Posts Tagged ‘iTunes’

Facebook's music plans: Five random thoughts & one prediction

Monday, October 20th, 2008

Facebook is in the news again about its plans for getting into digital music. Namely, the news is that Facebook doesn’t have plans as of yet to enter the digital music business. I posted a story about this today on The Industry Standard called The Facebook Music mess. If you’re interested, give it a read.

Facebook MusicAs I was working on the article, there were five extra things that I wanted to include but didn’t. Here they are:

1) MySpace is going to kick Facebook’s butt in music no matter what Facebook does. MySpace Music, which officially launched in September, has a huge lead on Facebook in the music business. Even before the company’s new music site launched, MySpace already had millions of bands and musicians signed up and using the site as a promotional tool. MySpace’s roots are in music, and this lead is going to be unbeatable for Facebook.

2) It doesn’t matter that Facebook will be #2 in social music. Even though Facebook will not beat MySpace, it will still be in the music business. And Facebook won’t mind being number two because the multi-billion dollar music business is large enough for there to be more than one winner.

3) The suggestion that Mark Zuckerberg is considering getting into music out of jealousy is preposterous. Facebook has millions of registered members and those millions of members want to listen to music. Zuckerberg and crew are going to have to figure out a business model that works for Facebook and its users, end of story. This has nothing to do with jealousy; it’s purely good business sense.

4) Facebook does actually have a chance to beat MySpace – even in music – internationally. I have written about this in the pastFacebook is going to dominate MySpace in the global arena. It’s possible that Facebook may even beat MySpace in music internationally, especially since MySpace hasn’t launched internationally yet.

5) The music labels are going to have to step it up because they are ridiculously behind the times. OK, this might seem unrelated, but really, the record labels are getting more archaic by the second. According to reports, Facebook is having trouble working out licensing deals with the giants. Apparently, the big four labels won’t give up their music libraries without getting an ownership percentage in Facebook first. That’s just ridiculous on so many levels. There will come a day (I think) when the labels realize that having access to Facebook’s enormous, loyal, repeat audience will be worth the trade of their content.

And here’s the prediction: Facebook will get into the music business in 2009 and whatever the company decides to do will involve a partnership with Apple and iTunes.

MySpace vs. iTunes

Friday, April 4th, 2008

My most recent article for The Industry Standard just went up – How MySpace Music could beat iTunes. If you’re interested, please give it a read!

The music industry is something that I’m really thinking about lately with the launch of Fat J Records and signing Cara Austin – so the recent news about iTunes overtaking Wal-Mart and MySpace Music’s launch are both of great interest to me. And there are a lot of things about the MySpace vs. iTunes topic that I didn’t have space to include in my article for The Standard. So I thought I would just list them here, kind-of stream-of-thought.

MySpace logoMySpace Music can beat iTunes by supporting musicians. This is the premise of the article that I wrote for The Standard. Basically, I think that if MySpace Music provides data about the fans that purchase music, ticket and merchandise to the musicians, it can beat iTunes. Go read the article for the whole argument.

CDBaby is a model of how MySpace Music could work. CDBaby is an unbelievable music retailer that caters only to independent artists. And this is what its privacy policy says (these points are directed at buyers who visit the site):

“Only the musician whose music you buy will know who you are. If you don’t even want the musician to know about you, just say so at the bottom of your order form.”

I use CDBaby to sell CDs for Cara Austin, and so far, NOT ONE person has requested that CDBaby withhold their contact information. This is because people who go so far as to buy a CD are usually fans – and they don’t mind the band or artist being able to contact them again in the future.  According to the company’s Website, CDBaby has sold 4,202,465 CDs to customers resulting in $71,482,212 paid directly to the artists.

iTunes is a store, MySpace is a community. I read this quote from someone involved in the deal, and this is a really important point. While there are millions of people who buy music from iTunes, the MySpace community that uses MySpace to discover new artists and read about what they are up to, will be a powerful environment for making a purchase. With the possibility of revenue coming from MySpace, artists will do even more to make sure that their pages are attractive, interesting and compelling. And the community of music on that site is going to get stronger and stronger. Imagine 5 million musicians adding content, video, new songs and new song versions – this is going to be incredibly powerful and impossible for iTunes to rival.

Facebook’s chance to win in this space is shrinking by the minute. Facebook is gaining on MySpace in the social networking space, but Facebook’s support of music is, well, pathetic. They are going to have one shot to try to release a music platform that users will like (and use) but it’s not looking good. With MySpace’s announcement of the support of three of the four major labels, one possibility is that Facebook already has the support of the fourth (but that is highly unlikely and just speculative on my part).

