Music likewater volkow-4up


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Lecture on the music industry with an emphasis on Internet music services. Overview of the state of the big 4 global music companies, UMG, SMG, WMG, EMI.

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Music likewater volkow-4up

  1. 1. The Sky is Falling Music Like Water (Digital Music News, 11/07/07), noted analyst Richard Greenfield of Pali Research issued an incredibly bearish opinion The Digital Music Landscape on Warner. The analyst changed his recommendation back to Fragmentation, Mobility, Opportunity "No matter how sell, and targeted a $7.50 share price. many people the RIAA sues, no matter Stuart W. Volkow 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," 2© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Tower Records The Music business has Closes its been transformed. Doors 9 Most people are getting music from October 2006 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© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  2. 2. 2003 2009 2007© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 A Brief History of Digital Music • October 1st 1982 Billy Joels 52nd Street, becomes the first album released on Short History of Digital Music 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 8© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  3. 3. Digital Music 2011 • Over 275 million iPods Sold But...... • iTunes is the 3rd most widely installed Windows Application. • iTunes sold Four billion songs after nearly five • iTunes has sold over 10 Billion songs and is the largest music years. It took Apple about two and one-half years retailer in the USA to accomplish its first billion. • App store downloads; over 3 billion • Pandora reportedly has 125 million subscribers, is deployed on • The fourth billion happened after roughly seven over 450 devices and has 68% share of Internet Radio (Pandora months, about equal to the time between the News Release). second and third billion. • The second billion was announced in early January of 2007, and the third came at the tail end of July. 9© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 World’s Largest! State of the Industry 13 million copyrights© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  4. 4. $3.38 Billion Market Cap 23% US Market 21% US Market More than one million compositions Warner Music reported a loss Now: Sony Music Entertainment Inc. of $16 million, or 11 cents per share, in the quarter ended Dec. 31, after a profit of $18 ✦Arista million, or 12 cents per share, in the year-earlier period. A failed union ✦Columbia ✦Jive The results sent shares of the New York-based music ✦RCA company tumbling $1.80, or 20.6 percent, to $6.94 Originally formed as a JV in 2004, ✦Epic Wednesday. The stock has Sony BMGs revenue fell over 46.3% ✦Jrecords traded in a 52-week range of over five years, while the number of $4.57 to $21.51. employees at the label dropped from ✦Legacy AP 6 Feb 2008 4,880 in 2003, to 2,851 in 2007. Sony ✦Rocnation bought out Bertelsman’s 50% stake in 2008. ✦Verity© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Warner Music Group At home, Warner Music Group hit another milestone, as 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 Musics 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. AP,updated 2/9/2012 3:43:05 PM Chief Executive Stephen Cooper told analysts Thursday that the purchase of EMI for $4.1 billion would "significantly impair" Warners 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.© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  5. 5. EMI Group New Order ? Worlds largest publisher with over 1 million songs £1,751.5 million Over 1,000 Radio Stations 8% US Market •Capital •Virgin •Blue Note EMI revamp tougher than expected, says owner Guy 10 year $120 million Hands 12 year deal with U2 3,000 jobs cut© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 F A I L ✦ Napster DIY ✦ Qtrax ✦ Spiral Frog  ✦ Ruckus  ✦ Imeem  ✦ iLike  ✦ MyStrands  ✦ Zune ✦ Sony Music Store ✦ UMG Music Store© Stuart W. Volkow 2012
  6. 6. 1 Billion Streams in First Week From $580 Mln in 2005 to $35 Mln to Specific Media in June 2011 (Justin Timberlake Invested) Text© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Seeqpod ( Imeem ( • Legal, Yes. • Classic internet search engine - but with emphasis on playable search results • Sensible? • Crawls for media files (including a “Far from a breakthrough, it is a death sentence for youtube adapter) Imeem. Under a dark cloud of looming lawsuits, Imeem entered into a crushing financial agreement • A vector-space (tf-idf) model of text that allows them to survive as long as venture capital around the link to the media content is collected (i.e. terms found near the link money continues to flow into the company, but spells are thought to be related to it) almost certain financial calamity once outside funding halts.” • Exposes keyword searches to the user Michael Robertson • Doesnt host only searches.
