Posts filed under ‘Digital Music’
Digital Song Sales and Streaming Performances Were Up in 2011
For the first time, digital music sales are larger than physical sales; accounting for 50.3% of all music purchases in 2011. Digital track sales set a new record with 1.27 billion sales in 2011; an increase of 100 million sales (8.4%) over 2010. Total digital album growth was 20% in 2011 as well, according to Nielsen Soundscan.
Adele had the top selling digital song, but Lady Gaga was the most streamed artist with more than 135 million streams while “Super Bass” by Nicki Minaj was the most streamed songs with nearly 85 million streams (according to Nielsen BDS).
Meanwhile SoundExchange reported that they distributed a record amount of money to artists during the 4th quarter of last year - $89.5 million with more than 18,000 payments, bringing year-end estimated royalty payments to $292 million (up 17 percent from the prior year). The royalties are paid by Internet radio, satellite radio and cable TV music-only channels for their use of sound recordings, and are distributed by SoundExchange to recording artists, record labels, and a non-featured artist fund.
The upward trends in both digital song and album sales and in streaming consumption and compensation are all evidence of a healthy online listening marketplace, something we can all be happy about.
eMarketer: 2012 Will Be A Big Year For Streaming Music
Cloud based streaming of music will be a key digital trend this year, according to a report by eMarketer. Rapid adoption of smartphones, tablets and other connected devices has shifted consumer expectations. Now, consumers expect consumption to be seamless across all of their connected platforms. This creates both a challenge and an opportunity for content providers and advertisers as they move to meet those expectations.
Music is a key example of content that consumers will seek to access mobilely and across multiple devices. Platforms and technologies that give listeners instant access to their music collection on their assortment of devices are perfectly suited to this challenge.
Streaming music, or cloud based music as eMarketer refers to it, will get its long term test in 2012. 
While a large part of the challenge to these online services is to keep listeners happy as they tune in on their collection of devices, that’s precisely the opportunity for streaming music as well. Music collections used to live at home, and then moved onto an ipod, but were purchased, collected and synced by the listener as a physical library. Cloud based music changes all of that, enabling listening to streaming services to replace the purchase of music. Services that allow that – from Pandora to Spotify to Amazon’s and Apple’s cloud services – are increasingly preferred by consumers.
Of course, the challenge in this major shift from purchasing music to streaming it from a service is the revenue, and the question remains whether the services can make money through subscriptions and advertising to cover licensing obligations and survive.
All of these challenges take place within a digital experience that continues to evolve – mobile commerce, targeted ads, privacy and social media are lending to an increasingly sophisticated online marketplace.
Last Year’s Biggest Story
Last year was quite a year for Internet radio and related streaming music services, and judging from some of the end of the year activity, this year should be lots of fun as well. I took the week between Christmas and New Year’s off, so here’s my just-a-little-late 2011 recap, summed up in what I think were the stories of the year.
1. Pandora went public. They raised $234.9 million in their public offering in June, selling 14.7 million shares at $16. The stock has struggled to regain that kind of price since then, but the service continues to gain listeners, ending the year with well over 100 million registered listeners.
2. Spotify launched in the US. While they would have liked to get their ducks in a row and have launched before Pandora’s public offering, Spotify did launch in July. Europe’s most popular streaming service began serving US listeners and gaining great attention with mobile apps, on-demand and programmed offerings.
3. Facebook made friends with streaming platforms. In September at its f8 developer conference, facebook announced that it would integrate third party streaming music apps into its platform, opening up the gates for those services to gain listeners as folks listen and like songs and share them with their network of friends.
4. iHeartradio revamped and relaunched. The all new iHeartradio includes all the streams offered online by Clear Channel stations as well as streaming channels. Other broadcasters are offering their programming through the platform as well – including Univision, Cumulus/Citadel/ABC, and EMF. These changes signal Clear Channel’s intention that iHeartradio become a portal to streaming broadcast stations.
5. Digital trendspotter and investment analyst Mary Meeker predicts that online audio is the next big thing.
Those are the five things that I think were the biggest stories in online radio in 2011. I think the real story is a combination of all of them – an investment friendly marketplace with increasing competition and opportunities. What do you think?..
Pandora’s Free Concert Series
Last fall when Tim Westergren keynoted the RAIN Summit in Chicago he spent time talking about how Pandora can use the information they gather from listener’s preferences to connect artists with their audiences. Based on a listener’s location, and the songs they give thumbs up or down to, Pandora can guess what other artists they might like.