International will be huge. I read that MySpace Music isn’t going to be able to distribute music internationally yet. What? What is the licensing issue with that? My suggestion – sign up all the indies asap and start selling to Japan, England, Australia, and everywhere else that has an appetite for U.S. music immediately – or else that could be a place that MySpace Music will be vulnerable.

DRM free matters, but won’t be the thing that wins it for MySpace. As part of the announcement, MySpace announced that they music that is sold from its music store will be DRM-free. (DRM=Digital Rights Management, it is the protection that Apple places on its files that prevents people from being able to share them.) This is a big deal, but not the biggest, as this will just (finally) compel Apple to follow suit with iTunes.

There is still a perception issue that could cause MySpace some serious problems. MySpace has kind of a seedy image. The site’s design is fairly unattractive, and it’s hard to navigate the social network without running into something that borders on pornography or spam. The company is going to have to do battle against that perception to win back people who have become disillusioned by previous negative experiences with MySpace.

Can Apple prevent iPods from using this service? Technically, I’m not sure if there is a way for Apple to limit the sites from which the iPod can download music, but if users are unable to load music from MySpace Music to their iPods, that would be a serious setback to MySpace. It also would likely cause a revolt among iPod users against Apple, but it would still be a hiccup in the acceptance of the service.

Cara Austin debut is amazing

Wednesday, February 20th, 2008

Cara Austin Send MeI have written about my friend Cara a number of times in the past, and today I am proud to annouce the launch of her new CD and Website. The CD – Send Me – is available for download or purchase at all the standard musical locations – Amazon.com, iTunes, Rhapsody, and CDBaby – but it SOLD OUT in the first day from Amazon, so they are waiting to get some more copies in and are temporarily out of stock.

I highly recommend that you check out these tunes – you’ll hear interesting lyrics, a great message that gets into your head and your soul, and I am constantly impressed with her songwriting skills.

Cara is one of the people who I admire most in the world – this is someone who everyone will want to get to know, check it out.

New music models worth checking out

Wednesday, January 16th, 2008

In a recent article, I made a series of predictions about the future of the music industry – one of those predictions was that “many new online and digital services will rise and fall.” Now that I think about it a bit more, that prediction seems kind of cheap because in the course of researching that story, I came across lots of the new online and digital services that have already risen. So half of the prediction was more just reporting than prophesying.

Even so, I thought it might be helpful to include a list of the new music models that I found while doing the research. If my prediction holds, many of these will eventually fail, and most of the others will be acquired or consolidate. Staying on top of this quickly changing industry will be tough for awhile, but knowing what’s out there now is a good place to start.

This list is obviously not exhaustive, so if you know of others, or have feedback on any of those listed below, please leave a comment. Also, some of these companies have revenue models that are clear, but others were a bit less so. If you have any input, let me know.

GoombahGoombah logoMusic recommendations based on your iTunes playlist and a comparison of what other people who share similar music interests are listening to. Goombah scans your iTunes library, finds other people who share your musical tastes, and then recommends songs to you based on the songs that they listen to. Revenue model: Affiliate income with potential to get into paid placement, with labels paying for their artists music to be part of the recommendations.

finetune- This site lets you type in an artist and they will createa custom playlist of songs based on that artist and others “like” them. Alternately, you can build your own playlist of up to 45 songs from 15 artists. You can then take your custom playlist and embed it on your blog or MySpace page. Revenue model: advertiser-supported

Groove Mobile – The leading music-for-your-cellphone provider,Groove Mobile logo they have mobile downloads, P2P sharing, music recommendations, streaming radio and music subscriptions. Groove Mobile also powers Orange’s Music Player (U.K.) and the Sprint Music Store. Revenue model: Subscriptions

Livewire Musician – This Web application lets bands, labels or managers book gigs and tours, Livewire Musician Logocommunicate with fans, manage radio promotions, manage the press, and track radio play. A basic account is free, and there are a la carte premium services available. Revenue model: Licensing fees

matchmine – Suggests other songs (and movies and blogs) that youmatchmine logo‘ll be interested in based on your preferences. The company is a product of The Kraft Group/New England Patriot’s interactive media and innovation team. Revenue model: Sells general user data to partners

Nextcat – Social networking for the entertainment industry, Nextcat logowhich in the entertainment industry looks more like traditional networking. Revenue model: Advertising and sponsored listings and placements

nimbit – Business management tools for the indie musician. The nimbit logocompany’s mission is “to put musical artists in complete control of their own music business and brand, enabling them to reach their full potential as quickly as possible.” They do this by providing solutions that allow artists to sell CDs and digital downloads, merchandise, and provides assistance with online ticket sales, e-mail list management, Website design and content hosting and a variety of other services. Revenue model: Paid services

OurStage – This site works kind of like a traditional “battle of the bands.” Bands upload their music, users OurStage logoof the site vote on what they like the best. Every month there are winners of cash prizes. Revenue model: The site sells the music that is uploaded to the site.

