Music likewater volkow-4up

© Stuart W. Volkow 2012

Music Like Water

The Digital Music LandscapeFragmentation, Mobility, Opportunity

Stuart W. Volkow

[email protected]

www.stuartvolkow.com


The Sky is Falling(Digital Music News, 11/07/07), noted analyst Richard Greenfield of Pali Research issued an incredibly bearish opinion on Warner. The analyst changed his recommendation back to sell, and targeted a $7.50 share price. "No matter how many people the RIAA sues, no matter how many times music executives point to the growth of digital music, we believe an increasing majority of worldwide consumers simply view recorded music as 'free',"


The Music business has been transformed.

Most people are getting music from their friends — either burning CDs or ripping digital files. And despite the record industry’s crackdown, there is no reduction in the number of people of peer-to-peer file sharing service.

NPD Market Research 2008


Tower Records Closes its Doors 9 October 2006

© Stuart W. Volkow 2012 © Stuart W. Volkow 2012

2003

2007

2009


A Brief History of Digital Music• October 1st 1982 Billy Joel's 52nd Street, becomes the first album released on

a “Red Book” audio CD. It becomes one of the most rapidly adopted CE formats in history and is the cash cow for the record industry for the next 20 yrs. A CD has a nominal capacity of 80 minutes.

• July 7th 1994, The Fraunhaufer Inst. released the first software MP3 encoder. MP3 uses Perceptual Encoding realizing a 10 fold compression ratio whilst maintaining good fidelity.

• 2000 Shawn Fanning Approaches the Labels to Create a Legal Approach to File Sharing and they return the favor by suing him out of business.

• Time Westergren’s Music Genome Project Begins

• October 23, 2001 Apple introduces the first iPod at 5 GB and $399. It was based on the “Portal Player” reference and with help from an outside UI design firm. January 9th 2001 Apple releases iTunes. 1,000 songs in your pocket now looks laughably small.

• 2005 Pandora Launches on the Web

• April 9, 2007—Apple® announced that it had sold the 100 millionth iPod®. On 9 Jan 2007 at Macworld, Jobs declares that iTunes has sold over 5 billion songs have been sold on iTunes and Apple is now the nations 4th largest music retailer.

• October 2008, MySpace makes a deal with the 4 majors and streams 1 billion plays. 7


Short History of Digital Music

8


Digital Music 2011

• Over 275 million iPods Sold

• iTunes is the 3rd most widely installed Windows Application.

• iTunes has sold over 10 Billion songs and is the largest music retailer in the USA

• App store downloads; over 3 billion

• Pandora reportedly has 125 million subscribers, is deployed on over 450 devices and has 68% share of Internet Radio (Pandora News Release).

9© Stuart W. Volkow 2012

• iTunes sold Four billion songs after nearly five years. It took Apple about two and one-half years to accomplish its first billion.

• The fourth billion happened after roughly seven months, about equal to the time between the second and third billion.

• The second billion was announced in early January of 2007, and the third came at the tail end of July.

But......


State of the Industry

13 million copyrights


World’s Largest!


Originally formed as a JV in 2004, Sony BMG's revenue fell over 46.3% over five years, while the number of employees at the label dropped from 4,880 in 2003, to 2,851 in 2007. Sony bought out Bertelsman’s 50% stake in 2008.

A failed union

23% US Market

Now: Sony Music Entertainment Inc.

✦Arista✦Columbia✦Jive✦RCA✦Epic✦Jrecords✦Legacy✦Rocnation✦Verity


$3.38 Billion Market Cap

More than one million compositions

Warner Music reported a loss of $16 million, or 11 cents per share, in the quarter ended Dec. 31, after a profit of $18 million, or 12 cents per share, in the year-earlier period.

The results sent shares of the New York-based music company tumbling $1.80, or 20.6 percent, to $6.94 Wednesday. The stock has traded in a 52-week range of $4.57 to $21.51.AP 6 Feb 2008

21% US Market


Warner Music Group


At home, Warner Music Group hit another milestone, as U.S.digital music unit sales surpassed those from physical for the first time. “We’ve crossed the threshold of 50/50 in the U.S.,” new CEO Steve Cooper told analysts. “The rest of the world is still about two thirds to a third.”

