Digital music trends – Episode 44

This week: an interview with Christian Mix-Linzer, CEO of Berlin-based start-up Tracks and Fields and a couple of thoughts on last week’s debate at the British Music Experience entitled Tomorrow Never Knows. In the news: Apple to shut down Lala but the end-game is still unclear, Spotify adds social integration but has to roll out the update gradually due to high demand, We7 reveals that the advertising revenues are finally covering the cost of licensing fees and also introduces some social features, the BPI and IFPI reveal their numbers for 2009 which make for an interesting read and Hans Pandeya causes more havoc whilst the Pirate Bay re-iterates that it’s not up for sale.

Apple shuts down Lala – an iTunes streaming service imminent?

http://www.musicweek.com/story.asp?sectioncode=1&storycode=1040991&c=1
http://www.macrumors.com/2010/04/30/apple-acquired-lala-music-service-to-shut-down-may-31st/
http://news.cnet.com/8301-13526_3-20003923-27.html

Macrumors last week was one of the first sites break the news that Apple is finally shutting down streaming site Lala on May the 31st.
Lala was acquired by Apple back in December 2009 for $17 million and only a short while after I interviewed the company’s CEO Geoff Ralston for the show – if you want to go back and listen to that interview it’s on Episode 24. http://www.digitalmusictrends.com/weekly-podcast/2009/11/9/digital-music-trends-episode-24.html
At the moment there are many speculations regarding the future of the service. On one side there are people maintaining that Apple will not launch a music streaming service from the cloud anytime soon, withCNET’s own Matt Rosoff maintaining that Apple’s idea of creating a music locker has already been shot down by the industry. Others believe that Apple will launch a streaming service as soon as June. Lala in fact is supposed to Shut on the 31st of May and Steve Jobs has agreed to open the D: All things Digital conference  the following day on the 1st of June. Given the rare public appearances of Jobs outside the of the tightly controlled environment of Apple’s own product presentations this has led to some speculation that he will indeed unveil the new service there and then. A third opinion is that Apple only acquired Lala for its engineers and never had any plans to roll out a music streaming service, but this would go against the fact that the Cupertino firm is investing over a Billion dollars in server farms and is without a doubt aiming to providing a better cloud services than the frankly inadequate Mobile Me.  In my opinion Apple would be mad not to try and create a subscription service, the a’ lacarte digital purchase is destined to decline in favor of services like Spotify and Rhapsody and I don’t think Apple is ready to hand over its digital distribution market share without putting up a fight. But I guess that if they are interested in creating this sort of service the music industry will have to make some tough decisions and evaluate the repercussions of the subscription model before committing to it. I should note thatLala customers who have bought tracks on the cloud will be given iTunes vouchers for the amount that they had originally spent – which is a meagre consolation to people that had built large collections on the site.

Spotify adds social integration and an iTunes-like interface for music management.

http://www.t3.com/news/spotify-pulls-plug-on-social-update?=45111

This week Spotify unveiled its new social side and started to compete seriously with iTunes. Spotify’s new software allows users to share their playlists on Facebook, lets people subscribe to those playlists with one click and lets you publish your profile on a host of social networks as well as your own personal website. It takes a stab at iTunes by finally incorporating the user’s local music library within the software.

Shortly after rolling out the update Spotify revealed that they were overwhelmed by the public’s interest and that they’d have to roll it out slowly in the next few days to avoid slowing down their servers. I personally wonder whether this move was actually a way to encourage people to upgrade to the monthly subscription – premium subscribers are apparently receiving the new software right away.  I think that this is a necessary and long-awaited move forSpotify and that above all I think that it may present some financial benefits for them. I hope the following makes sense but but think about it, even though many of us use Spotify for music discovery we also use it to repeatedly stream songs by bands we really love and know well. Chances are that we will have these songs on our computer either because we bought the CD or MP3 or because we followed less kosher avenues. If Spotify is able to access the music we have on our Hard Drive then we could incorporate the songs we ‘own’ in our playlists and that would allow Spotify to save the licensing money because they would be played locally and not streamed from their servers, a move that could potentially save them a fair amount of cash in the long run.

