Internet radio services such as Pandora are increasingly important platforms for new music discovery, according to a report released by NPD Group last week. The study also found that listening to Internet radio – 27% over last year, while listening to on-demand streaming music platforms is up 18%.
As Internet radio and on-demand listening has risen, the number of consumers who reported listening to music on CDs dropped 16 percent, while the music audience for AM/FM radio fell 4 percent, and the number of consumers listening to digital downloads declined 2 percent.
“Although AM/FM radio remains America’s favorite music-listening choice, the basket of Internet radio and streaming services that are available today have, on the whole, replaced CDs for second place,” said Russ Crupnick, senior vice president of industry analysis at NPD. “We expect this pattern to continue, as consumers become more comfortable with ownership defined as a playlist, rather than as a physical CD or digital file.”
96 million Internet users listened to Internet radio or an on-demand service in the past three months. In an interesting chart of usage rates of Pandora listeners to other music sources such as AM/FM, CDs, and digital music files on computers, the report shows that Pandora listeners listen less to all of those over time, but continue to listen to AM/FM more than the others.
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…
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:
Your comments are welcome below. You can reach Angus MacDonald at email@example.com.
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.
Adam Carolla has broken the record for most downloaded podcast, according to Guinness World Records, receiving 59,574,843 unique downloads from March 2009 to March 16, 2011. The previous record was held by the Ricky Gervais Show.
Carolla launched a pr campaign to boost awareness that he was closing in on the record, urging listeners and followers to download his podcasts so he could beat Gervais. “Be a part of history, and help us bring the World Record for Most Downloaded Podcast over to America—where it belongs.” The broken record was announced during Carolla’s live appearance on the Jimmy Kimmel Show.
The most recent Arbitron/Edison Infinite Dial Study reported that 31 million Americans have listened to a podcast in the past month. That translates to 12% of the 12+ population, a share which has not increased in the last year.
While it’s not growing at the rapid pace that streaming audio is, podcasting seems to be holding its own as an audio delivery platform that is uniquely suited to Carolla’s style – personality driven programming. Carolla’s story is a great one – from out of a job at CBSRadio in LA, to building his own show, to podcast of the year, to Guinness World Record for most downloaded podcast.
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…
CBS RADIO President and CEO Dan Mason is excited about broadcasting’s digital future. In a keynote interview at RAIN Summit West last week, Mason shared his thoughts on radio’s future. During the 30 minute “fireside chat” with RAIN Publisher Kurt Hanson, Mason outlined his perspective that digital is now an essential component for success for broadcasters.
Broadcasters should embrace personalization and explore sidechannels, said Mason. He mentioned Phillies Radio as an example of a sidechannel (HD, not streaming) that CBS RADIO is pleased with. Mason touched upon some other investments that CBS RADIO has made and is planning. He encouraged the audience to find him on Last.fm, where he listens to the Yardbirds, among other things.
He also said that plans are in the works to relaunch mp3.com in May. That’s big news – mp3.com was a free music download site that got into legal trouble with the record labels over licensing. Its history includes a huge IPO and eventual sale to record label Vivendi Universal, where it eventually died. CNET picked up the url, but it’s been inactive for several years. Now Mason says CBS RADIO will relaunch the site next month. A look at the site this morning shows the structure of a platform that will offer downloads, interact with Last.fm, and tie in videos, podcasts, entertainment news and more. (In an ironic sidenote, mp3.com’s original founder, Michael Robertson, also appeared at RAIN Summit later in the day on a panel discussion of The Future of Music.)
Later last week, Mason sent a memo to CBSRADIO employees that echoed the digital excitement he expressed at RAIN Summit West, commenting “never have I been more certain as to what an incredible opportunity we have before us.” and “the digital side of the business is just as important as our over-the-air operations.”
There were many impressive moments at RAIN Summit West, it was an event that in my opinion really exemplified the positive place that Internet radio is occupying. Listening to CBSRADIO President and CEO Dan Mason talk about the digital opportunity for broadcasters as a critical element to future success was one of those.
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.”
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…
Nielsen Entertainment recently expanded its coverage of music streaming measurement, adding several key streaming platforms to its streaming panel. Newly added services include Vevo, Slacker, MOG, Thumbplay, Akoo, and Cricket. Data from these services, and from the existing reporting panel consisting of AOL, Napster, Rhapsody, Verizon Wireless and Yahoo! will appear in Nielsen’s BDS reports.
Nielsen Entertainment produces reports on lots of activity related to the music industry – Nielsen BDS monitors music played on radio stations in the US, Canada, Europe and Mexico. Nielsen SoundScan reports on physical and digital song sales. They provide lots of insight into things like what songs people listen to and buy, which it sells to radio programmers, record companies, etc. Sources like Billboard produce their reports from this data.
During the first six weeks of 2011, Nielsen tracked more than 1.1 billion music streams through online music streaming services. More than 165 million streams per week are captured and nearly 26 million weekly song downloads are tracked. That is a lot of streaming music activity.
According to their press release, Nielsen is the only company able to provide weekly trending information on streaming activity, as well as a more granular understanding of from where consumers stream music. Nielsen also provides insights on the type of streams; on-demand streams, those songs/videos that consumers choose to listen to, versus programmed streams, or when songs are not chosen by the consumer.
As music streaming activity and digital downloads increase while physical song sales sink, streaming’s importance is growing as an important measure of who is listening to what. I expect we’ll see the list of streaming music platforms in their panel to continue to grow.
Digital music sales grew globally by 6 percent last year to $4.6Billion. That number accounts for 29% of record company revenues around the globe. According to a new report by IFPI, consumer choice for accessing music via digital channels continued to grow in 2010. It’s recently released Digital Music Study makes a very clear case that digital music piracy has stifled and eroded the music industry.
Case studies included in the presentation cite examples such as in France, where government regulation, awareness campaigns, and even subsidized legal downloads have made headway in lowering the amount of piracy and stemmed the loss of revenues, and in Spain where a once flourishing and highly creative music scene has gone the other way, with nearly half the residents using illegal download sites to obtain music and fewer and fewer new artists are emerging.
The study calls for government action in the form of ISP regulation, consumer awareness campaigns and content protection. It’s an interesting read – certainly worthwhile for anyone hoping to do business in the online music marketplace. You can access the summary and download the study here.