2010 Trends…

We are now well into 2010 and I think that this year will be pivotal for the music and creative industry sectors. Due to the economic crisis and the pain suffered by the financial services sector across the world, we are going to see a renewed emphasis on export led economies. A large proportion of strategy and investment will be on manufacturing, from cars to military equipment. However it’s clear that the creative industry sector will see a huge amount of political and financial investment being piled into it.

In the UK a rather rushed Digital bill was passed before the election. It will surely be amended and altered in the coming parliament. However, whether one thinks it is competent or not, most can agree that it draws a line. It renews the commitment of government and the legislators to protect creative works and the copyright that gives value to the end product and creative output.

Record Labels, which for the last decade (maybe even two decades) have been on the ropes, are now starting to not only find their way in the new digital market but also convert their activities into real money. Old deals are now out of their system replaced with lower advances and production costs. The way product is created is simpler and there is an understanding that as well as having top line acts a large label can play the long tail game as much as anyone else.

EMI, a company we often discuss, has shown that if it were not for its large interest payments on the debt used to purchase the firm, it would be making a healthy profit. This doesn’t help EMI as the debt is very real, however it does show that a label (with a very valuable publishing arm) can make good, real profits. Hence we can conclude that this is a good industry and one worth investing time and money in, whether you are a large company or individual.

Of concern to labels such as EMI will be the upcoming expiration of the copyright in many of the Beatles Recordings. In the USA these still have value due to change in the law to add an additional 50 years, but outside of the USA this will not apply. That is why last year saw the release of the re-mastered Beatles Albums. It was felt that it should be done before everyone else has a go, as with Elvis recordings.

2010 will be a defining moment for ‘free’ ad funded music streaming services. We are seeing more of these services pop up (trying to get on the audience share bandwagon) and they are making sure they can be accessed on as many platforms as possible, from the web to your Iphone or android mobile handset. The only snag in the plan is that they either cannot afford to pay what the label’s are charging or the labels are not really getting a fair return for the right to stream their music. Or in some bases both!

What does this mean? Well in some cases the services will be rolled into larger offerings perhaps part of film or game services. In some cases music services will just be consumed by much larger social networks – could Spotify or similar become part of Facebook for example? After all what made Itunes work was that it was an ancillary service which added value to the cash cow of Ipods and Macs being sold. Perhaps a stand-alone ‘cheap’ music service is an unsustainable concept?

Certainly the idea of selling records, via downloads will become part of the consumer culture again. At long last people are realising that the number of illegal downloads is not related to the number of legitimate, legal downloads. Even though the amount of materially being shared without payment or permission is still very high we have seen a steady growth in the legitimate and legal authorised consumer market.

Indeed it is a marketplace which is now worth a considerable amount of money, and by stores becoming easier to use and tied into people’s handsets, game consoles and other digital platforms with ease they will become the first choice method to get hold of content rather than a file sharing platform which for most people is quite a pain to use, which also brings all sorts of security risks to their computer.

The Digital Economy is dead. Long live the Digital Economy!

Spread betting on Spotify’s success

Spotify is probably the online music service which is generating the most headlines at present. In the last couple of weeks alone we have had analysts ‘guestimate‘ it’s potential turnover and costs, trying to paint a rosy picture. We have also had top record industry execs claiming the business will not exist in a years time and additionally, we have had Spotify themselves claiming that the business approach from labels is not helping them to survive which will ultimately only hurt the industry as a whole.

Why so? Well the labels need there to be legitimate companies selling and distributing their content. Without them, we the consumer, will have no choice BUT to go to illegal filesharing sites. However the labels also want to get a decent return on their property, otherwise whats the point – right? The problem is many of these online businesses, Spotify included, are still experimenting with what business models, or selection of models (in the case of spotify) will work and be sustainable.

Spotify is offering everything from subscriptions, to free content but with adverts, to downloads claiming they want to appeal to all types of consumers. Its clear though that they are also not too sure which, if any will work. So whilst I quite like the idea that there is a choice element in Spotify’s charging menu, it’s also clear that they don’t really know which options will stick.

In recent years some labels have been making investments and buying stakes in these sites, and clearly thats the way forward. After all, if I was Spotify and I DID have an audience of 6 million it would be substantially cheaper to create and commission my own music and market directly at the 6 million strong audience. Accordingly, if I was a label and wanted an audience of 6 million listeners I would buy Spotify and use it in the same way that labels used to use their own record stores many, many years ago. Perhaps the types of deals and contracts offered to artists, producers and all those involved in making the content need to ‘wind back’ to the 60s where people were salaried, perhaps with a milestone clause to protect the creatives – i.e. if the music generates over ‘x’ amount of revenue then the contract kicks into a bonus structure, more akin to a current deal structure. What do you think?