We7 Revelals that finally adverts are covering the amount of money they have to pay in licensing fees.

After Lala and Spotify this is the week of streaming services as We7 had an eventful week. Spencer Dalziel from the Inquirer has a really good write-up on the first and most important news which is that We7 has finally broken even, meaning that its advertising income is making up for all the royalties and other costs paid to record labels and publishers. This was highlighted by the company’s Chief Executive Officer Steve Purdham as a great milestone for the service – something that they have been working towards for the past three years. The CEO went on to detail in the announcement that it has taken a long time to get here because the service had to juggle with satisfying the needs of the consumers, of the advertisers and of the rights holders and that at last it seems to have found a happy balance. There was no shortage of sly digs at Spotify , We7 admitting that a song played one million times generates anywhere between 2.000 and 4.000 pounds, well above the figures allegedly paid out by the Swedish company to record labels and publishers. Also, he maintains that the company wants to remain completely open – no registration is required and the service is web-based –  and therefore it has greater mass-appeal than Spotify. in that respect it’s true – if you want to tell a mate to check out a great new album that is on Spotify they need to have an account as well, otherwise no cigar.  The second announcement of the week was in Spotify’s footsteps as We7 announced some new social features including an integration with Windows Live Messenger, one with Facebook and scrobbling with Last.Fm, although the announcement seemed a little rushed as a way to counteract the overwhelmingly positive coverage of Spotify’s update.

Interesting BPI and IFPI numbers
http://www.independent.co.uk/news/business/news/business-models-jostle-for-space-in-digital-revolution-1955255.html

http://www.guardian.co.uk/music/2010/apr/26/uk-recorded-music-sales-risehttp://news.bbc.co.uk/1/hi/entertainment/8645878.stm

http://www.zeropaid.com/news/88931/ifpi-global-music-sales-down-7-in-2009/

http://www.ifpi.org/content/section_news/20100428.html

Both the BPI and the IFPI last week revealed their latest figures for music sales in 2009 which make for quite an interesting read. The BPI reported that in 2009 for the first time in years there was a moderate rise in revenues by 1.4%. Digital contributed significantly to this performance since the year-on-year digital revenues more than doubled and shot up to 154 million pounds, which is becoming a respectable figure if you consider that the total revenue was 928 Millions. naturally though the Physical market is still the lion’s share of the business, and theBPI stressed how the majority of online downloads are still illegal. Companies like Spotify, We7 and the newly introduced MFlow are likely to start to contribute more significantly to revenues in 2010 but the BPI warns anyone thinking that the CD is dying that this is all but true – even with the demise of chains like Woolsworth and Zavvi that accounted for 17% of the physical market sales have not dropped by a significant amount and the success of the pop-up stores set up byHMV last Christmas showed that customers are still wanting to buy CDs.

The IFPI’s figures unfortunately did not reflect the situation in the UK. Its figures show that music sales globally slid by 7%, although the situation varies widely from country to country. Thankfully the digital music sales globally were up by 9.2% – which is probably not as high a growth as would be expected – but in many areas the growth was of over 40% in favour of digital sales. The report was keen to underline that countries with lax piracy laws were most affected by the decline in sales, with Canada and Spain on the front line, whilst the introduction of anti-piracy laws has improved the situation in South Korea and Sweden. Although the report seems to point its finger entirely on the piracy phenomenon when it comes to finding a cause for this steep decline, Zero Paid points out that this decline in revenues is also given by the sharp digital growth in countries like the USA and Japan , where over 40% of music transactions are now digital. This means that more and more consumers are buying one track from an album rather than the entire product which clearly reduces what were 20 dollar transactions to 99 cents.

Pirate bay not being bought?

