DMT 76 – SongHi

Hello everyone and welcome to Digital Music Trends. This week on the show an interview with Carl Costa, director of Songhi, a social music gaming start-up (www.songhi.com). We talk about the company’s development, its business model, online gaming & music,  relationships with the labels and much more! 

Digital Music Trends – Episode 76 by digitalmusictrends

And now as a second part of the show let’s talk Apple. Many of you will have heard by now of the new Subscription rules that have been announced by the company. Basically from June the 30th all content distributors that allow access to their subscription services via an iOS app will be required to offer their users the option to subscribe directly from the App – which means that Apple would keep 30% of the revenue from the subscription. On top of this it looks like they would not be able to provide any direct links within the app that potential subscribers could use to circumvent the in-app purchase. 
I must stress that publishers will still be able to bring in subscribers that signed up through their online channels but that this second in-app option will also have to be in place. This is an interesting turn of events that many have labeled as greedy on Apple’s part. Music start-ups like We7, Spotify, MOG and Pandora still operate on very low profit margins because of the costs involved in paying the rights-holders and developing/maintaining the technology required to provide a good service to their subscribers. A 30% cut in their earnings would certainly compromise the profitability of these companies. But in the end it all boils down to how many users would end up subscribing directly from the app – which I can imagine will be painfully easy compared to having to go through the company’s site, entering your billing information etc etc. 
The success of in-app subscriptions also depends on how prominent the option will have to be within the app itself – meaning that companies could provide this option but bury it fairly deep within the app itself so that users would not be able to readily find it. Obviously though this would cut into their conversion rates as Apple will specifically prohibit in-app links to lead to the subscription page for the service. 

Steve Jobs apparently – because we never know if it’s actually him or not – replied to a note by a worried Apple customer saying that this new subscription charges will only apply to publishers, in other words content owners and distributors and not to Software as a Service companies. Thanks Steve. So basically if you are Dropbox or Salesforce then you’re safe but if you’re a Spotify that’s where things start to get problematic. I understand that Apple wants to avoid seeing the content industry as a whole, with its big chunky numbers slipping away from the iOS net but at the same time – for example in the music industry – the margins just aren’t there to justify such a high percentage to Apple. A Neflix for example may be able to sustain losing 30% of the income from part of their subscribers to Apple but this charge may throw a smaller, less profitable company off balance. Google – in what looked like either a direct response or incredibly good timing – announced its One Pass subscription facility which will charge publishers only 10% – which according to Google goes to cover their costs. At the moment the One Pass service caters for written content only but there’s no reason why Google should not be able to extend it to Music as well. 

Naturally there have been a number of reactions to this announcement in the music technology world. Steve Purdham the CEO of We7 said that: “Thirty percent makes music subscriptions economically unviable in the current form” but he also maintains that once the dust settles there may be different approaches to this new charge.  Rdio CEO Drew Larner told paidContent.org that: “From a financial standpoint, that fee is certainly untenable for us, that’s obvious.” Deezer issued a statement saying that: “It is very unlikely that Apple could legally apply these rules on the paid digital music services. It would be a leverage of its dominant position on the mobile applications market to reinforce its already over?dominant position in the paid digital music market”. The BBC quotes Forrester Analyst James McQuivey saying that: ”Taking a 30% toll amounts to a massive increase in the cost basis of a content business that will kill it.” Also the CEO of Forrester has chipped in with a blog post on the Company’s website where he states that Apple has wildly overestimated the pricing of content on mobile devices. He reckons that a realistic fee level for subscription-based applications should be around 5%.
Also a number of news outlets from PC World to the New York Post have commented on the impact that this decision will have on a service like Pandora that counts on the App Store as one of the main driving forces for its subscription service. Some are saying that this could even delay Pandora’s plans to go public with an IPO. 
The New York Post also quotes Ted Cohen from TAG Strategic as saying that: “Apple, in this instance, and in a few other instances, is being more anti-competitive than Microsoft ever was.” 
At this stage there is really no saying as to whether Apple is just testing the waters or whether it’s really going to implement these new rules starting June the 30th. If the company shows no signs of budging anti-trust regulators on both sides of the Atlantic, the European Commission over here and the Justice Department and the Federal Trade Commission in the US, will start investigating its new policy seriously. In fact apparently they are already doing preliminary studies to understand whether apple is using its dominant position to impose this charge. Either way I’m sure we’ll be hearing more on this in the next few weeks and as the deadline approaches!

 

Sources: 

Wall Street Journal Article: 
http://online.wsj.com/article/SB10001424052748704657704576150350669475800.html?mod=WSJ_Tech_LEADTop

MacWorld
http://www.macworld.co.uk/business/news/index.cfm?newsid=3261927&pagtype=allchandate

BBC
http://www.bbc.co.uk/news/technology-12491883 

Tech Crunch
http://techcrunch.com/2011/02/16/powered-by-google-checkout-one-pass-is-a-simple-payment-system-for-content-publishers/

Paid Content
http://paidcontent.org/article/419-interview-rdio-ceo-says-subs-will-boom-but-first-that-apple-problem/

Billboard
http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-will-apple-face-antitrust-1005044262.story 

MacRumors
http://www.macrumors.com/2011/02/21/steve-jobs-email-suggests-in-app-subscriptions-dont-apply-to-software-as-a-service/

DMT 76 – SongHi

Hello everyone and welcome to Digital Music Trends. This week on the show an interview with Carl Costa, director of Songhi, a social music gaming start-up (www.songhi.com). Also this week a quick look at Apple’s new subscription rules, the reactions to this new policy and subsequent clarifications.

