The Music Radio Solution

By Jerry Del Colliano

DJs are history.

Streaming services can’t attract enough subscribers.

Apple worries everyone with what they are planning to do with their anticipated “cloud” service.

Music royalties have killed Internet radio and are a constant threat to the survival of the most popular Internet radio service of all – Pandora.

Apple doesn’t believe in putting FM chips in their most popular mobile devices. And even when they do (like in iPod Nano), it doesn’t make a difference to the radio industry.

So what is really going on?

Music is the one thing that consumers can’t live without – maybe next to Starbucks – and yet the future of music delivery has never been so uncertain.

Or is it?

I am seeing a scenario that should start to unfold in the near future that, if correct, will totally redefine the radio industry, music business and other media relying on music as a core attraction.

May I take you through it?

Big bad Apple is definitely up to something with the purchase of LaLa, the streaming service that it promptly shut down. You see, Apple was after LaLa for its "cloud" technology. I don’t believe Apple wants to get into the radio business as we know it. I don’t think Apple even likes radio as a business.

What it does like is its own concept of the iTunes store with 100 million credit cards on file ready to buy music for Apple devices.

So I wouldn’t be surprised to see a Steve Jobs announcement in coming days where a new Apple streaming service will make consumers’ iTunes libraries available on the “cloud” anywhere, anytime, on any device.

It’s hard to say how Apple will price it, but Apple is good about pushing price points without breaking the consumers’ wallet (with the exception of the first iPhone when Apple promptly cut the price and rebated the overcharge).

Apple will use the "cloud" to make your iTunes library available everywhere in an instant.

And maybe – just maybe – to allow you to preview music you may want to own. The “cloud” will enable this.

But I’m not counting out an Apple music subscription service, either. With Steve Jobs predicting Apple for fun and profit is a fool’s game.

Labels love subscription plans. They would support it. Years ago Warner Music told me they wanted ISPs to charge consumers a monthly fee for all the music you could eat, but that plan was dead on arrival. Try to get ISPs to agree on anything.

The streaming service Rhapsody has gone from 800,000 subscribers to 650,000 – a 19% drop in the past year.

Spotify hasn’t gotten off the ground in the U.S. yet and while consumers seem to like it in Europe the jury is out as to whether the financial model will work in a world of free filesharing.

So, it seems inevitable that consumers will keep their music on their mobile devices and add “cloud” accessibility thus reducing the role of terrestrial and satellite radio in acting as a jukebox.

But …

If radio could reverse the self-destructive trend of eliminating personalities and “music authorities”, it could and probably would present an attractive package to even young consumers who hadn’t previously turned to radio for music discovery.

You also hear me mention the term music discovery a lot because young people tell me that music discovery is exactly what they want.

More ways to connect with more and different kinds of music and artists. Radio used to serve that purpose with the dj as the music authority. Voice tracking and syndicated voices are not the same. Ask any young music consumer.

Radio, therefore, can get a leg up on what is inevitably going to happen by hiring (or re-hiring) personalities who know music and/or employing music "authorities" in their genre as well as putting specialty programs on-air that are about discovery.

Just driving terrestrial listeners to the Internet or mobile Internet, I am sensing, will not work.

I’d also like to see the radio industry announce at the NAB Radio Show this September in Washington a new agreement where the industry would agree to pay a small performance fee in return for very favorable Internet streaming and podcasting rates.

While I don’t think it is fair for radio, the longtime drive behind music sales, should pay this fee, reality says the time might be right for a compromise and our new NAB President seems to be that kind of a guy.

Important because the mobile Internet and the Internet stream will be vital to radio’s ability to make up for inevitable lost terrestrial listening in new media. What an opportunity.

The sky isn’t falling unless we take our eyes off the consumer.

Consumers are dictating what devices they prefer, how they want to listen (in shorter segments), where (on their mobile devices) and with whom (their social networks).

This is all good for us – we’re radio, the original social network and mobile device that may have lost its way during consolidation but can find the future by looking to the early adapters of new media.

http://insidemusicmedia.blogspot.com/2010/06/music-radio-solution.html

Written by Jerry Del Colliano for Inside Music Media

Re-posted by Dexter Bryant Jr.
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Another Study Vindicates File Sharing

By Jerry Del Colliano

Steve Meyer, who as I have often said is the smartest observer of the record industry, knocked my eyes out in a recent issue of his publicationDisc & DAT (Digital Audio Technology).

