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File Sharing Is Down? Part 2
April 1, 2011
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ERRATA: In my Commentary, 'A Dear Jon (Bon Jovi') Letter' in the 3/18/11 issue, I incorrectly stated "Now, 39 years after CDs were first introduced to the consumer..."
Sony first publicly demonstrated an optical digital audio disc in September 1976, 35 years ago and "The first public demonstration was on the BBC television program Tomorrow's World when The Bee Gees' album 'Living Eyes' (1981) was played." (http://tiny.cc/t68l5 )
The CD became commonplace in the mass retail music market in 1983.
My thanks to my old friend Ernie Singleton, the head of the Singleton Entertainment Corporation for his note correcting me on my timeline.
"The demand for new music seems as insatiable and diverse as ever, and record companies continue to meet it. But they are operating at only a fraction of their potential because of a difficult environment dominated by piracy."
-- Frances Moore, chief executive of the IFPI. (International Federation of the Phonographic Industry)Last week I gave my reasons why I believe, despite what the report from research firm NPD Group said about the number of U.S. file-swappers dropping "precipitously," after peer-to-peer file-sharing service LimeWire was shut down, file-sharing and piracy still exist in a very big way.
This week, a report from international record label trade group IFPI states global sales of recorded music fell 8.4% in 2010, to $15.9 billion. While sales of music on physical media dropped 14.2% last year, to $10.4 billion, digital music sales climbed 5.3%, to $4.6 billion. Digital sales now account for 29% of global recorded music revenues. Digital sales in the U.S. were flat in 2010, rising just 1.2%, while Europe saw 21.6% digital sales growth. Of course, digital sales do not generate the same revenues the music industry was earning when CDs exploded at retail, so labels will have to work increasingly harder to keep profits growing as time progresses.
You can read the article here with links to the IFPI report: http://tiny.cc/ca74i
From the article: "The world's two largest markets, the U.S. and Japan, took a hammering last year accounting for 57% of the total global decline in trade revenues. In 2009 the two countries accounted for 80% of the global decline." And this, "the rate of digital revenue growth has halved year on year as the industry continues to struggle with piracy and winning consumers over to legal download models."
The NPD Group report is specifically about peer-to-peer file-sharing (isn't that piracy of a sort, anyway?) in the U.S., and the IFPI report is about global sales. The NPD Group report does mention the (alleged) drop in file-sharing in the U.S. occurred after October of last year when LimeWire was officially shuttered. In fairness then, the (alleged) drop in U.S. file-sharing only factored in the last two months of 2009.
We will have to wait until a year from now to see IFPI's next report about the industry and if the decline in sales has slowed. I'm betting that's not going to happen unless the labels find another half-dozen artists the caliber of Lady GaGa that can sell a whole lot of physical CDs and downloads in terabyte quantities.
The IFPI report should be a clarion call to the industry. If indeed, as I wrote last week, "The music industry believes the research (in the NPD report) that illegal downloading has decreased, they can stop blaming the Internet for all their problems."
Globally, it's time the industry started looking to the Internet for solutions to their problems. (And if they are already doing so, put their plans into action)
"The only difference between a problem and a solution is that people understand the solution." -- Charles Kettering
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THE 'A-SIDE' - TRACK 2
WHEN YOU HAVE LEMONS, MAKE LEMONADE DEPARTMENT
I've written several articles about the "Now That's What I Call Music" collections, and how they: a) are indicative of the fact that great long-term A&R and artist development at every label has basically dissipated over the last few decades, hence creating; b) an abundance of one-hit wonders; c) represent the fact there are a whole lot of artists who aren't consistently putting out great albums worth buying, hence people would rather buy the best tracks available and save money.
To try and squeeze the lemons further, EMI and Universal have created nowmusic.com, allowing users to create their own themed Now! albums, with the price per track falling according to the amount of tracks purchased. You can read about it here: http://tiny.cc/3t0dg
The labels of course bemoan the fact that consumers can do the same thing -- they call it "cherry picking" -- by going to iTunes and buying songs there. And according to Jon Bon Jovi (see 'A Dear Jon Bon Jovi Letter', DISC & DAT, 3/18/11), that's why the music industry is in the toilet.
