The Music & Technology Relationship? It’s Complicated.

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There is no doubt that music and technology have continued to evolve both separately and together throughout the years. Technology has the power to seriously complement or hinder music. On the other hand, music has the power to help increase technology sales. Perhaps this all means that music and technology should simply work together as much as possible as opposed to against each other. Let’s take a look at some of the most recent news regarding the music and technology relationship…

Apple-Beats

Apple recently confirmed a decrease in downloads. Maybe this is one of the reasons why Apple acquired Beats earlier this year. Using Beats, Apple can easily gain the kind of simplicity it has been craving in the music streaming sector. In fact, a good example of this can be the recent Southwest Airlines and Apple partnership agreement. Southwest Airlines now offers free music streaming thanks to Apple’s Beats music service!

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Streaming is definitely the way music is heard these days. It is no wonder that Apple is interested in improving their music streaming services and pricing as Spotify revenues rose in 2013 and the music service turned to profit. Spotify also launched a family plan with cheaper subscription options recently as well. Despite all its good news, Spotify was caught a bit off guard when Taylor Swift surprisingly pulled her music from them. It will be interesting to see if this will affect Spotify success.

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Pandora is now giving artists the data it stores from the audience members. However, Pandora is not the only one doing this. Both Spotify and The Next Big Sound have also taken the same initiative. Data enables artists to grow and enhance their careers in a proactive way. By better understanding the audience members, artists are be able to improve musical content they offer and better engage with their followers. It is obvious why data continues to become so important! These companies definitely want to stay ahead of the game by providing artists with this free data.

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Next, news regarding a touchy subject: Piracy! For those that are still trying to illegally download music, Google is now using its search data to point those users towards legal sources through ads whenever words like “free” and “download” are searched in the Google search engine. Piracy has been a continuous problem so it is good to see that Google is playing its part to help regulate music consumption. There are still a large debate questioning whether this approach is enough when it comes to dealing with this issues..

imagesYouTube plans to launch its own subscription service called MusicKey. This is not exactly new news as there have been talks about this for a while now. Although YouTube’s CEO stated she is positive about this subscription service, 25% consumers say they will never pay for a subscription service since they can already find all the music they want using YouTube.

Looking at all these news, it is clear that music and technology continue to be very much connected. Sometimes it can be a complicated relationship. Music and technology have become so closely connected that it makes the relationship an incredibly powerful tool though. Technology alone and music alone cannot succeed in saving the music business. It is by coming together that this relationship can become less complicated as it provides the millennials, those tech-empowered fans, with the ability to become closer to the content they love, align with their socioeconomic surroundings, and follow the new cultural norms. This is what should save the music industry in the future.

To view the article that served as inspiration for this blog post, visit this link – http://blog.midem.com/2014/11/news-review-technology/#.VFoBJZV0zmI

Last.FM & Spotify

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It’s good to be back!  A couple years ago, I wrote about the emerging importance of Last.fm in today’s industry and how it can greatly impact the listening experience fans get from their music.  From compiling data from your iTunes and Spotify library to keeping you updated on events customized to your library, I was always heavily adamant on everyone joining together in using the app.  Sure enough, Spotify optimized Last.fm to run as a complement to the Spotify app so that users could keep their last.fm profiles up to date even while streaming music.  Part of me always felt that the unity between these two would grow, and surely enough, we have now come to a point where Last.fm and Spotify completely run each other’s services off one another.

Last.fm fell off the map a few years ago when its then-limited streaming capabilities paled in comparison to emerging competitors like Pandora and Spotify.  It was back in the day when music still had a debatable price tag on it; companies refused to admit that the future of music was in free streaming.  Of course, now the business model has been completely workshopped, and Last.fm has done, in my opinion, what it needed to do to survive: it has utilized the well-known Spotify to bring back its once-waning forte of streaming services.