The saga of Hans Pandeya is never-ending, once again he claimed that he will buy the pirate bay by the summer and circulated a press release to that effect. This would be done through a company called Business Marketing Services. Again the Pirate bay reiterated that it’s not even in talks with MrPandeya in a concise blog post.
Frankly given Pandeya’s supposedly shaky financial situation and the fact that his announcements in the past have produced only thick empty smoke I can’t even understand why anyone is reporting on this other than because Pirate Bay stories generate traffic and because this saga now reads like a mildly entertaining soap, but I guess that right now I’m falling into this trap myself so I’d better stop talking about it!

Tomorrow Never Knows.
http://www.themusicvoid.com/2010/04/exclusive-the-big-debate-jeremy-silver-on-that-piracy-thing/

The debate was well-stocked with with high calibre speakers including Geoff Taylor from the BPI, Paul Brindley from Music Ally, Jeremy Silvers from the Featured Artist Coalition, Peter Sunde Komisoppi from the Pirate Bay and Will Page from PRS for Music.

The debate’s aim was to address the future of the music industry but by and large it failed to address that subject comprehensively and much of the conversation – understandably given the presence of PeterSunde from the Pirate Bay – ended up revolving around Piracy –  although Paul Williams from Music Week who was acting as Chair did his best to keep the conversation fluid and on track.
The debate ended up being somehow monopolized by the polar opposites that were Geoff Taylor from the BPI and Peter Sunde Kolmisoppi from the Pirate Bay neither of whom was in my opinion entirely in touch with reality. Peter Sunde didn’t understand for a second the struggle of an artist who sees his work used and shared without permission on P2P networks – he simply said once it’s digital it will be shared and copied and there’s no way to stop that. On the other side you had Geoff Taylor who kept pinning the decline in sales entirely on piracy whilst we know that is not the cast saying things like: The many digital revenues are starting to add up to something but because of people like the pirate bay they are a fraction of where they should be and that the anti piracy measures are great for consumers and music fans as otherwise investment in new acts is going to dry up and it will be the pirate bay’s fault.

Thankfully the panel also offered some more balanced opinions like those of Paul Brindley from music ally, who pointed out that the music industry has been struggling for years as to where to intervene on piracy in the value chain. They tried suing the users and that back-lashed horrendously, they tried closing down the sites responsible but the nature of the Internet made that a useless pursuit, they are now putting pressure on theISPs to send letters out with the latest legislation but cutting people off the Internet could be going a step too far as the Internet is becoming a basic human right just like water. Also Will Page fromPRS talked about the value chain and about how measures need to put in place that allow for the growth of legal digital companies to outpace that of illegal ones.

I suggest that you go and read the very well written article by Jeremy Silvers on the Music Void where he debates the piracy issue as a reflection on Thursday’s debate in a very sensible way.

Digital Music Trends – Episode 42

This Week: an interview with Susan Bonds from 42 Entertainment and the first half of my Sounds Digital keynote summaries. In the news MFlow launches in the UK, Last.fm abandons streaming, the Ovi store increases in traffic and Apple changes the App rules.

Susan Bonds
www.42entertainment.com

MFlow goes public in the UK and start heavy advertising on Absolute radio as well!

http://blogs.telegraph.co.uk/technology/shanerichmond/100004939/mflow-updates-and-moves-into-public-beta/

MFlow was a big story this week in the UK as the service went in public beta. Mflow is effectively described by Shane Richmond from the telegraph as a cross between iTunes and Twitter, where users can recommend tracks to one another and get 20% of the price of the download in redemption credits if someone buys a track through their recommendation. I’m really intrigued by this service and I look forward to trying it out next week. I’m also in talks to arrange an interview with them so hopefully that will happen soon as well.

the Ovi store reveals its latest growth figures
http://www.mobile-ent.biz/news/36722/Nokia-Ovi-Store-generating-16m-downloads-a-day

The Nokia Ovi store keeps growing and is now reporting over 1.6 million downloads per day globally, with China, Germany, India and Indonesia being amongst the most active countries. Nokia has made a real effort in providing localized content to its users, and most of the Ovi Store’s users can now receive content and browse in their own language. Mobile entertainment reports on how the billing and operator supports are very important to the expansion of the service, with over two thirds of payments are being made via mobile billing. The Ovi store seems like a huge opportunity to reach consumers in countries where access to PCs or Broadband services is not as widespread that are seeing a huge increase in mobile data consumption.

