Month: October

Full Text:

In 2008, Amazon has made several deals to help further itself as a download service for digital music. They signed up Pepsi to offer redeemable codes for downloads and other merch at Amazon, as well as making a deal with Rockstar Games to allow players to tag songs from the soundtrack while playing Grand Theft Auto IV to download off Amazon at a later time. Now, Amazon has made two new moves. It is now the digital music sales provider behind MySpace Music and is also the mobile music vendor for Google's new Android mobile phone platform. These are important moves and Amazon has come a long way, but it is still far behind Apple and not yet a threat to iTunes. At the end of 2008, Amazon will have sold 130 million songs, compared to the 2.4 billion songs expected to be sold off iTunes. It is expected for Amazon's sales to surge 60%, up to 208 million in 2009 if they continue to make such deals. Amazon also has the backing of the industry in the sense that everyone is looking for something to seriously compete with Apple's iTunes to have leverage in digital music sales. Other companies like to partner with Amazon because it has DRM-free digital music, unparalleled ecommerce research, providing affiliates with 20% of the revenue from any song purchase (compared to Apple's 5%), and also there is Amazon's Web Services developer program. Its designed to integrate its commerce features with a given site without requiring users to navigate to Amazon's site. Execs say that all the ingredients are there for Amazon to drive rapid expansion.

Month: July

Full Text:

iTunes' Complete My Album is emerging as a marketing tool for labels releasing new albums from their artists. In recent years, releasing an upcoming album's first single for digital download has been common practice. But many believe this takes away from full album sales when the release date comes along. That is where Complete My Album comes in. The premise is to release several singles in a timely fashion before an album's release. Consumers can purchase these singles to give them a better idea of what the rest of the album will sound like, paying the usual 99 cents per song. When the album comes out, they will be offered to pay a reduced price for the rest of the album. In reality, they are paying the same amount, but in smaller installments over time. Lil Wayne's latest album released six singles beforehand, and the Complete My Album sales accounted for 52% of the digital sales on iTunes. Labels are happy this option gives a better chance of consumers purchasing the album after getting the singles. The videogame industry has done similar marketing schemes by releasing demos and screenshots in anticipation of the release date to generate excitement and demand for the final product.

Month: June

Full Text:

As more digital music services outside of Apple are converting their libraries of tunes to DRM-free software, record labels are thinking that variable pricing points will be another way to spark more music sales online. The drop in CD revenue has yet to be made up for by digital sales, but changing prices on individual tracks and albums could be part of the solution to do so. A survey was done that showed of the people who do pay for music, 33% downloaded between 10-50 songs in the past 6 months, while 26% downloaded less than 10. The idea with variable pricing is that raising prices will make more money off the 10-50 song crowd, while lowering other prices will encourage the less than 10 song group to buy more music. Digital service PassAlong, which has its own digital music store, completed a study using the Digonex variable pricing system conducted with Canadian label Nettwerk. Once per week for 16 weeks, the service altered the price on 2,000 tracks participating in the test (singles were 99, 66, and 33 cents while albums were priced more granularly). According to their CEO, prices fell on albums just over a dollar, but revenue from tracks in the program increased an average of 122%, with some up 500%. A key thing was albums were sold they customers would usually buy only two or three tracks from since they were priced lower. The trial did not include singles for sale over 99 cents, so it is unknown whether the elasticity of the system can support more expensive individual tracks. Along with DRM-free music, the industry is hoping this will give competitors more power and the ability to sell higher volumes of music while making a greater profit.

Month: June

Full Text:

The RIAA has a team of individuals working hard to crack down on illegal downloading. This group investigates peer-to-peer (P2P) networks and is seen as vital to the successful future of the recording industry. Despite its efforts, the demand for pirated content online is still high and it is hard to see how much illegal downloading their actions have deterred. To root out illegal downloading activity, the RIAA works with MediaSentry, which has developed customized programs that operate over the Gnutella Network, the same as many popular P2P networks. The company has a list of song titles owned by RIAA-member company and gives specific hash codes to each song file. If more than one user on a network has the same song file with the same hash code, they know it is being shared illegally. The company can also download songs that they do not already have to see if they are RIAA-owned by "fingerprinting" the recordings. While a copyright owner cannot sue every person who downloads their song illegally, they can notify the infringer's Internet service and block their material. If the RIAA identifies a user with a popular hash code of just one digital file, it is enough to send a take down notice to the ISP. Many universities claim that they are being targeted illegally, but the RIAA says that is not true and not technically possible. They find what they find through public means. The RIAA uses litigation against only the most egregious of users. When that happens, they file the suit and target the IP address's registered user. OF the tens of thousands of suits filed against commercial ISP's, universities, and individual file sharers, only one has reached trial.

