"Current digital music products are essentially transition technologies that were useful for bridging the gap between the analogue and digital worlds, but now it's time to start the digital journey in earnest. The current portfolio of digital products will not get us there. Consumer behavior, as disruptive as it may be, is rapidly outpacing the evolution of digital music products. This means a complete new wave of music products that embrace access and experience, instead of trying to replicate analogue-era distribution business models in a digital context."
-- Mark Mulligan, analyst at Forrester Research, from his article 'Why And How Digital Music Products Have Indeed Failed' ( tiny.cc/xbxjz )
Forrester Research analyst Mark Mulligan was recently quoted in an article in The New York Times talking about how digital music has failed. ('Music Industry Braces For The Unthinkable', NY TIMES 1-23-11, tiny.cc/qlnp7 )
"The problem with a quote like that of course is that it can mean many things to many people without further context," Mulligan writes on PaidContent. Mulligan states that "Digital music is at an impasse," and it has so far failed to reach three key objectives, including offsetting the impact of declining CD sales; generating a format replacement cycle; and competing effectively with piracy.
Mulligan goes on to state "The simple fact is that current music products do not meet consumer demand and the divergence between emerging consumer behavior and legitimate music products is widening at an alarming rate." context."
Nothing profound in Mulligan's statement. I've been saying this for years here in the newsletter. But maybe now somebody, somewhere, at some label will heed the words Mulligan has written and start developing new ideas about how to engage music consumers again. The labels, after all, are the content providers. If the best creative minds inside the music industry cannot develop new ways of packaging the music in their vaults and making it more attractive to consumers, then (as Jim Morrison said) "when the music's over, turn out the lights."
The good news this week might be that after all these years of watching iTunes sell 10 billion songs, the major labels finally thought it would be a good idea to have their own iTunes type store. So now here comes Music Unlimited, which has more than six million songs, and will let Sony Music Entertainment and partners Universal Music Group, EMI Music and Warner Music Group effectively cut out middle men and give them more control over revenue. (See the story below 'In Other News')
The one thing the major labels must keep in mind to make Music Unlimited successful is that no matter what content they do have, Apple has made the iTunes brand synonymous with buying music online. They have spent millions marketing and advertising iTunes and the labels will have to do the same to compete. If they don't, they will find out what every company in the hospitality/travel industry already knows: No matter how well they market their own websites direct to their consumers with great prices, Expedia.com, Hotwire.com, Priceline.com all outspend them in marketing, and that's where the consumers go when they want to get the "best deal."
The labels undertaking such a daunting task at this point is a good sign, though many already view it as a "last gasp for air" as the industry drowns in waves of decreasing sales year after year. But this venture can prove fruitful if then people putting it together know what they are doing and do it well.
Why do I say that? One word: Vevo.
Vevo is one of the most successful things the labels have done in the digital age, and it has created a great safe harbor from the online video storms whirling continuously.
If Music Unlimited can be as successful as Vevo, there is real hope that the industry can start to take more control of their destiny online. If that happens, it will benefit not only the labels, but all the artists they represent.
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THE 'A-SIDE' - TRACK 2
WITHOUT A&R THERE IS NO MUSIC BUSINESS, THAT'S JUST MY OPINION
Hartwig Masuch, BMG Rights Management CEO, said this week at MIDEM in Cannes the very core of the music business was obsolete. Speaking at Midem on the future of music publishing Masuch said, "I think the importance of A&R in finding new talent will be less important going forward. Currently there is an A&R bottleneck which is stopping a lot of talent being recognized. There is a proliferation of systems that allow aspiring artists to make their own music and to monetize their works for not very much money, and this, along with the Internet, will abolish that."
Peermusic's VP of Business Development, Mary Megan, took the contrary view saying "There used to be a real division of labor between the role that record companies played and the role that publishers played. That has gone. We are doing more A&R work than ever ... and although the Internet has the ability to help drive consumption, the role of A&R and the value it brings should not be underestimated."
I could not agree more. As I have said too many times here in the newsletter, it is my belief the lack of great A&R and artist development (once departments at every label) are reasons why the industry has fewer artists selling multi-platinum quantities like in the past, and why we have more 'Now That's What I Call Music' volumes.
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THE 'A-SIDE' - TRACK 3
JAY FRANK - THE 'FUTUREHIT DNA' MAN TELL US "ROCK IS DEAD" ... SORT OF ... BUT NOT FOREVER
Jay writes "Rock music, an energetic form of guitar-driven pop music, passed away in 2010 after being ill for the past several years. Anemic sales, high studio costs, and lack of label development are listed as the cause of death."
Read his article on his 'FutureHit DNA' site here: tiny.cc/c4rff
And if you haven't read 'FutureHIt DNA' and want to see how well Jay talks and analyzes the current state of hit music, get a copy pronto.
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THE 'A-SIDE' - TRACK 3
YIKES! THE APP MARKET WILL HIT $25 BILLION IN 5 YEARS
www.youtube.com/watch?v=94vYGZ5DBwE
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THE 'A-SIDE' - TRACK 4
THE BEGINNING OF THE END OF PAPERBACKS?
