the first half of music 2.0
well, despite being passed over for a keynote (that burden being borne by sean ryan of real networks, peter lowe of apple and wayne rosso of optisoft sl), i thought i’d throw a couple cents in the direction of the big industry hoe-down and love fest going on in los angeles.
as a victim of my own philosophy, of course, most of the important answers can be found right here.
(nobody brought a hecklebot….)
the day one agenda includes panels (well, they’re calling themselves “supersession panels”) with great titles like “rip! burn! sue!” and “reinventing the music industry” – then there are the lesser sessions on “what college students and consumers really think about music,” “the battle for consumers: can it be won?” “digital marketing strategies for music”, “the next wave for audio electronics,” and “wireless and mobile music: success stories for new revenue streams”
the agenda doesn’t tell the whole story, and since i didn’t attend, i have to rely on other sources. i found two media reports, one from news.com and another on the ap wire that give some hints. i can only really speculate about the good stuff. so, let the speculation begin.
no surprise, really, that some focus was directed at the 99-cent phenomenon.
Speaking at the iHollywood Forum’s Music 2.0 conference in Los Angeles Monday, executives on both sides focused on the 99-cent price tag that has become the market’s standard for downloadable music.
also no surprise that the people who own the back catalog and are under obligation to preserve the value of the back catalog are feeling some pain at the 99-cent level while others think that 99 cents is too high to reach the mass market.
Critics say that that price needs to come down if mainstream consumers are to start buying in large numbers, making the Internet a serious factor in the record industry’s bottom line. Record labels say they can’t afford to go lower.
“There’s very little money in this to begin with,” said David Ring, vice president of Universal Music Group’s eLabs division. “A lot of people are already recognizing that we’re going to have to sell a lot more singles at 99 cents in order for us to make money, and for artists to be able to make a living.”
another hint is in the language. sean ryan (vp of the realone music division, which is rhapsody) had this to contribute…
“That’s where people want to consume, in their stereo, in their home theater system and eventually in their car and cell phone as well,” Ryan said.
which could be evidence that the people on the tech side don’t appreciate where the value is created. it may take some time for the clue to sink in that people aren’t just ears to dump music into… or wallets to extract dollars from.
the bright side, at least for the players involved at this level, is that tech and music are in bed together, to some degree, and people are generally impressed with the itunes volume (which is good, considering the itunes economics – don’t worry, they lose money on each sale, but they make up for it in ipods).
Apple Computer said Monday that it has now sold more than 20 million songs in fewer than seven months through its iTunes song store.
peter lowe of apple also shared this little bit:
Apple director of marketing Peter Lowe said that 45 percent of songs downloaded through iTunes had been sold as part of a full album, rather than in single song form. That indicates many people are still interested in purchasing large numbers of songs, or full albums, despite having a la carte options, Lowe said.
interesting number, but i guess it’s my duty to take it to the next level. if 45% of songs are sold in album format, and there are 12 songs per album (i just made that number up), then that means 9 million tracks were sold as albums, which is 750,000 albums, versus 11 million singles. so with 11,750,000 sales made, a little under 6.5% of sales are albums. given some previous numbers, this is a dramatic reversal from about 91.5% of sales in album format. just the fact that the number was presented the way it was suggests that the industry is clinging to the album – apple giving some comfort to the labels with a nice big percentage as opposed to the alternative. that can’t last – it’s about the singles (you can see my version of this here).
The Macintosh audience may not be representative of the larger market, however, since Apple buyers tend to have higher incomes and greater technological sophistication than the PC audience as a whole, and have previously had less access to the free file-swapping services.
yes, there could be a big difference between the apple market and the walmart market.
“I don’t think we can look at the old models of how we made money in the past and say we can duplicate them in the new world, that’s not going to work,” said Courtney Holt, head of new media and strategic marketing at Interscope A&M Geffen Records.
indeed…
“More players are coming into the marketplace,” said David Ring, vice president of business development at Universal Music Group. “But we still have kinks to work out. We don’t have all the artists there, and usually, almost in every case, it’s an artist issue, not a record label issue or a publisher issue.”
whoups. did someone just blame the artists?