Milestone: For music giant, streaming passes downloads

While discussing their Q1 2015 earnings report, Warner Music's CEO noted that streaming revenues passed digital downloads.  If you combine streaming with other rights/licensing, it suggests that the music giant is making more from music licensing than music sales.

Source:  Warner Music says streaming passed downloads for first time, telecoms.com

Social Media Week Infographic: Social Media and Music

From Social Sound Bytes, Churchm.ag

Music licensing @CES2014

I attended what turned into a fun session on music licensing policy at CES in Las Vegas.  The paneL included a music industry rep from RIAA, the head of a public interest group, and two former musicians.

It started off on focus - acknowledging the mess that is music licensing in the US today, and some ideas for improvement.  The RIAA rep, Steven Marks, said one problem was that there was no comprehensive database of songs and performances, which could make it difficult to know whether a license was needed when using a recording, and who to contact to get it. 

[Which reminded me of a recent story that one of the nastiest of the licensers (for 'Happy Birthday to You') may actually have never filed for a legal copyright for the piece, and thus may have been illegally collecting licensing fees for decades.]

But he's right that having a central listing of licensed works would be helpful - particularly if they verify that pre-1976 works were actually copyrighted.  (Post- 1976 creations are automatically granted copyrights). He also suggested creating a basic licensing center for 'small' users.  Making things easier would arguably help those who want to be legal to do so.

Mark Weinberg, acting Co-President of Public Knowledge - a public interest group promoting wider diffusion of knowledge and content, concurred that making it easier for music users to know what licenses may or may not be needed, and making them easier to obtain would be useful - but was concerned that the industry would try to limit fair use exemptions and collect fees from those who shouldn't have to pay.  He also expressed a desire to see the industry become more flexible in dealing with new media and applications, to support innovations and the exploration of potential new music outlets.  He noted that there was a wide range of music licensing strategies (and different rates) being applied to the wide variety of digital music distribution options - and that applying a single consistent standard, regardless of what technological backend was used for delivery, would be helpful.

Next came Dave Allen, former Gang of Four member.  He made a strong point about the changes in the music industry.  Vastly more listened to radio or streaming sources today. He noted that the prime source for music with today's youth is YouTube (the RIAA guy agreed), but since most of the music content there is in the form of promotional videos, they don't pay royalties.  That led to a claim that the record industry is making deals with streamers that bypass licensing fees and cheat musicians, joined by Hank Shocklee (founder of Public Enemy), and prompting predictable objections from Steve Marks (Chief, Digital Business and General Counsel for RIAA).  The discussion of that generated a great deal of fun back and forth between the artists on the panel and the RIAA rep.

But the key point, which Dave Allen came back to later when things calmed down, was that digital and streaming music sources had the potential to scale much higher than the old record industry, again something the RIAA rep and other panel members acknowledged. Marks, from RIAA, noted that the scale of the physical recordings industry was always fairly small - people, on average, bought only 2-3 records a year, and acknowledged that the potential of digital to be significantly higher. Someone made the point that in the heyday of the old records industry, hit records were sales in the hundreds of thousands in the U.S.  Today, Spotify's paid subscribership in the U.S. is around 6 million, and Beyonce's recent digital album sales were in the millions in the first month alone. Allen suggested the digital market could easily explode - if the right model and pricing develops.

One problem delaying the scale-up is the fact that today's rights fee scales are derived from the payment schedule for vinyl records and that scale of sales.  Revising rights fees (lower) to the higher scale levels could encourage more listening, scale up music use, and benefit artists even more than the current system.  Of course, the RIAA guy wasn't about to support reducing licensing fees, but the head of Public Knowledge encouraged the idea, as a way of  encouraging exploration and development of new delivery options. 

I've been thinking about licensing fees and pricing strategies a lot lately (particularly focused on the bundling vs. a la carte debate on cable), and had a couple of proposals to offer - but the session ran out of time.  I wanted to support the notion of thinking of rescaling rights fees to the potential scale of digital systems - while it might initially reduce short-term revenue generation, it would accelerate the growth of those systems and in the long term had the potential in the long term to generate much higher revenues for the industry and the artists.  The other idea I wanted to raise was the notion of exploiting versioning.

