music as the ideal
virtual good
Nabeel Hyatt of Conduit Labs
www.conduitlabs.com

hi, nabeel here
Conduit Labs
Prism Ventureworks EIR
Ambient Devices
(MIT spin-out, profitable)
Teamtalk (’01 IPO)
internetsoccer.com ($15m sale)
Interphase Designs (dead)

behavior doesn’t
change online
Photograph by Robbie Cooper (NY Times)

the typical market for
virtual goods
$200m
2006
2007
$150m
$100m
$50m Note: some of these
are “hand wavy”
estimates
$0m
Habbo Second Life IMVU Nexon Facebook
virtual good sales

what about music
$1,500m
2006
2007
$1,125m
$750m
$375m
$0m
Habbo Second Life IMVU Nexon iTunes Rock band
virtual good sales

what about music
$1,500m
2006 Not
2007
counting:
$1,125m
- amazon,
emusic, etc
$750m - ring tones
$375m
$0m
Habbo Second Life IMVU Nexon iTunes Rock band
virtual good sales

what traits make music
tracks work so well?

functional
Photograph by homardpayette (Flickr)

authorship
(c) the label

decorative

infinite
Photograph by lickyoats (Flickr)

transportable
Photograph by ~Theresa (Flickr)

How’s that compare?
Habbo
Music Furni
Functional Yes No
Decorative Yes Yes
Authorship Yes No*
Infinite Yes No
Transportable Yes No
* - some advertising supported

How are we performing?
Gaia
Habbo Clothi Rock Kart Second Facebo
Music Furni ng Band IMVU Rider Life ok
Functional Yes No No Yes No Some Yes No
Decorative Yes Yes Yes Yes Yes Some Yes Yes
Authorship Yes No* No Yes Yes No Yes No
Infinite Yes No Some Yes Yes Yes Yes Yes
Transportable Yes No Some No No No No No

which items correlate to
revenue?
note: totally and
completely not
scientific

which items correlate to
revenue?
note: totally and
completely not
scientific
Help me get
more data so this
is real!

of course all is not rosy
in music land
Source: Enders Analysis

and it’s not piracy

passive media is
dieing

recorded music
as we know it is
niche

there is a place for
active music in media

and it is a growth
business
20%
15%
10% Concerts
Recorded Music
Growth Rate
5%
0%
-5%
-10%
-15%
-20%
2005 2006 2007
Source http://www.ft.com/cms/s/0/2c2ce6ce-626b-11dc-bdf6-0000779fd2ac.html?nclick_check=1
Neilsen Soundscan

Music games accounted for 16%
of U.S. video game sales in 2007
and 44% of growth
Source: UBS Securities

and many new places
for it to go

and many new places
for it to go

Questions?
Nabeel Hyatt
email me for the presentation:
nabeel@conduitlabs.com