Sonicbids – Connecting bands and music promoters. The site allows musicians to put together Sonicbids logoone digital press kit (DPK) that is then distributed to promoters and helps the artists book gigs without having to send out physical press kits. Revenue model: Promoters pay a one-time fee and artists pay for submissions.

Amie Street  – This site allows indie artists to upload their Amie Street logomusic – the more popular the song, the more expensive it is to download. All songs are free to start and then move up in cost the more popular that they get. When users recommend songs to their friends, they get credit to buy more music. Revenue model: Earn 30% of every song sold

Strayform – Artists put proposals online and they are (or aren’t) funded by the fans who see Strayform logothem. According to Strayform, “Fan funded proposals let artist get paid without giving up a big cut, without blowing money on ads, and without long term restrictive contracts.” All the media is Creative Commons licenced, so fans can use everything freely on any device and share on P2P networks. Revenue model: ?

SellaBand – With this site, musicians need to find 5,000 people who “believe in them” (people prove this SellaBand logoby giving $10 to the artist) and then SellaBand takes the artist to the “best producers and studios in town.” Then the three (artist, believer and SellaBand) split the profits from sales of $.50 downloads. According to this article from TechCrunch, some artists have hit the $50,000 mark and have already headed to the studios. Revenue model: Splits revenue with the artist and users

CDBaby – Online record store that sells albums by independent musicians. They oCDBaby logonly sell music that comes direct from musicians, and pay the musicians directly, weekly. They also help to facilitate the digital distribution of music. Revenue model: They take $4 per CD sold, plus an initial $35 fee.

iTunes – This is a site that probably needs very little introduction. MP3 library, iTunes logofrom which users can download songs for $.99 per track, $9.99 per digital album. Revenue model: iTunes takes 30% of each sale.

Amazon MP3 Downloads- Works just about the same way that iTunes does, except that users don’t have to download a special player to get songs, and digital albums cost $8.99 each. Revenue model: Amazon takes a percentage of each sale

Rhapsody- Another MP3 download site, thRhapsodyis one features unlimited downloads based on various subscription deals. Revenue model: Memberships plans starting at $12.99 per month

TuneCore- This site allows artists to upload their digital tracks, and then TuneCore manages TuneCoretheir relationships with digital distributors, including iTunes, Amazon.com and Rhapsody. I wrote a more in-depth assessment of the site here. Revenue model: Charge artists a yearly fee

In compiling this list, I relied heavily on TechCrunch and Xconomy. Thanks!

What's going to happen to the music industry?

Tuesday, January 8th, 2008

Everywhere I turn it seems that there is a story about the demise or revolution of the music industry (depending on your perspective), sparked by two huge music-related stories that broke last week.

The first was the report that music sales were down 9.5% in 2007. The bright note from that report was that the sale of digital music tracks was up 45%, but even that huge leap didn’t help the industry overall. The second was the announcement that Sony BMG will be joining the other three major labels in offering DRM-free songs.

The music industry is scrambling to deal with the impact of the Internet on its traditional business models.

Going out of Business Music WorldIn this October 2007 post, Michael Arrington of TechCrunch sums up nicely the issues that are facing the music industry, and ReadWriteWeb echoes some of the same sentiments. Basically, sales of CDs and digital downloads are not going to make huge amounts of money for anyone going forward. Both argue that the real money will be made from ticket sales for live performances, merchandising, and special limited-edition physical copies of the music.

But there is money being made from digital downloads – it’s just not of the scale that the major record labels are used to. In 2007, there were 844.2 million digital tracks sold. Radiohead’s recent experiment, in which the band released an album online for free download and asked listeners to pay what they wanted, made them more money from the digital distribution then they made from the digital distribution of all the rest of their albums combined. If this seems strange, there is a simple reason – Radiohead was released from their contract with their record label, a contract that in the past excluded them from any royalties from the digital distribution of their music (remind anyone of the current writer’s strike?) Many signed bands and musicians are currently stuck in contracts like these, the relics of an era when digital distribution didn’t really matter.

