Posts filed under ‘Digital Music’
Internet Radio’s Listeners Are Engaged
Targetspot has released a new whitepaper that examines the behavior of digital audio listeners with regard to discovering new music, giving and receiving musical recommendations, and music purchasing.
The paper points out that Internet radio listeners are an engaged bunch, 80% listen 1-3 hours a day. What’s more, 73% listen to more than one station a day and 46% often check out the name of the song or artist playing. 
Other indicators of the level of engagement with new music that Internet radio listeners have include:
- 69% of Internet radio listeners have decided to purchase a song as a result of hearing it on an Internet radio station.
- 42% rate songs on Internet radio stations
- 38% recommend songs, artists or stations
- 32% check out what others are listening to online
- 57% search for new music
- 28% click on ads
- 32% buy songs online
- 22% buy albums online
Pandora’s 2Q Call Impressive
Last thursday during an earnings call Pandora reported $67 million in revenues, a 117% increase over a year ago. They also reported impressive increases in listening – 1.8 billion listening hours, an increase of 125% over a year earlier. The report was the new public company’s first quarterly earnings report and it reported on earnings delivered during its fiscal Q2 – which ended in July.
This was a sturdy earnings report in the face of investment banker expectations that expected to see a report of $60 million in revenues.
The company also reported that mobile ad revenues accounted for approximately half of all ad revenues. This was good news as analysts have been focusing on Pandora’s ability to monetize an audience that is rapidly shifting to mobile device listening. During the call there were many followup questions regarding Pandora’s ability to monetize its mobile audience. Pandora CEO Joe Kennedy said that they have found that most mobile ads are part of “multi platform” ad campaigns, and that Pandora is optimistic that they will be able to leverage more and more of those dollars.
Kennedy also spoke about Pandora’s increasing ability to monetize audio at the local, regional and national levels. He said that while they were seeing audio ads from national ad campaigns, they are now expanding their base and developing audio based revenues from local and regional sources.
To a question about the revenues they are seeing from song download revenue sharing with iTunes and Amazon, Kennedy revealed that Pandora is one of the top 3 biggest link sources to iTunes. He said that is strong evidence that listeners are discovering music and purchasing it after hearing it on Pandora.
So, as the experts from RAIN: Radio and Internet Newsletter pointed out in their analysis on friday, Pandora had a strong 2Q earnings call where they managed to exceed revenue expectations and offer some excellent prospects for continued growth.
MP3tunes Scores A Victory For Cloud Locker Services
Image by ConanTheLibrarian via Flickr
This is a guest post by Angus MacDonald, General Counsel at Live365, Inc. regarding a recent court ruling that could have significant impact on the streaming audio industry.
Cloud-based music services can heave a sigh of relief. MP3tunes, the cloud locker service founded by Michael Robertson, scored a partial victory in the copyright litigation brought by EMI. In his August 22nd decision, Judge William H. Pauley III agreed with MP3tunes that the safe harbor provision of the Digital Millennium Copyright Act (DMCA) protected it against many of EMI’s infringement claims. The decision represents a significant victory for other cloud-based music services – such as Google, Amazon and Dropbox – who should have renewed confidence in operating their cloud services without a license. Though the decision sets a beneficial precedent for cloud-based music services generally, it is a mixed result for MP3tunes as the court also found both the company and Robertson liable for copyright infringement on some of EMI’s claims.
MP3tunes allows its users to store music files in personal online storage lockers and then to play those stored files from Internet-connected devices. MP3tunes also operates a second website, Sideload.com, that permits users to search for free song files on third-party websites and then “sideload” those songs, which would be saved to users’ lockers. EMI, along with fourteen record labels and music publishers, filed this lawsuit in November 2007, claiming a laundry list of violations of copyright and unfair competition laws.
Yesterday’s decision turned largely on whether MP3tunes is eligible for the DMCA’s “safe harbor” protection, which shields qualifying online service providers from copyright infringement for content uploaded (or “sideloaded”) by their users. To qualify, online services must follow the rules set forth in the DMCA, including expeditiously responding to takedown notices from copyright holders. The court found that MP3tunes – for the most part – complied with all of the DMCA rules and, therefore, was largely immunized from liability.