Before the merge, listeners wouldn’t be able to listen to a specific song on Last.fm, unless the artist was offering it for free through promotion, or if the user had a subscription.  Now, you can just head on over to your Last.fm library, click on any artist, and, as long as the track is Spotify-endorsed, listen to any track as you please.  Once you do, a Spotify toolbar will appear in your browser, managing your audio stream for you.  It’s a simple move that has revitalized Last.fm’s website.

Of course, these two have been working into each other for a while now.  Last.fm accounts are now accessible directly in the Spotify listening application as a part of the official Last.fm Spotify app.  Just go on ahead under the “App Finder” category in the left toolbar and you can access a streamlined version of your Last.fm information, through Spotify.  Let’s also not forget that scrobbling features from Spotify can still be enabled from the preferences section.

The question now arises: what is in the future of Last.fm’s radio features?  I remember the radio war between Pandora and Last.fm, and it should be noted that the Last.fm Scrobbler app still will not play radio without an account subscription.  It brings up a point that Last.fm has merged with a company that just has a better business model.  Subscribing to last.fm just guarantees you a decent quality radio stream, but you can get that out of Spotify for free.  A subscription to Spotify also gives you playlists you can use during offline mobile access.  Let’s also not forget the free radio services offered by both Pandora and the developing iTunes Radio.  So, to me, it just sounds a lot like a “if you can’t beat them, join them” effort from Last.fm.  Don’t get me wrong, both of these companies are largely responsible for my satisfactory music listening experience in the past few years, so, while this is a dream come true for me, it’s hard for me to see the bigger picture with Last.fm at the moment.

My guess is that Last.fm will just have to keep merging itself slowly into Spotify.  I can’t imagine its subscription feature keeping it on its feet when its users are referred directly to a better service in Spotify.  There are still a lot of personalized features that Last.fm offers almost exclusively, but these are all free, and, as I wrote before, we all know that free in the music industry should be always looked upon as a contingency plan, not a means to an end.

-@NishadGeorge

Online Radio / Music Streaming needs a better Business Model

Over the course of the semester I’ve been writing about developments in the streaming services sector of the music industry.  These services have seen expansive growth in terms of revenue, but to date have been unable to make a profit.

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Many critics believe that the main issue contributing to this problem is the high cost of music royalties. (In 2012, Pandora paid 54% of its revenue for “content acquisition, while Spotify CEO Daniel Ek has recently stated his company has paid over 70% of its income to the recorded music industry).   The cost to license music without a doubt contributes to the net losses of these services, one must consider the business models they employ and evaluate the effectiveness of these strategies.  Consider the following charts:

Distribution of Spotify’s revenues from 2009 to 2011

Pandora’s revenues from 2007 – 2012 by source

Pandora’s revenue sources 2007 to 2012

Granted, the Spotify chart displays distribution of revenues by percentage and the Pandora chart displays total revenues by each source, but the message is clear in both cases – Both services (as well as the majority of similar services) heavily rely on advertising dollars, and far less on subscription services while attempting to subsidize their extremely large group of free users.  It’s no question that online radio and streaming services have brought about the new age in music consumption where access is replacing ownership, but as it stands today, the most popular services have yet to made a profit, while copyright holders (labels, artists, publishers, etc) feel they aren’t compensated enough for their works available on these services. One thing is clear, however, that being both online radio/streaming services and copyright holders need each other in order to succeed – A business model that satisfies all parties involved is clearly needed for the music industry to witness growth in the digital age

Pandora on a thin rope

As discussed in many music industry news sources, Pandora is on an aggressive crusade to lower costs and payments to copyright holders, as they continue to suffer from huge net losses ($5.4 million net loss for the previous quarter).

 

The company has raised significant opposition from many artists and other rights holders in their petition to Congress to pass the Internet Radio Fairness Act (IRFA) that would lower fees for the performance of sound recordings to that of cable and satellite radio.  In a congressional hearing on Capitol Hill late November, supporters of the bill (largely technology venture capitalists) stated that reducing royalty rates for web radio would help artists over the long term by allowing the services to continue to grow.  Law makers did not seemed convinced, an the bill currently seems have lost movement while congressional hearings continue.  If Pandora continues to pay the current 60% of its revenue in royalties, many critics believe it will be impossible for the company to get their numbers in the black.

