an article on the subject and for a couple of years has spent given speeches and proselytized about the new era of digital economics. Anderson just doesn't hit the technologist circuit. He recently spoke at the Alternative Distribution Alliance conference in Philadelphia.

Now Anderson's book, The Long Tail, is available...and doing well enough to be currently ranked #78 at Amazon.com. (Today at Wired.com there's an adaptation from The Long Tail that's titled "The Rise and Fall of the Hit.")

John Cassidy reviewed the book for The New Yorker and gave it a luke warm grade. While he complements Anderson for taking an established model (power-law distribution) and presenting a "readily graspable picture," Cassidy points out some flaws and ommissions. Part of what's missing has to do with consumer behavior that distribution alone doesn't take into account.

"A widening of choices doesn’t necessarily lead to cultural fragmentation and a defection from mainstream fare; sometimes it has the opposite effect, as befuddled consumers congregate around the same things. To be sure, some curious individuals will rent Japanese anime and science documentaries from Netflix, but far more people will turn up for the fifth 'Harry Potter' film and 'Shrek 3,' because they’ll want to see the movies that everybody’s talking about. Big-time movie releases aren’t merely stories and images on a screen; they’re news events—a fact that Hollywood studio executives have long recognized. Sony’s 'The Da Vinci Code' was a good illustration."

And later:

"A widening of choices doesn’t necessarily lead to cultural fragmentation and a defection from mainstream fare; sometimes it has the opposite effect, as befuddled consumers congregate around the same things."

One phenemenon of digital distribution was the center of an article at The Times Online last week, and it appears to conflict with the niche-creating theory of the long tail: Songs stay on the UK singles chart longer than before digital downloads were taken into account. Some songs, like The Verve's "Bittersweet Symphony" and Oasis's "Wonderwall," never leave the chart. And longevity has been affected. The typical hit stays on the UK singles chart for five weeks, up from three and a half weeks before digital sales counted. That doesn't jibe with Anderson's theory. In the Wired article, Anderson writes that "the number of weeks the average best-selling novel remains at the top of the list has fallen by half over the past decade." Shouldn't there more, not less, turnover on the music charts?

Continue reading "The Long Tail Book Arrives" »

Posted by Glenn at 2:10 PM | Link
|Books||Digital Music||Internet|

Research and Markets has released a market report that claims that by 2010 at least a third of the UK spending on recorded music will come from legal downloading. The growth potential, it believes, is in the live music market. Only 18% of adults attend concerts regularly, it states. (What defines regularly? In the US, only 2% of the population attends three or more concerts per year.)

This report should help clear up any doubts as to the longevity of the CD format. Back in January of 2004, CNN.com tweaked the conclusions in a Forrester report and came up with this statement: "Music downloads will render compact discs all but obsolete in the next five years." What the report actually said was that digital downloads would comprise 33% of the U.S. recorded music market by 2008, which looks like an overly optimistic target.

The timing of the Research and Markets report coincides with a report from Telephia on over-the-air downloads, as reported today by Digital Music News. It found that despite growth in over-the-air downloads to cellular phones, "subscribers still rely heavily on their personal computers as the central hub of their music activity." Those personal computers have disc drives. People put CDs in those disc drives. And given the lack of rights management on CDs, consumers have an extra incentive to choose CDs over downloads hampered by DRM.

In March of this year, Forrester research predicted digital music will make up 36% of the European music market's value in 2011.

Posted by Glenn at 1:30 PM | Link
|Digital Music||Research|

Investors are starting to worry about digital sales. Through April, digital sales has slowed and the second quarter of 2006 is looking like it will have lower digital sales than the first quarter. Analysts don't like a sales trendline that is anything but postiive, even for a six-month period.

Frank Green of the San Diego Union-Tribune has an article that points to two studies on digital sales, but overall the tone is level-headed. Sales are flattening out, and seasonality of both portable media devices and digital sales -- and the connection between the two -- need to be taken into account

Pali Research released a report last month (PDF hosted by Digital Music News) that notes the seasonality but was worried that digital sales would be down in the second quarter. (June has actually been a better month than April, which is the most current month in the Pali data.)

A slowing is to be expected. Post-Christmas sales could not be maintained through the halfway point of 2006. Summer could very well be slow, too, but it's nothing to be concerned about. (Digital track sales dipped last summer, then rebounded in September.) There will be few big releases until the August back-to-school season. Seasonality is the nature of the beast. Because of this, the best measure is the same year-to-date sales measure that is used to track album sales against sales in previous years.

If one looked at album sales since the beginning of December the trendline would have a disasterous downward slope. Again, nothing to worry about. It happens every year.

Posted by Glenn at 12:45 PM | Link
|Digital Music||Research|

• ASCAP honored songwriters last night at its Rhythm & Soul Awards last night. 50 Cent and Jermaine Dupri shared the songwriter of the year honor. (Hollywood Reporter)

• The Internatinal Music Feed, a pop music brand that's part of the Universal Music Group, has signed a deal with Verizon to offer video and channels of programming to Verizon's fiber-optic TV services. (Yahoo! Finance)

• An article on the Miles Davis estate with some noteable news. A remix album is due this fall, and Don Cheadle is set to play the jazz legend in an upcoming biopic. Also, Sony Legacy "plans to release more Davis recordings this year," claims the article. (AP)

• PricewaterhouseCoopers is optimistic on global digital music, especially in Asia, and predicts new technologies in the U.S. will offset physical declines. (Digital Music News)

• The Supreme Court declined to hear TVT's appeal in its case against Island Def Jam. A circuit court voided TVT's $132 million jury verdict over a dispite regarding Ja Rule and Irv Gotti. (Billboard.com)

• One Stop Digital Music is a new digital distributor that will seek to take music directly from recording studios. (PRWeb)

• Jill Sinclair, who set up ZTT Records with her husband, producer Trevor Horn, was accidentally shot by an air rifle and is in critical condition. (The Independent)

Posted by Glenn at 9:19 AM | Link
|Digital Music||Sony BMG||Universal Music Group|

David Harrel, the musician behind the blog Digital Audio Insider, brings up a good point in a post he wrote for Shake Your First. On about the many ways a label or artist can get music to listeners, he wrote of the impact of getting so much music:

I'm certainly not complaining about having more music to choose from, but at some point, something has to give--you can't listen to EVERYTHING, even within a fairly narrow genre of music. At this point, I'm starting to think of the whole thing in Darwinian terms, that it's a struggle among an ever-expanding number of artists, all competing for the same resources. No, not the dollars of the music buyer (though that is part of the equation). The ultimate limiting factor is time, the available listening hours of music fans. Maybe that resource is expanding (do iPods and other portable devices mean that people spend more hours each day listening to music?) but probably not as fast as the competition for those hours."

Bingo.

And Coolfer will go one further: Another scarce resource is the time people can put into searching for music. When you hear that digital distribution is going to allow people to discover all sorts of new artists, the challenge isn't finding the correct artist. The challenge is finding the time to discover. There's a small segment of music enthusiasts who will ply the Internet for hours in search of music. The rest won't spend nearly as much time. People have jobs, families, etc.

Continue reading "So Many Songs, So Little Time" »

Posted by Glenn at 10:45 AM | Link
|Digital Music|

• Based on first-day sales, Hits predicts Nelly Furtado's Loose could go upwards of 200,000 in its first week. Underoath (on Tooth & Nail) could break 100,000. Keane may get to 75,000. (Hits)

• TLC member Chili has signed a deal with Konvict Records, the imprint owned by rapper Akon. Her first release is expeted this summer. (SOHH)

• The closely watched interoperability legislation in France is getting watered down. Additional language will allow for a loophole where labels could keep DRM measures if the get permission from artists. This news is being reported as if most artists will opt for DRM -- but will that really happen? Out come the fear-mongers. A consumer group claims artist will lose their deals with Apple if they opt out of the FairPlay protection on iTunes downloads. The Business Software Alliance warns that giving more leverage to record labels will result in the higher prices that some majors want to install on some songs. "It would definitely harm consumers," said its policy director. (AP)

• French music download store Starzik opened for business yesterday, selling DRM-free downloads as the country and continent seriously ponders interoperability issues. Digital distributor The Orchard has signed a deal wtih Starzik to supply more than 400,000 tracks. In all, most of Starzik's more than 600,000 tracks will be available in open format (MP3, Ogg Vorbis, FLAC, AAC, and WMA).

Posted by Glenn at 8:24 AM | Link
|A&R||DRM||Digital Music||Online Stores/Services|

As if the no-longer-free Stax music sampler at eMusic wasn't enough, the online music store is offering to subscribers a free, 24-track sampler of bands that will perform at the Pitchfork Music Festival later this month. The track listing reads like a who's who of indie faves: Art Brut, The National, Spoon, Mission of Burma, The Futureheads, Jens Lekman, Aesop Rock, Mr Lif, Tapes 'N Tapes, Destroyer and others.

Among the 24 tracks are two songs tagged as "eMusic only." One is Yo La Tengo's "Beanbag Chair," which is currently available for free at the Matador website (download MP3 here). The other is The Mountain Goats' "Woke Up New" from their album Get Lonely, out August 22nd on 4AD.

eMusic currently offers other free or mostly-free samplers from Mirsa Records, Surfdog Records and Upper Class Recordings.

Posted by Glenn at 11:45 AM | Link
|Digital Music||Online Stores/Services||Pitchfork||eMusic|

"Listen without limits," declares the website of the MusicGremlin, a new MP3 player that uses WiFi connection to access its own music store. The $300 device comes with an 8 GB hard drive and

The importart part here is the Gremlin cuts out the middleman -- the computer. The $15-a-month music service allows subscribers to access over two million songs without the need of a computer to facilitate the transfer of files. Files can be transferred via a USB; the Gremlin supports only MP3 and WMA formats.

Reviews of the Gremlin have been mixed. CNET complained that $15 is too much for a monthly subscription (although that's the standard price for a music subscription service) and did not like the cost/storage ratio of $300/8 MB. The Wall Street Journel's main complaints were about the Wi-Fi connectivity and the cumbersome manner of searching for songs, though it did acknowledge its "fresh approach." Wi-Fi Net News ripped it for poor security.