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THE 'A-SIDE' - TRACK 3
MICROSOFT RESEARCH CHIEF IS NOT SOLD ON TABLETS IN THE LONG-TERM (MAYBE IF THEY HAD SOLD A FEW MILLION OF THEM, LIKE APPLE, THEY WOULD THINK OTHERWISE)
Craig Mundie, Microsoft's global chief research and strategy officer, isn't sold on the long-term viability of tablet computers. He believes the smartphone, "as it emerges more, will become your most personal computer."
Yeah, maybe. But that would mean millions of iPad owners, and owners of all other tablets, would simply dispense with their tablets and start using their smartphones for the same things. That's going to be kind of hard to do when you want to actually use the phone to talk to someone. Read more here: http://tiny.cc/rfpl7
And Now For Some News ...
Google Is Testing Their Music Service
MEDIA POST, ET ALGoogle has reportedly begun testing Google Music internally.
Taking the news as a sign "that the much anticipated service is nearly ready to launch," CNet writes: "Employees at the online behemoth have begun a process commonly referred to in Silicon Valley as dog-fooding, in which employees try out a new service or product." "Google wants to operate a 'locker' music service, which gives users access to all of their personal music files from a cloud-based server, and has begun testing the service internally," writes MediaMemo.
"But just like Spotify, Google can't launch without label deals -- or, at least, it doesn't want to launch without label deals-and so far it doesn't have anything locked down."
Read more about it by clicking here.
Amazon Launches Their Cloud Drive & Cloud Player
ROLLING STONEAmazon has launched a new service that will allow customers to store music files on the company's servers, but stream the content on their computers and mobile devices.
Their new cloud-based media storage service will let consumers upload and store their music and other files, and stream them to any Internet-connected device.
Read more about it by clicking here.
That Eminem Lawsuit Again: How Older Artists Might Benefit
THE NEW YORK TIMESFrom the article: "The labels make tens of millions of dollars a year from the deep catalog without paying a penny in promotion costs. Anybody who ended their recording career before 1978, and probably before 1992, is in the decision ... For people who had a single hit, who couldn't afford to chase $100 in owed royalties, they are now looking at a couple thousand. It's worth a couple phone calls and an angry letter or two." - Attorney Fred Wilhelms, who specializes in collecting royalties for musicians, on the implications of the legal decision that digital music should be treated as a license."
Read more about it by clicking here.
Billboard's 'Schools Of Rock'
BILLBOARDBillboard presents their first guide ever to the nation's music business schools and the innovative educators who are guiding the students of the industry.
Read more about it by clicking here.
Indie Label Group Wary Of Rhapsody Royalty Plan
AMERICAN ASSOCIATION OF INDEPENDENT MUSICA group representing independent U.S. record labels has taken issue with what it believes are digital music service Rhapsody's move to seek lower royalty payments for streaming music.
Read more about it by clicking here.
Cutting The Cord With Cable TV
GIGA OMHundreds of thousands of people canceled their cable or satellite TV subscriptions in 2010, and many use Netflix, Hulu & Co. as a cheaper and more convenient ways to get their TV fix.
Others are using the Internet for their viewing television content.
Read more about it by clicking here.
Press Release: Mobile Music Subscribers to Reach 178 million by 2015 as Emerging Markets Embrace Music on the Move
JUNIPER RESEARCHA new report published by Juniper Research forecasts that the number of mobile users who pay a monthly subscription for access to music catalogues, either via download or streaming, will reach 178 million by 2015, more than triple the number of users doing so in 2010.
Read more about it by clicking here.
Bob Clearmountain, Mixer Extraordinaire
WALL STREET JOURNALA great article by the Wall Street Journal's Jim Fusilli on Bob Clearmountain, the main man when it comes to doing the final mixes for superstars such as Bruce Springsteen.
Read more about it by clicking here.
IT WAS 41 YEARS AGO THIS WEEK:
The Beatles' recording career ended in April of 1970. At the time, all four members of the band hadn't appeared together in the studio since they finished "I Want You (She's So Heavy)" seven months earlier. In early 1970 Phil Spector was given the difficult task of carving an album out of the group's disastrous "Let It Be" sessions from the previous year. Just nine days later McCartney announced that the group had broken up.