Last.fm re-focuses on scrobbling and discovery
http://blog.last.fm/2010/04/12/yes-it-does
http://www.guardian.co.uk/media/pda/2010/apr/13/lastfm-streaming

Last week Last.Fm announced that it would stop its streaming service to concentrate on its core business of scrobbling. Now if you want to play a track on Last.fm you are re-directed to one of the many partners of the service, including Spotify, MOG, We7, Vevo via what is called a “playlink”. The site announced that its aim is to become ubiquitous amongst music services and able to scrobble from any music experience on the web. Apparently the company does not get paid for the use of the scrobbling technology – the revenue comes from users that go through to the Last.fm site to check out their profile and tracks. Since streaming was just a side feature and didn’t really fit in with the company’s business plan it was certainly an expensive feature in terms of licensing fees and cutting it seems to make a great deal of sense – especially since last.fm users were probably scrobbling from other platforms anyhow.

More controversy regarding artist revenues from Spotify
http://www.telegraph.co.uk/technology/7590782/Spotify-rejects-claims-that-it-rips-off-artists.html

Some fresh controversy on the Spotfy revenues debate. The British Academy of Songwriters, Composers and Authors (Basca), which represents 2,000 songwriters last week claimed that the company generates very small amounts of money for the rights-holders – casting fresh doubts over whether the service is capable of providing a substantial revenue source even for artists that generate millions of streams. Spotify was very quick to hit back and to re-iterate that they are paying out to rights-holders considerable amounts of money, a figure in the tens of millions o euros, and that one of the company’s main objectives is to be able to compensate the creators fairly. Naturally the problem the company has at the moment is that with everyone being so secretive about the actual figures most of this is pure speculation and we have no idea of knowing who is making what!

Apple reveals new regulations regarding app advertising and analytics.
http://venturebeat.com/2010/04/12/apple-changes-rules-on-iphone-app-analytics/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+Venturebeat+(VentureBeat)
http://venturebeat.com/2010/04/13/apple-ads-analytics/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+Venturebeat+(VentureBeat)
http://www.nytimes.com/2010/04/12/technology/12slate.html?pagewanted=1

And finally Apple has been the source of a few headlines last week. First of all it changed some of its Development guidelines to include this line “Device Data may not be provided or disclosed to a third party without Apple’s prior written consent. Accordingly, the use of third party software in Your Application to collect and send Device Data to a third party for processing or analysis is expressly prohibited”. This caused quite a stir because basically it bans any analytics app for the phone from the store, and these had been very helpful to developers to understand the public take on the product. Second it may have changed the guidelines as to not to support personalized advertising powered by AdMob on the iPhone, naturally in favor of the company’s own and new iAd platform.

Digital Music Trends – Episode 41

This week: an extensive interview with Frank Rose, journalist, author and currently contributing editor at Wired magazine. In the news: the unveiling of the iPhone 4.0 OS brings multitasking which is great news for music apps, Pandora gets new exposure with its 3.0 mobile version for iPhone and iPad, in the UK the Digital Economy Bill which includes anti-piracy measures is rushed through parliament just shortly before the general elections, Nokia launches a DRM-free comes with music service in China, Universal partners with Conduit Labs thus entering the virtual goods market and Musicians for Music 2.0 aims at becoming a seed investment source founded by the music community.