Yet another study that exonerates filesharing as the culprit in today’s music industry.

It’s a lack of innovation -- not filesharing – that’s the conclusion.

I’m sure that doesn’t come as a surprise to you, but it may be to the record labels who are acting like it is 1999.

Professor Nico van Eijk of the University of Amsterdam conducted the latest study and his conclusion speaks volumes:

"The entertainment industry will have to work actively towards innovation on all fronts. New models worth developing, for example, are those that seek to achieve commercial diversification or that match supply and end-user needs more closely. In such a context, criminalizing large parts of the population makes no sense. Enforcement should focus on large scale and/or commercial upload activities. . . Introducing new protective measures does not seem the right way to go..."

In other words, filesharers are consuming all media especially concerts, films and games – not just copyrighted music.

I've linked to the 55-page report here.

Let me comment on a few of the findings my friend Steve Meyer highlighted:

“The study concludes (among other things) there "isn't a clear relationship" between the decline in sales and file sharing, while also finding that fear of evolution prevented the recording industry from adequately adapting their business models to the broadband age. While the recording industry is having problems, argues van Eijk, it has less to do with file sharing, and more to do with the fact they've been "abstaining from innovation" -- as the study phrases it”.

Think about it.

The labels could have bought Napster, not annihilated it, thus avoiding creation of the Napster vacuum that was promptly filled by bit torrent sites, etc.

The labels could have innovated along with Steve Jobs when the Apple CEO caught them off guard with his offer to help stop piracy. That offer was the iPod and iTunes store. He played to their fears. They allowed him to become the de facto Big Kahuna of the Record Industry.

They could have laid off streamers and come up with an easy to swallow royalty payment schedule that would have grown music consumption instead of dampened it.

Could have launched its own cloud.

Could have done Pandora itself as an industry consortium – that is, if they could have gotten along together for a minute. Bet Steve Jobs would have loved to own Pandora. Bet he still does.

More from the report:

"Turnover in the recorded music industry is in decline, but only part of this decline can be attributed to file sharing. Conversely, only a small fraction of the content exchanged through file sharing networks comes at the expense of industry turnover. This renders the overall welfare effects of file sharing robustly positive."

Innovation scares the record industry.

God forbid, they had a new idea other than CDs.

If record labels had to run the space program, they would find themselves doing a soft landing in Camden, New Jersey instead of the moon because they cannot figure out which way is up.

Now, record labels really need to know which way is out.

Because Steve Jobs is running their show.

Setting the rates, making the new age “record players” if you will. For all practical purposes, he’s eliminated the album (although you wouldn’t know that by Lady Gaga).

Apple is about ready to launch cloud-based instant access to iPods, iPads and iPhones – while record labels can brag about instant access to – well, suing people. And, by the way, the labels are opposing Apple's iTunes "cloud", too as witnessed by this recent article in The Wall Street Journal.

So expect the RIAA to raise a commotion and argue the latest study that looks at filesharing as the lesser of evils.

The worst being – a lack of music industry innovation.

As Meyer pointed out in his piece, Steve Jobs says "Sometimes when you innovate, you make mistakes. It is best to admit them quickly, and get on with improving your other innovations."

That’s a great quote -- not that Jobs ever admits a mistake (like in the current version of Apple TV).

Still wisdom of the quote is right on.

And Steve Meyer wrote this in 2003 when he launched his newsletter:

"Any software programmer will tell you the hard core (ugly) truth is this: anything that can be encoded digitally can be decoded and replicated with a little work. It's time the labels recognize this fact, accept it, and now spend time brainstorming on how new revenue streams can be created within the framework of all the technology at hand."

Okay, so don’t admit to past mistakes. We understand.

But, wake up and look around.

My USC students used to be split about whether filesharing was stealing. They had many excuses – some good (“I use it to preview what to buy”) and some bad (“the money never gets to the artists anyway”). I’ve often wondered about these rationalizations.

But there is no denying that one could also look at filesharing as today’s radio.

A source of music discovery.

And now we have yet another carefully considered report that explains the phenomenon if not the unfortunate response of the record industry.

http://insidemusicmedia.blogspot.com/2010/05/another-study-vindicates-filesharing.html

Written by Jerry Del Colliano for Inside Music Media

Posted by Dexter Bryant Jr.
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Rethinking Illegal File Sharing

By Jerry Del Colliano

About the only media company that cannot be robbed blind by cyberpirates is Apple.