Versioning is a strategy in marketing information goods where different versions of the product are offered at different prices, or to different market segments.  Versioning, based on sound quality, seems to have a natural potential for music.  It's already in regular use - Spotify offers free access to lower-quality streams, and lets subscribers also upgrade their subscriptions to higher-quality.  However, the current licensing system applies the same fees for all quality versions.  If the licensing fee rate schedules would similarly differentiate between quality versions, this could address many of the Public Knowledge's concerns about providing a mechanism for exploration and development of new music distribution systems.  It could also facilitate a better music promotion and sampling system - letting people to listen to low-rez versions of whole songs rather than the current method of allowing very short snippets from the start of songs.

Certainly, all the panelists, and most everyone in the audience, agreed that the current music rights and licensing scheme is massively screwed up, and the inevitable "strong debates" over major record labels handling of rights and fee reimbursements to artists just acts to delay any efforts towards solutions.  There are very reasonable proposals out there, some expressed by panelists, and multiple others being offered by academics, professionals, and policy types (including my own not-so-humble ideas).  It's time, as the panel title suggests, to "Stop Fighting and Fix It."

Sources -

Video of the Stop Fighting and Fix It music licensing session at the CEA Innovative Policy Summit, CES2014, can be found here.

Radio - Music try revenue-sharing

As older traditional business models are having trouble with a significantly larger and more competitive media environment, firms are seeking new options for revenues.

In a notable turn-around from intense competition with one another for shrinking revenues, mega-label Warner Music Group and radio mega-group owner Clear Channel for revenue-sharing and cross-promotion.  (It doesn't hurt that Clear Channel is also heavily involved in online radio and concert promotion).  In a nutshell, WMG gets a cut from all of Clear Channel's platforms, dedicated digital channels, and guaranteed promotion of its artists.  Clear Channel, in return, gets greater access to WMG artists and content, and (probably, but unstated) relief from emerging performance rights concerns

"WMG is showing the way for what a true 21st century music company can be – a music company built for the digital age,” Clear Channel CEO Bob Pittman said in a statement. “The team at WMG understands that old formulas don’t work as well as they must in the digital age, and that we have to think differently to build a robust future for the music industry. Today, music companies and media and entertainment companies need to be more supportive of each other’s needs. This agreement begins that new era, and will help both companies thrive in the digital world.”

The move reflects the collapse of the old market barriers, and would seem to enable better coordination and collaboration in music promotion, distribution, and sales.  There may even be some scale and scope efficiencies to discover.

Source -  Clear Channel inks royalty deal with Warner Music Group,  Inside Radio

More Music News

The latest NPD Group Annual Music Study is revealing big gains for Amazon's online music unit, with its share of the market up about 50% in the last year, to 22% of the market.  Apple's iTunes store still dominates the market with 63% of sales, but is finding it's share falling in the face of increased competition.  Analysts attribute much of Amazon's gain to the introduction of its Fire tablets (which offers an easy interface for users), and its aggressive pricing strategy (with special limited-time free, or heavily discounted, bargains).  I'd add Amazon's DRM-free approach (which Apple's had to adopt), it's Cloud streaming apps, and it's recent offer of free digital versions of CDs that had been bought through Amazon.  They've been making some smart moves at Amazon.

In other news, Spotify recently announced plans to expand into Asia, Latin America, and Northern Europe - a move that will advance the current global shift to digital music (and licensing for streaming services as a major revenue source for music labels).  Spotify currently operates in 28 countries, and claims 24 million "active" users (those using it in the last 30 days) and 6 million paying subscribers for its upgraded services.

"We're taking our first steps in Latin America with Mexico, and Asia with Hong Kong, Malaysia, and Singapore," the company said on its blog page on Tuesday. "Plus we're thrilled to make new friends in Estonia, Latvia, Lithuania and Iceland."