Episode 41 by digitalmusictrends

www.frankrose.com www.deepmediaonline.com
But let’s start with this week’s interview with Frank Rose –  Frank started out writing for the Village Vanguard in the 70s and since then he has written for some of the most important publications in the United States including Rolling Stone Magazine, Fortune and during the past ten years Wired Magazine. He has also published a number of books including titles like West of Eden on Apple computers and The Agency that details the history of Hollywood’s most powerful agency. Frank will be one of the speakers at the Sounds Digital event taking place this week-end in London and organized by the Music Void and XMediaLabs.

And now for the news

iPhone 4.0 and new possibilities:
http://arstechnica.com/apple/news/2010/04/apple-announces-multitasking-and-more-for-iphone-os-40.ars

So Steve Jobs must be in fine form now – he was spotted at the Oscars and recently made an appearance at an Apple store checking out his own iPad and was seen having a very conspicuous cup of coffee with Eric Schmidt from Google. On Thursday he took to the stage once again after January’s iPad announcement to unveil the 4.0 version of the iPhone OS. So what’s the news? Well, whilst there was nothing earth-shattering in terms of features at least for once Apple delivered what everyone was waiting for: multitasking. This is something that has been available for quite a while on Android and it was sorely needed if anything to stop Apple customers from turning to more advanced, specked out and open HTC Android phones.

But what does multi-tasking mean for music tech companies? Well, for starters it means that I’ll be renewing my Spotify or my We7 subscription since I will finally be able to listen to the music without having to continuously stop it and start it to check my email or update a Twitter feed. These applications will be able to run in the background while I’m doing other stuff both on the iPhone’s main apps and on other third party apps. So I could be checking out a new album whilst updating my Google calendar. This could also be an interesting development for an application like RjDj – where the music reacts to your movement and to the sounds that are around you – what if you just left that running in the background and let fate develop it? Naturally there’s a catch, as only iPhone owners with 3Gs models will receive these new features as well as, naturally,  those who will buy the new iPhone 4.0 which will very probably arrive in the summer. If I want to be totally fair it is probably down to the fact that earlier models with slower processors may not be able to handle multi-tasking without slowing to a halt, I have experienced my own 3g running very very slowly if I have more than for or five windows open in Safari.

Amongst many new features announced by Jobs another a really interesting one for Music companies is the iAd platform. Jobs highlighted pretty bluntly how advertising in the iPhone apps pretty much sucks, not least I’d add because they are not getting any money from it, so Apple created a centralized network called iAds that will take care of the placement and distribution of the adverts. The developers will only have to insert the appropriate API in their app in order to use the service and they will receive what Jobs called an “industry standard” 60% of the revenues, I have no experience in this field so I am unable to comment as to the accuracy of this figure! The adverts when “touched” open up within the existing application and are very much interactive to try and create an emotional experience and a connection with the user. the user can then close them and go straight back to what he was doing, making it more likely that he will want to check some of them out.

Pandora gets boost from iPad and new version of iPhone OS
http://techcrunch.com/2010/04/01/pandora-ipad/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29

One of the music companies that is poised to expand its audience even further with the iPad is Pandora, the personalized radio streaming service that is one of the most downloaded apps ever for the iPhone. The company has just released a 3.0 version of its app, which is universal meaning that it can be used both on the iPhone and on the iPad and scales things up or down accordingly. According to TechCrunch the iPad’s screen size means that the Pandora experience is more enjoyable now as the user can browse the artist biographies, pictures, reviews with ease whilst listening to the music – almost like browsing a magazine. Apparently the app’s performance has also been improved with fewer dropouts. Pandora recently announced reaching 50 million users and it’s certainly a platform that is resonating with the public since it’s a personalized experience that often helps you discover new music that really matches your tastes.