Even if the Gremlin fails to catch on beyond the curious early adopter crowd, the device is still an important first step and it symbolizes the quest for what is called the "heavenly jukebox" or the "celestial jukebox," or access to all the world's recorded music. The best celestial jukebox is one that is portable and not tied to a personal computer, thus the significance of a portable device that incorporates a subscription service. Retailers are trying (so far without much success) to work toward part of this vision. In-store digital kiosks will cut out the personal computer and allow consumers to upload directly to portable media devices.

In a piece at Wired, Eliot Van Buskirk realized the potential of the MusicGremlin.

"A Wi-Fi-enabled subscription service would lead to all sorts of impulse listening. While reading a music magazine in bed, you could queue up downloads of the artists mentioned without getting up. Or if a friend tells you about a band they think you'll like, you could listen to it on the way home (provided there's some Wi-Fi nearby, as is increasingly the case).

The celestial jukebox, which will famously follow you around reacting to your every musical whim, could be enabled by mere earthbound internet cables and Wi-Fi hot spots."

Posted by Glenn at 3:25 PM | Link
|Digital Music|

If geeks are showing disdain for Apple, the DRM debate must be picking up at least a little steam. DefectiveByDesign organized a series of anti-DRM protests at Apple stores around the country on Saturday. A video of the Chicago protest (guys in hazmat suits loitering peacefully in front of the store) can be seen at Chicago IMC. "Apple, get ready to be tied in knot" warned one blog post. Yeah right. Here's a Flickr set of the crazy protest LA.

Digital Music News wrote about the protests, commented on how organized they were and asked, "But is Apple the right target?" Well, if there's going to be a protest it should target the company that (a) sells the most digital music and (b) wraps its files in DRM. Yes, the labels mandate the DRM, but Apple is the one who collects the credit cards information and sells the music to consumers.

Posted by Glenn at 1:54 PM | Link
|Apple||DRM||Digital Music|

The Motley Fool is again commenting on digital music, this one an article by Anders Bylund titled "Entertainment Industry Breaking the Wrong Rules." In it, Bylund writes of how digital piracy busts and digital music stores represent the entertainment industry's digital strategy. The problem is he connects the wrong dots.

Bylund makes the common mistake of confusing the thirst for free music with the desire for a user-friendly music service, and then mistakes taking a fight against piracy as an unwillingness to take digital music seriously.

Taking down an ISP that hosted copyrighted content is an apple. A legitimate store like iTunes is an orange. The fight against piracy doesn't mean entertainment industries are against digital business models, it means they're against giving it away for free and without restrictions. There's a big difference. (It's as big a difference as illegal file sharing and fair use rights for sampling purposes, two issues that too often get lumped together.)

Continue reading "Foolish (Again) on Digital Music" »

Posted by Glenn at 4:45 PM | Link
|Business Writing||Digital Music||P2P|

In article after article, the only bands mentioned in the new indie rock sales paradigm -- give away free MP3s, tour like crazy, pray people notice you -- were Clap Your Hands Say Yeah and The Arctic Monkeys. In a recent article, Chicago Sun-Times music writer Jim DeRogatis adds new XL signing Tapes 'N Tapes to that very brief list of free music successes.

"Like the New York-based art-rockers (Clap Your Hands), Tapes 'N Tapes built a sizable and growing national audience seemingly overnight, based largely on the power of distributing its music for free on the Internet."

Posted by Glenn at 11:34 AM | Link
|Digital Music|

While reading an interview with WD-40 president and CEO Garry Ridge in yesterday's Wall Street Journal, one comment in particular stood out. It has to do with the value of convenience, an important factor in the profitability of online and mobile music stores. Ridge was speaking of some new products that expanded the WD-40 brand.

Wall Street Journal: WD-40's Smart Straw is bascially the old can with the straw permanently attached. Won't it cannibalize the old one?

Mr. Ridge: I hope it does. Because the consumer is pretty prepared to pay a higher price for the convenience -- about 30%.

How much will consumers pay for the convenience of buying music through a cell phone? Well, that's the five-billion-dollar question.

Posted by Glenn at 1:08 PM | Link
|Digital Music|

Microsoft unveiled its new Windows Media Player 11 today, a revamped media player that incorporates MTV's anticipated URGE music service. (Though I currently don't see it on Microsoft's Windows media download page, it installed along with URGE.)

In the few minutes Coolfer spent with URGE this morning -- after a buggy installation of WMP 11 -- the service looked like a honest to goodness revolution. Particularly striking were the incorporation and visual presentation of blogs and playlists. One quesiton though: Where's the "back" button?

CNET's editor ratings for both WMP 11 beta and URGE were a favorable 8.0 rating.

paidContent was nice enough to gather numerous reviews and comments on URGE, which by the way is sometimes spelled in all caps and sometimes not.

Michael Gartenberg of Jupiter says URGE "shines" while PC Mag wrote that URGE "could end up being the subscription service to beat once they work out some of the bugs."

Posted by Glenn at 11:15 AM | Link
|Digital Music||Online Stores/Services|

Def Jux announced its intentions a while back, but it wasn't until Billboard.com ran an article about the hip hop label's new online store that Coolfer remembered about it.

The store is built into the existing -- and well designed -- Def Jux site. All label releases look to be on sale, including singles. Tracks from singles can be purchased individually or the entire single -- no matter if it has four songs or seven songs -- costs $3.98. Albums cost $9.98. Videos cost $1.98. All audio comes in MP3 format (though that information came from the Billboard.com article...I couldn't find specs on the actual website).

One complaint: Unlike Warp's store, Bleep.com, the Def Jux store doesn't have its own domain. Go to www.definitivejux.net and currently you're met with an intro screen for Mr. Lif's upcoming album. It took two clicks to get to the digital store. That's two too many.

Posted by Glenn at 1:43 PM | Link
|Digital Music||Online Stores/Services|

Digital music shoppers need to be aware of different prices for the same titles. Just compare the price of Miles Davis Quintet's Fantasy titles at iTunes and eMusic. Cookin' With the Miles Davis Quintet was just added to iTunes with a price tag of $9.99. A 40-song subscription to eMusic is $10 per month, which means a person could buy the four-song album ten times at eMusic for the same price of of one purchase at iTunes. (Relaxin' With the Miles Davis Quintet is $5.99 and Workin' With the Miles Davis Quintet is $7.99.)

A further benefit: eMusic's downloads are DRM-free MP3 files. Though iTunes seems DRM-free to a lot of people because they aren't going outside of the iTunes-iPod walled garden, iTunes does indeed limit the use of its AAC files with DRM.

iTunes offers majors and indies eMusic offers only indie labels. Mainstream shoppers might feel lost looking at eMusic's highlighted titles, and they might be cowed by the idea of an ongoing subscription. But for a person who frequently buys music and is able to look beyond iTunes for digital downloads, eMusic's subscription service will reward them with big savings. Yes, variable pricing already exists...for those who are willing to shop around.

Posted by Glenn at 4:14 PM | Link
|Digital Music||Online Stores/Services||eMusic||iTunes|

Warner Music Group's Edgar Bronfman is often heralded as a digital music maverick. Yesteday's announcement will create more attention and adulation for him and his music company.

WMG announced that it is working with digital company B3 to provide indie music retailers a way to get online and sell digital downloads. The retailers are members of three indie music retail coalitions: Coalition of Independent Music Stores (CIMS), Association of Independent Media Stores (AIMS) and the Music Monitor Network. WMG will supply the content and licensing. B3 will provide the infrastructure.

The plan is to offer digital bundles (not bundles as in an e-label bundle, rather albums with added value), downloads of in-store performances, downloads from local artists and coupon-based promotions.

Indie retailers have wanted a level playing field, says AIMS' Eric Levin. "What we wanted was an opportunity to sell the same items as our online competition in the same time frame. At best, we'd hoped for a slow-down in the preferential treatment that other major online music stores have received from the music industry; we did not expect the gift of a digital delivery solution for all of our stores."

Continue reading "Digital Downloads Meet Indie Retail" »

Posted by Glenn at 9:44 PM | Link
|Brick-And-Mortor Retail||Digital Music||Warner Music Group|

Apple renewed contracts with the four major music groups and will sell its songs for $0.99 apiece, effectively winning the most recent Cold War between the technology company and the disgruntled major labels.

Two majors, Warner Music Group and EMI, publically called for variable pricing. Execs at Universal Music Group and Sony BMG were less vocal about the matter -- especially at UMG. Some execs agreed with Apple's Steve Jobs and felt changing the price would harm sales by making the process of buying downloads more difficult.

Of course, variable pricing on albums already exists -- to a small degree -- at iTunes. Songs, though, will stay at $0.99. Could album prices begin to rise even more now that single downloads are fixed through the life of these contracts?

Previously at Coolfer: A Vote For Variable Pricing

Posted by Glenn at 10:16 AM | Link
|Apple||Digital Music||iTunes|

• Muze has purchased the U.S. operations of digital media company Loudeye for $11 million. (Reuters)

• Another week, another rumor about EMI and Warner Music Group. This article says EMI is likely to make a takeover bid for WMG "within weeks." (Sharecast)

• Napster has launched a new, web-based and mostly free version of its music service. Each song can be streamed up to five times. Good news for bloggers: "It seems pretty easy to paste Napster Links to any personal page, a wiki, or an email." (Jupiter Research, via paidContent)

• The Stinkweeds store in East Valley, Arizona, will close its doors in about a month. The Phoenix location will remain open. Stinkweeds is a member of the Alliance of Independent Music Stores (AIMS). (Arizona Republic)

Posted by Glenn at 9:11 AM | Link
|Brick-And-Mortor Retail||Digital Music||Napster|

Via VentureBlog, Coolfer found a list of Web 2.0 companies that has a section of Audio 2.0. (and 36 companies under the Bookmarking 2.0 heading!) Though Coolfer woudln't agree that they're all competitors (except for venture capital) the list shows just how many Internet companies are attempting to remake and control. the digital music experience.