Spotify is currently trailing Pandora in reach and use.  Pandora currently claims around 70 million users.  Both are taking advantage of the booming smartphone market, and research that indicates that half of smartphone users listen to music on their devices.

Sources -  Amazon gains against Apple's iTunes in music downloads,  CEN-Web
Music streamer Spotify to expand into Asia, Latam, North Europe,  CEN-Web

Twitter Adds Music

Last week, Twitter announced a new stand-alone music streaming app, called #music.  The iPhone app will recommend and stream songs based on who users follow, as well as artists' recommendations.

 In a blog post, Twitter's engineers said the new service "uses Twitter activity, including Tweets and engagement, to detect and surface the most popular tracks and emerging artists... It also brings artists' music-related Twitter activity front and center: go to their profiles to see which music artists they follow and listen to songs by those artists."

The actual songs will come from subscription streamers Rdio and Spotify, as well as Apple's iTunes store.   The service is currently available in the U.S., Canada, the U.K, Ireland, Australia, and New Zealand.  No release date was provided for a native Android version of the app.

#music comes online four months after the launch of Twitter's video-sharing app, Vine, and is seen as part of Twitter's goal of becoming a multimedia hub for younger users.

Source -  Twitter launches music app to deepen multimedia offering, TheUSDaily

Milepost: Global Music Sales Actually Rise

On the heels of the news of iTunes' sales of songs surpassing 25 billion (6 Feb, 2013), comes a report that total global music sales actually increased in 2012 - the first increase since 1999.

  Global music industry trade group IFPI released their annual report earlier this week, showing a very modest increase in total sales revenues of 0.3%, to US$16.5 billion.  While the increase isn't huge, it is the first year-to-year gain seen in the 21st century.  In addition, while the industry has long blamed their decline on digital music, the latest report from the IFPI touts the growing contribution of digital music sector as the driving force behind the (hoped-for) recovery of the music industry.

“Digital is saving music,” said Edgar Berger, Sony Music’s international chief.

  The report puts annual growth of the digital music sector at 9 %, and being driven by a variety of revenue streams - sales of downloads, licensing to both subscription-based and advertising-based online streaming services, music video downloads and streaming.  In addition, there's been a huge increase in the expansion of digital music markets around the world.  While only 23 nations had viable (and legal) digital music marketplaces at the start of 2011, the end of 2012 saw more than a 100 nations where major digital music outlets operated.  Some quick supporting stats -

• Digital sources now account for more than a third of all global music sales.  Downloads currently account for 70% of the total.
• Licensed music streaming services saw a 44% increase in the number of subscribers.  The success of subscription music streaming services has opened up licensing fees as a major new revenue source for music labels.
• Social media is becoming an important channel for music promotion and fan engagement, as well as digital sales.
• Digital sources account for more than half of all revenues in a number of markets, including the U.S., India, Norway, and Sweden.
• Acceptance and use of digital music sources is expanding globally.  More than 100 countries have legal markets for digital music, and surveys suggest more than 60% of all Internet users have used a music subscription service in the previous six months - a number than jumps to 80% among young adults (16-24 age group).
• iTunes song sales generate about a quarter of all global music industry sales ($4.3 billion in sales generating $3.4 billion in licensing to music labels for 2012).

  The IFPI argues that this year's results, and the continuing expansion of digital music into markets around the globe, signal the return of the industry.  The report goes so far as to argue that digital music will be a major driver of the digital economy.

  It may be a bit early for for a victory lap.  The global total sales are still well below the industry's sales peak of $29 billion, as well as being well below revenues for other forms of media and digital gaming.  Still, it is a positive sign for an industry that's been having hard times.  I'm also glad to see the belated embrace of digital music and the range of new revenue streams it's been creating.

Sources -   History Shadows an Upbeat Music Sales Forecast, New York Times
IFPI publishes Digital Music Report 2013,  IFPI press release
Wednesday Apple Rumors: iTunes Music Revenue Up 10% in 2012,  Investorplace.com
IFPI Digital Music Report 2013, study report
The Digital Music Consumer - A Global Perspective, February 2013, slides for research report from Ipsos MediaCT

Digital Streaming Changing Music Listening Habits

A new study by market researchers NPD Group found that half of US internet users listened to an online radio station or from an online on-demand service in the last three months. A bit more than a third (37%) listened online through a streaming service (Pandora or Internet radio). a bit less (36%) listened via a pure on-demand service.