Of course, there is still money being made in the music industry, but as fewer people are buying CDs (that are costly to produce and distribute) and as more people are downloading digital music (that is practically free to reproduce and distribute), less money is being made. And, the money is being spread among more musicians. The Long Tail is in full force in the music industry, allowing more people to make money as consumers spend their dollars on a wider variety of music and musicians.

So this puts the music industry in this strange position. The indie artists, who are making some money on their small but loyal audiences and the Long Tail, but often not enough money to live off of, would be psyched to get a record contract because the record companies have the marketing and distribution capabilities that they don’t have access to. The big (and already famous) bands, are trying to get out of their contracts in favor of the freedom that the indie artists enjoy. And the record companies are panicking. This is creating a weird, wild situation where everything is about to totally implode if change doesn’t happen quickly.

The really big question is: What online business model is going to work for the music industry going forward? Any successful model will have to support both the record labels and the artists who are producing music. And it will have to be one that consumers will spend their money on.

Here are my predictions:

  1. The new model will be all about the audience.In the past, bands knew how many records or songs they sold, but not the name of the individual that bought them. Digital download and distribution, as well as social networking sites like MySpace, now let musicians know much more intimately who their audience is. By collecting the name of the individual who downloads their song (whether they pay for it or get the download for free), musicians will be able to have a much more personal relationship with their audience – and they will be able to re-market to them in the future. As musicians begin to realize that having the name of their fan is worth more money than the $0.70 they get from iTunes, they will either begin  offering all their songs for free, or Apple will have to adjust their business model and begin sharing data with the artists. Radiohead may have been the first major label to try offering free downloads, but many others are following suit. Trent Reznor (of Nine Inch Nails fame), just produced a Saul Williams album and released it online the same way that Radiohead did – and he has told everyone about the data that they collected. Reznor is bemoaning the fact that only 18.3% of the people who downloaded the album paid $5 for it. He thinks that this stinks (and it might) but he is neglecting the really exciting fact that 154,449 people downloaded Williams’ album! That is an audience of 154,449 if you at least collected an email address. That is a significant fan base – and in my opinion, it is going to be the primary model of the future.
  2. Musicians will begin releasing songs more frequently, as well as more versions of each song. When digital downloads become the norm (and that day is close), there will be no need to stick with the CD format where musicians release all their fully produced songs in one giant lump. Instead, they’ll release things as they are done, there will be more live performance and acoustic versions of songs, and more interesting bits, more looks into the recording studios, more evidence that songwriters and musicians are humans and that every version that they play isn’t perfect. (UPDATE: Looks like Mark Cuban agrees with this prediction.)
  3. Record labels will try to hold onto their business models. They will succeed only until current contracts run out, but they will eventually fail. They will do this not because they don’t see the writing on the wall, but because they can’t figure out how to change.
  4. A new type of record label will emerge. The new label will serve more as a helper to the artist than an owner of the artist. This new label will assist with marketing, bookings, networking and the other promotional aspects of the music business. But instead of owning all the rights to the artist, musicians will PAY their labels for their help, and the musicians will retain their rights. The new labels that will be successful will be the ones that know how to do SEO, online marketing and social networking. These types of labels will become the norm. (And they probably wont’ be called record labels.) (UPDATE: Looks like CNET agrees with this prediction: “If we end up ridding the world of labels, we’ll only have to re-create them–in some other, probably more nimble form.”)
  5. Apple will be one of the new “record labels.”
  6. Many new online and digital services will rise and fall. In 2-3 years, we’ll be left with the winners. At least three of the winners will be companies that no one has even heard of yet.
  7. There will be new ways to buy music. Walking through Target, no longer will you head to the music section to buy music. Instead, as you hear a song piped over the airways, or walk past a TV that is playing a music video and decide you like the song, you will be able to use your phone or mp3 player to purchase and and download the song instantly.
  8. The stuff inside the CD case will still be valuable in digital format, but it will look completely different. People still buy CDs for the lyrics and the liner notes inside – as well as for the artwork and the experience of opening the case and looking through the packaging. This won’t change, there will always be a market (although a smaller one) for the special edition hardcopy CDs. And it won’t be long until someone comes up with a way to sell that stuff in digital format, as well. But although the digital information will be the same, it won’t look the same as the CDs of today. This will be a huge money-maker, much bigger than anyone expects.

