by Molly Neuman, eMusic's VP Label Relations and MD Europe via digitalmusic.org.
For a large segment of music consumers, downloading music to own is something that's seen as music's past. But for an even larger share, owning and collecting is hugely important.
Compounding the issues at hand, streaming has taken on different meanings to today's consumers, including streaming your MP3 files to a device from the cloud, or streaming to your desktop via an internet radio station, a la Pandora or eMusic Radio. Streaming a term that's talked about in the industry today as the future of music, but what drives consumers to strong desire for ownership today?
Through recent research we've learned the different motivations behind consumers' desire to own music files instead of streaming them to rent. The reasons for consumers' desire to own their music include those that are more practical and those that are more emotional. The flexibility and security that owning music file provides is a practical reason (i.e. my files won't disappear if my subscription ends). Music buyers do not want to risk losing their collection if a service changes its terms or goes out of business; it would take a lot of time and money to replace most collections. Other reasons are more emotional, like the feeling of artist support (i.e. I'm supporting the artist more if I purchase a song or album and add it to my collection).
While the practical motivations behind ownership might be the main drivers today, the emotional motivations will make the most impact tomorrow. Especially for the more active and dedicated music fans – who are the most valuable type of consumers – the emotional feeling of supporting the artist is one of the main motivations to buy and own music. It's what pushes fans to buy the CD or other merchandise of an emerging artist after a performance. It's also behind vinyl's resurgence.
Ownership is art for many, not a science. A music collection is something that you've carefully crafted, take pride in and show off to your friends. A collection is something that's also composed of albums, not singles.
Even with today's endless options to stream personalized playlists, albums are what many artists want fans to experience, not just one single – a fragmented form of their work. It's not just because buying an album generates more revenue for the artist. For many artists, it's because owning an album allows a consumer to fully experience the artist's musical vision time and time again, and have it resonate on a deeper, emotional level.
That's something a streaming playlist can never replace, and why ownership – and the feeling it provides of artist support, collection, and experience – will remain relevant for digital music consumers in the future.

In the two months since f8 and Facebook's expansion of music in its Open Graph, fans have shared listening activity more than 1.5 billion times. As a result, some of Facebook's biggest music developers have more than doubled their active users and new services saw 2 to 10 time increases. FaceBook provided these service by service stats:
- Spotify: Expanded to the US this summer and added well over 4 million new users since f8.
- Earbits: Y Combinator-funded startup built by a team of musicians saw a 1350% increase in the number of users becoming fans of the band they’re listening to.
- MOG: A unique social business model has led to a 246% growth in Facebook users since f8.
- Rdio: A strong social ecosystem has expanded with a 30x increase in new user registrations from Facebook.
- Slacker: Available across mobile, TV, auto and web, Slacker saw a more than 11x increase in monthly active users in the month following f8.
- Deezer: Based in France, they've added more than 10,000 users per day since finalizing their Open Graph integration.
Facebook also singled out RootMusic and VEVO as established players on the site that have seen bumps since the latest Open Graph changes: "For example, on October 20, VEVO featured videos by Justin Bieber and Rihanna, which resulted in them doubling their daily active users in one day. Separately, RootMusic has seen an increase in engagement from both musicians and users on the 250,000 band Pages it powers, with musicians posting more updates and fans coming back more often to listen to music and engage with artists."
Ticketing has also benefited, according to Facebook reporting that ticketing sites like Eventbrite, Ticketmaster and Ticketfly all have seen between $2 and $6 in direct ticket sales for every link shared on Facebook.

Remember that ‘twist’ in the upcoming Google Music store that we wrote about earlier this week? The company’s Android boss Andy Rubin didn’t give any details when he made the comment, but Business Insider claims to have the full skinny on Google’s plans, courtesy of a music biz mole. Its report claims Google Music will let people who buy songs share them with friends “on a limited basis”. How? By sending them to those friends, who will be able to listen to them for either a limited number of times or a limited time period for free. The sending may involve links to stream the tunes from the purchaser’s Google Music cloud locker. “Our source also tells us that Google – like Spotify and many other services – is paying the major labels huge up-front advances to get these kinds of rights. The majors are big enough to demand these advances, while most smaller indie labels are not, and are therefore getting left out of the chain,” suggests the report. We suspect Merlin may have something to say about that, as well as publishers and collecting societies.
So what she's really saying is that the CD is dead -- or at least it will be soon. Should we let it go quietly into the night?
This question is a tough one to answer -- in a very real sense, CDs are the last holdout of the physical embodiment of music, the last big-time format we can still turn over in our hands and drool over.
Of course, some will argue that CDs aren't nearly as "physical" or as "real" as vinyl, and they might be right. Despite its resurgence, though, vinyl is still a minuscule player in the music market. The CD is the only widespread physical format between us and an all-digital landscape (except for USB drives, which seem about as authentically physical as iPods). Are we ready to let them go and finally submerge ourselves completely in a world of digital music?
What makes this easier is that the CD was never a good format to begin with. They're certainly not worth holding onto as the world changes around them, for a few reasons:
They skip. (If you don't believe us, put an old one in your car and drive around a city with as many potholes as this one.)
They're small -- big enough for some form of album art, but without enough real estate for anything masterful (like the Sgt. Peppers cover, which is impossible to scrutinize on a CD jacket) or subtle (like the White Album cover, which just feels stupid and bland when it's tiny).
They stop working over time (like records, but without the endearing hiss and crackles).
You have to save their contents on your computer as digital files anyways, since computers are essentially the only CD players anyone owns anymore -- at least outside of their car.
It's true: There's something incredibly important about music that with a physical dimension. It helps us remember that someone made the music with love and care. The transition of music to the digital era has been painful, with file-sharing turning artists against the fans who adore them and sales shrinking at alarming rates.
Yet the CD is an unfortunate format, not one we'd choose to be the last line of defense against an all-digital world. Ford may be the first to abandon it publicly, but it's only a matter of time before the rest of us turn our backs and do the same.