UK Digital Economy Bill
http://www.billboard.biz/bbbiz/content_display/industry/e3i3ddc3639f0395ca8b87f1dcc8467e547

http://www.guardian.co.uk/media/2010/apr/12/digital-economy-bill-households-piracy

http://www.telegraph.co.uk/technology/news/7571532/Digital-Economy-Act-what-happens-next.html

One of the biggest stories of the week was the UK parliament’s approval of the Digital Economy Act on Thursday. Naturally many sources both nationally and internationally reported on this story and all of them stressed how the approval process was a rushed and last-minute affair since the Queen had actually dissolved parliament officially on the 6th and these last few sessions were geared at tying up loose ends in the legislation. In fact not all parts of the bill were passed into law, but the one regarding anti-piracy measures was. The new legislation introduces a new system of warnings which are issued via letter by the ISPs. These will not be reaching people’s homes until early 2011. A year after thesxe measures are introduced there will be an assessment regarding their effect, and if piracy levels have not dropped by 70% in a 12 months period the regulatory body Ofcom will decide whether to activate stricter measures which could lead up to the suspension of the user’s connections.  So as the Telegraph points out these measures will not directly affect consumers for a while. But this does not mean that the way the law is formulated and its rushed approval are not a cause for concern. So far there is no clear indication as to what will happen, for example, to the local cafe’ offering free wi-fi  that people could theoretically use to download copyrighted content. Will that have to close down? Naturally content owners were pretty happy that this bill was finally passed, since it is the result of months and months of research and reports but it is not a shining example of a legislative process gone the way it should have, otherwise it would not have ended up being approved at the last minute and just before a general election. 

Nokia Comes With Music goes to China
http://news.yahoo.com/s/nm/20100408/wr_nm/us_nokia_china

Nokia has announced the launch of its Comes With Music service for for the Chinese market. This will allow users to download DRM-free MP3s – and this is a key difference with the European and South American version of the service. The service will distribute both major label tracks and independent and local material but the announcement was seen with some scepticism by the stock market. The main problems are that 1) Nokia is going to have to give something back to the labels for the use of their products 2) music in China is considered free anyway because piracy is so rampant, so this feature may not be considered so compelling 3) this is a free service that may only generate an additional income indirectly through advertising or cross-selling – as pointed out in a Reuters story (you’ll find all the links in the shownotes). In any case it’s a pretty brave attempt at breaking into a mobile market that can potentially drive a huge amount of business and we’ll see how it pans out or if any details of the label deals surface in the coming weeks and months.  

Universal Partners with Conduit Labs
http://techcrunch.com/2010/04/06/universal-music-group-strikes-deal-with-conduit-labs-to-bring-lady-gaga-and-rihanna-to-social-games/

Tech Crunch reports of a deal between Universal Music and Conduit Labs. The latter is a start-up that creates social music games, including the increasingly popular Music Pets, Loudcrowd and and Super Dance, These are all apps distributed via Facebook and collectively count over one million users. 

The deal will allow users to buy tracks by the likes of Lady Gaga, the Killers, the Black Eyed Peas and many others as virtual goods to personalize their gaming experience, and it will include linking to sites where they will also be able to buy the track outright as an MP3. Conduit Labs will naturally get a share of the revenues form the virtual goods sales generated within the game – which seems like a fair deal. The start-up had already secured deals with independent labels such as the Beggars Group – but this deal is likely give access to tracks with a more mainstream appeal. The incredible success of the Farmville idea has spurred the birth of a flurry of companies working with virtual goods, but it’s nice seeing one of them concentrating on music. Music is certainly not the most profitable item to sell on one of these apps – you can sell a virtual cow for $5 and keep all $5 or sell a virtual Just Dance by Lady Gaga and only keep a fraction of what you’re charging for it whilst the rest goes straight to the label…. 

Musicians For music 2.0 aims at helping music start-ups get funding.

http://www.indiemusictech.com/music_marketing_for_indie/2010/04/fund-music-technology-startups.html

And finally I wanted to point to an Article on Indie Music Tech.com about the Musicians For Music 2.0 initiative which is was started by Charles McErney from Well-Rounded radio and aims at raising funds from the community that will go towards helping 12 cash-strapped music tech start-ups. I’m glad to see projects like this one cropping up – I’ve spoken to a few people detailing the difficulties encountered in trying to secure funds and in trying to run a bootstrapped operation. At the moment the project is raising some preliminary cash through Kickstarter so go and give a buck if you can!