  The shifts in listening patterns are becoming apparent - over the last year, Internet radio listening is up 27%, audiences for on-demand music streams is up 18%, listening to digital downloads is down 2%, listening to terrestrial radio is down 4%, and listening to CD's is down 16%.

“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.”

The study also looked at the changing music listening habits of Pandora users. Compared to 2009 levels, the number of Pandora users listening to terrestrial radio is down 10%, listening to digital downloads on personal media devices is down 21%, and listening to CDs (on devices other than PCs) has fallen 21%.  Similar changes were found for listeners of leading on-demand music streamers.
  Still, the biggest change in listening is the result that 34% of Pandora listeners are listening in their cars over the car's audio system (directly, or indirectly through a link to a mobile connected device).
  As for those concerned that the shift to online music listening might tend to stifle interest in new music, the study found that 64% of online music service listeners reported that they had rediscovered old favorites and music, and 51% reported learning about new music.

“AM/FM radio has traditionally played a significant role in helping consumers learn about new music from well known artists, as well as finding new ones; however, Pandora and other music services are an increasingly important part of the music-discovery process.”

  Given that last result, the music industry might want to rethink their push in Congress to place significantly higher royalty fees on online music services - between the push for more royalties from radio and online, they may just price music listening out of regular use.

Source  -  The NPD Group: Internet Radio and On-Demand Music Services Rise, Putting Pressure on Traditional Forms of Music Listening, press release from The NPD Group

Billboard Incorporates More Digital Info

Earlier this year, Billboard started including data on digital sales and information about a song's online streaming in its Hot 100 singles charts (all genres).  Originally, Billboard relied primarily on radio station air play to measure a song's popularity - and for music genre charts like Country-Western, Latin, and Hip-Hop, it limited its data to radio stations whose exclusive program focus was that genre.  Thus, the genre charts failed to incorporate digital plays and sales, or the success that cross-over artists achieved in other genres.
  Last week, Billboard announced the creation of a new chart for R&B music, to better distinguish that genre from Hip-Hop.  More importantly, though, Billboard changing how it calculated its top singles charts for various genres.  First, it will expand the number of stations included in determining airplay counts.  Then, it will use the hybrid formula developed for the Hot 100 chart to reflect digital online sales of singles, and airplay counts from major streaming services.  This should provide a more inclusive basis for measuring artist and song popularity.
  The recording industry welcomed the change.  Jim Donio, president of the National Association of Recording Merchandisers (NARM), released the following statement.

"With digital downloads hitting record highs and streaming services such as Spotify, Muve, Slacker, Rhapsody, Rdio, MOG, Sony Music Unlimited and Xbox Music continuing to grow, the impact of digital music is growing more and more pronounced... We are happy to see that Billboard recognizes this trend and is taking steps to ensure that its charts will continue to serve as the industry standard well into the future."

 Source - Billboard shakes up charts to include digital, streaming data, CEN Audio blog

Royalty Rates for Internet Radio

For now, copyright royalty fees for "Internet radio" in the U.S. are determined by the Copyright Royalty Tribunal (CRT), which is supposed to use the "willing buyer, willing seller" standard in determining the appropriate fee structure. I'm sure that the CRT talked to the "willing sellers" - the music industry.  But who represented the supposedly "willing buyers" those who stream music over the Internet?  (The music license for Internet is compulsory - the only "willing" choice is to pay or not stream music)

   When the current fee structure was announced last April, the music industry was the clear winner.  Not only were rates set significantly higher for "Internet Radio" than for any other medium, but it significantly expanded the definition of Internet "radio."  Internet radio, from a copyright royalty perspective, was expanded from covering streaming broadcast services, to cover interactive streaming services (such as Pandora), music that was bundled with other services (music blogs, sharing through social media), and streaming from Cloud storage systems.  The last seems particularly egregious, as now individuals who put music they've purchased already and stored in one of the myriad Cloud-based storage services will be asked to pay royalty fees for music they already own.  As I noted in April's post on this issue, the fees are likely to increase the price of music streaming and Cloud services 10-25%, and kill or delay implementation of many innovative online services.