UPDATE: This Music Lessons post by Seth Godin is an awesome add-on to this article. Go read it.

Photo by SqueakyMarmot

What is The Long Tail?

Thursday, January 3rd, 2008

The Long Tail is a term that was coined in a 2004 article in Wired and then was turned into a book – specifically, The Long Tail: Why the Future of Business is Selling Less of More, by Chris Anderson.

The Long Tail book coverThe basic premise is that because of the Internet and it’s infinitely wide and incredibly low-cost distribution capabilities, the big “hits” of popular culture (be they movies, music, books, etc.) are no longer the only things that will make money. Now, the “misses” will also be money-makers.

“With no shelf space to pay for and, in the case of purely digital services like iTunes, no manufacturing costs and hardly any distribution fees, a miss sold is just another sale, with the same margins as a hit. A hit and a miss are on equal economic footing, both just entries in a database called up on demand, both equally worthy of being carried. Suddenly, popularity no longer has a monopoly on profitability.”

This large volume of small purchases (selling less of more) is what Anderson calls The Long Tail.

The best way to get a grasp on this concept is by reading the original Wired article, so go read that now if you’re interested in this topic. Anderson also has a blog that provides continuing coverage and analysis. The Wikipedia entry is here.

5 reasons that TuneCore has a place in the digital music revolution

Friday, December 21st, 2007

I first heard about TuneCore from my friend Mary when we were on a trip together in Baltimore. She is currently working on producing her first album, and I was picking her brain about digital distribution and manufacturing options for Cara Austin. Because of that conversation, I decided to use TuneCore to distribute Send Meto iTunes, Amazon and Rhapsody.

TuneCore logoSo far, the process has been seamless and I think that TuneCore will emerge as one of the Web sites that musicians can’t live without as the music industry continues to evolve and more and more control is in the hands of the artists. Why? Here are five reasons:

1) It’s a piece of cake to use. I have written step-by-step instructions for using a Web site application before, and although it seems like that type of writing would be easy, it is incredibly difficult to make sure that you remember every step and it’s also tricky to keep the language simple enough that it stays clear. Add on top of that the fact that it’s practically impossible to make step-by-step instructions not-boring. But TuneCore has done it all, and their FAQ may be the best one that I have ever read. It’s thatgood and helpful. Uploading music to the site was also really simple, and they are very clear about exactly how long it will take for the music to debut on the various services. (January 26, 2008 – Stay tuned!) I’m also in the process of manufacturing some CDs with them – I’ll let you know how that goes when the process is complete.

2) They give artists all the money they make. There are a number of other services that help musicians get their digital tunes up on iTunes (CDBabycomes to mind), but they all take a cut. Sometimes a small cut (CDBaby takes 9%), but TuneCore takes 0%. Nothing. They just charge a fee to process the stuff up front – $0.99 per track, $0.99 per store per album, and $19.98 per album per year for storage and maintenance. All the money that the songs earn goes to the artists. Plus, it’s really smart that they are charging $19.98 PER YEAR because that creates a recurring revenue stream that will only grow as more musicians sign up and use the service.

3) TuneCore “gets” musicians. I am not sure if the founders and people who work there are musicians, but I wouldn’t be surprised if they are. Here’s a paragraph from their philosophy that reminds me of the movie School of Rock, the part where Jack Black’s character is talking about how rock music is really all about fighting “The Man.”

“Why should you have to give up money from each and every sale of your music? Why should you have to enter into exclusive deals and sign strangling contracts? Why should you have to give up your rights and the ownership of your own music to some other company just to gain access to music stores? TuneCore changes all that.”

4) They keep rolling out new features. Since I first looked into TuneCore, they’ve released a service that allows artists to create a branded Web page for their album (these can be seen in the TuneCore directory), the ability to upload music videos to iTunes, and cool metrics, like the ones shown below. They are also working on technology to offer daily tracking of how many songs are sold through the U.S. iTunes service, a feature that is bound to be a huge hit with musicians who are trying to figure out ways to get people to listen to their music and who I bet will easily become obsessed with monitoring the sales.

TuneCore Screenshot

5) Success stories and big-name artists. TuneCore has been able to sign up some big-name artists – Jay-Z and Public Enemy – to use the service, and it’s generated some really good publicity for them. I expect this will continue. They also have a success story that’s really compelling, an artist named Eric Hutchinson who rocketed to fame after he was mentioned by celebrity blogger Perez Hilton. This type of rags-to-riches story is going to be really attractive to musicians who are trying to make it, and should only help to increase the popularity of the service.