Amazon.com reported fourth-quarter financial results this week ( tiny.cc/y0a0r ) saying it hit two milestones: It had its first $10 billion quarter, and its Kindle book sales had overtaken paperback books as the most popular format on the giant bookseller's site. Since the beginning of the year, it has sold 115 Kindle books for every 100 paperbacks sold (not including free books).
And Now For Some News ...
Sony & Major Labels Team Up To Compete With iTunes
BUSINESS WEEK
I have been asking here in the newsletter for years why the major labels never started their own iTunes-type store.
This week comes news that the world's major record labels are finally starting their own music streaming service in the U.S, "Music Unlimited powered by Qriocity," which will challenge Apple Inc.'s iTunes, after years of letting start-ups license their artists.
Read more about it by clicking here.
Sony Isn't So Happy About Music In The Clouds
CNET
Sony Music (and others) are "uncomfortable" with cloud-based music services like mSpot, which do not require a license to ensure songs being uploaded by users were legally purchased, according to comments made by Thomas Hesse, president of global digital business for U.S. sales and corporate strategy at the label.
Read more about it by clicking here.
Warner Music For Sale, Or Are They Buying EMI?
NEW YORK TIMES/DEALBOOK
The Warner Music Group (WMG) has hired Goldman Sachs to seek out potential buyers for the company while they still explore the possibilities of purchasing EMI.
Read more about it by clicking here.
Spotify Not Coming to U.S. As Fast As Reported
ROLLING STONE
Though the New York Post reported last week (and I linked to that story last week in the newsletter) that Spotify was close to a deal to launch in the U.S. soon because of a deal with Sony, now comes news that making deals with the other major labels might prevent it from starting here anytime soon.
Read more about it by clicking here.
Rhapsody Adds 100,000 New Subscribers
REUTERS
Digital music subscription service Rhapsody has added more than 100,000 net new subscribers since the company underwent a restructuring in April 2010, president Jon Irwin told Reuters.
Read more about it by clicking here.
The iPhone's On Verizon, But Android Will Be #1 Next Year
MEDIA POST
The iPhone may be about to launch on Verizon, but that won't stop Android's inevitable ascendance to the top of the U.S. smartphone market. The Google mobile operating system jumped from an estimated 6% of the market in 2009 to 24% in 2010, expanding across multiple devices and carriers.
Read more about it by clicking here.
WILCO FORMS OWN LABEL:
After speculation that they would leave the major label fold, Wilco have announced that they are departing Nonesuch Records to open their own label, dBpm Records. The label will be marketed and distributed by Anti- Records, which itself a subsidiary of Epitaph Records. The new label will be run by the band's longtime manager Tony Margherita.
IT WAS 50 YEARS AGO:
This week marks the 50th anniversary of Bob Dylan's arrival in New York City.
GAGA NOW 4X PLATINUM:
Lady GaGa's debut album, The Fame, has now officially sold more than 4 million copies in the U.S.
CROW COOKS:
Sheryl Crow will publish If It Makes You Healthy, her first cookbook, on March 29th.
DIAMOND DAVE IN STUDIO WITH VAN HALEN:
Van Halen have entered the studio to record their first album in 26 years with original frontman David Lee Roth.
SEGER ON THE ROAD AGAIN:
Bob Seger announced he'll be hitting the road with his Silver Bullet Band in 2011 for a North American tour.
ANOTHER 'STAR IS BORN' REMAKE COMING:
Clint Eastwood has signed on to produce and direct a new version of 'A Star is Born' starring Beyoncé Knowles for Warner Bros. No male lead has been cast yet.
AND SPEAKING OF REMAKES:
Jay-Z has made a deal to co-produce a new movie based on the musical 'Annie' with Willow Smith in the lead role.
THIS IS NOT GOOD NEWS (IN MY OPINION, ANYWAY):
President Barack Obama on Monday nominated Donald Verrilli Jr., a former attorney with record label trade group the Recording Industry Association of America (RIAA), to the post of solicitor general of the U.S.
MORE WEST COMING:
Only two months after the release of "My Beautiful Dark Twisted Fantasy," Kanye West has announced that he's already at work on another solo record to be released sometime this summer.
IT'S GOOD TO BE BRITNEY:
Britney Spears' latest single, "Hold It Against Me," debuted in the top spot on Billboard's Hot 100 Singles chart within just one week of its exclusive release on iTunes, and without any promotion by the pop star -- a feat generally only accomplished by icons of the Michael Jackson and Madonna variety.
WINEHOUSE DUET:
Amy Winehouse has reportedly recorded a duet with Cee Lo Green that may appear on her forthcoming album.
BUFFET OK:
Jimmy Buffett was released from a hospital and is recovering after falling from a stage in Australia.
KE$HA TIX GONE:
Ke$ha's first headlining tour in North America has completely sold out. The singer will begin her Get $leazy tour of large theaters at Portland, OR's Crystal Ballroom on February 15th.