Spotify is now looking at launching their own branded music phones, which will bring them in direct competition with Nokia ‘Comes with Music’ and Sony Erricson’s offering – along of course with the Iphone. Is this a wise move? Certainly having an Iphone app makes sense, but would you buy a phone especially to gain access to the Spotify network? Im not so sure.

10 Great Podcasts for True Music Lovers

10 Great Podcasts for True Music Lovers

iTunes isn’t just a place to store and listen to all of your favorite music—it can also be a great tool to help you learn about new titles or to expand your knowledge about your existing favorites. Through podcasts you can keep up to date with the music scene and quench your thirst for the latest and greatest bands without really having to do much but sit back and listen. Here are a few that music lovers of all kinds can try out.

  1. All Songs Considered: This NPR production is a great place to discover new music. Artists covered range from world music to indie artists and just about everything in between and the show not only offers insights into new music but concerts that you can download and listen to as well.
  2. Gramophone: If classical music is more your style then check out this UK podcast that takes you inside the magazine of the same name, sharing reviews of the best new releases, news, and interviews with composers and musicians.
  3. Above and Beyond: Trance Around the World: Those who are into dance music or clubbing will appreciate this podcast that tracks the latest developments in these tracks from all corners of the globe.
  4. KEXP’s Song of the Day: The small snippets from this Seattle radio station will let you keep up with some of the latest and greatest independent artists out there.
  5. Morning Becomes Electic: The podcast of this song makes it possible to listen to an assortment of creative music including jazz, indie, funk, rock, pop and even world beat artists, focusing on both new talent and established artists.
  6. Sound Opinions: Listen to this podcast to hear interviews with many of Rock and Roll’s greats as well as artists who are just up and coming. You’ll find shows on everyone from Jesus Lizard to She & Him.
  7. Push the Night: This podcast focuses on the best dance music out there including house, trance, techno and prog tunes.
  8. Sphere of Hip-Hop: Those who love hip-hop will appreciate this podcast that brings them the latest tunes and makes keeping up with the best new artists a piece of cake.
  9. indiefeed Blues Music: Here you’ll find a great collection of blues titles that mixes the old with the new so you’ll get the best of both worlds.
  10. Podrunner: If you need a great workout mix then look no further than this podcast which will provide you with a wide range of tunes to listen to while you’re getting all sweaty at the gym.
  11. Musicresearch.com of course! The place where you can find new music and RATE it. Help the music find its audience.

This post was contributed by Hannah Watson, who writes about the distance learning colleges. She welcomes your feedback at HannahWatson84@ yahoo.com

Apple Shows it’s Hand

So Apple came out with its revamped Ipod range. Many are calling it a bit limp with the biggest news being that Steve Jobs is back at work and healthy. However I think a mild repositioning has taken place.

What was new then? Ipod Nanos were given a ton of functionality from cameras (video) to pedometers. Apple are trying to make them a lifestyle product which happen to play music. They increased storage capacity on the old school Ipods and upgraded the Itouch to similar internal specs as the Iphone but without the camera. Thats right, without the camera.

Whats goings on here? Its simple; ever since they launched the Iphone it was expected that at some point there would congestion and overlap with the Apple product portfolio. Hence Apple have clearly decided to give with some products but take with others. Want an Ipod that has a camera but can’t afford the phone? Your option is the Nano. Want a touch Ipod but do not want the phone, get the Itouch, but it won’t do everything you need. Each product is either reaching out to specific consumers or are designed in such a way as to infruite them and hence force them to own multiple devices or continually upgrade!

Now on the music front, there was no demonstration of a Tablet, and hence my prediction for what it might mean for the music industry is still out there. Whatch the next 6 months for that story to continue to bubble as it won’t die down. However they did launch their new version of the LP. A download that includes a lot more artwork, interviews, lyrics and other content. Itunes LP is what they are calling it, and Im not going to say that for the cost to produce that content, ‘it won’t work’. Im sure it will bring in extra revenue for the labels and publishers and should be welcomed. However don’t for a minute jump to hyping this to a return to the ‘shared experience’ of all of us buying an album again.

Id like to see them sign some exclusive album or content deals and only sell them in this format. It would be an interesting experiment. If the content was compelling enough and sold at the right price would the LP format harm, boost or make no difference to sales?