  Concerns about the reasonableness of the CRT's last rates findings have led to the introduction of the Internet Radio Fairness Act in Congress.  The Act would direct the CRT to apply the same rate-setting standard for "Internet Radio" that it applies to setting rates for satellite radio and older media.  That standard would require the Copyright Royalty Tribunal to consider the impacts of proposed rates - the promotional value of playing the music, the impact on the music industry, and the impact on innovation and growth in the services playing music.
  To give you an idea about the difference in the two standards - streaming music service Pandora is required to pay a minimum of 25% of its annual revenues in royalties, while satellite radio service Sirius pays 8% of its total annual revenues.  Cable music channels pay around 15%.

"If Pandora was not burdened with these punitive royalties, the company could introduce music services that could grow the industry and grow royalties," said John Villasenor, a senior fellow at the Brookings Institution and a professor of electrical engineering at UCLA. "This will mean more music choices for consumers, a thriving Internet radio industry and more royalties for musicians."

  The music industry trotted out its usual over-the-top statement.  The executive director of music lobbying group MusicFirst, trotted out the standard strawmen -

“There’s nothing fair about pampering Pandora, with its $1.8 billion market cap, at the expense of music creators,” Mr. Kalo said in a statement. “Going from a fair market, ‘willing buyer, willing seller,’ rate to a government-mandated subsidy will break the backs of artists, while Pandora executives pad their pockets.”

  A different rate structure would help a lot of online music services, not only Pandora.  As for who represents the greedy big corporations, I'll note that Pandora has yet to turn an annual profit and pays out about half of its revenues in various rights and fees that go back to the music industry.  A music industry whose labels are so concerned about its artists that it typically pays them 10-25%, while retaining 30-50%.  (And the artist/label split increases with digital distribution).

  The music labels' rear-guard position appears to seek to maximize current label profits at the expense of promoting development of new online markets.  No wonder artists and others are exploring other business models - most of which give the artists greater control and a bigger cut of revenues.

Source - Proposed Bill Could Change Royalty Rates for Internet Radio,  NY Times
House bill would cut fees for Pandora, other Internet radio services,  LA Times
Also, 
Pandora - Can You Make Money In Online Radio?  Seeking Alpha blog

Update - John Villasenor send me a link to his research paper on the subject - you can find it here.

Radio Evolution Conference Proceedings

Last year, an academic conference was held in Portugal with the theme "Radio Evolution".  The conference proceedings, comprising 47 research papers in 7 thematic areas, is now being made available online.
  You can access and download individual papers, as well as the entire proceedings, here -

Radio Evolution: 2011 ECREA Conference Proceedings

Pandora booms

Music streaming service Pandora announced a 48% surge in active listeners, indicating that the service was reaching some 56 million listeners in August.  The even better news was the upsurge in how advertisers viewed Pandora as an advertising platform, and the increased ad revenues that will follow.

“Advertisers are loving Pandora,” came a headline in a report by Wells Fargo’s Marci Ryvicker Friday...  Pandora is viewed as a “very efficient local buy for large, national advertisers.”

In a comment, a professor at NYU indicated that "Puma's effort on the (Pandora) workout stations last spring were a big hit with my students who recognized the excellent fit between target and product."

Source - Pandora Attracts More Listeners, Advertisers,   MediaDailyNews

Watching how the music spreads

British indie pop band The xx has partnered with Microsoft to track and visualize how music from its new album was shared online.

  The band established a site for its recent album, Coexist, that allows visitors to not only stream the album, but explicitly allows the stream to be shared via Facebook, Twitter, and email.  Each shared stream is being tracked, and is visualized on a map that displays how the streams are shared by listeners.
  The pic to the side is a screen capture of the animated map, which continues to track sharing since the album was first made available to a single fan on September 3rd, 2012.
  It also gives listeners something to watch and play with as they listen to the album.