GLEE BREAKS ELVIS RECORD IN U.K.:
The cast of Glee have shattered a record set by Elvis Presley in the U.K. by scoring 20 top 40 singles in just over a year. It took Presley 88 weeks to achieve the same number of hits 50 years ago.
BON JOVI IN NEXT MARSHALL FLICK:
Jon Bon Jovi has signed on to play a rock star (what else?) in "New Year's Eve," director Garry Marshall's follow-up to his 2010 movie 'Valentine's Day.'
FLAVA' FULL CHICKEN:
Rapper Flavor Flav will be opening the first of several planned Flav's Fried Chicken restaurants in Clinton, IA today. The rapper has a culinary degree and some experience working in restaurants.
MORE LABEL LAYOFFS:
Universal Music Group let go of an estimated 60 employees last Friday in order to reduce overall costs for their business. According to a source contacted by Variety, the layoffs will not affect the creative areas of the company.
AND THIS IS NOT A GOOD SIGN:
This year's MIDEM confab has attendance off anywhere from 40-50%.
NO WONDER DVD SALES ARE DOWN:
Online DVD rental and video streaming service Netflix added 3.08 million new subscribers during the fourth quarter of 2010, up 166% from the 1.1 million added in the same period a year earlier.
THEY AREN'T SAYING YAHOO ANYMORE:
A month after the company laid off around 600 employees, Yahoo plans to lay off another 140 or so staff, or 1% of its total workforce.
BUT THOSE YAHOO PEOPLE MIGHT WANT TO APPLY HERE:
Google announced on Tuesday that it plans to hire more than 6,200 new employees in 2011, making it the company's largest year of expansion ever.
THE YIN AND YANG OF IT:
Fox television has finally established the elusive Thursday beachfront with American Idol now being seen on Wednesdays and Thursdays vs. Tuesdays and Wednedsays. The bad news is that it came with a price, sending the reality hit to its lowest-rated second night premiere ever.
10 MILLION APPS AT APPLE:
Apple sold its 10 billionth application from its App Store over the weekend, awarding U.K. resident Gail Davis a $10,000 iTunes Gift Card after one of her daughters downloaded "Paper Glider" for her iPod touch.
The Music Industry Past, Present & Future, And The Internet I answer questions on EconTalk
I did an interview about the industry and the Internet at EconTalk with host Russ Roberts. Russ is also a professor of economics at George Mason University, blogs at Cafe Hayek, and has written three novels that teach economics. He's also the co-creator of the Keynes-Hayek rap video. (And if your understanding of the economic meltdown that occurred needs to be enlightened, this video will do it)
In the interview we talk about the evolution of the music industry, the impact of the digital revolution, and I give my reasons for believing in the virtues and potential of the Internet in enhancing the music industry. I point out, as I have many times here in the newsletter, that the internet allows numerous artists to make money from their music and it can enhance revenues from live performances by expanding an artist's base. We also discuss the challenges facing record companies and I suggest that the full potential of the Internet as a distribution channel has yet to be fully exploited. There's a lot of ground covered, but based on the comments already posted of those who have tuned in, they've enjoyed it.
Read more about it by clicking here.
Quotes of the week
"That's 82 years in rock-star time."
-- Tim McGraw, giving himself and wife Faith Hill kudos for their 14-year marriage, to PEOPLE
"'Listen! I will kill you, do you understand, I am from New York, my husband fights ... we both fight, we will beat you up after the show -- with a couple of bleep bleeps in there."
-- Jennifer Lopez, to Ricky Gervais backstage before the outrageous host introduced her at the Golden Globes, to Access Hollywood. Yeah, "Jenny from the block" indeed. As Ricky said, the block is now Rodeo Drive.
"I think because of my relationship with Princess Diana, people automatically think I'm going to be invited. I'm not invited to the wedding; I would not expect to be invited to the wedding."
-- Elton John, commenting on the rumors that he would be invited to the upcoming Royal Wedding
"We didn't get a nomination 4 best song! That sucks!"
-- Cher, sounding off on being passed over by the Oscars for her film "Burlesque." Music from the film, which won a Golden Globe for songwriter Diane Warren ("You Haven't Seen the Last of Me"), was expected to get an Oscar nod.
The B-Side - 'Blips'
THE ONION (www.theonion.com) STORY OF THE WEEK:
Van Morrison Removed From Rock And Roll Hall Of Fame Following Allegations He Bet On Album Sales
CLEVELAND-Officials from the Rock and Roll Hall of Fame announced Tuesday they were removing 1993 inductee Van Morrison from the institution following the discovery that he had bet on record sales throughout his career.
Read the rest here and laugh: Click Here.
The Blogs
Check out Jerry Del Colliano's (the founder of INSIDE RADIO) daily blog, by clicking here: www.insidemusicmedia.blogspot.com
Website
Check out attorney Ray Beckerman's website at: recordingindustryvspeople.blogspot.com
where he prints news about the RIAA's ongoing activities
Smart Marketing Consulting Services
Smart Marketing Consulting Services has been in business sixteen years, and consults clients in the music, entertainment, attraction, media, and technology industry on branding, marketing, online exploitation, maximizing new media, and more.
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