Music’s lost decade: Sales cut

in half….

 ….

NEW YORK (CNNMoney.com) — If you watched the Grammy Awards Sunday night, it would appear all is well in the recording industry. But at the end of last year, the music business was worth half of what it was ten years ago and the decline doesn’t look like it will be slowing anytime soon.….

Total revenue from U.S. music sales and licensing plunged to $6.3 billion in 2009, according to Forrester Research. In 1999, that revenue figure topped $14.6 billion.….

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Although the Recording Industry Association of America will report its official figures in the early spring, the trend has been very clear: RIAA has reported declining revenue in nine of the past 10 years, with album sales falling an average of 8% each year. Last decade was the first ever in which sales were lower going out than coming in.….

“There have been a lot of changes over the past 10 years,” said Joshua Friedlander, vice president of research at RIAA. “The industry is adapting to consumer’s demands of how they listen to music, when and where, and we’ve had some growing pains in terms of monetizing those changes.”….

The two recessions during the decade certainly didn’t help music sales. It’s also a bit unfair to compare the 2000s with the 1990s, since the ’90s enjoyed an unnatural sales boost when consumers replaced their cassette tapes and vinyl records en masse with CDs.….

But industry insiders and experts argue that the main culprit for the industry’s massive decline was the growing popularity of digital music.….

“The digital music business has been a war of attrition that nobody seems to be winning,” said David Goldberg, the former head of Yahoo music. “The CD is still disappearing, and nothing is replacing it in entirety as a revenue generator.”….

The disease of free….

The battle for paying digital customers may have been lost before it had truly begun. In 1999, Napster, a free online file-sharing service, made its debut. Not only did Napster help change the way most people got music, it also lowered the price point from $14 for a CD to free.….

“It’s pretty easy to give away something for free,” said Russell Frackman, the lead attorney for the music industry in its 1999 case against Napster. “It’s not that the music industry thought the technology was bad, it just objected to the use to which it was being put.”….

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Click here to see Napster video:….

http://money.cnn.com/2010/02/02/news/companies/napster_music_industry/….

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Apple’s (AAPL, Fortune 500) iTunes is credited with finally getting people to pay for digital music, but it wasn’t unveiled until 2003.….

In the time between Napster’s shuttering and iTunes’ debut, many of Napster’s 60 million users found other online file sharing techniques to get music for free. Even after iTunes got people buying music tracks for just 99 cents, it wasn’t as attractive as free.….

“That four-year lag is where the music industry lost the battle,” said Sonal Gandhi, music analyst with Forrester Research. “They lost an opportunity to take consumers’ new behavior and really monetize it in a way that nipped the free music expectation in the bud.”….

Now just 44% of U.S. Internet users and 64% of Americans who buy digital music think that that music is worth paying for, according to Forrester. The volume of unauthorized downloads continues to represent about 90% of the market, according to online download tracker BigChampagne Media Measurement.….

“People will steal music regardless, so it’s not worth trying to fight against something where the fight’s already over,” said Dan Ingala, founder and lead singer of the band Plushgun.….

When Plushgun released its album “Pins and Panzers,” it was the most downloaded album on the popular peer-to-peer Web site What.cd with more than 10,000 illegally downloaded tracks.….

“It’s just a matter of adjusting,” said Ingala. “At the same time, it’s helping us create an audience.”….

Where we’re headed….

The problem for the music industry may actually be its greatest opportunity. Despite the great decline in sales, the Internet has exposed consumers to more music than ever before. But that accessibility has been difficult to monetize.….

The music industry has tried to keep up by licensing ringtones, licensing music on popular Internet radio stations like MySpace Music and Pandora and licensing music videos on YouTube. Digital licensing revenue reached $84 million in 2009, and it is expected to grow substantially in the coming year. (See correction below.)….

Licensing fees don’t make up for the volume of total lost sales, but Gandhi says the fact that the music industry is finally embracing these new technologies and revenue streams means the industry is finally getting it.….

She said the combined effect of interactive multimedia, a growth in digital licensing and services such as Lala, which was bought by Apple in December, will ultimately help give sales a boost.….

“The industry is actively doing a lot of things that are putting us back on the right path,” said RIAA’s Friedlander. “We’re switching to an access model from a purchase model.”….

Forrester forecasts music industry revenues will continue to decline until it reaches about $5.5 billion a year by 2014, as new revenue sources begin to lift sales again.….

Correction: An earlier version of the story incorrectly reported the figure for digital licensing revenue as $84 billion when it should have been $84 million. ….

Source: CNN

Tech group to launch digital music file successor

LONDON (Reuters) – A leading technology company is set to launch a new digital music file format which will embed additional content for fans including lyrics, news updates and images in what could be a successor to the ubiquitous MP3 file.