  This approach could bring a new dimension to music marketing.

Sources -  Stunning Visualization Shows How The xx's New Album Went Viral, Mashable Entertainment
The xx's Coexist streaming site

Apple joins Music Streaming market

The Wall Street Journal is reporting that Apple is planning to offer a digital music streaming service to compete with Pandora and other online streaming services.  The service is said to include customized listening and on-demand options.
  At this point, Apple is still negotiating terms for digital music streaming rights directly with music publishers.  Pandora recently broke off negotiations with publishers, falling back on the default licensing rates determined by the Feds.  Apple seems to be counting on its long relationships with publishers established with the introduction and growth of iTunes music market to negotiate a wider set of streaming rights that could allow Apple's proposed service more options in terms of how listeners could interact with the service and use the music.  Such a move would likely increase royalties payments, but being able to offer a wider range of listening options than other streamers could also give Apple a competitive advantage - something that a late entrant into the market needs.
  The WSJ article was unclear on what kind of business model Apple hopes to use, or even if the service was developed primarily as a separate profit center, or as a means to expand Apple-branded apps for their mobile devices.  What is clear is that the digital audio streaming market is expanding rapidly - Pandora has 150 million registered users, Spotify reports 33+ million users, and Clear Channel's iHeartRadio pulls in some 45 million listeners a month.  If Apple does develop a pre-installed audio streaming app (especially as part of an OS upgrade), it will very quickly have access to millions of potential listeners - and if it offers better, or more, listening options, Apple could quickly become a major player in this growing market.

Source -  Apple Plans Digital Radio Service,  Online Media Daily

Good News, Bad News for Music Industry

According to a recent Nielsen survey, file sharing (both legal and illegal) is not a primary source for either discovering or acquiring new music.  That's good news for the music industry, in the sense that it suggests that file-sharing and piracy are not widespread and seem to have limited impact on music buying decisions..  But that's also bad news (and should be a wake-up call) for an industry that has blamed file-sharing and piracy for industry declines over the last couple of decades.  It also undercuts industry claims of rampant piracy used to support increasingly intrusive anti-copying legislative efforts.
  Some of the other results of the recent Nielsen Music 360 Study confirm that the U.S. music market is in a major transition.

• Respondents indicated that radio remained the top source for discovering new music (43%), followed by friends and relatives (13%) and music videos on YouTube (8%)
• The most cited influences for purchasing music were recommendations from friends (57%), music blogs and chat rooms (27%)
• More people considered digital albums and tracks a good value (62% for albums, 61% for individual tracks), than considered physical CDs a good value (56%)
• More than half (56%) of smartphone owners had music player apps on their devices - 44% have radio apps, and 28% had music store apps.
• About a third of younger consumers will purchase a digital track or album within a week of its release

All of these results reflect the growing role of digital in the music industry.  While traditional sources still remain dominant, digital sources are gaining prominence, particularly in consumer listening devices, and consumers increasingly value the flexibility of digital.  The music industry needs to recognize and embrace the digital sector, and perhaps develop and more fully exploit the opportunities and options that the digital network economy presents.
  On the other hand, other studies suggest that digital revenues have not fully replaced the decline in physical delivery forms.  In a sense, they don't need to, as the cost of digital is significantly less than the cost of those physical formats.  Still, the industry tends to blame digital markets and piracy for their declining revenue base.  Two other findings from the Nielsen Music 360 Study suggest that there are more likely factors contributing to the decline in revenues.

• Large numbers of consumers indicate that the recession has reduced their spending on music "to a large degree) - 40% of those 55 or older, 38% of those 45-54, and 26% of the 25-34 age group
• Consumer's spending on media entertainment has splintered as new options emerge.  The Nielsen study found that monthly spending averaged $83.30 on TV packages, $36.60 on video games, and only $22.70 for music. 

