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New Models For The Music Industry & Time To Take Action
December 3, 2010
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"While the industry spent many years fighting the rise of the Internet as a distribution and promotion method for music, it was eventually forced to recognize it...However, there is another solution: stop worrying and learn to embrace the business models that are already helping musicians make plenty of money and use file sharing to their advantage, even in the absence of licensing or copyright enforcement."
-- From 'Brainstorming Session on New Business Models for the Music Industry Report: From Theory to Action' a white paper by Michael Masnick (President & CEO) and Dennis Yang (Vice President of Product Development) of Floor64, Inc.Six years ago I wrote in the newsletter, "I would again suggest that NARAS, the RIAA, and the music industry at large, focus its attention on MOVING FORWARD to design new models for revenue creation for the future instead of spending millions trying to stop what cannot be stopped. The technology is too far advanced and you can't take it away. You can't shut down all the websites that exist around the world that offer free downloads, you can't stop people from downloading or burning CDs."
I started this newsletter in December of 2003 and sent it to approximately 35 close industry friends in hopes that it might initiate dialogue about how to go about creating (for lack of a better term) 'The Music Industry 2.0' -- or whatever the proverbial "next phase" was going to be for the industry, if in fact the industry was to survive in any meaningful fashion. (Obviously, we're way beyond Music Industry 2.0 now)
Within six months the newsletter grew virally to over 100 industry subscribers, then two hundred, and it kept growing and at a faster pace than I ever imagined. Today, seven years later it goes to almost 2,000 people direct via e-mail, and it's also posted on the web's largest radio and record community, All Access.com, in the 'Digital Technology' section. ( http://www.allaccess.com/disc-and-dat )
During the past seven years I have reiterated time and again that the industry would be better served by putting together their best creative minds with some of the best technology people to create possibilities for what future industry models might look like.
This past week I received an e-mail with an offer to download some white papers from MIDEM, and one of those white papers is the one I used above in the opening quote of this commentary. The white paper by Michael Masnick and Dennis Yang is one of the best (maybe the best period) summation of ideas, concepts and well-thought-out processes that labels and artists can use to as they start to initiate to navigate into the digital future. What they have written is more valuable in my opinion than all the lawsuits the RIAA has pursued, and all the wasted words they have said over the past decade about challenges the industry faces.
The white paper is only 12 pages long, but it is a "must read" for anybody in the industry and anybody that is thinking about a possible future in it. After reading the white paper I was thankful for the work both Masnick and Yang put into it, and I wondered why in 2010, no label has ever attempted (at least not publicly) to assemble such a well-crafted roadmap to transition for the future.
This is a terrific piece of work, and though I have repeatedly urged labels and industry leaders to create new models, I also admitted I didn't have the answers about how to go about doing so. This white paper takes a giant step in offering solutions that can truly supply the industry with ideas that all make sense.
Rather than go into details in the white paper, I encourage all to read it. You can get it here: http://tiny.cc/q4eeb
(It's one of three free white papers you can download once you fill out the form)
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THE 'A-SIDE' - TRACK 2
WHAT HAPPENED TO DVD SALES?
You see them everywhere lately. In supermarkets, drugstores, gas station convenience stores, all mass merchandisers, etc.
I'm talking about the racks of DVDs you see on sale for prices ranging from $6.99 to $9.99, and in some cases, as low as $4.99. Of course when you start looking through the plethora of titles in those racks you usually end-up asking yourself "Why would I buy this?"
DVD sales have plummeted in the last few years, and what was one seen as a strong market segment for Hollywood studios that provided big profits after the box office receipts were counted and done, is now contracting year over year.
There's a myriad of reasons why DVD sales are declining, and the economy and competition for consumers' disposable income are only a part of it.
24/7 Wall Street.com has written an article titled 'The Five Businesses That Killed The DVD.' Check it out here: http://tiny.cc/omhp8
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THE 'A-SIDE' - TRACK 3
FOLLOW-UP TO "VEVO-A-GO-GO"
In the November 12th issue I wrote about VEVO's growth as an online video site and noted "comScore.com's latest music rankings said that Vevo is #1 again with 55.1 million unique visitors. That means that Vevo has been #1 in visitors for nine of the past 11 months, and #1 in viewers for the last 10 consecutive months since its launch."
Now comes new that the Vevo app (http://tiny.cc/21my1) for the iPhone and iPod Touch is also exploding. (VEVO's Apps for the iPad and Android platforms are coming soon.)
The app allows users to access VEVO's entire music video catalog - 30,000 videos from 8,000 artists -- create playlists, even gain access to exclusive content. And best of all? It's free!
Since its launch on August 19th the app has generated the following statistics: 2 million active users; 21 million video views; 16 million sessions; 8 million views of artist profiles; 6 million searches.