A little lost on what defines a Web 2.0 company? So is everybody else. Wikipedia has a good, general definition at its entry for Web 2.0: "Web 2.0 generally refers to a second generation of services available on the World Wide Web that let people collaborate, and share information online." To translate for the Audio 2.0 startups, they're trying to figure out a good way to organize and to allow people to share what is becoming a mess of information on the Internet. (It's also a way to distance a company/idea from the first round of websites that went belly up, which were most often online stores that sold consumer goods.)

The full list after the jump.

Continue reading "The Crowded Audio 2.0 Market" »

Posted by Glenn at 2:50 PM | Link
|Digital Music||Online Stores/Services|

• Latin label Urban Box Office plans to record a Spanish-language version of the U.S. national anthem to show support of migrants while Congress ponders immigration reform. Artists to appear on the track will be, among others, Ivy Queen, Gloria Trevi and Tito El Bambino. (Chicago Sun-Times)

• The NY Times calls music publishing "music's hottest star." (NY Times)

• Universal Music Group's Larry Kenswil, President of Universal's eLabs unit, credits the growth in gift cards for the growth in digital downloads. "t's still a very small percentage of people that are downloading digital music, but gift cards are helping to introduce digital to those people who haven't previously downloaded music." (Marketwatch)

• Congress is preparing to change to Digital Millennium Copyright Act -- and expand it, not scale it back. (News.com)

• Last week it was an article on collaborations between rock/pop and country stars. This week it's an article about "troubling couplings" such as The Ordinary Boys and Lady Sovererign. "It's the opportunistic couplings, where one party is clearly hoping that a bit of cool will rub off, that are both funny and sad." (The Guardian)

Posted by Glenn at 8:56 AM | Link
|Digital Music||Publishing|

Every now and then journalists and Internet commentators will latch onto a band. Currently that band is Gnarls Barkley (producer Danger Mouse and singer Cee-lo). The source of the buzz is not surprising -- Danger Mouse was a cause celeb a few years back when EMI didn't take lightly that he had taken Beatles samples without permission. It's not just Coolfer who notices the Internet lovefest. Hip hop blogger Byron Crawford wrote:

"Like most projects having to do with Grey Album producer Danger Mouse, this new Gnarls Barkley album is highly anticipated...on the Internet. Also, it may or may not be really popular in the UK. From what I understand, the first single 'Crazy' was the first song ever to hit #1 in that country having only been released in online music stores. But then I remember reading similar shit about Las Ketchup and whatever that Axel F ringtone bullshit was, so I'm not sure what to think."

The other day I had a conversation with a friend about Gnarls' sale potential in the states in light of the hit UK single. "Do you think American radio will play 'Crazy'?" he asked. "No," I replied without hesitation. In some markets, such as New York, the cross-Atlantic buzz is all that's needed for a record to sell well. New Yorkers look to England for its music trends. The big cities of the country will catch on to the UK Gnarls Barkley buzz -- standards like LA, San Francisco, Seattle, Chicago and Boston -- but the rest of the country doens't pay too much attention to what's going on over there.

Continue reading "The Buzz on Gnarls Barkley" »

Posted by Glenn at 12:29 PM | Link
|Digital Music||Indies|

Forget the upcoming battle between Apple and the major labels over variable pricing. Prices already vary. The current average cost of an album of iTunes' current Top 40: $10.50.

Not $9.99? No, and here's why: Five of the Top 40 albums cost $9.90. Eight of them cost $11.99 or more. Two cost $12.99. Two cost $13.99.

The two most expensive albums are T.I.'s King -- which has 17 tracks and is sold as a single CD -- and Dane Cook's Retaliation, which has 29 tracks and is sold as a double-CD.

One of the $11.99 albums is Bob Marley's Legend, which is a perennail top selling catalog album. Amazon.com sells the CD for $11.96.

Only two of the more expensive albums are what could be considered as proper double-albums -- Ben Harper's Both Sides of the Gun and Cook's Retaliation. The Flaming Lips' At War With the Mystics is long, and it has bonus content, but it's not a double-album. (Update: I didn't see the normal version, and according to a post at Digital Audio Insider a lot of other people aren't seeing it either.)

And what does one get for paying $11.99 for James Blunt's Back to Bedlam? A digital booklet and a video for his hit single "You're So Beautiful."

One of the titles in the Top 40 is a video collection. Queen's Greatest Video Clips 1 costs $11.99 for seven videos.

The cheapest album of the group? KT Tunstall's Eye to the Telescope. Virgin is trying to break KT here in the States, which would most likely explain the lower price. If she suddenly blows up, expect the price to blow up as well.

Posted by Glenn at 12:15 PM | Link
|Digital Music||Online Stores/Services||iTunes|

One of the staunchest digital holdouts may be moving toward putting its music for sale online. Digital Music News reports that the Beatles' catalog is currently being digitally remastered with an eye toward selling it as digital downloads. The information came out during court procedings of Apple Corp vs. Apple Computer when Apple Corp's Neil Aspinall revealed he would like to get the publicity that would go along with a one-two punch of digital remastered and the availability at digital stores.

Reuters is carrying the story and quotes an Apple Corp spokeswoman as saying, "There's no firm date on any of this at the moment. There are a lot of projects that Apple are working on at the moment."

Related: Logo Lawsuit Could Get Sticky for Apple (MacNewsWorld)

Posted by Glenn at 10:30 AM | Link
|Digital Music||EMI|

• Napster expects its fourth quarter top and botton lines to exceed the company's prior guidance. What's that mean? The net loss is projected to be "in excess of $26 million." If that doesn't strike you as particularly good news, this might do the trick: year-to-year revenue growth is expected to be about 100%, and the company's subscriber base is over 600,000 worldwide. (PR Newswire)

• Album sales were down 3% in the first quarter of 2006. Universal Music Group had the biggest share at 30.7%, a number that includes Fontana's sliver of the market. (The Hollywood Reporter)

• Touch and Go Records is celebrating its 25th anniversary and is throwing a three-day celebration with bands such as Calexico, Pinback, Shellac and Black Heart Procession. (Touch and Go 25)

• Times two: The Capitol Records Tower is celebrated its 50th birthday yesterday, and there's even a blog filled with history on the building and the label. (Pop Culture Fanboy)

• Sprint is crowing over reaching the two million over-the-air download mark. (The first million milestone was reached a bit over a month ago.) Wonder how many of those were freebies... (Wireless Week)

• MTV Networks' Van Toffler calls the mobile phone "the holy grail of electronic devices" at the CTIA Wireless convention, the discussed his company's mobile programming. (Digital Music News)

• Has he been reading Coolfer's posts on the Cult of Bronfman? Analyst Michael Savner of Banc of America Securities dowgrades Warner Music Group's stock to "neutral" from "buy." (New Ratings)

Posted by Glenn at 9:00 AM | Link
|Digital Music||Music Industry||Napster||Warner Music Group|

The Cult of Bronfman is back. This time Business 2.0 magazine is singing Warner Music Group's digital praises. Why?

"Its first-fiscal-quarter revenues were off 4 percent. But Warner has captured an outsize portion of the growing digital pie, commanding 17 percent of the CD market in the United States, but an almost 23 percent share of the sale of digital albums."

I've gotta hand it to WMG's Investor Relations people. They're realling spinning this story well. Pulling out digital album market shares? If only the rest of the company were that innovative. The thing is that digital album sales are not representative of the U.S. digital music market. Why is Paul Sloan giving these numbers to readers?

Here's all the three main points to keep in mind about WMG:

(1) WMG's digital sales were 7% of total sales last quarter. That's pretty average. Maybe half a tick better than average. But certainly nothing that deserves this much praise in business magazines.
(2) It wouldn't be a stretch to say the company's physical sales are underperforming, which in turn makes average to slightly good digital sales look even better.
(3) Last quarter net income was slightly up while revenues were down 4%. Digital is not replacing the loss of income due to sagging CD sales.

Related: Last week Coolfer pointed out the flaws in The Motley Fool's article that hyped WMG's digital performance and outlook.

Posted by Glenn at 11:04 AM | Link
|Digital Music||Music Industry||Warner Music Group|

• She Wants Revenge live at KCRW

Coolfer understands both sides of the debate on the band She Wants Revenge. The con side loathes the Interpol coattailing and Johnny-come-lately opportunism. The pro side loves the unadorned hooks and the dry, dark tales of relationships. Both sides will affirm their opinions when viewing these video clips of She Wants Revenge performing in the KCRW studio. The station is on the pro side of the debate, as is Los Angeles -- a huge chunk of the bands sales are from its home market. Coming up: a U.S. tour opening for Depeche Mode.

• The Times Online (UK) has podcasts with bands that mix interviews with song clips. Currently the offerings include the Yeah Yeah Yeahs, Kanye West, Graham Coxon, Corrinne Baily Ray, Ryan Adams, Editors and others. Go to the Times' podcast page for a full list. To be honest, Coolfer can't make it through most podcasts. Too boring. These, though, are well done.

• AOL Music's Full CD Listening Party has the usual selection of new releases. Up right now are Tim McGraw's Greatest Hits Vol. 2, Yeah Yeah Yeah's Show Your Bones, Rob Zombie's Educated Horses, Matt Costa's Songs We Sings, Ghostface's Fishscale and one that sounds like a peppy, Midwestern Death Cab, The Dust of Retreat by Margot and the Nuclear So and So's

Posted by Glenn at 8:22 PM | Link
|Digital Music|

The oppostion to DRM continues to grow in membership. Timothy B. Lee, who has written a policy analysis for the Cato Institute titled "Circumventing Competition: The Perverse Consequences of the Digital Millennium Copyright Act," has an op-ed in yesterday's Salt Lake Tribune that's basically a teaser version of the 28-page analysis. Here's a taste:

"The DMCA was billed as an anti-piracy measure. It prohibits anyone from 'circumventing' a copy protection scheme such as that used to scramble songs from the iTunes store, or from creating software to do so. ... But that's not how things have worked out in the real world. After nearly a decade on the books, it's hard to find any evidence that the DMCA has reduced piracy.