So, that’s all for this week. This week-end I’ll be at the Sounds Digital event organized by the Music Void and XMediaLabs so on the next episode you can expect lots of info from the event! 
Also, I’ve just read that there are two more MusicHackDays being organized, one is the 24th and 25th on Amsterdam and the other on the 15th and 16th of May in San Francisco – if you are a developer and like tinkering with APIs i strognly suggest you check out musichackday.org! 
If you’d like to get in touch with feedback or news stories or simply to say hi the email is digitalmusictrends@gmail.com. On the website, at www.digitalmusictrends.com you will find all the links to the show and finally you can follow me on twitter, the handle is Digimusictrends
Have a great week and ’till next time! 



Digital Music Trends – Episode 40

This Week: an interview with David Maher Roberts, CEO of the Filter – a company that since 2004 has been developing online recommendation technology in the UK. A slow week in terms of news: the iPad went on sale this weekend and could boost the development of interactive music, Guvera launched its public beta in the US but kept a low profile, Spotify launched an e-book section and Michael Robertson started a personalized online radio service BYO.fm.

And now here is the transcript of this week’s interview with David Roberts from the Filter. The filter was started back in 2004 by Peter Gabriel and Martin Hopkins and since then it has grown to develop a very successful recommendation technology whilst also shifting its focus from B2C to B2B . David Roberts, the company’s CEO since 2007, talks about its evolution both as a technology and as a business and about the Sounds Digital conference.

www.thefilter.com

AL: Well, I’m really happy to welcome to the show David Roberts, CEO of the Filter, a UK based recommendation engine. Hello David and thanks for coming on the show.

DR: You’re very welcome, hello.

AL: So, first of all, what is The Filter?

DR: Well, The Filter is a recommendation and relevance engine for digital entertainment contents, so music movies, web-videos etc, so it basically it finds the most relevant content that somebody wants to consume. And we do that on music sites, video sites, DVD rental sites.

AL: The company was created by Peter Gabriel and Martin Hopkins back in 2004,  and since then you have made huge leaps in the recommendation technology, you have been CEO at The Filter since 2007, looking back to the history of the company, what do you think are the most important milestones that spurred its development?

DR: Well, several stages. In the first they validated the power of the technology by building music playlists way before Apple Genius was around – it was using technology  to build great music playlists, so actually getting that done and out as a consumer piece of technology was the first milestone. I think after that one of the next milestones was probably getting Nokia to use our technology on their music store – that was the first B2b deal we ever did and it was pretty major. And I think that a final point was a leap into video. we have been working with Daily Motion now for over a year, we only announced the deal a few weeks ago but we have been working with them for ages and being able to use the technology for web video, for a library of 100 million videos was a massive milestone for us.

AL: Music Recommendation services are absolutely vital in today’s increasingly all you can eat subscription model, consumers are kind of confused as to what they should listen to and when presented with a blank page they sometimes don’t know what they want to find. But still, it seems strange that a company like Spotify for example didn’t launch with a full-blown recommendation service from the beginning and it’s not just Spotify, there are many other services that are lagging behind in this area. Why do you think that often the creation of a recommendation infrastructure comes as an afterthought to many companies?

DR: Well, there are probably two main reasons. The first is that these sort of companies  focus first on the content itself and on how they may deliver that and the deals they have to do – in the case of Spotify the deals they have to do with the record labels. So they focus on the UI and they focus on the deals and that takes up 99.9% of their time. So that’s one of the reasons. And it’s a problem across all media companies, they focus on the supply of content rather than on the demand for it. The second reason is that people is that people think it’s easy – they think ‘we’ll do it later” and it’s not – it’s been proven again and again that whether you are Netflix, Google, Youtube it is really hard to get quality personalization in place and it takes many years to be able to do that.