More impressive are these comparisons: the VEVO iPhone app reached 2 million users in one month while the Pandora iPhone app reached 2 million users in 5 months, Foursquare reached 2 million users in 15 months, and Twitter reached 2 million users in 27 months.
All these numbers mean VEVO is growing faster than and it's getting bigger than anyone probably anticipated. UMG has a huge success story on their hands at a time when all major labels are looking to create new models for future revenue generation.
UMG has taken a giant leap forward in creating VEVO and their artists will all benefit from it. Now, others are taking note.
AdAge had an article back on November 23rd titled "Why MTV Must Acquire Vevo Before It's Too Late ... Music Labels Got Digital Right for Once, and Now MTV Is Playing Defense."( http://tiny.cc/b9bju )
While I applaud AdAge for heaping praise on Vevo, the thought of MTV buying it is something I hope never happens. Vevo is now in the hands of MUSIC people. MTV (in my opinion) is not. It's in the hands of people who want ratings generated by such shows as 'Jersey Shore,' etc. If you doubt that, just check their daily program schedule.
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THE 'A-SIDE' - TRACK 4
FOLLOW-UP TO 'THE BEATLES ARE FINALLY ON iTUNES ... NOW WHAT?'
In the November 19th issue, I wrote about The Beatles catalog finally coming to iTunes.
In many previous issues I discussed that while the lawyers were dwelling on small details, millions of people all over the world were stealing The Beatles music everyday.
The Beatles sold a reported 450,000 digital albums worldwide and more than 2 million individual song downloads in the first week of their availability on iTunes. In terms of initial results, iTunes' first-week U.S. tally of 313k Beatles albums was only 33% of the first-week physical sales of the remastered albums in September 2009 (953k).
Others will have to decide whether or not those sales were satisfactory considering The Beatles' catalog is the most valued in all of pop music. But when one considers Taylor Swift and Eminem both moved over one million units of their latest albums in one week, Kanye West sold over 500,000 this week, 450,000 doesn't sound like a lot.
While it's good news that millions are still willing to pay for music online, it's bad news (in my opinion) that the price of waiting this long to get The Beatles catalog online at iTunes, resulted in sales numbers that were not that extraordinary considering The Beatles' legacy.
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THE 'A-SIDE' - TRACK 5
ONE-THIRD OF NON-AT&T USERS WOULD HAVE BOUGHT AN iPHONE
A Credit Suisse report earlier this year projected 23% of AT&T iPhone subscribers, or about 1.4 million people, would drop the carrier if Verizon also gets the Apple smartphone. You can read about it here: http://tiny.cc/j4wrn
One can only wonder how many more iPhones Apple will sell once Verizon starts selling it with their service in 2011.
And Now For Some News ...
The Music Biz Shrinks Again: EMI Lost In Court
MUSIC DISHIt's official: EMI has lost in court and it's now only a matter of time before its assets are chopped up, dispersed and the famous Capital Records building in Hollywood goes condo. After EMI is dismantled there will remain only WMG, UMG and Sony as the remaining "Big Three" labels in the US and the UK.
Read more about it by clicking here.
Netflix's Streaming Service
CNETNetflix, which transformed the DVD retail business (see my commentary above in Track 2), is now sure to further transform the video streaming space by introducing its streaming-only service to U.S. consumers. The thriving video rental business will now offer customers a plan that includes the ability to view movies through its streaming service for $7.99 a month. Netflix has also increased its streaming-plus-DVD-by-mail plans by $1 to $8 per month, depending on the option.
"The company said that it decided to change its plans because 'most members want us to deliver unlimited TV episodes and movies two ways: streaming instantly over the Internet plus DVDs by mail,'"
From the CNET article: "By increasing the price of that dual option, Netflix says that it can 'continue to offer the popular plan choice of unlimited TV episodes and movies streaming instantly along with unlimited DVDs." At $8, Netflix's new streaming-only option matches its Canadian streaming service and, critically, Hulu Plus.
Read more about it by clicking here.
The Rolling Stones 'Gimme Shelter' Deconstructed
ROLLING STONE/DANGEROUS MINDS(Thanks to my old friend Lee Arnold (WORJ-FM) for turning me on to this via a Facebook post)
The song has been broken the song down into five components: 1) Jagger and Merry Clayton's vocals, 2) Richards' first guitar track, 3) Richards' second guitar track with Nicky Hopkins' piano, 4) Wyman's bass and 5) Watts' drums with producer Jimmy Miller's maracas. Of these, the vocal and guitar tracks are the most revelatory.
Breaking the song down into individual components shows hidden complexity.
Read more about it by clicking here.
Feds Seize Web Domains Accused of Piracy & Counterfeiting
TORRENT FREAKThe U.S. government has seized the domains of dozens of websites it says are offering unauthorized copyrighted or counterfeit content.
Read more about it by clicking here.