Congress may have intended to target copyright infringers, but in practice the DMCA mostly harms paying customers by preventing them from playing legally acquired content on the device of their choice. The Constitution says that the purpose of intellectual property is to 'promote the progress of science and the useful arts.' When a copyright law begins to interfere with peoples' freedom to enjoy the content they have legally purchased, Congress needs to give it another look."

Posted by Glenn at 2:47 PM | Link
|Digital Music||Music Industry||Online Stores/Services||P2P|

The limitless shelf space of the digital world is encouraging a new era of music titles. RCA Dance Vault is a new undertaking that repackages dance tracks for digital stores. It has a dedicated page set up at iTunes that touts its "unreleased and out-of-print" versions. Some, like Kelly Clarkson's Because of You and Heather Headley's In My Mind, have the cost and length of a normal album. Most are bite-sized offerings of just a few tracks, like the trio of remixes of Icicle Works' "Whisper to a Scream" and the two versions of G.Q.'s "Disco Nights."

What RCA has done is move its catalog online, a storefront that encourages slower moving titles to remain in print. In the physical world some music wouldn't sell enough to keep from being pulled from circulation. Since labels are wise to maximize the value of their catalogs, finding new ways to sell old music will be paramount. We've already seen this from Rhino, which sells Hi-Five EPs, brief five-song artist introductions the label makes available at digital stores.

Posted by Glenn at 2:32 PM | Link
|Digital Music||Online Stores/Services||Sony BMG|

• Analysts point to France's bid for digital interoperability as a possible gateway to further growth. This factoid sticks out: A European study found that consumers are prepared to pay twice as much for a song that can be moved freely between devices. (News.com)

• Sticking with the same topic, the NY Times quotes a London-based analyst as saying Apple could pull out of France altogether if the country passes legislation requiring the iPod to play music from competing services. "My gut feeling is that Apple will simply pull out of France if these amendments get through. Weighed against breaking their business model for all markets, it doesn't make sense for Apple to continue operating with the iPod and iTunes in France." (NY Times)

• The latest on Microsoft's iPod killer: it will combine video games, music and video, and it may not be out until 2007. (A&R Interactive)

• Hypebot lists a group of Web 2.0 companies that are putting together music software/applications, such as Bebop Mercora and Odeo. (Hypebot)

• ECast, a digital jukebox company, raised $5.2 million in funding. (paidContent

• Groove Mobile, a mobile music technology provider that powers Spring's over-the-air download service, ha raised $8.5 million in a second round of financing. (Digital Music News)

• Lifehacker readers suggest where to find new music online. eMusic was mentioned most often. (Lifehacker)

• Archos unveiled a new 4 B 104. It has a $149 price tag, works with Microsoft's battery-draining PlaysForSure and is a bit thicker than an iPod Nano. (Engadget)

Posted by Glenn at 1:28 PM | Link
|Digital Music||Online Stores/Services||Portable Music Players||Venture Capital||iTunes|

• Ahead of tomorrow's final Soundscan numbers, Hits is predicting High School Musican to be the top album in the land with sales of about 130,000. James Blunt's Back to Bedlam will follow closely behind in second. (Hits)

• Digital Music Group Inc., a digital music aggregator with a catalog of oldies and not-so-hits, reported revenue of $1.06 million and a loss of $1.69 million in 2005. The company's February 2006 IPO raised over $33 million. (Sacramento Business Journal)

• Sirius has topped four million subscribers. Rival XM, currently at six million subscribers, plans to be at nine million by the end of the year. (Reuters) Related: Bear Stearns analyst maintains an "outperform" rating on Sirius at $9 per share. (Forbes.com)

• Orlando police are cracking down on bootleg CDs and DVDs and a usual place is targeted: flea markets. (WFTV)

Posted by Glenn at 8:56 AM | Link
|Digital Music||Music Industry||Sirius|

• The iPod killer may end up being the mobile phone, but a Citigroup analyst predicts an iPod that will double as a cell phone. "The iPod with phone functionality is going to be a category killer," he says. (Reuters)

• The MobiBLU DAH-1900 claims up to 150 hour battery life. (Stuff)

• PassAlong Networks has introduced software that matches a music library to a zip code to let users know when bands will be in their town. (PR Newswire)

• A profile on Internet startup Snaptunes, a program that records, edits and organizes hard-drive recordings of FM broadcasts. (Seattle Post-Intelligencer)

• Something for you tapers: Sony is introducing a new Minidisc recorder. (Engadget)

Posted by Glenn at 9:55 PM | Link
|Digital Music|

Does a lack of a pre-release single help CD sales? In a recent post, Hits suggests that very thing.

The impending chart-topping debut of Def Jam/IDJ Urban songwriter-turned-performer Ne-Yo's debut album, In My Own Words, would appear to offer powerful evidence that album sales were maximized by not allowing iTunes to sell the hit single, 'So Sick,' prior to release of the full-length disc. Industryites who have been arguing that download sales are cannibalizing album sales have some ammunition in what looks like the CD's estimated 250-300k figure.

Cannabilizaiton of CD sales is a favorite topic at Hits. Who can forget last month's rampaging guest editorial by Victory Records head Tony Brummel that called a la carte downloading "ultimately detrimental to the artists who created the music"?

Posted by Glenn at 10:50 PM | Link
|Digital Music||Music Industry|

The digital music explosion has lead to all sorts of new business models and entities. Though primarily a space occupied by small independents, digital labels have the interest of the majors as well. Cordless Recordings is Warner Music Group's new e-label. Lead by Jac Holzman, founder of both Elektra Records and Nonesuch Records, the label is building a diverse roster of artists that so far includes Brooklyn rock band Breakup Breakdown, melodic rock band Nozzle, electro-dance act Dangerous Muse and just-signed Roger Manning Jr (Jellyfish, Imperial Drag, Moog Cookbook). Cordless president Jason Fiber answers some questions for Coolfer about the labels structure, marketing and prospects.

Q: Many record labels depend on their catalog sales. Cordless allows its artists to retain ownership of its masters, which means it doesn't have those assets to monetize in the future. This is a drastic shift in business models, one that a larger traditional label won't undertake. How will Cordless make it work?

A: The Cordless contract provides Cordless a reasonably long license of an artist's material recorded while signed to Cordless. For the period that an artist is actively recording for the label (roughly 21 months) the Cordless staff works aggressively to find as many opportunities for the artist as possible. If we're successful in establishing an artist future success in the mainstream music business, we will collect their material released to date, add additional material and release a traditional album. We also offer our partners at the larger WMG labels the option to upstream our artists and engage them in a more traditional recording agreement.

Q: Is the public ready for an e-label, or did Cordless launch in anticipation of that day?

A: I would expect that this question could be asked of 10 different people and you'd get 10 different answers. Clearly the legitimate digital acquisition of music by consumers is growing at a rapid pace. At Cordless, we are of the opinion that it's better to be at the forefront of a movement rather than playing catch-up - but we're also under no illusions that a purely "e" label can reach the mass numbers of consumers that the traditional physical medium can. Cordless exists to develop artistic talent early and will use the appropriate tools necessary in order to bring great music to the public.

Continue reading "Interview with Cordless Recordings' Jason Fiber" »

Posted by Glenn at 4:23 PM | Link
|Digital Music||Interview||Warner Music Group|

The Digital Music Forum was last week in New York, and there have been a lot of articles with thought-provoking quotes from the panelists. Here's a sampling of what was written. And Coolfer should note that the tech sites are way ahead of the music sites in covering the news, as is usually the case in issues where music and technology overlap.

• "Students Shirk Legal Downloads" at Red Herring. "Michael Weiss, chief executive of StreamCast Networks, which runs the peer-to-peer service Morpheus, a frequent RIAA target, said his company had polled students about how much they would be willing to pay for music and found an unwillingness to pay at all."

• "Music publishers are restricting online growth - DiMA" at PC Pro. "Jonathan Potter, director of DiMA, the Digital Media Association, said that unless publishers accept a smaller share of the digital music pie for songwriters, the online services will not be able to cut prices in order to better compete with the 'free' music available on p2p file sharing networks."

• "Cell Phones That Play MP3s A Hot Topic At Digital Music Forum" at NY1. Larry Kenswil of Universal Music Group: "I think more and more phones are coming out with broadband capability, 3G phones, and a lot of them now you can download entire songs, not just ring tones, and there's huge growth in that market. Like everything, no one knows how much people want, but there's certainly going to be plenty of things for people to get if they want it. The convergence of the mobile device with the music player and the television set and the whole online world is what's happening this year.”

• "MySpace man says their CD was 'shitty'" at Drowned in Sound. "Gold told the Digital Music Forum that MySpace Volume 1 had only sold a maximum of 50,000 copies, a pretty poor return considering just how many people were made aware of it through the multi-million-person reaching MySpace."

• "Digital Formats Continue to Bless Indie Labels, Artists" at Digital Music News. "David Pakman, head of independent online retailer eMusic, pegged the independent sector at a 27 percent market-share in the US, a figure that factors in major label distribution arrangements. Pakman noted that the independent sector is "the only area that is growing in terms of revenue and market share," while observing that the 'independent artist has always been afforded advantages online that he has not been given in a traditional retail environment'."

Posted by Glenn at 11:10 AM | Link
|Digital Music||Music Industry|

Time Europe has a piece called "Sing When You're Winning: How EMI and the music industry learned to stop worrying and love the digital download." Great title.

It's a story about EMI's Eric Nicoli, who after losing his job when Seagram bought Polygram in 1998 went to EMI in 2001with the goal of finding a way to make money from digital music. Early hire John Rose was given the task of making it work. And it is working. Digital sales are up to 5% of total revenues, EMI's market share has increased in the last year and some analysts are impressed by EMI's innovative approach to digital music.

