Monday, August 27, 2007

In France - download of music will be free - how the Internet is changing the music industry

[A couple recent announcements today illustrate how the Internet is radically changing the music business. The music business is one of the first of many industries that will be fundamentally be changed by the Internet, especially with the advent of Web 2.0 open source and SOA. In my books, any industry that is dependent on take down orders, clumsy security protocols, lawyers and government lobbying for survival is a SELL. Think movies, publishing and telecom. These exciting new developments in France of course, in my opinion reflect the strong pro-competitive marketplace for broadband that has been enforced by regulators and policy makers in that country. The French teleco regulator is one of the most enlightened in the world. Thanks to various blogs and contributors including Benoit Felten, Om Malik, Dave Farber and Dewayne Hendricks- BSA]

In France, Music will be Free

Neuf launches a "free" music offer as part of its triple-play package

Artist promote thyself
Thanks to new Web businesses, musicians can reach a bigger audience
-- and keep more of the profits for themselves

A full-time career in music seemed unlikely for Chris O'Brien, or at
least one that would pay the bills.

But these days, the 27-year-old Medford musician is selling thousands
of albums online, along with downloads from his debut CD,
"Lighthouse," and he soon plans to offer T-shirts, tickets, and other
merchandise on his MySpace page and personal website.

He credits at least part of his newfound business acumen to nimbit, a
sales, promotion, and distribution company in Framingham that helps
emerging artists build careers online.

"This is the era of the independent artist," O'Brien said. "It's
easier and more doable than it ever has been. People are opting to
remain independent because there's a lot more money to be had."

Nimbit is one of a growing number of businesses, including CD Baby
and Musictoday, that have helped make it easier for independent
musicians to make a living from their work and widely distribute
their music.

It is the brainchild of Patrick Faucher and Matt Silbert, who worked
for a Web firm, Stumpworld Systems, which developed some of the first
e-commerce sites for bands such as Phish and Aerosmith.

About five years ago, they decided to design a platform to help
budding bands, so they set out to take some of the features created
for the major acts and build a suite of Web tools that independent
artists could use.

Soon after, they merged with Artist Development Associates and added
direct-to-fan sales, along with production and promotion services,
creating a one-stop solution for artists to run their businesses.

In June, nimbit introduced its online merchandise table, the first
portable Web store that lets musicians sell CDs, DVDS, MP3s,
merchandise, and e-tickets from a single point of purchase, virtually
anywhere online. The tool can easily be embedded in any website,
blog, or e-mail that allows widgets.

"Increasingly, recording artists and consumers are uniting and
circumventing traditional channels for creating and distributing
music," said Mike Goodman, a media and entertainment analyst at
Yankee Group in Boston. "These days, musicians can do business
directly with consumers. They don't need a recording label. They
don't need a store. They don't need Ticketmaster, the way they used to."

Just a few years ago, Steve Roslonek, of Wethersfield, Conn., was
getting e-mail orders for his CDs and going to the post office once a
week to send of the packages. His growing success as a children's
musician made it almost impossible to keep up with the requests. With
the help of nimbit over the past several years, he has earned more
than $100,000 from sales of CDs, tickets, and merchandise.

The full article can be found here:

This is another sign that disruptive business models are having an
immense impact the traditional business models. The fact is that many
of these industries have no idea how to compete with technologies
they barely understand.

Survey says: only DRM-free music is worth paying for
By Ken Fisher | Published: August 05, 2007 - 10:32PM CT


One of the largest surveys of music consumers to closely examine the
question of Digital Rights Management (DRM) has an important two-part
message for the music industry. The first is that DRM is definitely
turning consumers off music sales, and charging them extra to get rid
of it may be an uphill battle. The second message is that knowledge
of DRM and its problems is spreading fast.

Entertainment Media Research, working with media law firm Olswang,
conducted lengthy online surveys with 1,700 UK music consumers,
selected from a pre-existing panel of more than 300,000 music
consumers in the UK (PDF: 2007 Digital Music Survey). What makes this
survey important is the fact that it was aimed squarely at the music-
buying public, not the anti-RIAA crowd, not the techno-libertarians,
and not our general readership. I've been told more than once that
the views on DRM found at publications like Ars Technica are "not
representative" of the general public. Perhaps this was once the
case, but it can no longer be maintained generally. At least in the
UK, the dirt on DRM is out, and it's spreading.
First, the bird's eye view: 68 percent of those with opinions on the
matter say that the only music worth purchasing is that which is DRM-
free. Yet less than half (39 percent) are willing to pay a little
extra for it, while 18 percent say that they'd rather save a little
dough and keep the DRM if they had to chose between the two. In the
middle is a mass of people with no opinion on the matter, because
they're not sure what DRM is or don't know their preference. That
will likely soon change.

Familiarity with DRM has grown significantly in the last year. In
2006, more than half of respondents had never heard of DRM, but that
number has dropped 16 percentage points in 2007, to 37 percent. The
number of people who claimed to have a good or exact knowledge of DRM
nearly tripled in that same timeframe.