And now let’s talk Apple. Many of you will have heard by now of the new Subscription rules that have been announced by the company. Basically from June the 30th all content distributors that allow access to their subscription services via an iOS app will be required to offer their users the option to subscribe directly from the App – which means that Apple would keep 30% of the revenue from the subscription. On top of this it looks like they would not be able to provide any direct links within the app that potential subscribers could use to circumvent the in-app purchase.
I must stress that publishers will still be able to bring in subscribers that signed up through their online channels but that this second in-app option will also have to be in place. This is an interesting turn of events that many have labelled as greedy on Apple’s part. Music start-ups like We7, Spotify, MOG and Pandora still operate on very low profit margins because of the costs involved in paying the rightsholders and developing/maintaining the technology required to provide a good service to their subscribers. A 30% cut in their earnings would certainly compromise the profitability of these companies. It all boils down to how many users will end up subscribing directly from the app – which I can imagine will be painfully easy compared to having to go through the company’s site, entering your billing information etc etc.
The success of in-app subscriptions also depends on how prominent the option will have to be within the app itself – meaning that companies could provide this option but bury it fairly deep within the app itself so that users would not be able to readily find it. Obviously though this would cut into their conversion rates as Apple will specifically prohibit in-app links to lead to the subscription page for the service.

Steve Jobs apparently – because we never know if it’s actually him or not – replied to a note by a worried Apple customer saying that this new subscription charges will only apply to publishers, in other words content owners and distributors and not to Software as a Service companies. Thanks Steve. So basically if you are Dropbox or Salesforce then you’re safe but if you’re a Spotify that’s where things start to get problematic. I understand that Apple wants to avoid seeing the content industry as a whole, with its big chunky numbers slipping away from the iOS net but at the same time – for example in the music industry – the margins just aren’t there to justify such a high percentage to Apple. A Neflix for example may be able to sustain losing 30% of the income from part of their subscribers to Apple but this charge may throw a smaller, less profitable company off balance. Google – in what looked like either a direct response or incredibly good timing – announced its One Pass subscription facility which will charge publishers only 10% – which according to Google goes to cover their costs. At the moment the One Pass service caters for written content only but there’s no reason why Google should not be able to extend it to Music as well.

Naturally there have been a number of reactions to this announcement in the music technology world. Steve Purdham the CEO of We7 said that “Thirty percent makes music subscriptions economically unviable in the current form” but he also maintains that once the dust settles there may be different approaches to this new charge. Rdio CEO Drew Larner told paidContent.org that “..From a financial standpoint, that fee is certainly untenable for us, that’s obvious.” Deezer issued a statement saying that “It is very unlikely that Apple could legally apply these rules on the paid digital music services. It would be a leverage of its dominant position on the mobile applications market to reinforce its already over?dominant position in the paid digital music market”. The BBC quotes Forrester Analyst James McQuivey saying that : Taking a 30% toll amounts to a massive increase in the cost basis of a content business that will kill it,”. Also the CEO of Forrester has chipped in with a blog post on the Company’s website where he states that Apple has wildly overestimated the pricing of content on mobile devices. He reckons that a realistic fee level for subscription-based applications should be around 5%.
Also a number of news outlets from PC World to the New York Post have commented on the impact that this decision will have on a service like Pandora, that counts on the App Store as one of the main driving forces for its subscription service. Some are saying that this could even delay Pandora’s plans to go public with an IPO.
The New York Post also quotes Ted Cohen from TAG Strategic as saying that “Apple, in this instance, and in a few other instances, is being more anti-competitive than Microsoft ever was.”
At this stage there is really no saying as to whether Apple is just testing the waters or whether it’s really going to implement these new rules starting June the 30th. If the company shows no signs of budging anti-trust regulators on both sides of the Atlantic, the European Commission over here and the Justice Department and the Federal Trade Commission in the US, will start investigating its new policy seriously.

Wall Street Journal Article:

http://online.wsj.com/article/SB10001424052748704657704576150350669475800.html?mod=WSJ_Tech_LEADTop

MacWorld

http://www.macworld.co.uk/business/news/index.cfm?newsid=3261927&pagtype=allchandate

BBC
http://www.bbc.co.uk/news/technology-12491883

Tech Crunch

http://techcrunch.com/2011/02/16/powered-by-google-checkout-one-pass-is-a-simple-payment-system-for-content-publishers/

Paid Content

http://paidcontent.org/article/419-interview-rdio-ceo-says-subs-will-boom-but-first-that-apple-problem/

Billboard
http://www.billboard.biz/bbbiz/industry/digital-and-mobile/business-matters-will-apple-face-antitrust-1005044262.story

MacRumors

http://www.macrumors.com/2011/02/21/steve-jobs-email-suggests-in-app-subscriptions-dont-apply-to-software-as-a-service/

DMT 75 – Next Big Sound

Hello everyone and welcome to Digital Music Trends! This week on the show an interview with Alex White the CEO of the Next Big Sound. The start-up won the B2B category in the Midemnet Labs competition at Midem and has started branching out of the US and into the European market. (www.nextbigsound.com). In the interview we cover how their company started out, how they obtain the data they need for the stats, their business model and much more!