Recent other developments, in Europe at least, are that Apple has approved a Spotify app, which means you can now get music onto your Itouch/Iphone devices from places other than Apple. A lot has been written about how major this is. Its not. Not really. For quite sometime we have been able to buy music from Emusic, Amazon and many others and place it on our Ipods and Itouch devices. So this is just a wee bit different as its an integrated app, and hence feels much more embedded into the device.

Maybe Im pushing for Apple to move into a space they will never move into, but whether it be the tablet or new functionality for the Itouch and Ipod range, I feel that at some point they will have to embrace music interactivity. Its not as if they are unaware of it, Garage Band is a key free product with their Macs, but perhaps they have not yet joined up the dots and seen its value as a lifestyle element for their lifestyle products as well as their computers.

7Digital sells 50% to HMV

HMV has had a great 2009, with the closure of two of its main rivals in the UK, Zavvi and Woolworths, its been able to posture itself as the only real mainstream music, film and game retailer on the UK High Street. Along with this new commercial reality they have been able to focus more on their games portfolio and grow on the back of the expansion of that market.

However, they know as well as anyone, that as we continue to move into a world of digital downloads their business model will slowly evaporate. Music, as we know, can now be downloaded or streamed directly into devices, whether it be Nokia ‘Comes with Music’ phones, the Iphone/Itouch family of devices or games consoles which are now starting to push full price product through their online distribution solutions.

Hence they have invested and purchased 50% of 7Digital a UK based online retailer and distribution solutions company. 7Digital is an online retailer which also has a music streaming service. It is yet to turn a profit and is operating in crowded market place alongside companies such as Spotify (streaming) and Itunes, Amazon and many others for downloads.

This deal with HMV is wider than just music though. HMV also owns Waterstones a leading book retailer which in recent years has been trying to find its way in the digital world, playing ‘catch up’ to Amazon. 7Digital’s technology and services will allow HMV to launch an online book store and leverage the audience 7Digital already claims to have along with the current consumer base HMV and Waterstones have access to.

Yet, why go to their store? What USP will it have? Itunes were the first and their software and hardware combo are superb. Additionally they now sell a wealth of other content through the Itunes store which again gets nicely organised into their software. Amazon and Wallmart sell everything you can think of online and their music stores are there to add value and perhaps pick up extra sales. They have been very successful. But why go to the HMV/7Digital store? Will they have exclusive content? Will there be some unique software that makes their experience high value and too good to miss for the educated content consumer?

Im doubtful, and I would imagine that to some degree the HMV management are yet to come up with the answers. Perhaps the aim is to provide back end services to other businesses that want to sell content and not focus on a direct to consumer relationship themselves. As one of the last large ‘content’ retailers on the high street it will be a fascinating 5 years to see how they manage to progress from being in the physical world of business to moving to an online proposition.

Perhaps their overall strategy is to hedge their bets and add value to HMV so that they become an attractive purchase for another company, perhaps a hardware manufacturer who needs to add a digital distribution element to their business model. This would be similar to when Nokia bought Loudeye a digital music service, which then evolved into the Nokia Comes with Music proposition. For example, if Sony bought HMV, they would overnight gain access to a music store, ebook store and physical stores, some of which could be shut down, and others transformed into their versions of the Apple Store equivalent.

The Year where the application became more important than the music?The

The Beatles: Rock Band will be out on the 9/9/09 and its already been reviewed on multiple sites. They love it. Its the same old music, many of us already have, remixed and mastered as part of a game or game format many individuals already have and enjoy. What is interesting is that box sets of the same remixed and remastered recordings are being released along side the game.

Which will sell the more copies? Which will generate more revenue for the labels and publishers? This will be a huge milestone if the game does significantly better. It won’t be the start of a trend, far from it, but due to the historic nature of the content and act it will be a marker, a confirmation of all that we have learnt over the last 3-5 years.

Over the same time period new Ipod Touch products will be released. These may be nothing more than the same as the new (well not, so new now) Iphones, with faster CPU and graphics along with the cameras enclosed. However there has been speculation that along with a tablet type device (the jury is still out as to whether it will see the light of day) a new form of music purchase will be announced. A package of content, which includes videos, perhaps lyrics and who knows what else. Im still of the thinking that it might include some kind of Garage Band (the software for Macs) inspired tool for remixing tracks, as the actual individual instruments and vocals would be sent. Why pay for remixes when you can in effect get your audience to create them for you!