Cricket's Muve Music Service Passes 100,000 Users
In just six months, the Muve mobile music service from pre-paid wireless operator Cricket has done what year-old music services like MOG and Rdio have yet to do: reach 100,000 users. The company released the data today.
That's quite a feat, especially considering that the service has only been active in Cricket's full nationwide footprint for just over two months. The service went live in January in a handful of markets, rolling out slowly to cover all markets by early May. As Billboard previously noted, Muve's 100,000 subscribers are more than what both MOG and Rdio combined have generated, according to sources familiar with their progress.
"Not a lot of new services have launched that have reached that number of subscribers so quickly," says David Ring, Universal Music Group eLabs executive TV of business development and business affairs. "That's phenomenal."
What's more, Cricket also released usage data for the service that is raising eyebrows. On average, Muve customers download more than 400 songs per month, and in total have downloaded more than 100 million songs since the service launched. They also listen to music on their phones 2-3 hours a day, on average. In the month of June alone, the Muve service streamed more than 100 million songs. And internal surveys report a 90% customer satisfaction rate.
"A lot of services launch well, but if you don't see that much engagement, you know there's something wrong," Ring says. "They really have a highly engaged and highly focused audience, and they're very, very invested in this."
These are shocking figures, particularly when you consider that Muve operates completely differently than any other mobile music service available today. For starters, it's the first mobile operator to hard bundle a music service into its data plan. The Muve plan is all-inclusive: bundling unlimited voice, texting, Web browsing and music downloads on a specific phone designed just for the service, all for a flat fee of $55 a month. (See Billboard's initial coverage for more details.)
Secondly, this isn't a streaming service. All songs are downloaded in full to the phone, where they stay. There's no ability to transfer the songs to other device, which was a point of contention with some critics. Third, it only featured music from the major labels. Cricket is just now getting around to ingesting content from its various deals with independent labels and digital aggregators, with a goal of six million tracks available by the end of the year. And, it's available only on one phone: the Samsung Suede. There's no smartphone app or iPhone integration.
So what's the secret? Simple, it's an easy-to-use service that's priced properly. That's it. Muve was built from the ground up as a mobile music service, embedded directly into the operating system of the phone. Songs download in a matter of seconds. Users can share tracks, use Shazam to ID and buy songs. It all just works and it's cheap. The strength of these features, at that price, far outweigh the relatively minor negative of not being able to access the music on other devices.
The question going forward of course is whether Cricket can maintain both these growth rates and engagement stats. More than half of Muve's customers are new to Cricket, which suggests there is an interest in these kinds of bundled deals. But the mobile music space is heating up; Apple's iCloud set to go live this fall and Spotify expected to launch a U.S.-based version of its popular service next week.
Muve GM Jeff Toig remains confident. "This has the potential to be a big growth story for Cricket and a growth story for the digital music business," he says. "We're trying to run the biggest digital music service in the country."

Why Major Labels Continue To Be Apple’s Slave!
It’s a well know fact that the major labels missed a massive opportunity when originally negotiating with Apple for the first iTunes music licenses back in 2002/2003. That opportunity was to ensure that an album could be sold in it’s entirety and not sold song-by-song if the artist so chose. The fact the labels capitulated to Apple’s demands was what has most significantly led to a decline in album sales revenue for both artists and labels alike over the last 9 years.
Furthermore, the fact the label’s neglected to negotiate a royalty for every iPod sold by apple – much akin to the royalty labels were paid on blank CD’s is a seriously miss-calculation which has had a negative effect on label coffers as well. Laughable as it is UMG via Doug Morris did manage to negotiate a measly $1 per sale for the flop that was the Microsoft Zune MP3 player. The key issue labels forgot to leverage was the fact that without music there would be no iTunes and subsequently for Apple no music playing hardware device sales. What has in effect happened is that music has become the loss leader to drive Apple hardware product sales (iPod, iPhone etc). And the recorded music business is losing hand over fist in this scenario.
Moving on to the present day Apple has already been proved to use morally repugnant anti-competitive business practices when dealing with labels – prime example being when iTunes directly threatened to pull labels iTunes promotions if they continued to allow Amazon’s deal’s of the day promotions. TMV is in possession of an email forwarded from one major label digital head, which is clear evidence of Apple’s illegal anti-competitive behaviour in respect of this particular event.
As the majority of the major labels have knowingly colluded in allowing Apple to launch it’s own streaming and cloud-based service before Amazon and Google little own Spotify – it is clear these labels are addicted to the iTunes monopoly of their industry. This monopoly alone where Apple has a minimum of 65% market share in legal download sales is surprising in the fact that competition authorities on both sides of the Atlantic have not acted to break up this monopoly.
Both Amazon and Google were pretty much left with no choice but to launch their music locker services without licenses from the major labels. It obviously became crystal clear that these same labels were giving Apple Inc more favourable business terms than those offered to Amazon and Google.
TMV asks what does such law breaking reliance on Apple actually do for the long-term benefit of the recorded music industry? Its worse than the days of payola. If anything it just continually makes the recorded music business weaker and even more reliant on one retailer for more than 70% of its digital income whilst its physical retail product income continues to decline. Obviously, that is not good for the industry as a whole, artists or labels alike. Monopolies serve no industries long-term interests other than the actual monopolist itself.
The global digital music retail market is divided up as follows Apple/iTunes 70% (average global market share), Amazon 10%, and eMusic/Spotify about 5% with the remaining 15% left to over 500 different retailers fighting for peanuts! Whilst the major labels continue to prop up Apple/iTunes all they are in effect achieving is to become even more reliant on a monopoly. TMV believe some of the label digital heads have enough intelligence to understand that. So surely it is in these same labels interest’s to give services like Amazon and Google a level playing field to compete within?
In reality, no service competing with iTunes has been given viable terms to build a sustainable digital music retail business. No other business is provided with a 70/30 split in the labels favour – it’s more commonly 90/10. This in itself is quite frankly a market condition that needs to be urgently rectified. $0.99 is a fair price the music consumer is prepared to pay per downloaded track. However no business can survive on $0.09 per track before costs and marketing. Apple has previously stated it loses money on $0.27 per track that it makes. But as well know that is a small price to play to ensure its mountainous profits from hardware sales.
It is sad to see the recorded music business continually making itself weaker due to inept decision-making at the top. If the labels were to do some real research they would realise that consumers don’t just want platform such as iTunes in fact many consumers actually detest iTunes.