However, MP3tunes and Robertson did not completely avoid liability. Shortly before filing this lawsuit, EMI sent MP3tunes three takedown notices that identified specific song titles and URLs to be removed. Although MP3tunes disabled the links to those songs, thereby preventing more users from downloading them, it did not actually delete the songs from the lockers of its users who sideloaded the songs from those links. (MP3tunes claimed that it would be subject to lawsuits by its users if it removed property from users’ lockers.) The court held that MP3tunes did not do enough when it failed to remove the sideloaded songs from users’ lockers.
As for Robertson, the court ruled that Robertson was “directly liable for the songs he personally sideloaded from unauthorized sites.” This finding is somewhat confusing based on the court’s earlier statements that “there is no evidence that MP3tunes executives or employees had firsthand knowledge that websites linked on Sideload.com were unauthorized.”
There are several key-takeaways from this important decision. First, this decision provides significant legal cover for cloud-based music locker services to continue providing their storage and play-back services without obtaining a license. (When Amazon and Google launched their respective cloud services earlier this year, the record labels were “upset” and clamored that licenses were necessary.) While the decision does not specifically address the legality of MP3tunes’ music locker business model or other similar cloud-based services, it is clear that MP3tunes would have completely escaped copyright liability if it had removed the specific songs listed in EMI’s takedown notices from its users’ lockers.
Second, the ruling re-affirms the DMCA as a powerful shield against copyright holders, who claimed that the DMCA did not apply to MP3tunes. As the court observed, “the DMCA does not place the burden of investigation on the Internet service provider.”
Third, the decision appears to let MP3tunes off-the-hook for its storage process, which eliminated duplications of the exact same music files so that only one copy of a particular file would be stored on its servers and then streamed to its users. Google and Amazon took a different approach when they launched their respective services as both companies require every user to upload every song, regardless of whether other users had uploaded identical files, thereby resulting in an enormous consumption of bandwidth and storage space.
Finally, the ruling indicated that playing back songs stored in a user’s digital locker was not a “public performance” requiring a license, contrary to EMI’s contentions. This holding was a natural extension of an earlier decision – commonly referred to as the Cablevision case, which determined that a public performance license was not required for the play-back of television shows that were stored on a remote DVR at the direction of Cablevision’s subscribers.
The EMI v. MP3tunes case, however, is not over. While the decision disposes of some claims, several issues (such as damages) still will need to be tried – unless there is a settlement. The range of damages is $750 is $30,000 per work infringed, and can increase to $150,000 per infringed work if there is a finding of “willful” infringement. Because there are at least 350 works at issue, the damages could exceed $50 million dollars, though that result is highly unlikely. And, barring a settlement, one can certainly expect an appeal of this decision. But, in the meantime, the decision provides some important clarity and leverage for cloud-based storage services that may have been considering the daunting process of negotiating with labels (and other copyright holders) for the right to store and play-back their users’ lawfully-obtained digital files.
A copy of the decision is available here:
http://www.nysd.uscourts.gov/cases/show.php?db=special&id=125
Your comments are welcome below. You can reach Angus MacDonald at amacdonald@live365.com.
Will Streaming Sell More Music For eMusic?
Image via CrunchBase
eMusic has always had a slightly left of center approach to selling digital downloads. eMusic offers music consumers the opportunity to pay a monthly subscription fee for access to their song catalogs and download a certain number of songs per month – $12 bucks gets you 24 songs, $32 bucks a month allows you to download up to 73 songs a month. That’s a lot of music for a pretty good price – certainly a lot cheaper than your average iTunes song.
They used to be primarily focused on independent labels, lacking the deals to add the big four record label’s music to their catalog. But that has changed in the last couple of years and now eMusic has deals with all four. They also started selling audiobooks a few years back as well.