So will this be the month or even year where the music industry puts its hands in the air and recognises that whilst the music is important, what consumers want is interactivity but interaction with compelling content? Watch this space.

Its been too long

Once again I have left it too long to update the blog. Apologies! I hope though that those regular users of MusicResearch.com have been downloading our podcasts (music industry news) which have been more regular. In fact we are due to record very soon!

So what has happened in the music industry since I last posted? In some ways its been a rather retro three months, and the trend looks to continue. Some of the main stories that have made it big include:

The death of Michael Jackson. Clearly a sad and historic moment. Some would argue that we had seen the best of his work, and that all that lay ahead of him was an opportunity to relive that history with him in London. However I think its too early to make that call. It well known that he was working on new material with a range of interesting artists and producers. His record label have said that it WILL be released. Clearly he will have the last word on his career after all, and we shall see if it was just Michael Jackson doing an impersonation of Michael Jackson or whether he was treading new ground. I hope it was the latter.

Meanwhile ironically, but in many ways to be expected, sales of his music have rocketed since the announcement of his passing. Download stores and streaming services have seen his material dominate audience choice. I can speak from my own example, in that one of the first things I did when hearing the news was to go to Vid Zone on my PS3 and choose Thriller. A classic.

Another retro slice of news was one we have mentioned before on this site. Beatles Rockband. The game has now been shown off to the general public and pre-orders are already being taken. I expect demand for this game to be terrific if its not priced too high. The young will use it as a vehicle to explore classic music that they might have heard in passing but never actually owned whilst it will take music games to a wide demographic reaching out to older people who remember the Beatles first, second or third time around (in terms of re-releases of their albums!). It might also fuel an increase in CD sales of the new remastered recordings.

The game really does look terrific and the music has been remastered from the original tapes especially for this release by Sir George Martin’s son. It was pushed heavily by Microsoft at E3, the large games convention in May, but itll be cross platform and I would expect the Wii version to do extremely well.

Lastly, some pretty uptodate news. Well its more rumour than news. Apple is expected to bring out new IPOD Touch technology in September. However alongside the new Itouch and Ipod devices it is believed they will launch their ‘take’ on the tablet format of computer. The tablet has existed for sometime now, so what can Apple do to change things? Well from a technology front, it might have 3G or even 4G tech built in. It will be very thin and probably have multi touch tech on the front like an Iphone.

However it will clearly also have some key content tie ins. One of these is ‘Cocktail’ which some are describing as Apple’s attempt to redefine the album and make a ‘package’ of content valuable again to the consumer. Content to be included would be ongoing video footage, behind the scenes and other extras, which clearly might be experienced better on a larger screen device such as this tablet. However Im inclined to think that even if that content IS included, its not exactly ground breaking. Certainly not enough to make it a reason to buy the device.

Perhaps Apple have looked at the music game market and the clever music making device which uses LEDs made by Yamaha (the TENORI-ON) and thought that the way to go is to make music interactive to the masses. I can see the Apple Tablet having a type of simplified Garage Band built in (software on a regular Apple Mac), and when you download the ‘album’ you also get the seperate instrument and vocal tracks. This in turn would allow consumers to either listen to the studio mix or make their own.

Along with Apple’s recent move into the gaming world via the Iphone and Itouch, this in many ways, would be a nice fusion of their history of wanting to be seen as the facilitators of creative production (hence Imovie, Garage Band, Idvd etc on macs) and being seen as an alternative form of ‘fun’ via their appstore.

Now we just have to wait a few weeks to find out….

Its been a while, so here is a round up

Its been a while since we updated this blog. That is not because there is a lack of news in the music industry! Far from it! However it is simply because we have been pulled in different directions by the industry itself. At the moment there any tons of opportunities to make money and pursue new audiences in the music and sound sectors. Indeed the creative industry sector is expected to grow over the next 5 years, and that despite the global economic downturn.

Does this mean the times are good for everyone or even that the money you can potentially make from your ‘art’ and skills is of a high volume? Well lets tackle those two questions.