Apple dominates among US teens but digital music pricing is still a barrier
A study into the digital music habits of US teens reveals they prefer Apple products and services but feel downloads and subscription services are overpriced.
The Piper Jaffray study surveyed 4,500 teenagers and discovered that 80% of them own an MP3 player, but this was down from 90% ownership in the autumn.
Apple's iPod was comfortably the device of choice (with an 86% share of all devices owned by teens), while Microsoft's Zune had a mere 3% share. This comes amid suggestions that the Zune player could be decommissioned this year.
The drop in MP3 player ownership is explained by growing ownership of music-enabled mobiles and smartphones. Some 17% of those surveyed had an iPhone while 37% planned to get one in the next six months. Overall, 53% listened to music on their mobile.
Music pricing remains, predictably, a barrier for many teens. While 65% of those surveyed admitted to getting music from P2P networks, only 22% of the total survey base felt that $0.99 (£0.60) was a fair price for a download.
When looking at subscriptions, the responses were slightly more encouraging. When asked if $15 (£9.18) a month for an online music subscription service was acceptable, 37% said yes.
Overall, 70% said they primarily buy music online compared to 21% buying music from a bricks and mortar retailer. Apple's iTunes was where 95% of teens bought digital music while Rhapsody and Napster accounted for a mere 1% each.

Just three outlets - iTunes, Amazon, and Spotify - account for more than 94.4% of indie digital revenues, according to a global estimate by AIM (Association of Independent Music). The rest are fighting over a paltry 5.6 percent.
Alison Wenham, head of the UK-based consortium, pointed to a lopsided logjam. "There are now a series of monopolies and it is jolly hard for anyone else to get a slice of the market," Wenham told Music Week (subscription req'd, here).
Indeed, this is an extremely top-heavy situation, though Wenham also highlighted niche winner Beatport as an exception. But can fresh technologies shift the broader lopsidedness? "I don't think there is room now for anyone to break into the download model, but the world of apps could be a game-changer," Cooking Vinyl founder Martin Goldschmidt relayed.
The study was done on behalf of the various AIM members, all of whom are also part of the Merlin consortium. Merlin has been quite the scrappy fighter against startups like Rdio, though after this report, battles like those seem totally peripheral.
And what about the US? Early Thursday morning, A2IM head Rich Bengloff pointed Digital Music News to some critical differences in the stateside market, noting that "we in the US have no US-based Spotify service and do have a large eMusic presence."

Want To Realese Digital Only? Think Again
Wish you could save some money and release your next product digital only? That one decision could cut sales by 65% and more, according to some analysis by Glenn Peoples of Billboard. While digital's share is growing around 3-6% a year, even the smallest releases still sell more physical product than digital. Here's the proof:
2010 New Release Sales
- 500,000+ - 17.7% digital
- 100,000 to 500,000 - 20.4% digital
- 50,000 to 100,000 - 23.8% digital
- 10,000 to 50,000 - 27.2% digital
- 1,000 to 10,000 - 33.7% digital
- 100 to 1,000 - 48% digital

Topspin To Open Direct To Fan Platform To All
Topspin CEO Ian Rogers used the New Music Seminar to announce that their direct to fan platform will open to all musicians in March. While used by hundreds of musicians from Paul McCartney to unknown bands over the last 18 months, Topspin had been previously invite only. In addition, Rogers announced a $5,000 Direct-To-Fan marketing grant contest.
The new Direct-To Fan Marketing grant will award $5,000 plus four 2-hour sessions of Topspin Pro Services consulting, to the applicant with the best direct-to-fan business plan. Applications will be judged by an all star industry panel including: Rick Rubin (co-president of Columbia Records), Marc Geiger (William Morris Endeavor), Richard Jones (manager of the Pixies), Glenn Peoples (Billboard Magazine), Mike King (Berklee Music), Jennie Smythe (Girlilla Marketing) and others.
For grant application visit www.topspinmedia.com. Entry deadline is March 7, 2011 at 6:00pm PST. The grant recipient will be announced at SXSW on Thursday, March 17.
6 Reasons Why Major Labels Are Still Screwed
2011 could prove to be a spectacular year.
Spotify may launch stateside. Google Music might start cloud-based music storage off with a bang.
Apple may convert into a subscription service.
Slacker will offer on-demand music streams and may capture substantial market share. Sony is bringing their own service called "Music Unlimited" to market.
Make no mistake, this could be the biggest year that the music industry has seen in quite some time.
Amidst all this excitement though, there are still reasons for concern.
Even if everything above goes as planned and impacts the major labels positivly, they still have a winding road ahead of them. Their product strategy is lacking, piracy has proven hard to force underground, and they are their own worst enemy.
Here's why the major labels are still screwed:
1) The Format Replacement Cycle Is Over. Throughout the history of record industry, the introduction of new formats has driven profitability and dug them out of decline. There appears to be zero new formats that are capable of achieving CD era revenues. Digital music has failed to generate a new format replacement cycle and nothing in sight looks like it will perform much better.
2) Music Piracy Can't Be Forced Underground. The harder labels have tried to force music underground, the more mainstream the activity has become.
The second that they shutdown one file-sharing client, another turns around, bends the rules, and fits between the cracks of copyright law. MP3 Rocket now downloads directly from YouTube – no p2p technology involved. Speaking of cracks, others are embedding storage devices into walls and creating networks that don't even connect the Internet. Music piracy will only evolve – not die.
3) Complete Lack of Creative Leadership. Major labels are full of leaders who preserve the status quo by sticking with feasible but relatively unoriginal solutions. New research says that creative people are looked down upon and shunned from positions of leadership. This means that those who desire to move the record industry in profitable new directions are likely to be turned down for promotions in favor of those with more practical solutions. Thus, the old way of doing thing remains and after one digital decade has ended, not much is different.
4) The Music Consumption System Is Broken. Here's what fans want. Here's what the major labels provide. Now, if the space between those sentences were equal to the distance between the Earth and the Sun, we might be close to characterizing how far divorced from reality the music consumption system is.
There is a vast chasm between what the Digital Natives want and what the major labels sell. If nothing is done, the gap will only widen. Entire generations aren't being catered to properly and until the consumption system is adjusted to reflect known fan behavior, major label decline will only continue. Piracy will worsen.
Future music products are needed and now. Otherwise, fans will go elsewhere.
5) Major Labels Are Their Own Worst Enemy. Call it "The Hulu Problem." The company is controlled by the major TV networks and has been enormously successful. So much so, that they are now the worse enemy of the people that endorsed it. People love Hulu. What's cannibalizing regular TV viewership? Hulu.
What's the solution? Kill Hulu. If your biggest success is also your greatest enemy, it's sort of a big problem. Major labels are in a similar situation. If Spotify, Slacker, Apple, and Music Unlimited turn out to be enormously successful and digital downloads and CDs decline more, all hell will break loose. If killing off the future of your business is the only way to preserve the future of your business, that might be the main reason why the major labels are still screwed nowadays.