That last finding reflects the fact that consumers have alternatives for their entertainment dollars (that there are strong substitutes).  In addition, a lot of those alternatives, TV packages in particular, have seen price increases (combined with increased content offerings) over the last 20 years, and are considered more of a necessity than new music, whose purchases can be delayed if necessary.  In recessions, or other times when incomes are static and the state of the economy is uncertain, music purchasing are likely to be among the hardest hit.  In other words, the growth of competitive substitutes and a weak economy may well be more significant factors contributing to the decline in music industry revenues.  

Source -  Friends' tips, radio still drive musical choices,  USAToday

Senators concerned over Universal-EMI merger

A bipartisan group of Senators on the Anti-trust subcommittee have asked the FTC to examine the proposed merger between Universal Music, a division of Vivendi, and British-based EMI (now owned by Citigroup, which took over debt of around $4 billion).  Last November, Citigroup made deals to sell the music portion of EMI to Universal Music for $1.9 billion, and the music publishing arm to Sony/ATV for $2.2 billion.
  Prior to the sale/merger, EMI was ranked as #4 of the "Big Four" companies that dominate the retail music industry, and Universal Music Group was ranked #1.  The combination of the two labels would arguably dominate the US music industry, accounting for about 40% of the US market.  Artists signed to the two labels accounted for 51 of Billboard's Top 100 songs for 2011.
  The letter from the Senators express concerns that that level of dominance might give the merged labels the economic power to set prices or act as a gatekeeper for new online music services.

"The music industry has undergone a transformation in the last two decades as consumers access music through new online forms of distribution and as the market faces the challenge of piracy," the senators wrote. "Yet, in this as in other industries, robust competition remains the key to restraining prices, ensuring new and innovative forms of distribution, and maintaining diversity of choice available to consumers."

  Universal Music has argued that the online accessibility of music (legal and pirated), effectively limits the ability to manipulate prices; still they indicated that they were working with the FTC to address any concerns.
  The proposed merger is also under scrutiny from EU regulators, and Universal has given them indications that they might be willing to sell off some assets to reduce concerns.

Source -  Senators warn Universal-EMI deal poses 'significant competition issues,'  The Hill (Hillicon Valley blog)

Billboard Hot 100 lists to count on-demand streaming

Billboard's been tracking the popularity of music for decades, first looking at sales, and then for some of their charts (like the Hot 100) adding in radio plays.  Now, in recognition of the growth of on-demand music streaming, its going to factor those choices into the mix.

  Specifically, Billboard is going to include information from the Nielsen BDS monitoring of streaming activity for its On-Demand Songs chart, and also factor those into its premium Hot 100 chart. With the rise of a number of subscription on-demand streaming services (like Spotify), and Cloud-based streaming from personal music collections, Billboard argues that this is a growing and significant component of the music market that can't be ignored if you're truly seeking to measure the popularity of songs and artists.
  Some numbers from the Nielsen BDS give an indication of how big music streaming is - in the first 70 days of 2012, more than 4.5 billion audio streams were tracked, growing to a record 625 million ilast week.  Compare that to the average 2.5-5 million online song purchases per week during 2011.

"The methodology behind all of the Billboard charts is ever-evolving to incorporate new technologies and the emerging ways consumers listen to and buy music" said Silvio Pietroluongo, Billboard's director of charts. "Accounting for an interactive medium such as streaming, both in the Hot 100 chart and the On-Demand Songs chart, provides an even more accurate gauge of the songs that are truly the most popular in the country."

  Of course, not everyone is happy with the move - mostly feeling that on-demand metrics might dilute current radio plays and sales numbers with older favorites.  On the other hand, I'm old enough to remember that Pink Floyd's Dark Side of the Moon remained on Billboard's weekly Top LP chart for 15 years, without much complaint from music companies or the radio industry.  Besides, Billboard's got lots of charts, and most don't include on-demand streaming... yet.
  Still, Billboard's creation of new focused charts and inclusion of on-demand streaming in its Hot 100 chart can be seen as a recognition of the growth and impact of this newer distribution system for music..