Tomorrow night, Pandora will host the first in a new series of free live concerts based on just that kind of information. The concert will feature Dawes, an emerging rock band from Southern California. Pandora data shows that Portland-area listeners are 25 percent more likely to enjoy a Dawes song and 30 percent more likely to create a Dawes station on Pandora than listeners in any other U.S. city. Invitations based on a listener’s musical preferences were sent to listeners in the Portland area by email.
Pandora Founder and Chief Strategy Officer Tim Westergren said, “Connecting artists and their fans is part of our mission at Pandora and we bring some very unique capabilities to that task. Our data shows that Dawes has a sizeable potential audience in Portland and we’re excited to help bring them together.”
Westergren is a musician himself and someone who really cares about artist relations and music discovery. He often talks about the value that Pandora can offer to artists by helping them find their fans.
Taylor Goldsmith of Dawes said, “As we have traveled the country, we often hear from our listeners that they discovered us on Pandora. We are excited that, now, through this new concert series, we’ll get to connect in person.”
Sure wish I could be in Portland tomorrow night to see the power of personalized radio firsthand..
Play, Skip And Pause NPR Streams
When it comes to offering excellent diverse digital audio programming, NPR has been doing it really well for a long time. Years ago they started offering many of their weekly or daily news/talk programs as podcasts which dominated the podcast charts at ITunes. As iPhones made connected access more mobile, they began to offer the programming on demand as well. I’ve been listening to Wait, Wait Don’t Tell Me during my morning runs for years, first as a podcast and then as a stream on my iPhone.
But one of the things that NPR has done brilliantly is use their digital platform to extend their offerings beyond their typical broadcast offering. NPR Music is a wealth of excellent music, from Song of the Day to First Listen where they preview new albums, to All Songs Considered, they have created an online music platform that is diverse, deep and interesting. 
Now, NPR has created the Infinite Player to allow listeners to listen to segments of NPR’s news and talk programming in a personalizable player that will learn what a person likes and doesn’t and tailor offerings accordingly. Similar to the mechanics of Pandora‘s personalizable player, NPR’s Infinite Player offers thumbs up and down buttons, as well as options to skip and pause.
NPR hopes the Infinite Player will “deliver the type of serendipitous experience you expect from NPR, with recommendations based on your input, NPR editors’ judgment and story popularity.” It’s currently in beta, and only available in Chrome and Safari. It’s designed, according to the blog post that introduced it, to enable more distracted listening – the kind of listening that folks do while they are doing other things as well. The kind of listening that is increasing as we listen more and more to Internet radio away from our desktops..
New Study Claims Folks That Stream Buy Less Music
NARM, the National Association of Recording Merchandisers, and research firm NPD Group have released a study showing that AM and FM radio are still very relevant to consumers in discovering new music. Traditional radio was the most popular way that respondents discovered new music in this study, while online radio and web videos were very important as well.
The purpose of the study was to better understand listening, new music discovery and purchasing behaviors among music consumers. The study found – not surprisingly – that younger music consumers are more actively interested in discovering new music. They use the widest variety of sources to find it, including radio, video, streaming and movies and they are more committed to ownership of the new music.
Older music consumers are less adventurous and more satisfied with traditional means of music discovery. They have lighter listening habits, and lower interest in digital sources of music discovery.
The study write up also states that “free online radio, video sites like YouTube and Vevo, and other emerging forms of influence are more likely to cause listeners to continue to stream songs, rather than buy them.” However, it makes no claims about the impact – positive or negative – that radio has on song and album sales. Yeah, I’m thinking this statement should have come with a little bit more substantiation in the form of data..
Coldplay Gives Spotify The Cold Shoulder
Coldplay released a new album this week and didn’t license subscription services such as Spotify to play it, a strategy that is raising concern for on-demand services. There’s been a debate brewing about the wisdom of offering brand new releases through on-demand subscription services and whether that has an impact on song and album sales.
After withholding their new album Mylo Xyloto from Spotify, Coldplay sold more digital albums that ever before in the UK – something that doesn’t bode well for on-demand services like Spotify. DMN reports that Coldplay sold more than 200,000 units in the UK alone, 40% of which were digital sales. Figures from US sales were not yet available.
Services like Spotify, Rdio, Rhapsody and MOG offer on demand song plays for a monthly subscription fee. But artists have been unhappy with the payouts from these services, and some are removing their new albums, or even their entire catalog from the playlists of some streaming services.
In a story on this topic, CNET quoted artist and indie label owner Sam Rosenthal pointing out that 5000 song plays on Spotify would earn him $6.50. An artist would earn $.20 per song download on iTunes, or $1000 for the same number of song sales.