An Ocean of Pennies
Pay-Per-Play Music Streaming Service Launches In UK
Psonar is a UK music startup that will let users stream songs they don't own for a penny. There's no advertising or monthly subscription required. The company bills users directly on their phone bill, as well as, though PayPal and credit cards. This Pay Per Play streaming service is being built on top of their current locker system.
Users can also give tracks to friends – almost like a prepaid phone card, but song plays instead – and post playlists to Twitter and Facebook.
Psonar will work on desktop computers, smartphones, and mobile devices too.
In the second quarter of this year, the company plans to launch the service in Australia, New Zealand, Canada, Ireland and Scandinavia.
Starting out, Psonar will only contain music from The Orchard – no majors.
CEO Martin Rigby says, "Psonar aims to answer the digital music dilemma where users are forced to choose between expensive fixed cost online streaming services or pay to own tracks which limits the amount of music consumed and encourages copying and side-loading." In other words, Rigby thinks that there's a cushy place – and price-point – to occupy right in between iTunes and MOG.
If you asked Google how users already solve this digital music dilemma, they would tell you that they have this petite company they own called YouTube.
Fans stream songs they aren't willing to pay for a dollar for or exert the energy to download from BitTorrent for free. Then you have places like Snoost and Tubeify that enable users to stream music they don't own and let Google foot the bill.
That's not to say that Psonar doesn't have a good idea, but the company sure puts a new spin on the notion that digital music services only pay labels via a river of pennies. To me, this service seems like the toll road that the major labels fawn for. Every single play of every single song will cost a penny. There will be no free rides. Except, in the hands of the majors, each stream would cost a quarter and users would find that is makes more sense to buy songs than stream them.
Wait a second, if a user streams a song 99 times, will Psonar let them keep it?
All those pennies add up. Idea to steal: Song-layaway.

Sony, Universal Plan "Instant" Singles To Beat Pirates
In a reversal of a decades old marketing strategy, Sony and Universal will begin putting new singles for sale as downloads on the same day that they are released to radio. The new policy, which the labels hope will encourage younger users to pay for a new song rather than grab it free, is being implemented first at the UK branches of the two label groups, but seems likely to spread to other territories.
Previously, labels gave radio up to six weeks before they released the for songs for sale hoping to "set up" the record by building interest that would drive first week sales and chart position.
"Wait is not a word in the vocabulary of the current generation. It's out of date to think that you can build up demand for a song by playing it for several weeks on radio in advance," according to David Joseph, the chief executive of Universal Music UK.
"What we were finding under the old system, was the searches for songs on Google or iTunes were peaking two weeks before they actually became available to buy," added Joseph, "meaning that the public was bored of or had already pirated the new singles."

The End of Retail Space by Brian Clothier
The last time I walked into a retail music store was some five years ago (not counting Amoeba, that's a record store) so I was surprised to find one on a trip to Vancouver, BC. It looked to be bustling with customers at the height the holiday shopping season. Physical CD sales have declined rapidly in the U.S. over the past decade. Knowing this was less so outside America, I guess I should not have been surprised. There were plenty of pop mass market music offerings as well as the latest mega-movie blockbuster music sound tracks with little to no independent selections. This wasn’t a combination of music and DVDs, the whole floor was music (DVDs had their own floor downstairs). Upon browsing I came to a realization that reminded me of a viral photo that has made rounds in recent months. It’s a picture of a hard rock/heavy metal band playing to a throng of crazed fans. The photo was taken from back/side stage, a roadie’s view, and shows a wall of fake amplifies set up behind the band. Amplifiers that represent what the band would be using to ‘go to eleven’, if they were real. Now, don’t get me wrong, as a musician and life long concert goer I saw nothing new in this picture. I remember seeing what was probably the same back in the late 80’s, but at least they used actual amps/speakers that simply weren’t plugged in. This picture shows them as just false fronts, like the set of an old western town movie set. It was the fake Rockridge from Blazing Saddles.
Back to HMV. In pulling a CD of the soundtrack of Tron off the shelf I found that the front CD was the only actual CD. The five or so behind them were empty CD cases. I looked further and this was the case throughout most of the store, one CD and five empty cases behind it. The effect does make the shelving look much more stocked… until you remove the CD, then boom. It’s just a matter of time before they’re all just empty CD cases.
DVDs downstairs were fully stocked and clearly keeping this store in business.As streaming increases, especially movies via Netflix and the like, the balance of retail music outlets will take their last breath and truly end the era of buying music in a store.

Half of All Folks Who Stream Don’t Listen to Broadcast Radio
A new report from Coleman Insights provides information on the amount of crossover there is between listening to AM/FM and listening online. About half of the streaming population in the US doesn’t listen to AM/FM radio at all. Of the 17% of the population that is streaming monthly, 48% say they don’t listen to any over the air radio.
It’s worse with younger demographics and with males: 57% of 15- to 24-year-olds and 59% of 25- to 34-year-olds do not listen to any “over the air” radio. 54% of male streamers use no over the air radio while 42% of female streamers report no usage of broadcast signals.
Minorities are likely to have replaced over the air listening with streaming as well - Sixty-seven (67%) of African American streamers listen to no over the air radio.
The same folks that are spending more time streaming and less time listening over the air say they have a positive attitude toward over the air radio, and they also say they are listening to AM/FM stations online. This leads to the conclusion that “Streamers who no longer listen to “over the air” broadcasts do not hate radio. They share the same moderately positive attitude toward the medium as other streamers. They simply have gravitated toward a different delivery method.”
70% Thumbplay Users Stop File-Sharing Their Music.
What stops fans from file-sharing music?
According to a new study released by Thumbplay, a cloud-based music service, 70% of their users stopped file-sharing music upon engaging with Thumbplay Music.
Out of a pool of 500 respondents, that leaves 150 who – even after gaining access to more than 10 million songs – still desire to use P2P music services.
This indicates that, for the most avid fans, a void in the market exists. Unlimited, on-demand access to music isn't enough to quench their thirst; they want more.
Additionally, 80% of respondents revealed that they migrated from Pandora to Thumbplay Music. Of that 80%, 30% of respondents suggested that their reason for switching to cloud-based music was to gain access to an unlimited catalog.
The takeaway: As Hypebot has suggested before, the wider that streaming music services proliferate, the fewer users will employ P2P music services. The challenge is to raise awareness for legal those services. However, despite these efforts, a small percentage of users will still file-share their music regardless.
Given that 30% of Thumbplay Music users migrated from Pandora in order to gain access to unlimited, on-demand music streaming, this suggests that Slacker's new business model is promising. In the coming months, the radio service will be offering free radio in the front and paid on-demand music streaming in the back.
Slacker has the potential to convert users of their free radio service into paying subscribers. Overall, if the music ecosystem is given the room to evolve, getting users past music piracy is possible in the 25 – 34-years-old, male demographic.*