Source -  Hot 100 Impacted by New On-Demand Songs Chart,  Billboard

Sony joins crowded music service field

Sony is expanding its Music Unlimited streaming service with apps for iPhones and iPads.  The service currently is optimized for a variety of Sony devices and smartphones running the Android OS.  The service offers the same basic access to some 15 million songs licensed for streaming, as well as channels for a range of genres, and local caching for off-air play, for $9.95 a month.  The company hopes to use the service to help its international retail operations, and will focus on recruiting subscribers new to music streaming, rather than competing with other cloud streaming options.

While competitition is generally good for the consumer, the promised Sony service doesn't seem to have a competitive advantage over its competition, so it's unclear what impact it will have on the market.

Source - Sony's Music Unlimited streaming service coming to Apple's iOS,  FierceMobileContent.

More Bad News for traditional media

A recent piece in The Economist has an interesting take on the competition between physical media products and the digital world.  In "Not Worth Nicking," they look at criminal activity in the UK - with a focus on what is being stolen.

“Years ago, you’d see a man in a pub selling CDs,” says Eric Phelps, a detective in London’s Metropolitan Police. “Not any more.” Indeed, thefts of entertainment products like CDs and DVDs have collapsed in England and Wales, to the point that they are now taken in just 7% of all burglaries in which something is stolen

 The article contributes the decline to the drop in the price and value of recorded content from legal outlets, and that the "dishonest" can get pirated digital versions for free.

On the other hand, computers and digital devices are not only valuable, but increasingly portable, 

On a side note, the recording industry in the U.S. reported that digital music sales in the U.S. topped sales of physical media products for the first time.  Digital music sales accounted for 50.3% of purchases in 2011, while sales of physical copies dropped 5%.

The most recent Nielsen Company & Billboard’s 2011 Music Industry Report also found that:

• In 2011, more than 76,000 albums were released that sold at least 1 copy
• There were 1.27 billion digital tracks sold in 2011, a new record (up 8.4% from 2010)
• Digital album sales reached a new all-time high of 103.1 million sales, upf nearly 20% from 2010
• Top genres in 2011 were: Rap and Electronic (up 42%), Country and R&B (up 27%) and Latin (up 23%)
• For the first time ever, a digital song had more than five million downloads in a calendar year; Adele’s “Rolling In The Deep” (5.8 million) and LMFAO’s “Party Rock Anthem” (5.5 million) both topped the mark
• For the first time, more than 100 Digital Songs (112) exceeded the 1 million sales mark for the year
• In 2011 there were 38 different digital songs with sales that exceeded two million (there were 37 in 2010, 31 in 2009, 19 in 2008 and nine in 2007)
• In 2011, eight different artists broke the 10 million digital track sales mark
• In 2011, 31% of albums were purchased from online sources,  31% from mass merchant outlets (like WalMart), 20% were bought at retail stores, and only 7% came from independent music stores

It sure does look like digital is winning.

Sources -  Not Worth Nicking, The Economist
See Ya, CDs: Digital Music Sales Overtakes Physical Media, PCWorld
The Nielsen Company & Billboard’s 2011 Music Industry Report, BusinessWire

Music Services Bringing More Fun to Shopping

Post contributed by Brittany Hood -

For those of you who become agitated with the music playing across the store as you peruse racks of clothing while listening to your kind of music on your smartphone, technology has a solution for you!  The Gap has teamed up with streaming music start-up Roqbot to allow Gap customers/Roqbot users to choose the playlist to play over the store’s loudspeakers.  “Shoppers who check in with the Roqbot app may actively parse the store’s featured pre-approved music selections, pick favorite tracks and vote on others’ acoustic choices, thereby impacting currently queued selections” (Steinburg).

  The Gap is only in the testing stage of this at its Chestnut Street location in San Francisco, California; however, this testing “…will run through the holidays and includes integrated support for Facebook, Twitter and Foursquare, the service could expand to future locations and retailers in 2012 if it proves successful on Chestnut Street” (Steinburg).

Source: Scott Steinburg. “The Gap and Roqbot Let Shoppers Decide StoreSoundtrack.”  Rolling Stone.com