 

Pandora has also began proceedings to sue performing rights organization ASCAP in hopes to lower performance royalties paid to ASCAP’S songwriters and composers for their works.  In the lawsuit filed in early November, the non-interactive online radio service asked the court to set “reasonable fees and terms” through 2015, claiming that the original 2005 license they obtained from the PRO was “ill-suited and not reasonable.”  The company points out that ASCAP changed it’s rules in April 2011, allowing members to withdraw certain licensing authority.  Some members such as EMI have already taken advantage of this, and will negotiate a new media rights deal directly with Pandora.  

 

The future of Pandora seems to be greatly affected by the outcomes of these pleas of intervention from the judicial system.  Lowering payments to artists and other rights holders may allow Pandora and similar companies to stay afloat but it is not a solution for the long term.

THE BARGAINING POWER OF DIGITAL PLATFORMS

It’s a matter of fact that nowadays listening habits are changing, provided that a big percentage of U.S teenagers, accounting for at about 64, are getting used to listen music on YouTube, rather than watching MTV. Well the thing is that the former uses the videos provided by the latter with a result much more appealing in terms of listenings and watchings, earning huge advertising revenues. Let’s think how some popular videos as Gangnam Style have increased massively the popularity of K-Pop, having been clicked milions of times. These figures clearly benefit the image of those acts in terms of marketing and brand value. However, in terms of songwriters/cowriters shares, the result is not great.

Infact, the income generated by streaming,  has been considerated moderated by artists and record labels, while on the other hand there has been a significant growth in terms of revenues for the owners of the recordings. Spotify, as revealed from an independent Swedish label called Hibrys, doesn’t recognize any revenues for musicians and also publishers/songwriters get a low share. However this tool advantages the labels, providing that it has become so popular within them.

In addition, Pandora has reducing his royalties commtiments, on a basis that the satellite radio pay less than 10% of their revenues in royalty payments. Well this is unfaire, also taking in consideration that in Usa artists don’t get paid for air play.

So let’save the songwriters, let’s think about a new business model that could reduce the bargaining power of labels and digital platforms !!

guardian.co.uk

http://www.guardian.co.uk/media/2012/oct/10/music-streaming-songwriters-youtube-pandora

Microsoft announces Xbox Music

Microsoft is the latest name to be added to the list of companies competing in the digital music arena – The company announced their new Xbox Music service earlier this week, featuring the usual perks digital music companies are offering, with a few twists:

– The free streaming service claims it is one of the largest digital music catalogs on the planet, going so far to boast that you can “listen for over 80 years and never hear the same song twice.” This may be of huge interests to current users of Pandora, sick of the same songs played over and over again on certain stations.
– Cloud connected, so users can sync their Xbox Music Pass collection and playlists across your tablet, PC, phone, and Xbox 360 (currently, you can sync iTunes to the cloud, but iTunes is not also a streaming service),

Xbox Music will ship free bundled on every new Windows 8 PC. The basic paid Xbox Music Pass service will cost $9.99/month (similar to most other streaming services) and $99.99/year. Xbox Music will replace Microsoft’s previous failed attempt at the digital music sector, its Zune music service. Speaking of Zune, I find it hard for consumers to become interested in trying Microsoft’s new service because of negative associations with Zune. I find it likely that only consumers that purchase a new Microsoft computer may ever try the service, and only consumers that already have Xboxs may actually use the paid service. Also, I find the video very unsettling in terms of brand image and target market. The video feels very bland, uninspiring, and on top of this all, the unoriginal logo for the service makes an overall unenticing package – At least for me, personally (a Mac user, nonetheless).

What do you think, does Xbox Music have a chance at the digital music market?