Twitter & iTune's Ping Link For Music Discovery
Ping, iTunes' music social network, and Twitter have linked in ways that enhance and encourage the viral spread of music. Ping users now can link to their Twitter account and find other Ping users among those they already follow on Twitter. When the user posts, likes, reviews or tells why they purchased on Ping, it will also be tweeted to their Twitter followers including playable song previews and links to purchase from iTunes.
When users click on a Tweet that's sent via Ping or that contains an iTunes link, they'll see the song or album in Twitter’s details pane and be abe to to listen to song previews. Last month, Twitter which has 175 million registered users sending 95 million daily, launched an upgrade that gave users the ability to see embedded photos and videos in their details pane
Song previews are only available on Twitter in the 23 countries where the iTunes Store offers music.

Streaming audio is a category that doesn’t have a lot of brand awareness, accordingto a study released a few weeks ago by Coleman Insights. That’s a good thing, it means that there’s still plenty of room for growth and competition. Even Pandora’s brand awareness is limited – only 28% of streaming audio consumers could name Pandora and only 22% use it regularly.
Consumers who regularly listen to streaming audio could only name – on average – 1.6 streaming audio brands. This, says the report, indicates that the streaming audio category is nowhere near mature. In mature brand categories, consumers can name 6 or 7 brands.
That said, streaming audio consumers were much more likely to name an online only streaming station when asked than a terrestrial streaming station. 77% named an online station while only 33% came up with a terrestrial streaming station when asked to name a streaming station. Similarly, they’re much more likely to report that they listen to the online only station.
Kudos to the Coleman Guys for coming up with this unique marketing study. While several research companies are hung up on asking people if they listen to streaming audio and certain stations, or even less reliably, whether they would like to listen, this is research that offers streaming audio brands some highly valuable insight into their marketplace. The study summary comes with some good advice too:
- Make branding your station/service of paramount importance
- Focus on a singular position or benefit
- Rethink the unique benefits that streaming services offer from the perspective of the listeners
- Broadcasters: don’t ignore the fact that listeners prefer online only services – create your own!

Report: Expect Google Music By Christmas
According to multiple sources, Google is in final stage talks with labels to open a download store and a cloud based song locker that would allow mobile users to play songs wherever they are. Google hopes to open its new music service before Christmas. Some label executives believe that Google Music will become the first real competitor to iTunes.
"Finally here's an entity with the reach, resources and wherewithal to take on iTunes as a formidable competitor by tying it into search and Android mobile platform," a label executive who asked not to be identified told Reuters. "What you'll have is a very powerful player in the market that's good for the music business."
But before the industry gets too excited about Steve Jobs finally having competition, they should remember that Amazon has massive reach as well, and they've barely managed to make a dent in iTune's sales numbers. Still Google has repeatedly shown its ability to compete in categories dominated by established players.
"If they get it right, it will hasten the transition by consumers from music you have to own to music you need ubiquitous access to," says Ted Cohen, the former EMI digital executive who runs TAG Strategic Partners.

Apple Plots iTunes Music Subscription Service And How To Stop Spotify
(UPDATED) Apple is in serious talks about a music subscription service and once again the major label heads appear ready to do whatever Cupertino asks them to do. iTunes head Eddy Cue has recently been in touch with label execs to "figure out how the partners can move forward," according to the NY Post. The new music service would reportedly be priced in the $10 - $15 range depending access and portability. Subscriptions could be tied to an iTunes in the cloud service, but at least one report suggests that Apple's desire to add subscription music has more to do with stopping a Spotify entry into the U.S.
Major Labels Fall Under Apple's Spell Again:
Music subscriptions are not new. Rhapsody, Napster and others have been offering them for years with only moderate success. But an iTune's music subscription service appears to sound new and sexy to the struggling labels.So when Apple also recently told label heads that they were having serious doubts about whether Spotify could ever deliver serious revenue; the profits Apple was really worried about were their own. According to CNet, Apple reminded the labels that it's hard to to sell something that someone else - like ad supported Spotify - is giving away. An industry insider told CNet's Greg Sandoval that it's "only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon."
There are at least two major problems with Apple's hypothesis that the labels are choosing to ignore. While single tracks sales are flat, Nielson and many others project continued album download growth. As for Spotify hurting music sales - the old "why pay for the cow when you can get the milk for free?" argument - most surveys show that Spotify increases download sales while also fighting piracy.
Apple has always been a very aggressive competitor and with Google, Spotify and others preparing to chip away at it's supremacy in the music space, Jobs & Co. appears anxious to crush or at least stall any competition that in can.

Study: More Youth Listen to Pandora than all other Internet streams combined
There was a lot of great content at the Radio ShowRAB and NAB last week in DC, not the least of which was the sold out RAIN Summit which took place the afternoon before the Radio Show actually started, as an official partner event of the show. You can read RAIN’s coverage of the event here.
One excellent presentation during the Radio Show was Edison Research‘s American Youth Study 2010, which is “a significant survey of the media and technology habits of America’s 12-24 year-olds, and represents a sequel to a study originally conducted by Edison in 2000.” Sponsored by publication Radio-Info, the study looks at the media use behaviors of 12-24 year olds, and updates the behaviors of the demographic originally studied in 2000 – 22-34 year olds.
Some of the findings, bulleted:
- Radio continues to be the medium most often used for music discovery, with 51% of 12-24 year-olds reporting that they “frequently” find out about new music by listening to the radio. Other significant sources include friends (46%), YouTube (31%) and social networking sites (16%).
- 20% of 12-24s have listened to Pandora in the last month, with 13% indicating usage in the past week. By comparison, 6% of 12-24s indicated they have listened to online streams from terrestrial AM/FM stations in the past week.
- More than four in five 12-24s own a mobile phone in 2010 (up from only 29% in 2000). 40% have used their phones to listen to music stored on their phones.