The music industry has been hammered by piracy in the last decade and is looking to develop new offerings to entice consumers to buy their music from legitimate sites, instead of taking it from illegal outlets.

The new proposal, which is called MusicDNA and has the backing of the original MP3 digital music file inventor, would allow fans to download an MP3 file on to their computer, which would carry with it additional content.

Music labels, bands or retailers could then also send updates to the music file every time they have something new to announce such as the dates of future tours, new interviews or updates to social network pages.

The user would receive as little or as much of the information as they want, every time they are online. However anyone who downloads the music file illegally would receive only a static file which would not receive any updates.

BACH Technology, the group behind the MusicDNA file, says it is looking to partner with retailers, music labels, rights holders and technology companies and is happy to provide its technology for others who could use it under their own brand.

BACH is based in Norway, Germany and China and has Germany’s Fraunhofer Institute for Digital Media Technology as a partner.

“We are getting very good feedback and the fact we are looking to include everyone in this, and not competing against them, helps,” Chief Executive Stefan Kohlmeyer told Reuters.

The music files can play on any MP3 player including Apple’s iPod. The music player, or online music library, can also be adapted to suit the user and could, for example, be integrated into existing social networks.

Kohlmeyer said the service would hark back to the time when music fans enjoyed looking at the lyrics and artwork on an album almost as much as they enjoyed listening to the music itself.

“What we are bringing back to the end user is the entire emotional experience of music,” he said. “We think it got lost in the transition to the digital era.

“We think a beautiful piece of audio has been reduced to a number code. We want to enrich it again.”

BACH, which counts the inventor of the MP3 and a former chief executive of Sony Music Entertainmentamong its investors, is also hoping that software developers will create new applications and content for the MusicDNA player.

A beta version of the file will be available in the Spring and a full commercial rollout is expected by the summer. It also hopes to roll out a mobile version of the music player.

BACH has already signed up a host of partners across the industry and is in talks with the major record labels.

Rob Wells, the senior vice president of digital at Universal Music Group International, told Reuters he thought the new offering was exciting and said Universal could quite possibly work with the company, but said they still needed further commercial conversations.

“I think the music industry has got a great opportunity to open up completely new revenue streams,” Kohlmeyer said. “They haven’t contemplated in the past all the aspects of rich media.”

(Reporting by Kate Holton; Editing by Rupert Winchester )

New free music sites learn from others’ mistakes, US

Would Anyone Pay for MySpace Music?By Paul Bonanos | Saturday, November 14, 2009 | 9:00 AM PT | 
Speculation arose this past week that News Corp.-owned MySpace Music is considering moving to a paid model, as the cost of free streaming is making its current model unsustainable. News Corp. digital chief Jon Miller expressed some interest in such a move in an onstage interview conducted by paidContent’s Rafat Ali in Monaco on Thursday, noting that he believes in the “freemium” music model conceptually, even if a practical and sustainable version hasn’t appeared yet. (The audio and video are out of sync, but the segment concerning MySpace begins around the 7:15-minute mark, with deeper discussion of MySpace Music after 12 minutes.)

But even if the freemium model does work for music — and I’m far from convinced that it does — MySpace is so far behind in terms of user interface and experience that it’s hard to imagine the company launching a compelling paid product. A primary reason Spotify has garnered attention is its user interface, and the emerging battle for the music subscription marketplace will likely hinge on a compelling user experience. Consumers already know plenty of places to find free music, and historically they’re only liable to open their wallets for a superior experience. MySpace, however, isn’t seen as a premium provider of anything — and MySpace Music is viewed as a place where clutter and advertising are tolerated in order to get something for free.

What could MySpace deliver that people would pay for? Neither charging to hear music that used to be free nor crippling the free service by taking away music from people’s playlists are very good options, and violate the 10 commandments of freemium. Building a premium ad-free desktop, browser-based or mobile service would merely put MySpace in more direct competition with Spotify — which is having its own troubles satisfying content owners — and other music subscription services that are still seeing more experimentation than customer traction. And for a company that’s already admitted it’s long stopped innovating, MySpace would have to overtake more nimble competitors to draw users to a paid music service while overcoming the perception that it’s a messy-but-free one.

Asked if MySpace Music is nearing profitability, Miller told Ali, “On an operating basis, it’s getting there, but no, because of the payments to the music companies,” adding that he considers a paid model “something to look at.” Fourteen months after MySpace Music’s launch, with the four major labels on board as equity partners, time appears to be running out for its free ad-supported model. It’s worth revisiting Om’s remarks from back then:

This article also appeared on BusinessWeek.com.