And let's not forget the ringtone, the newest revenue stream that is sometimes forgotten because it lives in a world separate from music downloads:

"The unexpected cash cow of the digital era is the ringtone, and its wireless cousins: ringtunes, ringbacks and wallpaper. Last year mobile music sales were more than $400 million globally. EMI's publishing arm — with a catalogue of more than a million songs — is the world's largest, with a market share analysts estimate at around 20%. ... And consumers — especially teens — are embracing the new technology with fervor."

The article also hits on wireless sales, which has everybody hopeful due to the high penetration rate of mobile phones. One thing that's missing from the article, though, is Ted Cohen, the respected head of digital development and distribution. This Newsweek article from September of 2005, which calls Cohen "one of Levy's secret weapons," explains how valuable he is to the company's digital future.

Posted by Glenn at 11:45 AM | Link
|Digital Music||EMI||Music Industry||Online Stores/Services|

• From a business point of view this is great, but it's even better from a fan's point of view: The Orchard has announced it will launch a program to provide record labels a way to digitize rare and unreleased vinyl. What a blow to eBay and other markets for expensive collector's pieces, but what a bounty for music lovers. Here's how it will work:

A modified Simon Yorke S7 turntable fitted with a Kondo IO-j cartridge feeds the esoteric, rare, expensive and exquisite Kondo M1000 preamplifier, via a Kondo KSL SFz step-up transformer. This signal is in turn converted via an audiophile A-D 2 channel converter, and archived in DSL. All wiring is Kondo age-annealed 99.9999% pure silver wire, and all components are isolated by Vibraplane active isolation platforms."

The resulting high resolution digital archive can be re-encoded in the future as better digital formats become available. The first group of labels taking part in the program include SST, Delicious Vinyl, Lookout! Records, In the Red, Amphetamine Reptile, and Bizarre/Straight, and the songs will be available next month under the banner "When It Was Wax" at online stores such as eMusic, iTunes, Napster, Rhapsody and all the usual players. (Press release)

• Interesting quote from a Motorola exec: "Our relationship with Microsoft is about making the mobile world seamless with the desktop world and allowing consumers to experience music wherever and whenever they want." What is Richard Chin talking about? Motorola is adding Microsoft's DRM into its mobile phones, and they're pretty happy about it. (ZDNet)

• Koch Entertainment Distribution has inked a deal with digital distributor IODA and RoyaltyShare, a provider of royalty accoutning services and sale data consolidation. Over 40 labels and over 32,000 songs are part of the deal, which will help work the songs to many smaller retails while the Koch staff concentrates its efforts on the larger online retailers. (Market Wire)

• Indie rapper Murs will have a new album out on March 21st on the Record Collection label, which recently hired him as an A&R consultant. Murray's Revenge was produced by 9th Wonder. The label is known more for its rock releases by bands like The Walkmen, Ash, John Frusciante and Kate Earl. Look for more labels to rebuild in an effort to reach both rap and rock fans, which are increasingly the same group of people.

Posted by Glenn at 9:02 AM | Link
|Digital Music||Music Industry||Online Stores/Services|

• As his The Greatest Songs of the Fifties is the top album in America, Barry Manilow and Clive Davis have already started work on hits from the next decade. The collection of hits from the Fifties sold 156,000 copies in its first week of release. (Billboard.com)

• Lou Pearlman, the entrepreneur who has launched the careers of Backstreet Boys and 'N SYNC, announced a new venture into the growing Latin pop market. Trans Continental Latino will develop new talent and recruit established artists. The first artist signed to the new label is bilingual boy band C Note. (I-Newswire)

• Rapper E-40 is teaming up with MySpace.com to promote his new album, My Ghetto Report Card (out March 14th). The social networking site will prominantly feature his video, debut an exclusive video interview, host an album listening party and sponsor a contest that will send the winner to New York to meet with E-40 and Lil' Jon for the listening party. (SOHH.com)

• As always, it'll be interesting to see how the Grammys impacted sales last week. A hint can be found at Amazon.com. The sales ranking of U2's How To Dismantle An Atomic Bomb rose to #5 the day after the awards show, compared to #59 the day of the show. Mariah Carey jumped to #33 from #47, and John Legend rose to #6 from #12.

• As digital music stores make it easier to make available more music, it's a good time to ask the question: Is more better? Is it good for the consumer to have an artist's sub-par music, and what does it do to the artist's legacy? Would a deceased artist have wanted the public to hear recordings that were never intended to be officially released? These are questions asked by The Guardian's John L Walters about the upcoming Miles Davis The Cellar Door Sessions 1970 box set. Walters wrote an excellent article, "Kind of Overkill," and talked to people on both sides of the debate.

• The future of marketing campaigns: Subscribers to Verizon's VCast service will get exclusive access to A Capella, a four-song EP from Jaheim. The singer will be featured in VCast's media campaign just as his new album Ghetto Classics hits stores. (Soundslam)

Posted by Glenn at 8:22 AM | Link
|Digital Music||Music Industry|

• CNET has a review of the Toshiba Gigabeat S MES30VL -- which got a lot of attention at CES -- and it's positive enough to make on think it might actually be a minor iPod-killer. Reviewer James France gives props for simple delivery of PMC software, its breadth of file formats, the FM tuner and video-out jack, and the compatability with WMA subscription services as well as the Starz Vongo movie subscription service. Points were taken away for the average screen and the "confusing" buttons on the side of the device, though time and experience tends to solves those problems. (Via Endgadget)

• Speaking of slight iPod killers, SanDisk has become the number two seller of digital music players in America.

• A post at Digital Music News reminded Coolfer about Songbird, a Firefox-based music player that was mentioned here a few months ago. The site is up and downloads are available. Take a look at the features page. Songbird supports MP3, AAC, OGG, FLAC, WMA, and others, and it can play web pages as a playlist.

Posted by Glenn at 11:30 PM | Link
|Digital Music|

• It's an increasingly digital world: Warner Music Group made a deal with Skype, the Internet calling service. Skype customers will be able to download master ringtones from an online retail store.

• Just two years ago the 22/20s were the object of the majors' desires and were being hailed as the next great rock band. One EP and one album later, the powerful, bluesy trio has split up. Says the band's MySpace page, "For the benefit of anyone who missed the first announcement or anyone new to this site,22-20s have split up.The split was amicable and mutual." This passage from an album review at The Guardian proved to be telling: "Though not responsible for the frenzy the record companies whipped themselves into as they fought to sign the first British blues band capable of taking on the ubiquitous US sound, their impeccable influences and talent sealed their fate." Too impeccable maybe?

• Koch Records has announced it will release Second Sign, the new mix album by DJ Carl Cox. The album will be out on April 4th. Cox will perform at the Ultra Music Festival as well as Coachella.

• Hip Hop Galaxy has some info on the upcoming Mobb Deep album. Blood Money will be out on March 21st and will have cameos from members of G Unit. One track, "Nightmares," was produced by Dr Dre.

• Francis Davis of the Village Voice writes about some of 2005's best jazz albums by living artists.

Posted by Glenn at 8:42 AM | Link
|Digital Music||Indies||Music Industry|

Tuesday's Billboard Bulletin had news that is that is bookended nicely by some recent articles. One bookend is Kelefa Sanneh's "So Light, So Sugary, So Downloadable," an article in the NY Times about D4L's "Laffy Taffy" in the NY Times that explained how the song is an a la carte smash but the album is barely moving off shelves. And there were many reports of the 200% increase in digital downloads in 2005 and the big expected increase for 2006. So what's the next ogical lstep?

On Tuesday Universal Music unveiled Apollo, a new multi-territory label that was created to specialize in one-off hits. Former Mercury Records U.K. VP Matt Jagger will be the new label's managing director. Apollo will encompass territories across Europe and will have separate divisions for dance, urban and Europop.

Let's face it, not all music is purchased for its longevity. Some pop music is about right here, right now. Ringtones especially -- those are seasonal, too. Or didn't you notice a Perry Como Christmas ringtone nearly topping the ringtone chart last month?

Not only was it inevitable that a major music group build an infrastructure of this kind, it was mandatory. The on-demand nature of mobile music, the novelty of ringtones and the short-lived nature of many pop hits demands that labels are able to take advantage of the very short window of opportuntiy they're given. Taking such hits and freeing them from the expectations of album sales is an important shift in strategy and outlook.

Posted by Glenn at 8:38 AM | Link
|Digital Music||Music Industry||Universal Music Group|

The word of the day is shakeout. That's the word that appeared in many articles coming out of Cannes, France, to describe the impending changes in the digital music retail market. "I don't imagine all these services can last. Some will go out of business or be consolidated," said Gabriel Levy, head of music in Europe for RealNetworks in this Reuters article. Barney Wragg of Universal Music Group's eLabs predicted "winners and losers" in the growing marketplace.

AP writer Laurence Frost singled out some of the issues surrounding digital growth. iTunes' dominance and flat pricing scheme is still a worry to many (though I've noticed more than a few albums priced at $7.99 at iTunes lately, so album prices are obviously more flexible than single download prices). Everybody is looking and hoping for some other player to emerge as a contender. "I'm hearing that the artists aren't happy, the publishers aren't happy. Someone other than Apple needs to be happy for this industry to grow," said Amit Shafir of AOL, which is close to introducing a subscription-based music service. (Shafir and everybody else knows subscription services will most likely be only minor successes as long as the iPod is imcompatible with the Microsoft DRM on which these services are based.)

Lastly, Billboard.biz reports conference attendance rose this year, helped in part by a stronger showing from American companies.

Posted by Glenn at 8:23 AM | Link
|Digital Music||Music Industry|

Coolfer was just having a conversation the other day about the lack of music available on online stores. Even though stores offer upwards of a million songs, the search for rare, lost or out-of-print tracks can be frustrating for collector types. The reality of digital music is that songs just don't magically appear at online stores. There needs to be enough of a financial incentive to go through the steps involved in reviving the music and getting them to stores. (Rarities placed on peer-to-peer networks don't have this problem, but that's another discussion altogether.)