AmieStreet Closure May Show Where Amazon Thinks Music Ownership Is Headed
Amazon was an early investor in AmieStreet, Inc. which until today owned AmieStreet.com and still controls Songza.com. That it was decided to shut down AimeStreet, abandon its dynamic pricing model and concentrate on Songza, may say more about the internet giant's music strategy than it does about AmieStreet's business model.
In fact, Amazon's purchase of AmieStreet.com "doesn't change their ownership level of Amie Street, Inc. and therefore of Songza.com," according to AmieStreet Inc.spokesperson Joshua Boltuch. So was AmieStreet a bad idea or did the music industry change directions before it gained traction? "To the extent people are buying music a la carte, variable pricing is a great way to price digital music because it empowers listeners while maximizing sales for artists," replied Boultuch when asked if dynamic pricing of music had a future.
Why concentrate on Songza?
Because as Boutuch implied, "the extent people are buying music a la carte" is not growing rapidly enough and Songza, at its core, is a social music streaming application. Many believe this is where the music industry is headed and so it's where Apple, Google, Sony and now it appears Amazon are placing their new bets.
Report: Expect Google Music By Christmas
According to multiple sources, Google is in final stage talks with labels to open a download store and a cloud based song locker that would allow mobile users to play songs wherever they are. Google hopes to open its new music service before Christmas. Some label executives believe that Google Music will become the first real competitor to iTunes.
"Finally here's an entity with the reach, resources and wherewithal to take on iTunes as a formidable competitor by tying it into search and Android mobile platform," a label executive who asked not to be identified told Reuters. "What you'll have is a very powerful player in the market that's good for the music business."
But before the industry gets too excited about Steve Jobs finally having competition, they should remember that Amazon has massive reach as well, and they've barely managed to make a dent in iTune's sales numbers. Still Google has repeatedly shown its ability to compete in categories dominated by established players.
"If they get it right, it will hasten the transition by consumers from music you have to own to music you need ubiquitous access to," says Ted Cohen, the former EMI digital executive who runs TAG Strategic Partners.

Michael Zapruder is an award-winning musician who serves as Music Curator for Pandora, the Oakland-based internet radio service based on the Music Genome Project. As curator, he directs all aspects of music collection, curation, and cataloging for Pandora’s stations. Zapruder has been with Pandora nearly since the inception of the Music Genome Project and was appointed as Pandora’s music curator in 2004.
There are any number of ways to get your music on Pandora. We’re always looking for new music to play for our listeners, so we watch all kinds of blogs, radio stations, show listings, charts and things like that. And while we don’t automatically add everything we see in those places, when an artist reaches a certain level of visibility we like to try our best to make that music available on Pandora.
So that’s the first thing you need to know. If you are connecting with an audience or community in a strong way; if you’re playing good rooms and getting attention, you will have a fine chance of getting into our collection.
We know we can’t find everything, though, so for the many deserving bands that we miss for one reason or another (and for bands that are just starting out), we offer a web-based music submission process that is free and open to everyone.
Here’s how it works:
1. Register for Pandora (the submission process is connected to listener accounts, so you can use your existing account if you have one).
2. Go to http://submitmusic.pandora.com and follow the directions for submitting.
3. If your CD meets the requirements for submission (you have to have a valid UPC code and the record has to be for sale in the Amazon CD store), you’ll be prompted to upload two songs along with any biographical or press information and any links you’d like us to know about.
4. When we get to your submission, we listen and make a decision about whether your submission is right for us. (This takes time, so be patient.)
5. If you’re accepted, we send you an email with a customized mailing label that you’ll use to send us your record. If we pass on your record we let you know on your submission page and we encourage you to keep us posted on your future work.
Lots of people ask us about the Amazon requirements, so here’s the skinny:
We use UPC codes as identifiers to display the right artist information and album art when something plays on Pandora. We want to be able to show as much information about the artists we play as we can, and UPC codes make that possible.
Requiring albums to be available in the Amazon CD store guarantees that we will have usable metadata for every album we accept, which in turn frees us up to spend our time listening to your submissions instead of entering song titles and such. It also means that interested listeners will be able to find and buy your music by clicking the Amazon link in the Pandora tuner.
You can get your music into the Amazon CD store for free using a service called CreateSpace. They press on-demand CDs for Amazon purchases. For people who have CDs for sale already, there is a vendor program that Amazon offers that charges an annual fee as well (and in case you’re wondering, we don’t have any financial stake in the above services).
So, what are we listening for when we get to your submission?
Well, for unknown bands the fundamental question we have to answer is: will fans of this kind of music be excited to discover this on Pandora stations?
We also consider how the submission might add to our existing collection. We may have more of a need for Black Metal, a less visible genre, than for something more common like Indie Rock (that’s not to say that we close the door on any genres, but the state of our collection sometimes comes into play).
We have a few basic internal guidelines for listening to every submission.
For one thing, our reviewers never have to give a reason for accepting music, but they always have to explain their decision if they are rejecting something. This only seems fair to us.
Also, we try to keep our personal musical preferences out of the decision-making process. The fact that a reviewer may not enjoy Darkwave or East Coast Hip hop or anything else really has no place in the decision about whether our listeners would embrace that music.
We are looking for excellence. Tim, Pandora’s founder, often says: “You have to earn your way into Pandora.” We try to make good decisions about whether the music lives up to that high standard.
When it’s all said and done, though, we know that with music and art we can’t ever be 100% sure we’re making the right call. We can never completely transcend our own subjectivity. Our way around that is to keep it simple: we try as hard as we can to give your music a fair hearing. We do our best to be conscientious with your work.
If we do get it wrong (and we do sometimes), we’ll find out about it; and when we see your music being reviewed or appearing on a chart somewhere, or when you’re playing the Fox Theater here in Oakland, we’ll make sure to get it into the collection right away!
Best of luck to everyone who is considering submitting their music or has already done so, and thanks from all the reviewers here for your interest in being a part of Pandora.