Times are clearly not good for everyone in the creative sector. As we know large record labels are failing, indeed they have been for sometime. However the recession is accelerating the rate at which their old business model is dying out. This is due to a number of factos such as:

  • People having less money on non essential purchases, such as music
  • When they do want to buy music, they want it for less (same with films, see the crash in DVD prices!)
  • Other industries which might have utilised music as part of their model, and hence are a customer of the music industry’s are trying to pay less, as they are making less. Ad funded websites for example.
  • Recessions are time when people invest in new businesses with new models, and the record labels do not represent this sector of business.
  • Some of the record label’s mother companies, which might have once absorbed their losses for strategic reasons are themselves losing money. Sony for example. Hence that puts more strain on any part of the overall business which is shrinking or failing, the music part for example.
Its not just the music sector having to face up to new realities. In the UK, one of the largest commercial broadcasters, ITV, announced losses of almost £3 billion! This is due to a collapse in advertising revenue, the same problem that is resulting in many websites either downsizing, going bust or looking for new business models. Rupert Murdoch’s Newscorp is now actively looking at ending the ‘news and content’ for free culture on their websites and are publicly talking about introducing a subscription format for many or all of their websites.
However, despite the challenges and ‘bad news’ for the large companies, people still need content. In many ways, people need more of it now than ever. There are more and more websites that need to fill their pages. Due to the recession people are ‘in’ more than ever and need to be entertained at home. Hence we are witnessing the success and growth of the small to medium sized business in the creative sector. Due to the equipment needed to produce film, music and games being so much cheaper than it was, even 5 years ago, many of these businesses can now produce content to a professional standard. This is leading to them picking up work where previously traditional suppliers would have been automatically been chosen (due to to history and convenience).
Each job itself might be worth less, perhaps substantially less, but the business’s costs are so much lower that it works in this new economic landscape. In many ways I do not see things going back to how they were with overpriced video suites and large recording studios in swanky locations. Id like to think that we have now reached a point in the development of the creative industry sector where in many ways we have gone back to the pre-industrialised way of making creative products, such as pottery, clothing, art etc. The idea of the artisan, in their home, or village producing on a small scale.
So is the creative industry sector growing? Yes.
Is there going to be a much larger number of players in the market than there were previous to the recession? Yes
Will they be smaller in terms of turnover and employees than previous? Yes.
Is this good? Yes!!!!

EU Extends copyright in its territories

The argument about whether the mechanical copyright (the copyright covering the actual sound recording) should be extended in the UK was always going to be resolved from a European Perspective, and the EU has now taken the lead and voted on the way forward. The European Parliament has voted on an extension to the current life of the copyright.

However, the EU will still differ from the USA on a number of very important points. The most obvious is that the term is 70 years in the EU and not 95 as in the USA. Additionally, there are greater revenue sharing mechanisms in play revolving around a scheme where Labels pay 20% of the additional income gained (from the extra years) into a benevolent fund designed to support performers and sessions musicians. Similar to the USA there is also a clause which makes it mandatory that after 50 years the acts can renegotiate their record deals.

Although, this is clearly a step in the right direction, and does give more power back to the artists I still can’t see why they couldn’t have let the right to copy be handed over to the market place. There is still an argument that if a label can’t make good money from a copyright over 50 years, then the extra 25 won’t help, and if they DID make good money in the first 50, then why should they make more over another 25? And why 70 years and not 95? Why 70 and not 75, or 70 years after death as with publishing? These seem to be arbitrary numbers based on what people ‘feel’ is right.

Im still a fan for it expiring after 50 years and then the music being sold in a competitive environment. Labels would pay good money to have their copies remastered, perhaps adding extra content so that way their version stood out from the artist’s own version who would be free to sell their copies. I see no downside to this and its more in line with where the industry is heading anyhow which is one defined by open access, low level ‘direct to artist income streams’ with less and less ‘labels’ involvement in the production.

Are artists in the Long tail who produced their own music, did all the performing and singing going to have to pay 20% of any income derived to the benevolent fund after year 50 of the copyright, even if no one else was involved in the production or performances on the recordings? One wonders if this law is a last ditch effort of acts and labels, who are part of the ‘old industry’, to hold back the tide of change?

Sony to offer video compression in the next PS3 Firmware update?

Sony have managed to slip some nifty new features into its latest Blue Ray players. These improvements allow the Blue Ray players to quickly convert video files for use onto a PSP or Sony Media Player. This is COULD be great news for PS3 owners as often this kind of software upgrade finds its way into PS3 firmware upgrades. This would mean users who use PlayTV could easily convert the files for use on the PSP without having to export to a PC or Mac first.

The more hardware like the PS3 or computers in general can have conversion software built in the better for all of us. What would be great is if its implemented at a system level so that the moment the user tries to copy content from one machine to another, whether its video or audio, its automatically optomised for that hardware. This would take the ‘techie’ element away and result in making it user friendly to the vast majority of consumers out there.