It’s press release week – err, I mean CES week – in our industry this week, a time when lots of folks gather in Vegas for the Consumer Electronics Show, and announce innovative products and projects. I don’t mean to belittle the announcements, some of which sound very promising. But it’s kind of a shame that it all has to be condensed into one week.
In any event, two announcements in particular caught my attention yesterday. First, an announcement by AdsWizz and Aha by Harman, who have partnered to deliver ads. Aha has a strong foothold in the automotive market – in some 50 car models by 14 manufacturers. The AdsWizz piece enables audience targeting based not only on the usual age/gender demographics, but also including location, make and model of the car.
Pandora‘s announcement yesterday concerned similar innovations – rolling out in-car audio advertising that enables advertisers to target listeners who are listening in their cars. Ford, BP, State Farm and Taco Bell are national brands that are targeting Pandora listeners in their cars. More than 4 million unique users have activated Pandora through a native integration in a car.
Streaming audio services continue to refine their ability to deliver ads to consumers with precision, enhancing advertiser impressions by doing so. Increased targetability creates increased value for the advertiser by boosting an ad’s return on investment, and that’s a great place for our industry to focus innovative energy..
More than 70 million folks in the US listen to music on their smartphones, says eMarketer. That number represents about 22% of smartphone users, and includes people who stream from their smartphones or download to their phones and listen at least once a month. By next year more than 25% of the US population will be listening to music with their smartphones.
Advertisers are missing the boat though, according to a blog post based on a new report for sale from Forrester Research. That report by Anthony Mullen says that downloading is a transitional stage for the music and audio industry and that consumers’ personal libraries of mp3s will dwindle as CDs, tapes, and vinyl did before them.” The streaming audio audience is “mushrooming”, with Google, Twitter and iTunes all jumping in in 2013. Meanwhile, in-stream audio advertising is showing signs of going mainstream as well – gaining spots in more and more standard ad campaigns. Streaming audio ads are data-rich, meaning that they enable great targeting and tracking opportunities, but it’s a market that remains under-invested in by advertisers.
In-stream audio advertising offers a great opportunity for advertisers, but it deserves quality creative that recognizes its unique attributes. Educating the ad community on both the benefits of the streaming audio audience, as well as the need for strategies that recognize its unique targeting and ROI abilities is the job at hand for streaming services, and reports like these two from Forrester and eMarketer are good things to have in your toolkit.
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.
Fred Wilson apparently thinks it’s a good year to invest in streaming audio and has announced investments in two companies this week as an indication of this. His company Union Square Ventures just is heading up an $8 million funding round for digital audio advertising company TargetSpot. Other investors in that group include CBSRadio, Bain Capital Ventures and Milestone Venture Partners. It’s not Union Square‘s first money in Targetspot, nor for CBSRadio or Bain.
Wilson’s Union Square Ventures also announced an investment in Berlin based Soundcloud, which bills itself as the YouTube for audio. According to Soundcloud founder Alexander Lyung, the site had a million registered users last spring and 2.6 million by the end of the year, so it’s growing pretty fast.
“There has not been a wildly popular open audio sharing platform with simple APIs like YouTube and Vimeo in video, Facebook and Flickr in photos, Blogger and WordPress in long form text, and Twitter in short form text/link sharing.” says Wilson in his blog. “We think SoundCloud is on its way to becoming that wildly popular open platform for audio expression and sharing on the web and mobile devices. A few months ago, Union Square Ventures… invested in SoundCloud and I have joined the Board.”
Wilson is a guy that likes his music. He puts songs he likes on his daily blog, along with quotes and pictures. He also has a radio station you can stream, fredwilson.fm . Mostly, I think he’s a guy that thinks a lot about music and the Internet, and right now he’s thinking it’s a good investment…
70 million Americans have listened to or watched a downloaded podcast, according to a recently updated report by Edison Research: The Current State of Podcasting. That’s 23% of the population, a number that’s increased just one percent from a year ago.
Awareness of podcasting is sitting steady at 45%, up just slightly from last year’s 43%. That’s not the kind of growth that inspires hope that the medium will spread like wildfire. Podcast listening and/or viewing just hasn’t gone mobile – 71% of people who listen to podcasts do so on their desktop and that number has actually increased from last year, according to the study.
So while cell phone usage has soared, podcasting usage has gotten stuck on the desktop, which is one possible explanation for the stagnant growth of the audience. Smartphone streaming has made downloading audio files for listening on mobile phones unnecessary.
It looks like streaming is taking a bite out of podcasting at this point. Online radio’s audience is 70 million monthly (Arbitron/Edison’s Infinite Dial Study).
Podcast consumers tend to be early adopters and social networkers, according to the study. They tend to respond to sponsor ads – 71% said they had visited a website because of an ad they had seen or heard in a podcast.
With wifi and 3G, and soon 4G access more readily available to consumers who want to stream and listen on demand, it’s looking more and more like podcasting is an interim audio technology that has limited long term audience growth because it’s replaceable by audio streaming.