Digital Music Trends – Episode 75 by digitalmusictrends


This week was fairly busy in terms of tech meet-ups here in London. First on Friday was the TechHub demo night – where start-ups and developers get to demonstrate the app/product/idea that they are developing and get feedback and questions from the Audience. From a Music point of view Spreaker presented their demo which was quite a coincidence considering that I had them on the show only last week.

Other start-ups that caught my eye but non-music related were UbiCabs, Enterproid and Just What’s on – if you’re in London check out techhub.com for a list of all the events they are putting together, it’s worth dropping by! http://www.techhub.com/magazine/read/the-presenting-companies-at-techhubfriday-demo-night-4-feb-2011_132.html

Also this week was the launch party of the MusicConnex conference – a new event focused on the independent sector that will take place here in London in April and it was definitely a success with high attendance, good networking and great music. If you want to get involved in the event go to www.musicconnex.co.uk and check it out.

And that’s all for this week, I really hope you enjoyed the show. As usual visit www.digitalmusictrends.com for more information and to sign up to the mailing list. The show can be enjoyed both via subscribing on iTunes, via Soundcloud, RSS feed and Mixcloud. If you’d like to follow the show on twitter the handle is DigiMusicTrends, have a great week and ‘till next time!

DMT 75 – Next Big Sound

Hello everyone and welcome to Digital Music Trends! This week on the show an interview with Alex White the CEO of the Next Big Sound. The start-up won the B2B category in the Midemnet Labs competition at Midem and has started branching out of the US and into the European market. (www.nextbigsound.com). In the interview we cover how their company started out, how they obtain the data they need for the stats, their business model and much more!

This week was fairly busy in terms of tech meet-ups here in London. First on Friday was the TechHub demo night – where start-ups and developers get to demonstrate the app/product/idea that they are developing and get feedback and questions from the Audience. From a Music point of view Spreaker presented their demo which was quite a coincidence considering that I had them on the show only last week. Other start-ups that caught my eye but non-music related were UbiCabs, Enterproid and Just What’s on – if you’re in London check out techhub.com for a list of all the events they are putting together, it’s worth dropping by! http://www.techhub.com/magazine/read/the-presenting-companies-at-techhubfriday-demo-night-4-feb-2011_132.html

Also this week was the launch party of the MusicConnex conference – a new event focused on the independent sector that will take place here in London in April and it was definitely a success with high attendance, good networking and great music. If you want to get involved in the event go to www.musicconnex.co.uk and check it out.

And that’s all for this week, I really hope you enjoyed the show. As usual visit www.digitalmusictrends.com for more information and to sign up to the mailing list. The show can be enjoyed both via subscribing on iTunes, via Soundcloud, RSS feed and Mixcloud. If you’d like to follow the show on twitter the handle is DigiMusicTrends, have a great week and ‘till next time!

DMT 74 – Spreaker

Hello everyone and welcome to Digital Music Trends! After the ultra-long shows from Midem last week today it’s short and sweet as I interview Francesco Baschieri, co-founder of Italian-based start-up Spreaker (www.spreaker.com). The company allows users to create their own radio shows on the cloud and broadcasting live.

Digital Music Trends – Episode 74 by digitalmusictrends

But before the interview today it’s impossible not to mention the twist in the fate of EMI with Citigroup taking over the major and writing off 65% of its debt. EMI is now left with a cash reserve of 300 million dollars and it will be interesting to see whether they decide to invest any of it in the Digital space. Meanwhile there were reports this week that a deal had been reached between EMI and Spotify for a US launch, which means that Spotify could indeed see a launch by the end of this year since it has reportedly already reached an agreement with Sony. I think that if either Warner or Universal were to also join in Spotify could comfortably launch on the back of three majors and the indies.

Meanwhile ever-reliable Greg Sandoval from CNET outlined in a great article the latest on Google Music – with conflicting reports on it being very close to launch (as early as next month) and on it not being very close at all with a launch still months away… Here the link:

http://news.cnet.com/8301-31001_3-20030130-261.html
 
Well that’s all for this week! I hope you enjoyed the show. Next week I’m going to have Alex White, CEO of the Next Big Sound on the show so it’s going to be a good episode!

As usual you can find all previous shows both on iTunes, Soundcloud and www.digitalmusictrends.com. On the site you can also sign up to the weekly newsletter so you’ll know as soon as a new show is out. You can also follow the show on twitter at twitter.com/digimusictrends.

Have a great week and ‘till next time.
Andrea Leonelli
www.digitalmusictrends.com

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