Now they are launching genre based Internet radio streams as well. Join the club! According to Billboard, eMusic will offer streams of music curated by eMusic’s editorial staff. There are a wide variety of offerings from punk and alt-country to electronica and “fresh jazz”. Streams are available to eMusic U.S. subscribers for free for up to ten hours of listening per month. Non-subscribers may get to try them out soon as well.
So eMusic wants to take on Pandora and Spotify? I doubt it. It sounds like eMusic – and perhaps the labels it’s partnered with as well – are noticing that streaming has a positive effect on music purchases. They’re planning to add a buy button to the player, and they certainly have the buy in of their record label partners. Though it hasn’t been quantified in a while, I’ve seen data out there that shows Pandora selling lots of songs for iTunes and Amazon to their listeners.
Song, Album Sales Are Up For 2011
2011 is turning out to be a good year for the record industry, which is seeing growth year over year sales for the first time since 2004. Digital album sales are leading the way in terms of growth – they’re up 19% over 2010. Digital track sales are up 11%. Overall music sales are up 8.5% to $821 million.
In early July Eminem‘s Recovery became the first digital album to sell more than a million units, with Adele‘s 21 not far behind. Earlier in the year the Black Eyed Peas made themselves the first to sell more than 7 million digital song downloads of I Gotta Feeling.
Eye On Spotify
Last week was a busy week for Internet radio. Clear Channel shook things up at the beginning of the week with their announcement of the coming “New iHeartRadio”, later in the week Spotify launched its US based service. While I think Spotify’s entrance here is interesting, I don’t think it will have an enormous impact on free streaming radio options.
Spotify’s on-demand service is more competitive with other highly interactive services that are looking to replace personal listening collections. Those include services like MOG, rdio and Rhapsody. Cloud based services that allow a listener to sync their own music files and stream from multiple devices are a competitor to on-demand services as well. Premium Internet radio services, such as Pandora One and Slacker’s premium ad-free option may also be affected, as I think they will compete for the same dollars.
More than 2/3′s of Internet users here in the US have paid for digital/online content already, according to The Pew Internet and American Life Project, 1/3 have paid for digital music online. That information validates the consumer subscription model. But how many different services will the consumer pay for? Probably not more than one or two.
In addition to all the streaming on-demand services competing for digital dollars, there are subscription based podcasts such as Adam Carolla, Bubba The Love Sponge and others. In fact, I think Sirius XM, with its monthly subscription fee, is ultimately competing for the same monthly listening subscription dollars.
The arrival of Spotify, long heralded by themselves, has been anticipated by industry watchers aware of their large listening share in Europe. But the general public is largely unaware of them so far. Interest in earlier Euro based services has been weak – GOOM Radio launched and quickly fizzled, and UK born Last.fm, which CBSRADIO picked up a few years back, has not been able to build a massive following.
It’s an interesting case study from the get go, one that I’m looking forward to tracking..
RIAA Performance Royalties Up 60% in 2010
Image via Wikipedia
According to 2010 year end shipment statistics reported by the RIAA, digital formats now comprise 47% of all music shipments in the US. That’s a large share, especially compared to the 9% share digital music held in 2005. Overall, the total digital music market in 2010 was $3.2 billion, a 3% increase over last year.
According to 2010 year end shipment statistics reported by the RIAA, revenue from downloaded tracks and albums increased 12% and 8.6% year over year. Sales from physical units were down 10.9%. Music video sales and ringtone sales slipped as well. Subscriptions grew in number, but revenues were down, meaning more subscribers paid less for those services.
Performance royalties are becoming a major source of revenue for the labels. Payments grew from $155 million in 2009 to $249 million in 2010 – a 60% increase in just one year. That’s on top of 55% growth the year before that. At the current pace, that number will top a billion in just a few more years…
Nielsen: Song, Album Sales Are Up
Music sales are up this year, bucking a several year annual decline. Led by strong digital downloads of albums and songs, music sales in the US are up 1.6% through May 8th. That’s according to Nielsen. Physical album sales continue to drop, but the rise in online sales is compensating for the first time. Digital album and track purchases went up 16.8 percent and 9.6 percent respectively.