Digital music sales have helped shield Warner Music's revenue from declines in three of the past four quarters.But the privately-held company said its digital future will be put in jeopardy if the planned acquisition of rival EMI by Universal Music Group and Sony/ATV goes ahead.Chief Executive Stephen Cooper told analysts Thursday that the purchase of EMI for $4.1 billion would "significantly impair" Warner's ability to compete. The company has argued the deal would impart a dominant market share to Universal in recorded music and Sony/ATV in publishing.

AP,updated 2/9/2012 3:43:05 PM


EMI Group£1,751.5 million

EMI revamp tougher than expected, says owner Guy Hands

8% US Market

•Capital•Virgin•Blue Note

3,000 jobs cut

Worlds largest publisher with over 1 million songs


Over 1,000 Radio Stations

10 year $120 million

12 year deal with U2

New Order ?


ghosts.nin.com www.radiohead.comwww.madonna.com/www.davemathewsband.comwww.ArcadeFire.com

DIYF A I L

✦Napster✦Qtrax✦Spiral Frog✦Ruckus✦Imeem✦ iLike✦MyStrands✦Zune✦Sony Music Store✦UMG Music Store


1 Billion Streams in First Week

Text

From $580 Mln in 2005 to $35 Mln to Specific Media in June 2011

(Justin Timberlake Invested)

Imeem (http://www.imeem.com)

• Legal, Yes.

• Sensible?“Far from a breakthrough, it is a death sentence for Imeem. Under a dark cloud of looming lawsuits, Imeem entered into a crushing financial agreement that allows them to survive as long as venture capital money continues to flow into the company, but spells almost certain financial calamity once outside funding halts.”

Michael Robertsonhttp://www.michaelrobertson.com/archive.php?minute_id=250

Seeqpod (http://www.seeqpod.com)

• Classic internet search engine - but with emphasis on 'playable search results'

• Crawls for media files (including a youtube adapter)

• A 'vector-space' (tf-idf) model of text around the link to the media content is collected (i.e. terms found near the link are thought to be related to it)

• Exposes keyword searches to the user

• Doesn't host only searches.

Copyright Stuart W. Volkow 2008

....WMG Differs

25 Copyright Stuart W. Volkow 2008

WMG Vs Seeqpod Lawsuit Key Points

26

SkreemR (http://skreemr.com)

• MP3 search engine• Media crawler

• Audio ‘quality’ ranking

• Search by track metadata (artist / title)

• Doesn't host any content, just provides searches. • Uses embedded player/widgets

• Saved Playlists

• “SkreemR respects the intellectual property of others, and we ask our users to do the same. If you believe in good faith that materials we link to infringe your copyright, you (or your agent) can contact us requesting that we remove the links to the material. “

Songza (http://www.songza.com)

• Track metadata keyword search by artist, title, album.

• Content from Youtube (music vids), Imeem (track plays) and others

• Links to Amazon MP3 to buy tracks

• "Songza pays for licenses from all the major performing-rights organizations (ASCAP, BMI, SESAC), who then pay the publishers and writers in proportion to the number of plays they get on Songza."


Nokia's unlimited "Comes With Music" plan misses

the boat due to DRM David Chartier, Arstechnica.com

October 2008Nokia unveils

Comes With MusicU.K.-only deal touts access to

millions of tracks

FAIL


FAIL



Social MusicDiscovery/Sharing

imeem

Mediaraptor


33

I n t e r n e t M u s i c S e r v i c e s



Why Pandora Is on Virtually Every DeviceOn Fridges, Fords and Phones, It's Become the De Facto Radio App After Being on the Brink of Bankruptcy

By: Andrew HamppFEBRUARY 11, 2011, 7:25 PM I.P.O./OFFERINGS

Pandora Files to Go PublicBY EVELYN M. RUSLI

Thor Swift for The New York TimesTim Westergren, founder of Pandora Media.

"Smartphones really turned Pandora into an anytime, anywhere service without us doing anything," Pandora founder Tim Westergren said, noting that half of smartphone listening is done in users' cars.

Kurt Jovais, director of Samsung's home appliances, said, "The apps on our LCD refrigerator are all kitchen-specific for the new kitchen center, and Pandora was the easy choice as a music service people know and love."

Yvonne Malmgren, a spokeswoman for the BMW Group, said Mini drivers overwhelmingly asked for the service when the automaker started researching potential partners for its new Mini Connected App player.



VEVO was created in partnership by Universal Music Group (UMG), Sony Music Entertainment (SME) and the Abu Dhabi Media Company. It is operated independently by a dedicated management team with offices in New York, Los Angeles, Chicago, Detroit and San Francisco.