Now the long tail has a chance to stretch out ever more. Yesterday came news that Universal Music Group is going to digitize 100,000 previously deleted European recordings and make them available at online stores. "This program will offer material that, in some cases, goes back to the early days of recorded music," said Barney Wragg, senior vice president of Universal's eLabs division. He continued to say the company's "digital archeology" program is a "serious commitment" to use the unlimited storage space of the Internet for the good of artists and their fans.

That's very altruistic, but this wouldn't have happened if Universal didn't think it was an investment that would pay off. Obviously it believes there will be adequate demand to unearth all those tracks. Coolfer believes such a move could spark a new movement to online stores by consumers groups hesitant to move beyond CDs and LPs.

Posted by Glenn at 8:07 AM | Link
|Digital Music||Music Industry||Universal Music Group|

Ever since word got out that Elliot Spitzer was investigating the major labels' pricing at online music store, there's been speculation -- though not any good theories actually printed -- over the focus of the investigation.

Digital Music News reports that the Spitzer's office is looking at "clever contracts" crafted using most-favored nation clauses and, here's the really interesting part, "the right to audit competing agreements on an annual basis."

The roles of Apple and other online sellers are also part of the investigation. "Everybody expects to be contacted, and some already have been," said Jonathan Potter of the Digital Media Association last week, adding that he thinks the investigation has the potential to be "full-blown."

Posted by Glenn at 8:38 AM | Link
|Digital Music||Music Industry||Online Stores/Services|

There has been a lot of squawking about the explosion in paid digital downloads in the last week of 2005. Soundscan said 20 million downloads were purchased between Christmas and New Years's Day. That was more than double the record of 9.5 million set just the week before. Just about every article mentions the two factors that probably contributed to the huge increase: MP3 players and gift certificates given as gifts.

If there's a correlation between gift cards and an increase in paid downloads, there's only one thing the industry should attempt to do: Sell as many gift cards as possible. Bundle them with hardware. Stick them in bags of potato chips. Put them next to the gift wrapping windows of department stores. Include them in legal papers sent to groups who didn't pay royalties after singing "Happy Birthday." Whatever it takes.

But gains in single downloads are often seen as a net negative because the industry's bread and butter, album sales, continue to dwindle at a rate that isn't being offset by digital gains. A TechNewsWorld article quotes two analysts who summarize the situation. On one hand, says one, people are still sharing files and the generation raised on free music still exists. But, the number of homes illegally downloading songs fell 11% between June and October, according to controversial NPD research. Said Russ Crupnick of NPD, "If this trend continues into next year, it would signify a solid victory in the music industry's efforts against illegal music file sharing in the U.S."

Posted by Glenn at 8:34 AM | Link
|Digital Music||Music Industry|

The 2006 edition of the Consumer Electronics Show is going on in Las Vegas. Coolfer has been visiting CES sections at Engadget, Gizmodo and paidContent.

paidContent has some notes from CES. At a press conference for its URGE music service, MTV Networks Music Group President Van Toffler said user input will be an integral part of the experience. "They will tell us what sucks and what they think about the service," he said. Also, Justin Timberlake will work with URGE for the release of his next album.

Engadget's liveblog of Bill Gates' keynote address (during which he was joined by Toffler) has more details and photos from nosebleed seats. Quoting Toffler: "URGE will offer a customized relationship to music, a sense of musical discovery ... over 100 radio stations .. a chance to learn about the roots of songs and lyrics ... a chance to interact with the artists."

Posted by Glenn at 9:15 AM | Link
|Digital Music||Music Industry|

Last week there was news that Apple planned to drop its flat pricing structure and allow prices to rise and fall from the current $0.99-per-song system. Apple has thus far had no comment on the matter. How did people react?

The Daily News quoted NPD's Russ Crupnick. "For those consumers who want a current track, $1.29 [a random figure] or even higher could still be a good value."

From a CMJ article: "The CMJ staff agrees that as long as new Jessica Simpson tracks are $1.49 while downloads of old Sebadoh records are 79 cents, we're cool."

CD Freaks predicted a "mixed reaction should iTunes offer flexible pricing." People buying older songs will have an advantage over those buying more expensive hits.

Not suprisngly, p2pnet started its article on the topic with the line, "Apple's Steve Jobs may raise the cost of his already grossly over-priced digital music downloads." Later it called 20 cents an appropriate price and warned that a price hike could send "even the Apple faithful" for P2P networks.

The Inquirer deadpanned that variable pricing already exists -- 99 cents is a lot cheaper than 99 pence.

Posted by Glenn at 3:58 PM | Link | Comment (2)
|Apple||Digital Music||Music Industry||Online Stores/Services|

Napster comissioned a report on music collections and listening habits and found that the average person own 126 albums but has lost 37 of them for various reasons. Also, 25% of people listen to music on computer or MP3 player rather than on a stereo.

Its conclusion? "This latest ICM research underlines the tremendous shift towards digital music that we've witnessed all year," said a Napster vice-president and UK general manager. I'm sure Napster is using this to bolster it's claim that people want to buy downloads and will like its subscription service. After all, it paid for the study. Jupiter Research, the article points out, will remain the most popular format through the decade.

Read the article at BBC.com for more.

Posted by Glenn at 8:33 AM | Link | Comment (1)
|Digital Music||Music Industry|

There are two articles on the front page of today's NY Times's business section that are applicable to the music industry's digital conundrum. One is "Trying To Week Internet Users From Free" by Joseph Nocera and it looks at how the NY Times' new Times Select paid content has early subscribers "at the high end" of expectations. A Times Select success would follow failures by Slate and LA Times' Calendar Live in getting a sustainable amount of paid subscribers. The key may be that Times Select' paid content is for opinion columns, not event listings or everyday news.

Makes me wonder if online music stores can get some people to pay for additional services or content. As any physical music retailers can attest, there's less and less money to be made in selling music. Out of necessity, music retailers are incorporating other, higher margin products and giving music less floor space.

The other article is "For CSI, Press A1," about CBS's plan to offer through Comcast digital cable reruns of four top CBS shows within hours of their broadcasts. The price tag may give some music execs a bit of indigestion: a mere $0.99. When iTunes rolled out its $1.99 price point for videos I wondered if that spell an inability for labels to raise prices for music downloads. And now CBS plans to go even lower. It's hard to imagine any consumer paying more for a four-minute song than for an episode of "CSI."

Posted by Glenn at 5:26 PM | Link
|Digital Music|

Sean Donnerwood's assessment, at his blog Shark Jumping, of the Digital Music Group's S-1 filing (the paperwork submitted to the SEC when a company plans on going public) is witty and insightful. But I really love it for its uses of the concepts "long tail" and "bubble," and for raising the topic of irrational exuburance in digital music. As Coolfer detailed the other day, there's a lot of investment in music right now, and much is in digital music.

DMG, he explains, is a 20-month-old shell company that owns the digital rights to a catalog of music. Such a company hopes to leverage the scale of digital distribution to capture value that is impossible and/or inefficient with physical distribution and physical retail. Its competition, he estimates, the other small content owners, do more business than DMG and have annual revenues of $20 million between the four of them. It's a business of small margins and high volume, and he's not sure how much volume is out there.

"So we're left with a 7 month old company with 10 employees (reduced from 15 three months ago), $224K in revenue for the 1st 6 months of 2005, a 9% gross margin (sounds like Loudeye as we discussed in an earlier post), and a brutally competitive sector with multiple larger players where all of the leverage is held by the music services such as iTunes, which currently accounts for 80% of DMG's revenue. The idea that this company is going to go public is clearly ridiculous and dredges up bad memories of MusicMaker from the last bubble."

More on the mysterious company with doubtful potential after the click...

Continue reading "A Digital Music Bubble?" »

Posted by Glenn at 12:22 PM | Link
|Digital Music||Venture Capital|

There have been two great examples in 2005 -- alas, only two -- of how the Internet has signalled a change in how things work in the music business: The Arctic Monkeys and Clap Your Hands Say Yeah. Both rose to prominance, relatively speaking, through Internet-created, MP3-downloading grassroots campaigns.

In "Click Your Mouse, Say Yeah!" The Guardian's Alexis Petridis takes a look at both bands and how their situations reflect upon the changes underway. Though there are rumors that the Monkeys built buzz in such old fasioned ways as online street teams sent into other bands' chat rooms, "the notion of the Internet has a hotbed of new talent" is deepened by these two bands. NME editor Conor McNicholas laid out the timeline:

"A generation of music fans came through that had never known the world without the Internet. [File-sharing website] Napster, in its first incarnation, introduced the notion of music as a free commodity. When the clampdown came that shut the free Napster down, people were still interested in filling that free-music fix, but unsigned bands were the only way to do it. Then the Libertines came along, and they were really interested in breaking down the boundaries between the band and their fans. The habits and practices that grew up around the Libertines involved giving away lots and lots of music for free. ... The Arctic Monkeys were the first band to really develop that and match it with genuine inspirational talent. The Internet has become much more important for finding new bands."

He also attempted to find undiscovered gems on MySpace.com and found it to be difficult. That and more after the jump.

(Photo from The Guardian)

Continue reading "Arctic Monkeys, The Clap and The Internet" »

Posted by Glenn at 5:19 PM | Link
|Digital Music||Music Industry|

Cordless Recordings, the digital-only record label started by Warner Music Group, officially took flight yesterday. (Read press release.) The label is the "brainchild" of Jac Holzman, founder and former CEO of Elektra and Nonesuch Records.

The label was started to discover and develop new artists in a "supportive, lower-risk environment." It plans to "make use of these digital resources to implement innovative marketing programs to promote its roster of artists." Rather than rely on the album and single formats, the label plans to release every few months a new cluster (group of three or more songs) by each artists. Frequent, smaller releases by artists make perfect sense for a digital label. Distribution costs are extremely low and marketing costs -- low as well -- are more related to the artist than the particular release.