But does an on demand song play on Spotify replace a song download? That’s a good question and one that no one can really answer. In the CNET article, Jon Irwin of Rhapsody claims that rather than cannibalizing song sales, on demand services are cannibalizing piracy – that inexpensive subscription services appeal to the younger listener who used to download all their music illegally and now pay a monthly fee instead.
Unfortunately, higher song sales for Coldplay after holding back their new album from Spotify doesn’t help on demand services make that point…
Study: More Americans Are Listening On Connected Devices In Cars
Americans spend a lot of time listening to music in their cars. According to a new report by NPD Group, two out of three Americans say most of their music listening happens in cars. Most of that listening is still to radio and cds – but that appears to be changing.
flickr: andrewarchy
The report shows that 80% of Americans listened to radio in their cars and that is a two point drop from a year ago. 53% listened to cds, which is down 4 points from a year ago. Meanwhile 29% are listening on a connected device which could be a smart phone or iTouch. That number is up 9 points from a year ago. Time spent listening with those devices has increased 9% as well.
“A tipping point is approaching when vehicles and portable devices move from a tethered connection to a more integrated one,” said Russ Crupnick, senior vice president and entertainment analyst for The NPD Group. “Smart devices streaming music could end up being the largest threat to CDs and broadcast radio since the dawn of digital music.”
More evidence that consumers are shifting to connected mobile devices for music. Pandora now has 70% of their audience on those mobile devices. Last week I featured a post about Mary Meeker‘s latest presentation which is all about mobile, and the way that mobile will make online audio the next big thing.
Artists Streaming Albums Online For Free
There is a growing number of artists who are taking their music promotion directly to their fans by offering streaming access to it online. Why not – it’s a great way to give people a sample – and if they like what they hear they might buy a song, share it online, or buy a ticket to a live performance.
Singer songwriter Ryan Adams‘ latest album Ashes and Fire went on sale this week. For the past few weeks, listeners could sample songs or listen to the entire album online at NPR Music, SoundCloud, or at the Ashes and Fire website.
Some might think he’s crazy, offering his entire album upfront for all to hear. How on earth will he sell albums? In fact, I think Adams and a growing number of artists understand that the formula for selling songs has changed, and restricting access to your songs isn’t the way to get folks to buy your music. Instead, offer a listen to everyone. In fact, offer them the chance to hear your whole album! If they like it, do you think they’ll be satisfied with returning to the website every time they want to hear it? Of course not – they’ll buy it, or the songs they like from it. And maybe they’ll come see a show as well.
CBS Interactive Music Group Buys One of the Biggest Music Sites On the Web
CBS Interactive Music Group has purchased the top lyrics site on the web. Based in Vancouver, Metrolyrics is the third largest music site in the world in terms of traffic. Founded in 2002, it has a database of more than 700,000 songs and 48 million unique users per month. The site was built initially by a high school student who discovered that “song lyrics” was one of the most popular search terms on the web. In addition to its deep catalog, one of the strengths of Metrolyrics is that all of the content use is properly licensed.
This is an impressive move for CBS IMG at a time when they had appeared noticeably quiet amid a flurry of activity surrounding some of their competitors. In recent months they had lost a deal with AOL Radio which moved to Slacker, and faded into the background while Clear Channel’s Bob Pittman and his team made a big splash relaunching iHeartradio. CBS IMG services such as Radio.com and Last.fm were noticeably missing from facebook‘s recently announced integration of third party streaming services.
But coming up with the purchase of one of the top ten music sites in the US and top three globally is an impressive move. Metrolyrics is already integrated with CBS IMG’s other anchor services including Radio.com, Last.fm and mp3.com. It’s clear that they see the opportunity that this massive amount of traffic presents for their platform. Metrolyrics users that search for a certain song’s lyrics will have links to personalized Last.fm stations returned along with their results, along with recommendations for similar artists. Free mp3.com song downloads will be offered on the Metrolyrics site as well. Content developed by any Radio.com music station will be featured on the Metrolyrics page as well.
“Searching for lyrics is a core behavior of both the casual and passionate music fan,” says David Goodman, President, CBS Interactive Music Group. “MetroLyrics is the leader in the category, and has methodically built a loyal following by embracing the inherent social intentions of the music community. Our assets integrate naturally into the existing framework of MetroLyrics and vice versa. The immediate back and forth effect between the premier online properties will have overwhelming benefits to users.”
One interesting note is that Metrolyrics has a partner deal with AOL Music and claims to represent 30% of their traffic. I’m thinking that’s traffic that CBS Music would like to see going to its own services at some point in the future..