Anti-Piracy Lawyers Sued For Fraud & Extortion
TORRENT FREAKThe US Copyright Group thought it had found the ideal scheme to turn piracy into profit when it started filing lawsuits against tens of thousands of BitTorrent users this year. But the defendants in the Far Cry lawsuits have now become the plaintiffs in a class action filed against the anti-piracy lawyers and their partners. Among other things, the lawyers are accused of fraud, extortion and abuse.
Read more about it by clicking here.
Tablet PCs Continue To Diminish PC Sales
GIGA OMFrom holiday wish lists to mounting sale statistics, the rise of tablet PCs is impossible to ignore. Citing new Gartner findings, GigaOm notes that tablet fever is cutting into PC sales. According to Gartner, worldwide PC shipments are on pace for 352.4 million units this year -- up 14.3% year-over-year, but down from projected growth of 17.9% just two months ago. Meanwhile, Gartner expects worldwide PC shipments in 2011 to hit 409 million -- a 15.9% increase over 2010, but down from an earlier estimate of 18.1% growth.
"The rapid revisions suggest that the PC market, while still growing, is in flux as it deals with the growth in demand for tablets," according to GigaOm. Separately, Citigroup on Monday predicted that 35 million tablets will be sold next year, while FBR Capital Markets said it expects 70 million tablets to be sold next year -- with 40 million of that figure coming from Apple. While tablets offer fewer returns for PC makers, they represent a potential boon for publishers hoping to charge consumers for newfangled, tablet-ready content.
Read more about it by clicking here.
Rolling Stone's 2010 Gift Guide:Over 100 Holiday Gifts
ROLLING STONEIt's just 22 days until Santa comes.
Here's a great gift guide from Rolling Stone that will make choosing a gift for that special someone that much easier. Categories include: Audio/Video; Photo; Laptops/Tablets; Musical Instruments; CDs/Vinyl; DVDs/Books; Toys/Games; Spirits/Apparel.
Read more about it by clicking here.
SPIDER-MAN HASN'T CONQUERED BROADWAY QUITE YET:
The Broadway preview of Julie Taymor's $60 million 'Spider-Man: Turn Off the Dark' (musical score is by U2's Bono and The Edge), was called an "epic flop" by the N.Y. Post, which added the show's "high-tech gadgetry went completely awry amid a dull score and baffling script," according to theatergoers on hand. "Stunned audience members were left scratching their heads over the confusing plot -- when they weren't ducking for cover from falling equipment and dangling actors." The NY Daily News had better things to say about the preview. Following the preview, the show did rake in $1 million in advance sales, but that $60 million sure will take quite awhile to recoup.
GRAMMY NOMS:
Eminem pulled in 10 Grammy nominations to lead the pack for the show when it airs in 2011. Tied with six Grammy nominations apiece are Jay-Z, Lady Antebellum and Lady Gaga.
THERE HE GOES AGAIN:
Axl Rose is suing Activision Blizzard Inc, the owner of the hit video game Guitar Hero, RadarOnline.com has exclusively learned. Axl is suing the company for over $20 million dollars for fraud, breach of contract and unjust enrichment, among others claims. In the court filing, Rose sates that he is the majority owner of the trademarks and licensing associated with the band. Axl evidently has an issue with Guitar Hero III using "Welcome To The Jungle" without his permission.
LIKE FATHER, LIKE SON:
Next year James Taylor will launch a tour with his son Ben Taylor - their first together - who is also a singer-songwriter. Only eight dates are on the books now (the first is February 26th in Tulsa), but additional shows will be announced December 3rd. Ben has previously toured with his mother Carly Simon. He's currently finishing his new album, "Listening."
SWIFT TOUR:
Taylor Swift is launching a massive world tour next year in support of her new album "Speak Now." Most of the venues for the American leg hasn't been announced yet, but the tour will touch down in stadiums in at least six cities. At just 20 years old, Swift is one of the younger performers to headline a stadium in musical history.
GOIN' DOWN, DOWN, DOWN:
ABC's American Music Awards had their lowest ratings ever, dropping down 22% from 2009.
BLACK EYES PEAS NOW 6X PLATINUM & SUPER BOWL SHOW:
The Black Eyed Peas' hit "I Gotta Feeling" was certified six times platinum for digital sales this week, the highest digital song certification issued by the RIAA. The tune passed Flo Rida's "Low," the previous record-holder at 5.54 million downloads, in May. The Black Eyed Peas will also be the featured halftime performer at the Super Bowl on Fox Feb. 6th at Cowboys Stadium.
LOLLAPALOOZA CHILE:
The Lollapalooza festival will head overseas for the first time next spring, landing at O'Higgins Park in Santiago, Chile, on April 2nd and 3rd. Founder Perry Farrell said the to-be-announced artist lineup will feature a combination of local artists and more traditional Lollapalooza acts. "We found that there are so many groups and artists that have never been to Chile. It's been fun figuring out who will be the first to get there," he said in a statement.
