Month: November

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Booklets with art and lyrics came with CDs to help bring fans closer to the artist, but when digital downloads came on the market there was no longer any of that. It was just the music until now. iPhone has a new application out that allows artists to have interactive booklets that fans with the phone can access. This is a great step up from the PDF that some labels used with downloads on iTunes. This new way to connect with fans is a great leap forward, but it is an expensive way that labels can go and because of this they have to be very selective with what artists they choose to use the new application with. There are only 7 million iPhones being used so labels have to figure out what demographic has the phones and match their artists to that. Fall Out Boy’s is one of the first to try and use an application like this, and many are sure to follow. Pink, Snow Patrol, and David Cook are three examples of other artists that have released applications on the iPhone that are interactive and similar to what Fall Out Boy’s have done to this point. This new application with its features could help attract more people to digital music.

Month: October

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MySpace launched its separately operated music service under the support of the four major labels. It allows users to stream music on demand, create playlists, add music players to their profiles, and buy DRM-free music downloads (via Amazon) and ringtones (via Jamster). Soon MySpace Music will allow artists to sell concert tickets and merchandise on their pages and will get a cut of the revenue, as well as exclusive content like new tracks and videos to encourage consumers to download albums and music. MySpace has recently made deals with the four major music publishers. This launch took place during a time of steep drops in physical sales and iTunes dominating the online digital music market. MySpace Music is facing some problems. Converting MySpace users into music purchasers, the division of equity between major labels, and the under-representation of the independent labels' music repertoire. Despite this, Amazon looks to be the most likely guaranteed winner since they are not involved in any of those listed problems. The majors have 40% equity in MySpace Music, valued at $120 million. It is interesting to see them so involved with the service after not supporting services like Last.FM, Pandora, etc. One reason could be because of the inclusion of sponsors such as McDonald's, Toyota, Sony Pictures, and State Farm, which will be rotating ads around the site. Many independent music publishers and agencies have still not been able to reach agreements with MySpace Music over rights to their songs. Another advantage the majors have in their 40% stake is the access to sales and other data from MySpace, especially that of independent artists that their labels will not have access to. While it does not have the same amount of music as iTunes, yet, MySpace Music seems set to be a success. They will need to sell a large number of ads on their site for around $10 per 1,000 impressions, much higher than the standard US rate of $3 per 1,000 impressions, in order to generate long-term profits. Thus far, Amazon seems to be the only player set to be the definite winner.

Month: October

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At the end of the third quarter for 2008, there is some hope for the music industry. There are signs that the business is shifting, most likely to a digital future. While sales slipped 5.3% from the same point last year, the rate of decline has slowed from the 9.1% it was down at the same point in time last year. Digital sales have made up some of the ground that physical sales have lost, growing to 47.3 million sold so far at 15.9% of all album sales compared to 10.6% last year. Combined physical and digital albums sales fell 11.7% to 298 million units, slowing from the 14.2% decrease at the same time last year. More individual tracks have sold this year as well.

Month: October

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MySpace Music shows a turning point for the recording industry. The four major labels and MySpace, a News Corp. subsidiary, are taking part in this joint venture of a brand new music service and business model. This is the culmination of over 18 months of research in business models and digital music strategy for the labels. During that time, the majors signed deals to open the door for ad-supported free streaming, digital rights management (DRM)-free music sales, and reduced licensing costs while getting revenue share and/or company equity in return. The new model is meant to be more of a template for future agreements, rather than an experiment. Many indie labels are upset with MySpace. They were not included during the launch of the site, mainly because theyre still working out their agreements with MySpace. This is because many of the indies are fighting to get company equity like the majors have, but it is off the table in the discussions. They are still discussing the terms of ad revenue from streaming and purchased music and video. The focus on major labels could also be a problem because the vast majority of artists on MySpace are unsigned or on indie labels. The Orchard and major label-owned indie distributors have licensed their catalogs to MySpace Music in time for launch.

Month: September

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There has been a lot of speculation as to why Best Buy purchased the struggling Napster for $121 million. The truth is that Best Buy is using the acquisition as a part of a broader platform to offer digital content and to leverage its market share in consumer electronics by bundling services that bring in recurring monthly revenue. They have already done this over the past few years with services like TiVo, DirecTV, and XM Radio. With Napster, Best Buy can persuade makers of consumer electronics like stereos, TVs, and computers to embed the service in their products in return for better shelf space and promotional support. They already have a lot of leverage in this area. Best Buy also may expand the platform beyond music, to movies and other digital content. An area to watch is mobile phones. The store recently opened new Mobile Shops and is experiencing increased mobile phone sales by 50%. If Best Buy increases its market share in this sector, it could wield the same leverage over mobile phone manufacturers and wireless operators to include Napster mobile services. Major labels are very excited about the acquisition and see it as a great way to drive sales in new ways on a lot of devices.

Month: August

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Atlantic Records has created a new application that makes it easier for fans to connect to and check up on their favorite artists. Fanbase is a program that works directly from users' desktops with an imeem music player, Meebo chat feature, and content from YouTube and Brightcove along with up-to-date tour and new release information all on a single window. This application with make it easier for fans to connect with their favorite artists through less clicking and searching around the Internet. Atlantic chose specifically to use pre-existing technologies for the application because they saw programs like Meebo's chat being much better than anything they could create themselves. The chat feature is looking to directly connect fans to each other in a better format than MySpace uses with just leaving comments. Fanbase and Atlantic hope to move to mobile content and possibly find different solutions to the CD problem and more in the future.

Month: May

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Record labels used to be able to plan a CD release, but now the problem they face is having the CD leaked before its official release date. Labels don’t have the control over distribution like they have in the past, which brings up knew challenges that are hard to overcome. Now, the focus is on figuring out different solutions to the problem that may work. A few ideas that have come up are to work in areas that are more likely to be controlled like the video game market and ring back tones. These areas could bring new opportunities to the way songs are promoted and released.

Month: March

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Search engines like google and Yahoo both help to point a user in the direction of information that they are looking for.What had been noticed was that a user could not search for a song and stream the whole thing without being a subscriber or logging in to a service provider.That is when websites like seeqpod and Baidu appeared, but is what they are doing legal? Record companies say no and are asking questions.They also are asking when they will be compensated.

Month: February

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All the majors, iTunes, and stores like Wal-Mart are going ahead with their plans on digital download cards. They hope to be marketed in a way that they will become a convenient impulse buy for the everyday consumer. The only question that has come up is "Will this work". Starbucks has had sucsess selling these type of cards, but will that continue on to other stores?

Month: March

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Based purely on Nielsen SoundScan data, the retail value of digital recorded music sales in the US last year rose by almost 50%. Digital recorded music sales last year accounted for 13% of the total retail value of recorded music sales in the US. Digital album sales rose by 53% while digital track sales rose by 45%.