Source: Gigaom

It’s November 2009 and we’re nearing the end of a decade. It’s been a tumultuous time of change for many industries, much of it driven by the Internet. With that in mind, over the coming weeks ReadWriteWeb will look back on the defining Web trends of the past 10 years. From the dot com boom, to the nuclear winter after, to the passion and enthusiasm of the pre-Web 2.0 innovations (such as RSS and podcasting), to the highs and hype of Web 2.0, to the current era of the real-time Web, to the near future of the Internet of Things. We’ll explore all of this and more.

We’re starting with online music. No industry, except arguably the newspaper one, has been rocked (pardon the pun) more by the Internet than the music industry.

Napster & Kazaa: Online File Sharing

The online music decade started with Napster, a music file sharing service created by Shawn Fanning that operated between June 1999 and July 2001. Napster enabled people to freely share MP3 files over the Internet; however it quickly ran into major legal trouble. Napster was the subject of lawsuits in 2000 by touchy metal band Metallica and others. It was eventually shut down by court order, after several major record labels went after the service.

After Napster’s demise, a P2P application called Kazaa became the most popular service for music file sharing. But it too eventually succumbed to record industry attacks.

Curiously, both Napster and Kazaa were recently reincarnated as law-abiding services. After years of re-launch attempts, Napster was acquired by Best Buy in September 2008 and was born again in May 2009. Meanwhile Kazaa turned into a legit music subscription service in July this year.

iTunes / iPod: Digital Music Goes Commercial

While Napster and Kazaa tried to skirt around the commercial imperatives of music, like paying artists, Apple took on the record industry in an entirely legal way. In January 2001, Apple launched a digital music player for music callediTunes. Then in April 2003, the iTunes Store was launched. It offered the ability to buy songs for 99 cents each, which had a major impact on the music industry.

Soon after Napster’s demise in 2001, Apple launched what was to become a revolutionary device in the music industry. The iPod was launched in October 2001 and it became the most popular portable music player since the Sony Walkman in the 1980s.

Fast forward to 2009 and iTunes continues to evolve. In January Apple announced that iTunes would go DRM-free. In September 2009 Apple launched version 9 of iTunes, which included a Genius-like recommendation feature for apps and ‘iTunes LPs’ - a feature that brings liner notes and artwork to digital albums.

MySpace: Music & Social Networking

MySpace was launched in August 2003 and soon became a popular hangout for local bands, especially indie rockers. MySpace provided a way for those bands to promote their music and reach a wide network through social networking.

As ReadWriteWeb’s Sarah Perez wrote last month, it was a virtuous circle for MySpace. The bands’ presence on MySpace “began to attract a young, hip crowd of users who were interested in following pop culture, and, in particular, the up-and-coming artists they discovered while browsing through the network. Only eight months after its launch, MySpace began to experience exponential growth, as its users created profiles and friended others who would then, in turn, invite more users to join the social network. Thanks to the “network effect,” MySpace soon became the place to be online. Everyone was there.”

However by 2008, MySpace had ceded the social networking crown to Facebook. In 2009, MySpace is once again trying to reclaim its heritage as a music service. In October MySpace launched ”Artist Dashboards” and integrated its music video vault with recent acquisition iLike.

Pandora & last.fm: Online Music Discovery

Online music services have flourished in the ‘web 2.0′ era, when the ability to find new music and share it with others via the Web became increasingly sophisticated.

Two services in particular stand out. One is Pandora, a free online music discovery service. Pandora was founded in 2000 and continues to grow, despitevarious legal issues over the years. As ReadWriteWeb’s Frederic Lardinois noted earlier this year, Pandora derives its revenue from targeted audio advertising in its music streams and affiliate sales through Amazon’s MP3 store and iTunes.

Last.fm is another online music discovery service. It was founded in 2002 and was sold to CBS in 2007. It continues to innovate in 2009, for example in May this year last.fm announced combo stations, allowing a user to create a station with up to three artists or tags.

Conclusion

This post and series was inspired by one of my favorite blogs and podcasts, NPR’s All Songs Considered. They’re currently looking back at the decade in music and much of the discussion is about how the Internet helped define it.

And it’s true, when you think of music at the end of 2009 you think of iTunes, Pandora and last.fm - MySpace even. The record industry is still coming to terms with these and other changes.