Fans critical of industry practices will probably be glad to know the artists will retain ownership to their masters. The label will not pay for the production of the recordings, and artists will no receive advances. The difference then between Cordless and say, indie distributor CD Baby, would be the amount of marketing done by Cordless and its ability to secure mobile and ringtone deals not available to the independent artist.

How to make a profit? More thoughts after the jump, as well as some info on Cordless artists.

Continue reading "Cordless Launches Operations" »

Posted by Glenn at 9:26 AM | Link | Comment (1)
|Digital Music||Music Industry||Warner Music Group|

Around New York, Los Angeles and Nashville, there must have been groans when execs read the words of analyst Simon Baker of SG Securities in London: "Digital optimism seems to be crashing in on itself." Or maybe they haven't read the Bloomberg article yet.

The article doesn't paint a very rosy picture. Most people just don't buy digital downloads. They rip their own CD collection, it contends, or that of their friends. " In the U.S., annual downloads per iPod dropped from 25 to 15 in the last year, New York-based Fulcrum Global Partners LLC said in an Oct. 17 report."

As for albums, 11.3 million digital albums have been downloaded, out of a total 436.1 million. The numbers don't lie: Not only is the CD not dead, but the digital album has barely arrived. iTunes has been called a savior of the muisc industry yet the 600-plus million songs that have been downloaded since iTunes opened two and a half years ago represents a tiny amount of overall revenues. The industry's digital model has come into focus -- thanks to iTunes -- but there's not yet a pot of gold at the end of this rainbow.

One main problem: How to make money from the casual consumer. (Labels must be looking at subscription models as the way to monetize the mild interest of the typical consumer.) The more serious music fans and the early adopters have been paying for downloads, but others aren't spending much money. Said a New York equities trader who said he downloaded ten songs immediately after purchasing an iPod and then one or so a month since then, "I certainly didn't want the whole album."

Of course, digital optimism -- if there is any -- must include the brighter future for mobile downloads, ringtones and video downloads.

More thoughts after the jump...

Continue reading "Digital Optimism...Or Lack Of" »

Posted by Glenn at 9:02 AM | Link | Comment (4)
|Digital Music||Music Industry|

• A report by The Consumer Electronics Association predicts a 9% jump in consumer electronics purchases this holiday season. MP3 players will be leading the way.

• The FTC has halted the deceptive ads of P2P site MP3DownloadCity.com.

• Toshiba has two new additions to its gigabeat line of MP3 players, a 20GB and a 60GB. Engadget has a few details, and the comments section quickly falls into the usual argument between iPod's fans and dissenters (always good for both comedy and product feature information).

• PC World asks, "Are You Still Using CDs?" Coolfer replies, "Yes." Harry McCracken asks, "Why fuss with CDs when you can listen to an MP3 player that holds way, way more than six CDs' worth of music and provides instant access to all of it, not to mention podcasts and other audio?" I'll tell you why: Because a lot of CDs can be purchased for the same price or less than can digital downloads at online music stores. Here's another reason: Because a lot of music I buy isn't available at online music stores. Here's another: Because I like a permanent copy even though I just moved owning a large music collection can really be a pain at times. Here's another: Because CDs sound better. Here's another: Used CDs are a great way to beef up one's music collection. Here's another: In some cases, packaging still matters. Here's another: Labels like to send promo CDs to bloggers. Have fun with your zeros and ones. I'll stick with CDs and rip the songs when I get a chance.

Posted by Glenn at 4:04 PM | Link | Comment (5)
|Digital Music|

P2P company eDonkey's attempts to survive in a post-Grokster world will be the stuff of books, documentaries and conference panels for years to come. BusinessWeekOnline captures the dilemma faced by Sam Yagan and Jed McCaleb, the P2P company's co-founders. (via Prefixblog). Writer Burt Helm put it this way: "Now (Yagan) is trying to reinvent eDonkey and use its popularity as a foundation for a legitimate business." That means trying to work with the content owners who are sending him cease-and-desist letters.

The article shows a few things. First, Grokster has initiated a sort of scared straight program for P2P companies. To some that points to a "chilling effect" (a negative effect on innovation caused by legal uncertainties) but let's not forget about the innovation from those companies scared straight. The RIAA's Cary Sherman and Snocap's Shawn Fanning predict all sorts of growth and innovation to spring up to support and create new legal P2P companies. Some innovation may be chilled, but there's other innovation that will arise. Over the long term the thing to look at will be the net of the two.

Also, P2P may not be avoidable, but when I read that the president of StreamCast Networks (owner of Morpheus) said, "The [file-sharing] landscape in America is going to be dramatically different just 30 days from now," it's hard to believe that the Surpreme Court ruling will have no impact. It may not impact the innovation of rogue file sharing applications, but it is and will impact the formation of legitimate file sharing. When and if legal P2P will gain traction is another issue.

JupiterResearch's David Carr is skeptical eDonkey can do something about the software that's already out there. "They are going to have to prove that their value is something other than free music," he said.

Related: BitTorrent may have the exact opposite fortunes as eDonkey. Here's an article by Fortune on BitTorrent's creator, Bram Cohen.

Posted by Glenn at 10:01 PM | Link
|Digital Music||P2P|

• What's in a name? Digital music player manufacturers must not put much weight in the name of their products. Panasonic introduced the new D-Snap (mentioned at Engadget) and fortunately the specs and the design make up for the name. Coolfer's first impressions: Sounds like a late-'80s cross promotion for Dee-Lite and Snap.

• Some reality was injected into the digital music euphoria by analysts at Fulcrum Global Partners LLC. Digital Music News has some info from a report and it sounds like what Coolfer has been preaching for some time now. Digital sales are up but not by an astounding margin (given the penetration of hardware devices) and not at a rate that is overcoming the decline in physical sales. Also, physical retailers' inventories see more DVD and other high margin product and less CDs. The analysts were not blown away by third quarter digital revenues. "We are surprised that weekly digital downloads have not increased rapidly throughout 2005, given how early the industry is within its digital migration," they wrote.

• From Reuters, "Video iPod opens gates on ad model." If shows move, asks Michele Gershberg, will ads follow?

Posted by Glenn at 2:00 PM | Link
|Digital Music|

As soon as the word "greedy" was uttered by Steve Jobs in reference to major labels' interest in varirable download prices the topic has been a heavily debated topic. It's been good water coolfer talk in the music business, and online trade mags and their pundits have used it to again show their distaste for major labels and their tactics.

Well get ready for more. Yesterday an article at The Guardian revealed that Universal Records " is likely to introduce variable wholesale prices for music downloads in 2006." The Guardian obtained a leaked copy of a contract between Universal and a smaller UK online retailer that details a three-tiered pricing structure that would "drastically" increase the wholesale cost of some downloads and decrease the wholesale cost of others.

What Universal wants, Universal often gets. Its market share gives it the leverage and confidence to makes moves -- popular or not. Given the fact that the other three majors have not followed Universal Music Group in cutting list prices and revamping how marketing money is used, a unilateral price increase by Universal doesn't mean others will follow and adopt their own tiered pricing structure.

Universal Music Group currently has six of U.S. iTunes' top ten singles downloads and five of its ten top albums.

Posted by Glenn at 1:28 AM | Link | Comment (1)
|Digital Music||Music Industry||Universal Music Group|

• Slate's Jack Shafer explains the press corp's crush on Steve Jobs and his company.

"The inordinate amount of attention paid to Apple's launches must be, in part, a function of the company's skill at throwing media events, stoking the rumor mills, and seducing the consuming masses. All this, plus the chatter-inducing creativity of Apple's ad campaigns, and its practice of putting its machines in pretty boxes make writing about Apple products more interesting than assessing the latest iterations of the ThinkPad or Microsoft Office."

The psychological savvy of Jobs, the company's role as perpetual underdog, it's evangelical outreach programs...they're all enough, he writes, to erase from most memories the Apple III+, the Lisa, the Macinitosh Portable, the Mac TV, the Newton, the Apple G4 Cube and eWorld. People gotta believe in something, right?

• IDC's latest research predicts an MP3 player market of 124 million units in 2009. It also predicts the maximum flash drive capacity to increase to 8GB by 2006 and 16GB by 2007. Way to exceed Moore's Law!

• Analyst Matt Rosoff of Directions on Microsoft commented on the RealNetworks/Microsoft partnership to vnunet.com: "Microsoft was inclined to settle because of Real's involvement in the EU antitrust case." He's talking about the European antitrust division's case against Microsoft that focused on its media player. RealNetworks will now drop its support of the litigation.

• Who's being called greedy now? Some third party iPod accessories makers are balking at paying Apple's demand for 10% of all revenue for the right to receive "Made for iPod" certification for their products. An article at Macworld Daily News (via Digital Music News) quotes an exec at Bose as saying, "This is a massive licence fee which will not sit comfortable with many partners." An Altec Lansing spokesperson called the fee "ridiculous and excessive." Digital Music News' Jonny Evans wrote that Apple's scheme is "mainly designed to regulate the quality of a growing number of iPod add-ons," which for consumers means a mark of reliability. Coolfer doesn't see it. From everything that's been reported thus far, the "Made for iPod" mark means only the company paid for the certfication and is no indication on the quality of the product. (Though an argument can be made that exacting a high fee from manufacturers eliminates low cost, shoddy items. So the low of the low end is eliminated. That doesn't speak of the rest of the products.) In other parts of the music business there's a word for it: payola. No matter. Spitzer probably has a crush on Jobs, too.

Posted by Glenn at 8:55 AM | Link
|Digital Music||Online Stores/Services|

It's a good thing there were no hurricanes, major earthquakes or judicial confirmation hearings yesterday. After all the reports of Apple's latest press conference/product initiation there wasn't much room left on the news wires for much else. As always, the Steve Jobs presentation consumed a lot of bandwidth. Gadget blogs Engadget and Gizmodo covered it all with typical moon landing fanfare, and the blogosphere erupted in praise and critique.