Month: June

Full Text:

Columbia Records wanted to make sure that the new single "Hammerhead" by The Offspring was successfully reaching as many radio DJs and station programmers as possible. So rather than send out CDs, which would probably get lost in a pile of others, the label used eNotes to e-mail the single directly to the desktops of their targets. The result was the single being #9 on the airplay chart of Radio & Records for active-rock, according to Billboard. eNotes sends an email with a streaming version of the song and gives the recipient the option to download the tune from a secure digital courier service. This multimedia advertisement gives labels the ability to track results on how many and how downloads the single. The company also targeted over 1,200 DJs, station programmers, and decision makers at rock stations for The Offspring's track. An e-mail also saves money and is eco-friendlier than shipping out physical CDs to radio stations.

Month: May

Full Text:

US court ruled that three top webcasters should pay ASCAP and its members up to $100 million in copyright royalties for streaming music online. AOL, Yahoo, and RealNetworks had been streaming music without an official agreement since 2002 because of a 1941 consent that requires ASCAP to have a blanket license if they could not agree on a performing right tariff. ASCAP sought 3% in music-related revenues, but the webcasters were looking to pay a significantly lower amount. The court ruled a main difference in this case is that webcasters have the ability to offer any song, music video, or playlist to consumers on demand at any time or place, whereas radio or television cannot and only provide selected music at certain times. The court sided with ASCAP's argument and method of calculating royalties, but only lowered the amount from 3% to 2.5%. The ruling, which may be appealed, only covers the year 2006. The payment for the remaining years between 2002 and 2009 is still up in court.

Month: June

Full Text:

The main competitors for Apple in the realm of digital music all meet the prerequisites for existing customers, flexible pricing and business models, and willingness to invest in new technologies. The key problem that Amazon, Napster, and Wal-Mart have in their efforts to compete with Apple is their marketing. Especially with TV ads, these three companies seem to have non-existent promotional strategies for their DRM-free digital music services. Apple has spent $400 million since 2003 on their successful iPod + iTunes TV ads, along with more on billboard and print ads. Napster has cut down advertising costs since their Super Bowl ad due to low quarterly earnings in an effort to cut their net loss. Amazon and Wal-Mart, who both had billions in revenue last year, have still shown next to no advertising for their services. Amazon has a lone ad with Pepsi that advertises a point system where consumers can purchase anything from Amazon with Pepsi points, not just music, that has been running since February. Amazon's system is also still in the beta format, so it could be waiting for a broadening of its service. Wal-Mart has not advertised their service at all and has been in the midst of a transition to the DRM-free model with the addition of WMG content. It is possible there are campaigns waiting in the wings for these companies, but nothing has come about as of yet. A group effort from these companies and labels alike will be necessary to compete with Apple's chokehold on the digital music world. DRM-free music service-providing companies need to increase their messaging and record labels need to make artists available for promotional purposes in these new marketing campaigns.

Month: May

Full Text:

Apple appears to be set to upgrade their iPhone to a 3rd generation. The product is easily the phone with the biggest impact on mobile music on the market to date. While only 6.7% of mobile phone users listen to music on their phone, 74.1% of iPhone customers use their iPhone as an MP3 player. Most of these consumers transfer their songs via computer connection. The new iPhone supposedly may be able to use cellular networks to download music, rather than current iPhones that use a slower, older network for downloading tracks. This would give faster downloading and a much larger coverage to customers, and probably increase music downloading more significantly. While Apple continues to run with its successful product, other phone companies try to keep up. Smart phone company Research in Motion (RIM), who makes Blackberry, owns the largest share of the smart phone market, but Apple is closing in. In an effort to fight off Apple, the two latest Blackberrys, the Pearl and the Curve, are aimed at the high-end music market. They each have available applications such as MediaGuide (service that identifies songs on the radio), streaming XM radio, and a pending full-track downloading service from PureTracks. Verizon is also trying to make music more widely available for all of its phones. Teaming up with Rhapsody and its newly acquired Urge music service from MTV, Verizon is the mobile platform for these music services. Since smart phones only cover a small part of the market, Verizon hopes to capitalize on the rest of the consumers with these new music phones.

Month: April

Full Text:

Sony BMG is working with major publishers to strike a digital deal in the Asian market.Some of the countries that they are focused on are China, India,Hong kong, and Malaysia. This deal is important to continue promoting the use of digital music in a legal way.Many publishers and societies like ASCAP arent yet ready to work with the Asian countries,but arrangements are in the works from all the majors in one way or another, except EMI Music and EMI Music Publishing which are unknown.