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July 31, 2007

News From the Digital Music Biz

AT&T has joined up with eMusic to provide direct to handset music downloads.  eMusic is the leading source for independent label artists and the number 2 online music store after Apple's iTunes.  The service will be available to select handsets from Samsung and Nokia.  The iPhone is not part of this service.  Tracks will be way more expensive over the air at 5 songs for $7.49, compared to the 30 tracks for $9.99 at the eMusic site.  Cost of wireless transmission is blamed for the increase.  Consumers will be able to download mp3s of the same music at the site as part of the deal.  eMusic is notable for selling tracks without DRM.

iTunes has grown to 3 billion downloads as of today.  This news puts Apple at number 3 in music retailing, just behind Best Buy and the ubiquitous Wal-Mart.  Amazon slipped to number 4.  Apple may be happy over this but the labels probably have mixed feelings.  They, of course, would love to see more revenue from the deal through higher prices for songs.  Though Universal refused to re-up with iTunes recently, they haven't had the nerve to pull catalog yet.  As of now Universal is stuck with Steve Job's 99 cents mandate until they can come up with something better.  Well, good luck with that.

And then there's the story about how social network sites are the "new" radio for consumers.  Yes, in the old days radio was exempt from paying certain royalties because of the free advertising the labels received for their artists.  Everyone went along with that one until the invention of mass-marketed tape recorders.  Now the battle is over locking down content that streams over the Internet.

Enter social networking sites.  Everyone in the world seems to have a page up on MySpace or Facebook (not me, though, so don't look for one).  And mostly everyone who does have a page seems to embed music on those pages as a way for expressing themselves.  Bands also have pages for themselves.  People who browse for friends and bands also browse the music.  53%, in fact, actively surf social sites to discover new music.  30% of those go to buy or download that music.  The problem is that there is no easy way to buy that music at the point of discovery. 

This is all from a survey by the law firm Olswang and reported on by the BBC.  46% of those surveyed wish they could buy music through a "Buy-it-now" button. That would be difficult as its hard to tell these days who owns the rights to what, unless it went to a central store where everyone contributed catalog.  Any social networking music store would have to compete with iTunes on price and offerings.  That hasn't developed in any significant amount with other web music stores.  The labels could capitalize on social networking by cutting some sort of deal with the sites, though they probably would chafe over being told what's popular by consumers.  Their model has always been to tell consumers what they want.  This is uncharted territory for them, literally. 

The survey has some numbers for piracy as well.  The number of people claiming to download music illegally has risen to 43% in 2007, up from 36% in 2006.  Legal downloads grew 16% in 2007.  Growth was 40% in 2005 and 2006.  There are more results, many of them that will upset the labels efforts in controlling their product.

If that doesn't get to them, then the story of Prince giving away about 3 million copies of his latest release with a Sunday issue of the Daily Mail in the U.K. will.  Record shops were angered at this distribution of music as a cheap commodity.  Sony BMG, Prince's record company, was not thrilled at the idea, as they are trying to sell the disc everywhere else in the world.  Copies are available for download on the Internet and on eBay.  Sony isn't going to make much off this one, but Prince likely will through shows and the sale of other promotional items.  Music may become (or already is) a commodity, but the unique performance of the artist will never fall in that category.  This may be the future for musicians, where recorded music is (disposable) promotional material for the live show.

July 31, 2007 | Permalink


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