Is it curtains for iTunes Music?
Apple has been engaged in meetings with record label execs in an attempt to work with them to develop an iTunes-based music streaming service, reports have claimed. But music industry chiefs have been hesitating at this, because they think Apple's music service has too much industry power.
[This story is from the new Apple Holic blog at Computerworld. Subscribe via RSS to make sure you don't miss a beat. Or link up via Twitter on the all-new feed.]
Apple has become the biggest music retailer in the US, coincidentally the world's biggest music market. The company holds a similar slice of other key music-loving territories, including the UK.
EMI's latest annual report warns that the company is too dependent on Apple: "The substantial dependence on a limited number of online music stores, in particular the iTunes Store, for the online sale of music recordings, and the resultant significant influence that they can exert over the pricing structure for online music stores," that report said.
As CD sales continue to wane and digital accounts for a higher percentage of music industry sales, it's no surprise label executives want to stimulate a diversity of digital store fronts.
Meanwhile digital music industry insiders mutter that labels charge these new digital store fronts so much for licensing the right to sell their music that most smaller services simply can't succeed.
Music industry is a distorted loop
The labyrinth of music industry politics, territorial licensing and baroque organizational practices in which one business unit can be posting video to YouTube only for another division of the same firm to take the clip down underscores the nature of this fragmenting industry.
That fragmentation and lack of unity is part of what led Radiohead to reclaim as much of their music publishing and recording rights as possible in advance of the radical 'pay-what-you-want' 'In Rainbows' release.
A person connected to Radiohead's publisher, Warner Chappell which handled much of the royalty collection for the release told an industry forum in 2008 that the project wouldn't have been possible without the attempt, and that the band made more cash out of the release than any previous album as a result.
Faced with a move toward consensus the industry faces a tough challenge, infested as it is with ego and hubris. Old business and new business models sit together uneasily as music labels try to change.
Artist relations
For all the attempt, high-profile casualities continue to emerge. Pink Floyd, one of the world's biggest-selling album acts, have now removed some of their biggest releases -- including The Wall and Wish You Were Here -- from sale by iTunes and other digital music services following termination of a deal with EMI.
In any case, Pink Floyd argue they should be able to sell their music as whole albums only. iTunes does not agree -- its model demands artists allow fans to 'cherry-pick' their music.
The Beatles remain another high-profile iTunes hold-out. Music from that band still isn't available for reasons which are never plainly described.
Rocker John Mellencamp is anxious about the Internet, saying this week, "I think the Internet is the most dangerous thing invented since the atomic bomb. It's destroyed the music business. It's going to destroy the movie business."
Labels still fear the Internet itself. Most recently, Universal Music put pressure on Apple to kick popular music streaming app, Grooveshark, off of iTunes. That's despite the fact Universal had never once asked Grooveshark to remove any content.
"In the app world, a mere complaint issued from one multinational corporation to another, rather than through the legal system, is enough to delete a mobile app that contains the same functionality that's tolerated, for now anyway, on the open web," Wired remarked.
Music is valuable
Radiohead producer, Nigel Godrich, once told me, "I think Apple sees iTunes content as software and doesn't give it enough respect. You are dictated the terms of how you sell things, which is a little weird. And when you buy all your music through this small door, suddenly you're no longer going to a record shop and hearing things and looking at the artwork."
Peter Gabriel recognises things have changed, saying, "Many young people don't seem to be buying music legally but even so, the culture and passion for music both new and old has never been greater and this is partly down to the internet."
He sees it as a creative challenge, "I'm excited at using the internet to do new things with my music – inviting people to remix my songs, or my Full Moon Club, where I try and do something for my fans when there's a full moon," he says.
Happy to listen to a major label complaint, Apple last year did make some small shifts to restore the balance of power to labels.
After years of negotiation, it finally permitted labels to offer music at variable prices, though admittedly these were split into just three price bands.
Apple said, "based on what the music labels charge Apple, songs on iTunes will be available at one of three price points-69 cents, 99 cents and $1.29-with many more songs priced at 69 cents than $1.29."
Music labels see streaming music services as the future. Executives have been spewing the idea of music as access rather than ownership for years and years. Even before Napster. They want to embrace the internet, but only on their own terms.
It is all about control.
It is understood that hugely succesful music streaming service Spotify is finding it challenging to secure the permissions to stream music in the US. Odd when you consider the labels own a slice of that service.
iTunes faces similar challenges. When it acquired music streaming service Lala.com, immediate speculation emerged claiming the company would introduce music streaming via iTunes. This hasn't happened yet.
A recent CNET report warned there may be a long wait. Like Spotify, Apple still lacks the licenses it needs to stream tracks and is now telling the majors it won't deliver any 'significant' cloud-based music offerings in the near future. The focus appears to be on Apple's television plans.
Reluctant to enable Apple to take music services into the future, fearful of its level of control and clearly unwilling to abandon the money tree that is iTunes sales, Apple and the labels sit at a strange place. Both want to explore different futures, but neither can yet figure out how to let the other go.
Music lovers meanwhile look to iTunes and the labels and ask why we haven't yet seen music made available in Apple Lossless format for music fans who like the highest quality sounds.
Along with many other music-related innovations ideas like that appear stillborn right now, as major label reluctance to change continues to imperil the relevance of the very industry they are trying to protect.

Google Music Store Talks Have 'Accelerated'
By Glenn Peoples
Google is in “accelerated” talks regarding the launch of its Google Music Store, according to the New York Post. One aspect of those talks are said to be discussions with Harry Fox Agency, which the Post sees as a sign that discussions with labels have proceeded to the point where Google can begin to plan for mechanical royalties.
In this context, Google would be speaking with Harry Fox because it is likely planning on selling digital downloads that will require it to be a licensee. Harry Fox issues mechanical licenses for music publishers, collects and distributes those mechanical royalties and distributes synchronization fees for licenses granted prior to 2002.
It would make sense for Google to offer some sort of cloud-based service in addition to a download store. Mechanical royalties would not arise from such a service.
As Billboard reported last week , Google has hired attorney Elizabeth Moody to help it secure deals with copyright owners in the music industry. “Where it’s been going recently, it’s subscription models again, but it’s streaming from the cloud,” she told Billboard. “The technology has advanced where we can do that now, and the price points have come down.”
Nielsen: Digital Album Sales Are Up
Digital song sales for the first half of the year were off very slightly (.2%) from the same period last year, indicating that the price increase from 99 cents to $1.29 on iTunes did have some negative impact on the number of tracks sold.
Meanwhile, full album sales were down as well – 11% to 154 million from 172.9 million units in the corresponding period last year. But digital album sales actually rose nearly 13% during the same period, offset by the continued decline of physical cd album sales which were down 18%. Last year album sales dropped 8.5% but digital album sales rose by 16%.
So what does all of this mean? It appears that the negative impact from the 30% price increase on iTunes was minimal. It also looks like record labels and artists may have found a formula for increasing album sales – some combination of pricing, marketing and artistry that is convincing more and more people to purchase albums rather than single songs.
Digital music now accounts for 40% of all music sales in the US, and digital albums make up 27.4% of all album sales.