Source: NY Times

-Here is a re-post about that thing we call - PIRACY!!!-

Friday, April 24, 2009 

Internet Pirates All At Sea Category: Music Enforced regulation regarding internet piracy took a giant step forward last week, with news that the operators of notorious torrent site The Pirate Bay had been charged with digital theft by a Swedish court, fined $3.6m and sentenced to one year each in jail. The news was welcomed by the creators of Glasgow-based Kerchoonz.com, the first integrated social networking and media site to legally enable streaming and download of music, videos and on-line games whilst paying the artists and creators of music. Co-founder of Kerchoonz.com and renowned US artist Indiana Gregg, has had personal conflict with The Pirate Bay. She says, “As a performing artist myself, I take great offence with torrent sites making a profit on the backs of musicians, who in turn, aren’t paid a penny. A small number of torrent tracker sites, including The Pirate Bay, refuse to do remove material on request and are arrogant enough to believe they are above the law. Whilst I certainly would not wish anyone to be incarcerated, this recent sentence sends a clear message to existing and would-be file sharing hosts - illegal downloading is a crime, you can be traced and sooner or later you will be prosecuted”. Her argument isn’t that users should have to pay for downloads, quite the opposite in fact. She reasons that users should be able to listen to their favourite tracks for free, but that the artists should also be given some form of payment. Kerchoonz.com does just that. Scheduled to launch in June, it allows users to access free downloads, whilst artists, whether internationally acclaimed or as yet unsigned, are paid each time their work is streamed or downloaded. Revenue gained by unobtrusive advertising on the site is used to fund these payments, ensuring that everyone benefits. “Already over 32,000 have signed up”, says Indiana. “Although there are obviously other sites out there who offer free legal downloads, Kerchoonz.com is the first to absorb the offering into a social networking environment, ensuring full integration with Facebook and Twitter”. It is inevitable that other, similar services will appear on the internet over a very short space of time, as increasing numbers of illegal file sharers are prosecuted or close down of their own accord, before “The Internet Police” knock on their virtual door. This can only spell good news for the thousands of artists who have, since the dawn of the internet, been royally ripped off. Kerchoonz, founded by Indiana Gregg and Ian Morrow in 2008, is a group of veteran record producers, artists, songwriters, music and technology industry professionals. Kerchoonz.com is a social networking platform that allows free exchange of music, art, ideas and entertainment. It enables fans to search and discover new music, play games, meet people, watch and upload video, keep up with news and post blogs. Kerchoonz.com is an ad-funded model that allows artists and musicians to be paid for their audio and video streams, as well as their free downloads.doesn’t want to give their music away for free, they are free to sell it and provide links to their on-line shop. But, they can still opt to be paid for streams. http://www.kerchoonz.com

April 17, 2009

By Joseph Palenchar — TWICE, 2/6/2009 1:53:00 PM

New York — Separate announcements by Warner Music and Internet music service Slacker underscore the music industry’s shift away from physical media.

In reporting its first-quarter financial performance, Warner Music said its worldwide digital revenues grew 20 percent to $171 million for the quarter ending Dec. 31, compared with the year-ago period, and were up 2.4 percent sequentially from fourth-quarter 2008’s $167 million. Digital growth was driven by online downloads to the PC as well as by downloads of songs and ringtones to cellphones, the company said.

With the increase, digital music revenues accounted for 19 percent of total revenues in the first quarter, but total revenues were down 11.2 percent in the quarter to $878 million compared to the year-ago quarter.

“This performance reflected the ongoing transition in the recorded music industry characterized by a shift in consumption patterns from physical sales to new forms of digital music as well as the impact of the turbulent global economy on retailers,” the company said.

Warner attributed the overall decline mainly to “continued contracting demand for physical product by retailers primarily in the U.S.” Digital’s growth kept sales from slipping further, as did increased revenue from Warner’s artist services business. The company said it is continuing “to broaden our revenue mix into growing areas of the music business, including sponsorship, fan club, Web sites, merchandising, touring, ticketing and artist management.”

Warner’s digital revenue include revenues from Internet music service Slacker, which announced that its customizable Internet music service can be streamed to the new BlackBerry Storm PDA phone via Wi-Fi and cellular.

Compatibility with the touchscreen Storm is one of the upgrades included in a free Slacker application downloadable over the air to all U.S. BlackBerry phones that run the BlackBerry 4.3 or higher operating system. The announcement follows the January launch of a free Slacker app for the iPhone, iPhone 3G and iPod Touch on the Apple iTunes App Store.

With the Slacker Mobile app, users stream music from Slacker’s free ad-supported service or subscription-based commercial-free services to their portable device. All Slacker services stream more than 100 Slacker-programmed stations, more than 10,000 artist stations and an almost unlimited number of a user’s custom-created stations.

 On BlackBerrys, the application also stores Slacker music streamed at a faster-than-real-time rate for local storage and playback, reducing battery consumption by up to five times that of streaming playback, Slacker said. To store Slacker music on a BlackBerry, consumers connect it to a PC via USB cable. The BlackBerry then automatically fills itself with music at a faster-than-real-time rate from stations marked by the user to be cached.

Source: http://www.twice.com/article/CA6635601.html