Of those who have some idea of what DRM is, their views are largely—
but not entirely—negative. 61 percent said that DRM "invades the
rights of the music consumer to hear their music on different
platforms." 49 percent called it a "nuisance," and 39 percent
expressed concerns that DRM could have privacy implications. Despite
this, 63 percent agreed that DRM "is a good idea because it protects
copyrighted music from illegal file-sharers." In other words, the
idea of stopping illegal file-sharing via DRM doesn't bother these
consumers much, but the effect the effort is having on their own
purchases is not appreciated.

This view isn't surprising. Few are those who, in principle, believe
that all information (and content) should be "free"; the mainstream
viewpoint is still staunchly in the "artists should be compensated"
camp. This appreciation for the music business does not surmount all
other concerns, however.

Consumers aren't interested in a "nuisance" for the sake of stopping
file-sharers, and of course those of us who play closer attention to
the world of DRM know that DRM actually does not stop file-sharing at
all. As this general truth spreads, so does dissatisfaction.

The takeaway from the survey is that DRM's bad reputation is
spreading among general music consumers, and there is a growing
aversion to purchasing music that comes with DRM. Despite this, the
general understanding of the struggle the industry faces with piracy
is still somewhat positive among those same consumers. Still, given
that file sharing in the UK is at an all-time high, it would appear
that the the music industry needs to remove the digital locks on its
tunes, and fast.

Prince Points the Way to a Brighter Future for Music
07.09.07 | 2:00 AM

In his autobiography, Miles Davis wrote that Prince was the only
musician in the world capable of moving music forward. Davis was
referring to musical prowess, but he may as well have been talking
about Prince's business acumen, as evidenced by his upcoming album
giveaway -- the latest in a long series of innovative maneuvers,
including his escape from a Warner Music Group contract in 1994,
early support for P2P trading and status as one of the first major
artists to sell music from his website.

Davis' last, best hope for the future of music most recently outraged
the music establishment by saying he'll give away CDs of his Planet
Earth album to British fans who purchase next week's Mail on Sunday
newspaper. In light of the giveaway, Sony/BMG refused to distribute
the album in Great Britain, provoking outbursts from music retailers
who had been cut out of the action.

Paul Quirk, co-chairman of Britain's Entertainment Retailers
Association, threatened: "The Artist Formerly Known as Prince should
know that with behavior like this he will soon be the Artist Formerly
Available in Record Stores."

Part of the problem, according to retailers, is that Prince's move
helped solidify a growing perception on the part of consumers that
music is free.

Jack Horner, creative and joint managing director for Frukt, a music-
marketing agency, said that while "people like (Prince) play a key
part in helping figure out what the models may be in the music
business of tomorrow, by giving away a whole album on the front of a
newspaper, there is a very clear devaluing of music, which is not a
positive message to send out right now."

Neither the Mail on Sunday or Prince's camp would divulge how much
the newspaper paid Prince for the right to give his album away, but
it's clear Prince was paid upfront, and that nearly 3 million Mail on
Sunday readers -- plus everyone who bought tickets to one of his
shows -- will receive the CD for free. The giveaway almost certainly
contributed to Prince selling out 15 of his 21 shows at London's O2
Arena within the first hour of ticket sales. The venue (formerly the
Millennium Dome) holds around 20,000 people. If the remaining six
shows sell out, the series will gross over $26 million.

Combined with the undisclosed fee paid by the Mail on Sunday, it's
not a bad take for someone who's involved in a "very clear devaluing
of music."

Prince's latest gambit also succeeded by acknowledging that copies,
not songs, are just about worthless in the digital age. The longer an
album is on sale, the more likely it is that people can find
somewhere to make a copy from a friend's CD or a stranger's shared-
files folder. When copies approach worthlessness, only the original
has value, and that's what Prince sold to the Mail on Sunday: the
right to be Patient Zero in the copying game.

As with blogging and so many other things digital, music distribution
could become a competition to see who posts things first. In a sense,
music distribution would no longer be about space -- it would be
about time.

More bands and labels are likely to explore the idea of squeezing
extra value out of their music by selling off the right to be first,
as traditional sources of revenue continue to dry up. Universal's
recent insistence on an "at will" contract with Apple music store,
for instance, is thought to be part of a plan for the world's largest
record label to start selling the exclusive rights to debut certain
albums. And nowhere is it written in stone that music stores are the
only candidates for buying those rights.

Artists have licensed music to advertisers for decades, of course,
but this goes a step further: allowing the licensee to function as
the music's distributor (at least initially). If this idea catches
on, artists and labels looking to duplicate Prince's success will
have to proceed with caution if they want to avoid accusations of
selling out.

In the '90s, a popular slogan for posters and graffiti in and around
my college radio station was "Corporate Rock Sucks," and although
that attitude no longer seems prevalent, fans still routinely revolt
when they hear one of their favorite songs used in a car ad.

Prince ensured that the Mail on Sunday version of his album looks
identical to the one sold in stores, giving it the clear appearance
of coming with the paper, rather than being of the paper. Companies
that want to make a business out of music sponsorships, like RCRD LBL
(an upcoming collaboration between Engadget's Pete Rojas and Downtown
Records), will have to negotiate sponsorships with similar care. If
they do, brands, fans and bands large and small stand to benefit.

Eliot Van Buskirk has covered digital music since 1998, after seeing
the world's first MP3 player sitting on a colleague's desk. He plays
bass and rides a bicycle.

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