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.

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 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.

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 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. 

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 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.

For a while now I have been doing talks at various universities or even at the Dana centre (part of the London Science Museum), and the focus of the discussion often falls on the ‘quality’ of audio today.

In essence I find myself stating my case that the MP3 format might have helped the digital music player industry grow, but that it has held back the progress and sound quality of music for the majority of people.

The MP3 was launched at a point in history when memory capacity was limited. The MP3 format compresses the audio which results in the file taking up a lot less space. For example a CD quality file lasting around three and half minutes can be reduced from 38.5 Mb to around 3-10Mb depending on the amount of compression applied. 

Of course ‘compression’ cannot be done without a hit in the audio quality. The MP3 format in effect results in parts of the recording being removed. Normally its the part of the audio which is not crucial to the sound and ‘narrative’ of the music. This results in a range of frequencies being removed. Although not crucial to the listening experience these frequencies are noticeable, especially if played through a decent hifi rather than the standard Iphone headphones. Placed against a CD, a MP3 is clearly inferior for the majority of music genres. However, this reality has not stopped MP3 taking off and being the ‘format’ of choice for the majority of people. Apple have their own version called AAC, but this too is inferior to CD. 

Where as the visual would has not only avoided reducing quality (yes I know compression is used for digital broadcast - but it always has so compared to SD television its a win, win) but its actually gone HD and FULL HD mad. Maybe its because watching things is a primary activity, where as sound takes place whilst something else is taking place for the majority of people? However, I still believe that many people still listen to music just for the sake of listening to music, and hearing it in its full glory is something which most people would appreciate. Why else spend money on that expensive Bose Ipod dock if you don’t care about the sound quality?

Believe it or not audio HAS gone HD. We have 24 bit audio and it can be recorded and played back 192Khz (the frequency at which a sample is taken - the higher it is the more accurate the recording). Its just that, except for the production environment, these formats have failed to take off. Home cinema has helped a little as Blue Ray can support some of these formats, but for most people CD quality sound is still the best they have ever heard, and they live in a MP3 world for most of the time. 

The success of the MP3 format has been the main factor holding back progress. MP3 players were created to play back MP3s and hence new or even older alternative formats were locked out of the consumer offering. However the owner of MP3, Thomson, have now come up with MP3HD. This is excellent news!

What is great about MP3HD is that its backwards compatible with older players. So if you download a MP3HD file but your player can’t play HD files, it will still read it and just play a traditional MP3 version. However, when you upgrade your player then your files are already HD and you haven’t got a wasted download. Now these MP3HD files are not better than CD but are promising the same as CD sound, which is good. However, one assumes that the format could be extended to a FULL HD audio standard with the same backward compatible principles being applied.

The pressure to act is now with the actual download stores and hardware manufacturers to adopt this new standard. We want Amazon and co to offer MP3HD files for download and for hardware to support the files. Clearly download stores won’t jump at this despite the improved experience for customers. This is because of the extra bandwidth the stores will require to be able to send all this data to consumers. Additionally consumers will need fast broadband connections to recieve a file within a reasonable period of time. The latter of these concerns is not really relevant in most of the developed world with broadband fast enough to deliver this for most people.

The earlier concern, regarding the bandwidth download stores will have to use to deliver the files, is relevant. Indeed, this would most probably result in the files carrying a higher price. Though, this might stop the format establishing itself in the first place. Perhaps Thomson should lower any licensing fees required to use the format, at least to begin with, to help it take off?

Either way, its good to see that the quality of Audio is at last being made relevant at the consumer level and is not just an academic issue for the producers and professionals in the industry.

The demise of Spiralfrog has highlighted the reality of the ‘music for free’ model. This reality is simple: music is not free and costs to listen to and own. The record labels knew this and hence charged Spiralfrog a premium for granting access to their content. 

Unfortunately they did not have a strong enough business model and did not sell other services or generate enough income from advertising to be able to afford the music. This is interesting, as it demonstrates to consumers that the idea that there is no cost to music is phoney. Certianly Spiralfrog users now understand that there is a cost, because their service no longer exists.

However, one assumes that they will just migrate to another free music service such as Spotify. Spotify are clearly learning from the Spiralfrog story and has now announced that it will start to offer paid downloads via 7digital. 

Record labels want these new, legitimate services, to exist but then charge such high fees from them, they end up not allowing these services to bed in and grow. Hence, it is impertive that new music web ventures have a range of income sources from day one of launch. Especially in a market where advertising income on the net is down from anywhere from 2-20% depending on the sectors targetted. 

Meanwhile the Itunes music download service will start to vary the pricing structure of songs within its library. Some would argue that the timing is awful, as the industry as a whole is still struggling and we are in a recession, but the idea of increasing the COST of downloading music is interesting. Perhaps Apple is seeing if the legitimate download market is now becoming a way of life for many users rather than something to ‘play with ‘ on the side of their traditional music consumption habits. Accordingly they are testing the market to see if they can squeeze value back into certain recordings.

One thing is for sure, good music costs money to find, nurture and produce. Perhaps the re-education of the public has started?

The EMI story continues to entertain and distress in equal measure. It would seem that the friction in EMI has now spilled over to Guy Hand’s own private equity company TerraFirma as can be read here.

This news that Mr Hands has bought out (for a nominal sum) some of his co-investors isn’t so shocking taking into account that many investors have no more money to invest. However, the timing is as EMI is due a health check with the banks around March time. Perhaps Mr Hands is expecting to have to literally cough up more money from his own pockets (EMI’s losses have been reduced, but they are still losing and not making money) and he doesn’t want any dead wood as part of the fund holding him back.

Guy Hands might know exactly what he is doing, and indeed he might have a great master plan. On the other hand he might just happen to be the Moby Dick of the Music Industry and EMI is one huge whale.

Clearly in the year where UK acts have been doing so well, its a shame that the UK’s main record label is still so weak and is lacking a true strategy to carry it forward. Once the Beatle’s recordings become shared ownership with the Beatles (which under US law they will) then it might be a case of game over.