YES AGAIN:
Yes have re-teamed with Trevor Horn - the producer behind their massive 1983 hit "Owner Of A Lonely Heart" - to cut "Fly From Here," the band's first album of original material in 10 years.
THE ONLINE STORE STORY:
iTunes, Amazon and Spotify account for more than 94.4% of indie digital revenues worldwide, according to data from the Association of Independent Music.
FOSTER FETED:
David Foster will be honored as a BMI Icon at the 59th annual BMI Pop Music Awards, May 17th, at the Beverly Wilshire Hotel in L.A. The evening will include an all-star musical tribute to Foster, as well as the presentation of the Songwriter, Song and Publisher of the Year awards.
iPAD 2 GLOBAL SELL-OUT:
Apple's iPad 2, which launched in 25 international markets on Friday, was sold out by Saturday in many places, CNET News.com reported, citing published reports.
GAGA DOES GOOD FOR JAPAN:
Lady Gaga raised more than $1.5 million for those affected by the earthquake and tsunami in Japan via online sales of her Japan Prayer Bracelets, which she donated to social games publisher Zynga's Save the Children effort, as well as to the American Red Cross, Mashable reported.
BAD BAIDU:
A coalition of music industry trade groups has penned an open letter to Chinese search engine leader Baidu, via the Financial Times, which pleads for the company to combat piracy by filtering links to unauthorized music files from its search results.
SO 36 YEARS AFTER 'AUTOBAHN' THIS IS WHAT THEY'RE DOING:
Jesta Digital on Monday released an interactive iPhone and iPad music application called "Kling Klang Machine - No1," developed in collaboration with electronic music pioneers Kraftwerk and SonyATV.
THE BUFFALO ROAM AGAIN:
After months of rumors, Buffalo Springfield have announced dates for their first tour since splitting up in 1968. The group - featuring original members Neil Young, Stephen Stills and Richie Furay - are going to play a six-date California tour in early June, leading up to their set at Bonnaroo on June 11th. Young's longtime bassist Rick Rosas will be taking the place of the late Bruce Palmer and Crosby, Stills and Nash drummer Joe Vitale is filling in for the late Dewey Martin.
STEVE GETS BRUCE JUICE:
To celebrate the nine-year anniversary of Little Steven's Underground Garage radio show, Bruce Springsteen will appear with his E-Street bandmate in a series of programs to be broadcast on Sirius XM April 1st, 8th and 15th. Van Zandt and his longtime partner will discuss their musical influences in a series of conversations recorded earlier this month at Little Steven's office studio in Greenwich Village. "I knew it would be a good show, just from us talking," said Van Zandt. "Because we've never really talked to each other, on record, official ... not only on my station, but anywhere."
BRITNEY UPDATE:
MTV will premiere "Britney Spears: I Am the Femme Fatale" this Sunday (4/3) at 9p. (ET/PT), a behind-the-scenes peak at what her life has been like over the past few hectic weeks as she prepares for today's release of her seventh Jive/JLG studio album, "Femme Fatale."
THE DROID TOPS:
In a new forecast, technology research firm IDC predicts Android will become the top smartphone platform this year after vaulting to the No. 2 spot in 2010. IDC expects overall smartphone growth to drop to 50% in 2011 from 75% last year as supply starts to catch up with demand.
GOING MOBILE EVEN MORE:
The mobile video audience grew about 40% in both the third and fourth quarters of 2010, ending the year at 24.7 million, according to Nielsen. That total was up about 10% on a quarterly basis from 22.9 million.
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
"Anyone who can create this much controversy within a week, I want to meet."
-- Simon Cowell, defending maligned "Friday" singer Rebecca Black, to PEOPLE"Rock'n'roll is sexuality personified."
-- Steven Tyler, in the 1995 documentary 'The History Of Rock'n'Roll'. There ain't no sexual personification on "American Idol," Steven ... just that big check you get each week.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Harry Connick, Jr. Dies In Piano Fire
NEW ORLEANS-According to a statement released by the New Orleans Police Department, a piano fire claimed the life of celebrated singer Harry Connick, Jr. late Tuesday night. Witnesses on the scene said Connick was in the midst of a particularly jaunty rendition of "S'wonderful" when the piano -- which had been inspected just two weeks prior to the incident -- suddenly burst into flames.
Read the rest here and laugh: Click Here.
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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