BOSS PICKS:
After admitting that "I don't know a lot about the artists," Bruce Springsteen singled out Best Coast, Cherry Ghost and Josh Ritter as newer artists that he likes in an interview with Sirius Radio. He also mentioned Gaslight Anthem, Against Me! and the Dropkick Murphys.
HERE'S WHERE ENTERTAINMENT DOLLARS ARE GOING:
Call of Duty: Black Ops has set a new five-day record for the entire entertainment industry with more than $650 million in sales, breaking the previous record of $550 million set last year by Call of Duty: Modern Warfare 2. The blockbuster videogame has also set records on Xbox Live, where 5.9 million multiplayer hours were logged and 2.6 million gamers played Black Ops on a single day.
GAGA ON 60 MINUTES IN FEB:
Anderson Cooper's extended interview with Lady Gaga will air on 60 Minutes around the time of the Grammy Awards on February 13th.
EDDIE JAMMING WITHOUT PEARLS:
Pearl Jam singer Eddie Vedder has announced his first-ever Australian solo tour, running from March 10th through March 27th.
UND DAS IS NICHT GUT:
German hackers stand accused of breaking into the computers of more than 50 pop stars in order to obtain both music and compromising images. These include Lady Gaga and Justin Timberlake.
LIVE NATION APP:
Live Nation has just released a free iPhone and iPad touch app that includes ticketing, listings and in-venue frills.
The Music Industry Past, Present & Future, And The Internet I answer questions on EconTalk
I did an interview about the industry and the Internet at EconTalk with host Russ Roberts. Russ is also a professor of economics at George Mason University, blogs at Cafe Hayek, and has written three novels that teach economics. He's also the co-creator of the Keynes-Hayek rap video. (And if your understanding of the economic meltdown that occurred needs to be enlightened, this video will do it)
In the interview we talk about the evolution of the music industry, the impact of the digital revolution, and I give my reasons for believing in the virtues and potential of the Internet in enhancing the music industry. I point out, as I have many times here in the newsletter, that the internet allows numerous artists to make money from their music and it can enhance revenues from live performances by expanding an artist's base. We also discuss the challenges facing record companies and I suggest that the full potential of the Internet as a distribution channel has yet to be fully exploited. There's a lot of ground covered, but based on the comments already posted of those who have tuned in, they've enjoyed it.
Read more about it by clicking here.
Quotes of the week
"The vast majority of music consumed on the Internet -- over 90% -- is pirated. When music is pirated, the artists don't get paid, but the ISPs, search engines, advertisers, websites and device manufacturers do. They all profit from enabling this pirate activity, while denying any responsibility to pay the people who create the music in the first place. Not only will Bill C-32 fail to fix this, it will actually ensure that these companies never have to pay."
-- ole President Michael McCarty, on his problems with Canada's anti-piracy bill."It really should fall on people like me to get together and do things to help the people in this country. If you're not worrying about how to put food on your table, you [should be] worrying about why other people don't have food on their table. I remember a great America where we made everything. There was a time when the only thing you got from Japan was a really bad cheap transistor radio that some aunt gave you for Christmas."
-- Cher, from her Vanity Fair cover story"We used to have amazing artists now it's f**king ridiculous, record labels are to blame ... Rihanna, I'm sure you could be interesting but what the f**k are you doing, who the hell is writing these ridiculous songs ... I love new young artists with something to say, in any style of music. What would Lennon think if he was alive, he would throw up ... F**king TV crap, everyone is in a panic (partly by the way is because 90% of music is now downloaded for free), so spiraling downwards ... OK I'm going to try (to) get a music TV show on USA TV network, amazing legend artists and new artists each week, I will choose and be host. I can't just complain and not do anything so I need to get (a) TV show...Signing off with last comment, bring back 'sex and drugs and rock n roll' better than "botox, t**s and autotune."
-- Former Eurythmic Dave Stewart, in a Twitter rant after watching the American Music Awards
The Blogs
Check out Jerry Del Colliano's (the founder of INSIDE RADIO) daily blog, by clicking here: http://www.insidemusicmedia.blogspot.comWebsite
Check out attorney Ray Beckerman's website at: http://recordingindustryvspeople.blogspot.com where he prints news about the RIAA's ongoing activities
Smart Marketing Consulting Services
Smart Marketing Consulting Services has been in business sixteen years, and consults clients in the music, entertainment, attraction, media, and technology industry on branding, marketing, online exploitation, maximizing new media, and more.
"And the beat goes on, the beat goes on ... drums keep poundin' rhythm to the brain."
"Work is life, you know, and without it, there's nothing but fear and insecurity." -- John Lennon
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