Music As A Virtual Good VGSummit08

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While virtual goods are usually confined to conversations about pixelated clothing and weapons, music is by far the highest grossing digital good. A look at what makes music sell as a virtual good.

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Music As A Virtual Good VGSummit08

  1. 1. music as the ideal virtual good Nabeel Hyatt of Conduit Labs www.conduitlabs.com
  2. 2. hi, nabeel here Conduit Labs Prism Ventureworks EIR Ambient Devices (MIT spin-out, profitable) Teamtalk (’01 IPO) internetsoccer.com ($15m sale) Interphase Designs (dead)
  3. 3. behavior doesn’t change online Photograph by Robbie Cooper (NY Times)
  4. 4. 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
  5. 5. what about music $1,500m 2006 2007 $1,125m $750m $375m $0m Habbo Second Life IMVU Nexon iTunes Rock band virtual good sales
  6. 6. 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
  7. 7. what traits make music tracks work so well?
  8. 8. functional Photograph by homardpayette (Flickr)
  9. 9. authorship (c) the label
  10. 10. decorative
  11. 11. infinite Photograph by lickyoats (Flickr)
  12. 12. transportable Photograph by ~Theresa (Flickr)
  13. 13. 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
  14. 14. 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
  15. 15. which items correlate to revenue? note: totally and completely not scientific
  16. 16. which items correlate to revenue? note: totally and completely not scientific Help me get more data so this is real!
  17. 17. of course all is not rosy in music land Source: Enders Analysis
  18. 18. and it’s not piracy
  19. 19. passive media is dieing
  20. 20. recorded music as we know it is niche
  21. 21. there is a place for active music in media
  22. 22. 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
  23. 23. Music games accounted for 16% of U.S. video game sales in 2007 and 44% of growth Source: UBS Securities
  24. 24. and many new places for it to go
  25. 25. and many new places for it to go
  26. 26. Questions? Nabeel Hyatt email me for the presentation: nabeel@conduitlabs.com

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