Music At the Speed of Sound by Jeff Price
Not only has technology changed the way music is created, discovered, bought and shared, it also seems to have changed the artistic process. Artists used to write music and spend months touring, mailing demos and promoting the same songs before even getting the chance to have a label distribute their album. Getting distribution could take years and was almost the last thing to happen for an artist, now it’s almost the first.
In 1996, when I was running spinART Records, I went to a gig in New York at the Wetlands to see our band Lotion. Two weeks prior, spinART had released their new album “Full Isaac”. I was back in the green room and overhead the lead guitar player state he was sick of playing the songs off their just released album.
That didn’t make sense to me. “You just started touring on this album, how can you be sick of playing the songs already?”
“Jeff”, he shot back, “the album might have just came out, but we wrote these songs almost two years ago, we have been playing them forever. We’re tired of them, we want to play new stuff”.
I realized how clueless I was for not getting it. Lotion had written these songs years ago. They recorded them as demos and sent them around. They toured and played incessantly to get a label interested. After months of gigs, mailing demo tapes, perfecting their live show, learning how to play the songs live, and coming up with the best set lists, they finally got labels interested. Then came the contract and two months of subsequent negotiations before it got signed. They then went back into the recording studio to re-record the songs they had recorded over a year before. With that done, they needed to make the full CD art, get a band photo shot and write a bio. With the CD art and master, the manufacturing order could be placed, and it wold be another three weeks before the final ready to go CDs would arrive.
Finally, 18 months after first writing and performing the songs, they had their album in their hands with full art, ready to go……but there was yet more waiting.
Magazines like Spin, Option, Magnet, Alternative Press etc needed three months lead time to consider it for review. Off went the mailings to press, college radio, commercial radio, retail stores (for in-store play), each outlet needing several months of lead-time to properly “set up” the album.
Finally, almost two years after Lotion first wrote and played their songs on the album, it was released. To the world the album “Full Isaac” was new; to Lotion it was old. They were itching to move on to new material.
The very process of distribution caused a huge time lag that impacted artistic creativity. In some ways it may have stifled the band from writing and recording more music. In other ways, it might have given them the experience to be a kick-ass touring band teaching them to play and perform better by playing the same songs over and over.
All of this changed when music fans stated buying music online. Currently at TuneCore, most music is live on-line at iTunes around the world waiting to be bought within three to four hours after finishing checkout,. What used to take years for the very select few, now takes hours for anyone that wants it.
And it got me thinking, how does this impact the creative process? I would suspect that more artists make more music more regularly, that many artists no longer need to tour and play the songs from recordings from years ago. Is more music more quickly recorded and released a good thing, a bad thing or neither? How will it impact the creative process? Would the Beatles, Radiohead, Led Zepplin, Queen, U2, or any band, have become better, worse or just plain different in this model?
It all moves so quickly now, almost at the speed of sound….

Rumors are flying about an Apple and other music in the cloud services. No one knows exactly what they have in mind, but several companies have been offering their own versions of music in the cloud for months. For example, 7Digital let's users store music they've purchased for playback anywhere.
But few, if any, have the depth of experience with cloud music storage as Michael Robertson and his MP3tunes.com. Their open locker lets users stream and download their music to almost any device - PC, smartphones, set top box, game console, etc. The founder of the original MP3.com, Robertson claims 500,000 users storing hundreds of petabytes of music.

Amazon & Walmart Tie For #2 U.S. Music Retailer
iTunes Still #1 As Digital Grows
iTunes continued to be the top retailer of music with 28% of all music purchased by U.S. , up 4% since Q1 2009 according to researcher NPD. Amazon gained 3% to tie Walmart's shrinking music department for second position at 12%
Sales of digital tracks and albums accounted for 40% overall music sales in the first quarter of 2010, up 5% from Q1 2009.*
When reviewing sales of digital music separately from CDs, NPD found that iTunes’s share of the digital-music download market has remained essentially flat since Q1 2009 - growing just 1% to 70% of the digital music market last quarter. At the same time, AmazonMP3 grew by 4% to reach 12% while Amazon’s share of the CD market grew 2% to 11%.
"Amazon’s growth reflects a stronger position in both the CD and digital formats,” said Russ Crupnick, VP of NPD. “This dual-pronged approach of selling both digital music and CDs helps attract the most valuable and committed music buyer who prefers access to both formats.”
Walmart led U.S. CD purchases in Q1 2010 with a 17% share of the retail market. Best Buy followed Walmart with 14%, Amazon’s 11 percent share positioned them in third place.

Google Launches Web-Based iTunes Competitor...
Today at Google I/O, Vic Gundotra introduced Froyo, aka Android 2.2. But he also went a bit beyond Froyo. Coming soon, is a way to download an app through the Android Market over the web — and have it automatically download on your Android devices too. But that’s not all. Gundotra also showed off a new section of the Market — Music. Yes, an iTunes competitor on the web from Google.
Details are sparse at the moment, but here’s how this basically works. You go to the Market on the web, find a song you like, click the download button, and just like with apps, the song starts to download on your Android devices. So it’s iTunes, over the web, with auto-syncing. No word on who the partners are for this, what the prices will be, etc. Undoubtedly, we’ll hear more about that soon.
Google is taking aim at Apple’s dominance of online music, offering Android users the opportunity to buy music on the web and have it automatically sync to their mobile devices — as well as stream all the music on their home computers to their phones.
Google announced the new initiatives at its Google I/O developer conference in San Francisco Thursday.
Google announced it had purchased Simplify Media, one of a number of companies that makes software that lets you stream music from your home computer to mobile devices. Apple recently purchased a company called LaLa that lets you stream your own music from its central servers, once it’s identified the songs on your computer and mirrored them in the cloud. Apple is widely expected to integrate some portion of that service into iTunes, its software for syncing and buying media with mobile devices and traditional computers.
























