Curation, Recommendation


Mobile and Subscription

$4.99/$9.99 $9.99

$9.99

$35-$65

$11.99


Live, Local, Music Services


DIY Artist Services/Promotion


Hyperfragmentation of the music audience

Music ConsumptionEverywhere, Anytime, Any Tune

“Music Like Water (MLW)” “Feels Like Free (FLF”

The$hyper(fragmentedworld$of$music:

Marke:ng$considera:ons$and$revenue$maximisa:on,$Nielsen$Media$Research,$

MIDEM,$March,$2011


Music is Mobile


Music is Mobile

Copyright Stuart W. Volkow 2008 46




Music Consumption Varies by Region


• Terrestrial Radio is STILL king with 290 million weekly terrestrial radio listeners in the USA generate $20 Billion / Yr in ad revenues.

• Internet Radio generated a diminutive $15 million in ad revenue.

Arbitron Infinite Dial 2008 Report


Who pays for Internet Radio ?

(iii) Transmission. — A complaining party may recover an award of damages for each transmission or communication that violates section 1002(e) in the sum of not more than $10,000, as the court considers just.

• 2011 - $.0019 per performance• 2012 - $.0021 per performance• 2013 - $.0021 per performance• 2014 - $.0023 per performance• 2015 - $.0023 per performance

Webcasters have a minimum fee of the greater of $25,000 or 7% of expenses. The 7% of expenses is also required under the microcaster deal. As it will be mostly larger “small” webcasters, ones with concerns about the $1.25 million dollar cap or the 5 million aggregate tuning hour limit under the microcaster deal, who elect this deal, most will have revenues in excess of $250,000, and thus would owe the $25,000 minimum fee in any event. That minimum can be paid in quarterly installments.


SoundExchange:An independent, nonprofit performance rights organization that is designated by the U.S. Copyright Office to collect and distribute digital performance royalties for featured recording artists and sound recording copyright owners (usually a record label) when their sound recordings are performed on digital cable and satellite television music, internet and satellite radio (such as XM and Sirius).

www.soundexchange.com


Metadata

56

Metadata is becoming almost as valuable as the data itself


Algorithmic Metadata

Collaborative Filtering and

Recommendation Systems

58

• EchoNest• Myna• Fraunhaufer• Gracenote• Music Intelligence• Magix Mufin Music Finder• The Filter• Platinum Blue• Itunes Genius

Copyright Stuart W. Volkow 2008 59

Visual Search, Browse, Discovery

http://discovr.info/ http://www.mpme.com

Radio ONELLAMA

• Live internet radio stations often with real DJs (i.e. not personalised internet radio but a way of finding internet radio shows playing now that suit your tastes)

• Legal?

www.musicplasma.com

http://company.onellama.com/section/labs/

http://company.onellama.com/flash/discover.swfCreative Commons

• Creative Commons licenses allow artists to share their works freely for certain uses, on certain conditions; or dedicate their works to the public domain.

• “Our tools give everyone from individual creators to large companies and institutions a simple, standardized way to grant copyright permissions to their creative work. The Creative Commons licenses enable people to easily change their copyright terms from the default of ‘all rights reserved’ to ‘some rights reserved’.”

• http://search.creativecommons.org/ Find creative commons content (including filters based

Creative Commons Licenses

• Attribution: Lets others distribute, remix, tweak, and build upon the work, even commercially, as long as they credit the author of the original creation.

• Attribution Share Alike: Lets others remix, tweak, and build upon the work even for commercial reasons, as long as they credit the author and license their new creations under the same terms.

• Attribution No Derivatives: Allows for redistribution, commercial and non-commercial, as long as it is passed along unchanged and in whole, with credit to the author.

• Attribution Non-Commercial: Lets others remix, tweak, and build upon the work non-commercially. New works must acknowledge the author and be non-commercial.

Creative Commons Labels/Sites

• Generally support academic, research or non-commercial uses

• Donation or flexible pricing models for personal or other uses

ccMixter (http://ccmixter.org/)

“ccMixter is a community music site featuring remixes licensed under Creative Commons where you can listen to, sample, mash-up, or interact with music in whatever way you want.”

“Jamendo is a community of free, legal and unlimited music published under Creative Commons licenses.

Share your music, download your favorite artists!”

Magnatune (http://www.magnatune.com)

• Record label publishing music under creative commons licenses with flexible pricing models (Pay what you want and receive high quality versions of tracks)

Technology

Music likewater volkow-4up