A contributing factor in this would be the release of the Beatles catalog online which drove catalog album sales to a 5.4% increase. CD sales were down, but only 8% compared to double digit declines for several previous years. And strangely enough, Vinyl album sales were way up – 37% year over year, after growing 14% last year.
So what does all of this mean? Well, the future’s not as bad as it seems. Perhaps precipitous drops in revenue are a thing of the past for the record companies.
Google’s Cloud Streaming Music Service
Google launched its long rumored cloud based music service on tuesday, calling it Music Beta, a name that signals the tentative nature of the service. It’s likely a response to Amazon Cloud, which hit the market a few weeks ago. Google had been in talks with record labels, trying to strike a deal for its service, but was meeting with lots of resistance. Amazon Cloud launched without record label permissions, boldly claiming that they did not need them.
The service is similar to cloud based streaming music locker services such as MP3Tunes as well as Amazon Cloud. Listeners can upload their personal music collection from one or more computers, any folder or ITunes library; build playlists and keep them in sync; and listen to recently played music offline as well. Missing from the service at this early stage are options to purchase songs, and share music with your personal network. Users can store up to 20,000 songs for free, versus Amazon‘s service which limits free service to 1,000 songs.
Even though it’s clearly temporary, I’m not very impressed with the name Music Beta which is far more hesitant than Amazon’s bold entry with Amazon Cloud. What, they couldn’t think of anything to call it? Music Beta is a branding catastrophe, an automatic do-over later. In the meantime, if you are trying to decide where to upload your ten thousand songs, are you choosing something called Music Beta???
But then again, Google’s history with music projects has been kind of tentative. They launched their last iteration, called Google Music, in October 2009. That initiative offered search for music by band, singer, song, album or lyrics, with results that allowed a full song streamed along with a purchase opportunity and other stuff. It disappeared quietly a while back.
In 2006 Google bought radio ad software company dMarc to launch Google Audio, a platform that tried to sell audio ads on radio stations by tapping into Google’s enormous advertiser base. After a bunch of stops and starts, I think that platform is still in existence, but limping along.
So it’s game-on for cloud based streaming music platforms, with Google, Amazon and MP3Tunes in play and Apple reportedly readying their entry as well. I’m waiting for my invitation to try Music Beta, so that I can come up with the perfect name…
Radio Totally Missed The Boat With Friday
It’s Monday but I want to talk about Friday, Rebecca Black’s teen pop song and video that has had tens of millions of views. The video, as you probably heard, was produced by a place called Arc Music Factory, where Rebecca’s mother paid a couple thousand dollars for her daughter to record it. On youtube the video took off virally and suddenly everyone was talking about it.
There were a lot of snarky comments about how bad it was, particularly in the professional programming trades. It’s definitely a song that can rub you the wrong way – limited lyrics repeated over and over, annoying pop tune. But like it or not, it was the kind of thing that grabbed people’s attention, particularly kids online. They were all talking about it. My daughter, who’s 16, and her friends hated it, but they were watching it, quoting it, making fun of it on each other’s facebook pages.
By March 25th, Black’s song had more than 43 million views and had generated 37,000 digital download song sales, but had been played only 12 times on the radio. Billboard magazine said of the song’s lack of play :” While morning drive talents are discussing (and, thus, adding to) the song’s buzz, it garnered just 12 plays in its entirety in the March 16-22 tracking week among the more than 1,200 stations monitored by BDS for Hot 100 Airplay.”
Sigh.
Unfortunately, radio is so entrenched in their own methods of adding whatever songs the record labels tell them to add that they didn’t play the song that in a week captured the musical buzz of the country. You can call it what you want, say it was a bad song, say it wasn’t worthy of airplay, the bottom line is that the week it came out, that song WAS what everyone was listening to – but not on the radio.
Message: if you want to hear what everyone is listening to, don’t turn to radio.
This is all about radio’s inability to create, capture or capitalize on compelling online content. Figuring out why that’s so difficult and changing the way things are done to overcome those challenges is critical…