Think about it.

It’s damn hard to pirate anything from the iTunes store -- songs, apps, books, software.

That is because Apple locked down the exit doors of the Internet and made it virtually impossible for people to steal from Steve Jobs.

Not so with record labels whose only security is when they sell songs through iTunes and other protected sites. Meanwhile, everything else is available online for the low, low price of -- free.

In Europe, especially France, we keep hearing of draconian steps being taken to stop the theft of intellectual property. European countries are having various battles to win this control but nothing done to date has put an end to sharing what can be made freely available on the Internet.

Putting ethical issues aside -- and lots of consumers easily do that -- you can understand two things.

One, it is difficult to batten down the hatches to prevent cyber theft.

Two, theft to you may be promotion to someone else as there is mounting evidence that free exposure even through file sharing and/or free plays actually sells music for record labels.

In Spain recently the courts have dealt a blow to companies trying to stop file sharing.

The Barcelona Reporter describes the case that went to the judge:

“Torrentfreak, the ever-vigilant blog focusing on BitTorrent and file-sharing issues, points to a recent lawsuit in Spain that ended quite favorably for both P2P users and link sites and dedicated search engines, and that found both use-cases to be perfectly legal in the country.

The subject of the lawsuit isn't particularly important in the grand scheme of things. A fairly small eDonkey and BitTorrent link site called elrincondejesus.com was sued almost a year ago by a local music industry group, SGAE (Sociedad General de Autores y Editores), for alleged copyright infringement on the site.

The group initially tried to get a court injunction on the site, to take it offline before a full hearing of the case, but the request was denied by the presiding judge, Raul N. García Orejudo, claiming that P2P networks by themselves didn't violate copyright law”.

The judge ruled that as long as there were no financial benefits to sharing music, file sharing was, indeed, legal.

The judge may have also been persuaded by the fact that the defendants did not have advertising in their sights as a direct link to revenue.

The judge also proclaims individual users downloading copyrighted material from peer-to-peer networks without a profit motive are doing so legally in Spain.

The record industry had a chance to nip file sharing in the bud back when Napster came onto the scene.

An interview on NPR not too long ago featured former RIAA President Hilary Rosen admitting to the coolness of file sharing. She tells the story of what happened when record execs met to try Napster and discusses the missed opportunities for record labels that could have embraced file sharing -- or at least had a say in how it developed. (The interesting transcript is linked here).

The gist of the interview which also includes other music industry types is that no one knows what the future will bring -- certainly not the labels.

But I’d like to take a swipe at it, if you will:

Spotify (the European company) or Rhapsody-type services will not make it here if Apple offers a “cloud” option that allows consumers to access their music on mobile devices anywhere and everywhere.

A subscription-based plan by Apple (or should I say, app-based plan) that makes a listener's music libraries available without waiting for downloads on the “cloud” may very well work.

A new form of music discovery also available on the “cloud” with instant access could compete with traditional terrestrial radio if Apple makes a better deal with the labels than stations, streamers and satellite radio now has for royalty payments.

Unlicensed music will thrive five or more years from now.

The record labels were the biggest disincentive for new acts in the past when they controlled the recording studios, pressing plants and access to the radio airplay. Now that these things are no longer necessary, any artist can produce a song and get exposure. Terrestrial stations would be wise to get in on the unlicensed music craze especially with the music industry trying to win Congressional repeal of its performance royalty exemption.

The thing that will save the music industry is not obsessing over file sharing, Apple’s increasing dominance or buying music to feed starving musicians.

That old argument that file sharing hurts sales is -- well, unbelievable and unsubstantiated as new research continues to disprove this emotion-charged argument. Lady Gaga is disproving that misconception with just about everything she gives away.

The only sure way to save the music industry is to make better music and get as much democratic exposure as the Internet and mobile revolution allows.

File sharing is not going anywhere and neither is a record label that doesn’t embrace it.

http://insidemusicmedia.blogspot.com/2010/04/rethinking-illegal-file-sharing.html

Written by Jerry Del Colliano for Inside Music Media

Posted by Dexter Bryant Jr.
Powered by d.BRYJ Music Media Group.