Apple introduced a new iTunes, a video iPod and a six-button remote control for use with the new iMac.

iTunes 6 adds some new features: music videos ($1.99), TV shows ($1.99) and Pixas short films ($1.99), the ability to send music to friends, personalized recommendations and customer reviews. (OK, Apple customers, here's your chance to show Amazon.com reviewers how to spell and construct proper arguments.) The recommendations page has potential. My recommendations were a bit skewed because I downloaded quite a few free downloads of the week without really caring much for the artists. iTunes doesn't discern between what was paid for and what was free, and the recommendations are impacted accordingly.

The music video stores (which is accessed through the music store) has a few thousdand videos that can be sorted by date added, artist, title and genre. There are a few interesting things like a Brazilian Girls Live video EP recorded at NYC's Irving Plaza (Coolfer was there, it was a great show and that nine-minute version of "Pussy" was crazy) but mostly new hits for the iTunes crowd (Kaiser Chiefs, The Killers) and safe, old favorites (Fatboy Slim's "Weapon of Choice," Michael Jackson videos). Familiarity and safety rule. But hey, Chumbawamba's "Tubthumping" is available.

I found a few bugs at the store (a blank top 100 page, getting CD search results when I thought I was searching for videos) but overall it's the kind of clean and easy shopping experience one would expect from iTunes.

The video iPod...what to say, what to say. Well, my first thoughts are that New Yorkers are not only going to deaf to what's going on around them but they'll soon be blind as well. Let's hope the videos are watched in safe places like the subway and not while jaywalking across Broadway. My second thought is that the $1.99 price tag may hurt the majors' wish to occasionally raise prices on a music download. Unless some videos will go up as well the price of a music download may be stuck at $0.99.

An immediate question is whether or not people want to buy music videos. Yes they do. Next quetion: Do they want to buy them in the same numbers as music downloads? I'd guess no on that one. Here's the reason: Mobile music is much more practical than mobile video. Video takes up so much more of a person's attention. Music involves only one of the sense, not two. Another reason is because music videos on DVD just don't sell as well as their CD breathen, the greatest hits comps. Live concert DVDs can sell in good numbers but rarely as much as the studio album for which the artist was touring.

Extra credit:

• CNET has a FAQ on the new products. ("Can I copy DVDs into iTunes and then into the iPod? Not with the Apple-supplied software.")
• Digital Music News' Paul Resnikoff on The Gamble of the Video iPod.
• What are Gizmodo readers going to do with their video iPod? 34% will download pirated video, while only 4.4% intend to watch videos.

Posted by Glenn at 9:03 AM | Link | Comment (3)
|Apple||Digital Music|

RealNetworks settled its antitrust lawsuits with Microsoft on Tuesday and walked away with not only a large sum of money ($461 million) but agreements to market its products and services together for 18 months. The total package is worth $761 million.

Here are some key aspects of the agreement:

• Non-exclusive: Microsoft is still free to partner with others and promote its own services.
• Promotion: Rhapsody's service will receive
• Integration: A new version of Rhapsody will download with every new MSN Messenger client and with every upgrade to the client. Microsoft will give Real access to and long-term licenses for Windows Media and security technologies.
• "We will pay Microsoft predetermined market-rate bounties for new Rhapsody subscribers delivered by Microsoft through the MSN marketing channels," said Real's Rob Glaser.
• Pricing: The Wall Street Journel predicts lower pricing for Rhapsody services to compete against Apple and Yahoo.

There's now speculation about Microsoft's plans for a subscription service, given this deal and the failed talks with major labels. Coolfer would like to see elements of MSN Music brought into Rhapsody, such as the easier method of purchasing tracks for download and an ability to access the store via a web browser (though it's hard to say if either is likely since Rhapsody will continue as a standalone product and competitor to MSN's services).

Good coverage throughout the day came from Paid Content and News.com. If you really want to geek out over this announcement, here's an MP3 of the Real-Microsoft press conference complements of Paid Content.

Posted by Glenn at 9:12 AM | Link
|Apple||Digital Music|

• The trials and tribulations of Sanctuary continue with an announcement that the music company will cut 175 jobs -- or 25% of its workforce.

• Two articles on Jay-Z worth sharing. One is a very good article at Forbes that takes a look at Sean Carter the label executive. It's a week old, and that almost puts it past the Bloggers Statute of Limitations, but it's a good profile. ("He gives Def Jam ... unmatched credibility with the artists that will define its future.") The other is a brief article at SoundSlam reports that Jay-Z is in discussions with a major English soccer club. He is reportedly interested in purchasing a large share in London-based Arsenel F.C.

• At AFF Brainwash, Tim Lee encourages the music industry to demand that Apple remove its DRM from iTunes. He draws a paralle between Microsoft's domination in the early days of its DOS operating system to the ability Apple has to lock in its customers to its products.

"How does ditching DRM help? If Apple's songs were distributed without copy protection, your customers would be able to switch to another program at any time. You could threaten to cut a deal with any of the other companies now clamoring for your business--Real, Napster, Sony, Microsoft, etc--and Jobs would know that his customers had the option of leaving his platform."

DRM, he argues, isn't effective in fighting piracy and is not to be worried about. He gives to reasons why people download at iTunes: convenience and respect for the law. Somewhere between the two is a fascination and loyalty to Apple products, but the point is clear: people will use P2P if they so desire. (Via Corante)

• Roger Friedman on Jason Flom: "Jason is the last of the real record executives who cares about the business." (FowNews.com article.)

Posted by Glenn at 9:18 AM | Link
|Digital Music||Music Industry||Universal Music Group|

• Yahoo will offer tools to find, organize and rate podcasts.

• Making a ringtone can be an art, says the Des Moines Register. How does one find the essence of a song and capture it in a brief clip? It's not always a chorus, according to Tim Nilson, Sony BMG's VP of Global Music Technology. He cites AC/DC's "Back in Black" as an example.

• PC Mag reviews high quality download store MusicGiants. In a nutshell, lossless files sound great but the "catalog is anemic."

• Samsung and Apple are being investigated by the Korean FTC, reported Engadget yesterday. The two companies' sweetheart deal on flash memory has raised a few eyebrows and possible "unfair trading practices" may be looked at. As the majors will attest (after their Minimum Advertised Prices got them in hot water) it's best to keep off the FTC's radar.

Posted by Glenn at 9:37 AM | Link
|Digital Music|

Are music critics and tempestuous record store clerks going to be out of the jobs? No, the unemployment office won't see a flood of messenger bags and saggy clothing just yet, but there will soon be more competition for their services. MusicStrands, a music recommendation firm, just received a $1.25 million investment in its first round of investment financing.

MusicStrands's technology recommends music based on listening behavior of individuals and social networks. "People listen to music by grouping and playing songs in ways that make sense to them," explains the company at its website, "without necessarily being able to explain the rationale behind the grouping." They break it down into playlists that are cognitive (selected ahead of time) and spontaneous (chosen in real time).

If this technology is good it will have a crate digger's mentality. By that I mean it will suggest songs not based on popularity (small music collections lead to songs being grouped more out of necessity than with larger collections). That's the human element. Somebody has to be able to resurrent forgotten or lost tracks, and somebody will need to push out a new song nobody has heard yet.

Posted by Glenn at 9:11 AM | Link
|Digital Music|

• Podcasting News asks, Are Creative Commons-NC Licneses Harmful? As author Erik Möller sees, it, there are four key problems:

- They make your work incompatible with a growing body of free content, even if you do want to allow derivative works or combinations.
- They may rule out other basic uses which you want to allow.
- They support current, near-infinite copyright terms.
- They are unlikely to increase the potential profit from your work, and a share-alike license serves the goal to protect your work from exploitation equally well.

• Engadget reports that the low-priced SanDisk m200 series of digital music players will come with a rebate of $80 in return for a six-month commitment to Rhapsody To Go. That would mean the $79 price tag for a 512MB m230 will cost you sales tax. The iPod has style, but free is a time-tested marketing strategy. (The 4GB model costs $199.) Coolfer cannot find a mention of the rebate at either the SanDisk website or the Rhapsody To Go website, and today's press release made no mention of the rebate.

(Update: Coolfer got a confirmation of the $80 rebate. The official announcement will come tomorrow.)

Posted by Glenn at 11:18 PM | Link
|Digital Music|

It was all over the news yesterday, and even Matt Drudge gave the story a link (pictured). The IFPI announced via press release that global digital music sales tripled in the first half of 2005.

Other stats:

• Global music sales dropped 1.9%

• Digital sales are being driven by the US, Japan, UK, Germany and France.

• Digital sales now account for 6% of total record industry sales.

Posted by Glenn at 9:28 AM | Link
|Digital Music||Music Industry|

The rock band Harvey Danger, who you may remember for the wonderous one hit "Flagpole Sitta," has come up with a publicity stunt: The band is giving away its music. It's not revolutionary and sometimes the downloader get what he pays for, but the media tends to treat free as newsworthy. Never fails. All the band needs is a few journalists and a few bloggers to start talking and the ball is rolling.

Slashdot.org took to the story and took quotes from the band's website that give reasons for giving it away:

"'In preparing to self-release our new album, we thought long and hard about how best to use the internet. Given our unusual history, and a long-held sense that the practice now being demonized by the music biz as 'illegal' file sharing can be a friend to the independent musician, we have decided to embrace the indisputable fact of music in the 21st century, put our money where our mouth is, and make our record, Little By Little..., available for download via Bittorrent, and at our website."

Harvey Danger brings up an important point: file sharing is not always illegal. Some people trade songs issued under a Creative Commons license, which can grant certain permissions that would allow for legal sharing. Others may trade files that are in the public domain (though it's surely extremely rare). Some may trade travel photos or Word documents. The file sharing that is "demonized by the music biz" is that which trades copyrighted material owned by RIAA members. (The cease-and-desists letters and efforts to close some file sharing networks, though, ends up targeting all traffic on those networks -- whether or not its related to the RIAA.) To my knowledge (and if I'm wrong please let me know) nobody has been sued for allegedly trading non-RIAA songs.

Just take a look at the lawsuits. This page at the EFF website lists them by label. An article at Slyck tells of a