  7. 7. WMG Vs Seeqpod Lawsuit Key Points ....WMG Differs Copyright Stuart W. Volkow 2008 25 Copyright Stuart W. Volkow 2008 26 Songza ( SkreemR (• MP3 search engine • Track metadata keyword search by artist, title, album. • Media crawler • Audio ‘quality’ ranking • Content from Youtube (music vids), Imeem (track plays) and • Search by track metadata (artist / others title)• Doesnt host any content, • Links to Amazon MP3 to buy tracks just provides searches. • Uses embedded player/widgets • "Songza pays for licenses from all the major performing-rights organizations • Saved Playlists (ASCAP, BMI, SESAC), who then pay• “SkreemR respects the intellectual the publishers and writers in property of others, and we ask our users proportion to the number of plays to do the same. If you believe in good they get on Songza." 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. “
  8. 8. FAIL FAIL October 2008 Nokia unveils Comes With Music U.K.-only deal touts access to millions of tracksNokias unlimited "ComesWith Music" plan misses the boat due to DRM David Chartier,© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Social Music Discovery/Sharing imeem Mediaraptor Copyright Stuart W. Volkow 2008 © Stuart W. Volkow 2012
  9. 9. Internet Music Services 33© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Why Pandora Is on Virtually Every Device On Fridges, Fords and Phones, Its Become the De Facto Radio App After Being on the Brink of Bankruptcy By: Andrew Hampp FEBRUARY 11, 2011, 7:25 PM I.P.O./OFFERINGS Pandora Files to Go Public BY EVELYN M. RUSLI Thor Swift for The New York Times Tim 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. Yvonne Malmgren, a spokeswoman for the BMW Group, said Mini drivers Kurt Jovais, director of Samsungs home overwhelmingly asked for appliances, said, "The apps on our LCD the service when the refrigerator are all kitchen-specific for the automaker started new kitchen center, and Pandora was the researching potential easy choice as a music service people partners for its new Mini know and love." Connected App player.© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  10. 10. Curation, Recommendation 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.© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Mobile and Subscription Live, Local, Music Services $4.99/$9.99 $9.99 $9.99 $35-$65 $11.99© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  11. 11. DIY Artist Services/Promotion Hyperfragmentation of the music audience Music Consumption Everywhere, Anytime, Any Tune “Music Like Water (MLW)” “Feels Like Free (FLF” The$hyper(fragmented world$of$music: Marke:ng$considera:ons$and$revenue$ maximisa:on,$Nielsen$Media$Research,$ MIDEM,$March,$2011© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Music is Mobile © Stuart W. Volkow 2008 © Stuart W. Volkow 2012
  12. 12. Music is Mobile Copyright Stuart W. Volkow 2008 46© Stuart W. Volkow 2012© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  13. 13. © Stuart W. Volkow 2012 © Stuart W. Volkow 2012 Music Consumption Varies by Region© Stuart W. Volkow 2012 © Stuart W. Volkow 2012
  14. 14. Who pays for Internet Radio ? • Terrestrial Radio is STILL king with 290 million weekly terrestrial radio listeners in the USA • 2011 - $.0019 per performance generate $20 Billion / Yr in ad revenues. • 2012 - $.0021 per performance • 2013 - $.0021 per performance • 2014 - $.0023 per performance • Internet Radio generated a diminutive $15 • 2015 - $.0023 per performance million in ad revenue. 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, Arbitron Infinite Dial 2008 Report 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 (iii) Transmission. — A in quarterly installments. 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© Stuart W. Volkow 2012 © Stuart W. Volkow 2012 just. Metadata Metadata is becoming almost as valuable as the data itself 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). Copyright Stuart W. Volkow 2008 56© Stuart W. Volkow 2012
  15. 15. • EchoNest • Myna Algorithmic • Fraunhaufer Metadata • Gracenote Collaborative Filtering and • Music Intelligence Recommendatio • Magix Mufin Music Finder n Systems • The Filter • Platinum Blue • Itunes Genius Copyright Stuart W. Volkow 2008 58 Visual Search, Browse, DiscoveryCopyright Stuart W. Volkow 2008 59
  16. 16. 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?
  17. 17. Creative 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’.” • Find creative commons content (including filters based
  18. 18. Creative Commons Licenses • Attribution: Lets others distribute, remix, tweak, and build Creative Commons Labels/Sites upon the work, even commercially, as long as they credit the author of the original creation. • Generally support academic, • Attribution Share Alike: Lets others remix, tweak, and research or non-commercial uses build upon the work even for commercial reasons, as long as they credit the author and license their new creations under the same terms. • Donation or flexible pricing models for personal or other uses • 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. ccMixter ( “Jamendo is a community“ccMixter is a of free, legal andcommunity music site unlimited music publishedfeaturing remixes under Creative Commonslicensed under Creative licenses.Commons where youcan listen to, sample, Share your music,mash-up, or interact download your favoritewith music in whatever artists!”way you want.”
  19. 19. Magnatune (• Record label publishing music under creative commons licenses with flexible pricing models (Pay what you want and receive high quality versions of tracks)