AL: The bulk of your business at the moment is in the B2B licensing of your technology for use by clients such as Nokia as you mentioned earlier and Sony Music for example. But you started out as a B2C service, and you still have that embedded within The Filter, how do you separate thses two units and how do you go about developing them?

DR: Well, the B2C side of it – so our website, our downloadable playlist generator and other things that we do like the iPhone app Bandstalker – all of those things are showcases for the B2B part of the business so we don’t actually separate them. When some of our engineers have some spare time they will develop new features on the B2C side of things but they are very much there to show what we can do and 95% of our time is focused on licensing.

AL: And Data is at the core of filter’s experience naturally. Your services, more than just providing great recommendations to your clients are also complemented with a great set of metrics and analytics that help your clients gauge the impact that you have on their business. How did you go about building the infrastructure to provide this sort of data?

DR: Well, the good thing is that to provide really deep recommendations you have to capture a great deal of very detailed  granular data around the content. Since we were capturing all of this data anyway to feed to the recommendation engine we didn’t have to  build anything separate for the analytics. What we did have to do is start  understanding what information was important and start showing it in dashboards to customers. We understood it was important  when people started realizing that from Omniture and from other existing packages they could not get the same level of detail that we could provide about the content. So it’s now become a bigger and bigger part in the future of what we offer. We actually have 2 services – we have software as a service and data as a service because it’s becoming huge for us.

AL: And although you started with a focus on music you mentioned before that you also create movie and web video recommendations. Is music still the bulk of your business or are online video and movie rental businesses becoming an increasingly important part of you client base?

DR: Well the video and movie rental is defiantly increasingly important. In terms of volumes – the amount of recommendation calls we put out every month i’d say that 75% are now on video, but in terms of revenue 65% of it is still coming from music, so the volume and the revenue are not necessarily connected.

AL: And your client base spans from organization such as video distributor Daily Motion which is pretty huge going all the way down to small start-ups like Evolver.net. How do you deal with working with businesses that have such varied requirements in terms of both the type of recommendation and the scaling of it?

DR: Well we have a very easy start point for recommendations so we can actually set up small businesses without costing much money or time, so it’s a very easy start point. What tends to happen with larger businesses is that they have many more bespoke requirements as to how we need to adapt our recommendation model to them. So that’s when we get much more involved with the teams, how we integrate the APIs etc… Integrating the core technology is fairly straightforward on any system and so we can work with very small businesses all the way to the Daily Motions, the Nokias and the Sony’s of this world.

AL: The Filter is based in Bath, which is a city that is not widely known for its tech community. Did you find it harder to develop the company from there, or would you say that today location has minimal impact on businesses that operate mainly online?

DR: The good thing about Bath is that it’s 10 miles away from Bristol. Bristol has a very strong tech community – there are a lot of digital agencies and a lot of technical resources and creative people that you can access to build up a company in Bath – and since it’s only 10 minutes by train that’s quite easy. Having said that it’s not San Francisco and you have to work quite hard to find the right people to come and join you. But it’s a great place to live and once you attract the right people they love living and working here.

AL: You’ll be one of the speakers at the Sounds Digital event hosted by the Music Void and the XMediaLabs in London between the 16th and 18th of April. What will be the focus of your keynote there?

DR: Well my keynote is all going to be about how to make content more relevant to individuals based on their taste, location, time of the day,  the device they are on – so I’m going to explore what is important to making things more relevant to individuals when it comes to music.

AL: And talking about the Sounds Digital event – you will also be taking part in the Labs sessions as a mentor – what are you planning to bring to the table to help these new digital projects get of the ground?

DR: I guess in my background I’ve been lucky enough to be involved with very large media companies, so I ran all of Future Publishing’s web operations for several years, I set up a lot of magazines, international operations, so I come to the table with that experience. But actually what’s even more relevant is the last three years at the filter where we have gone from a B2C model and strategy and changing that to one that makes a lot more money and is a lot more successful. So I can talk about how you need to be flexible, you need to understand the strengths of you technology and your people  and how you can be flexible to deliver a better business model and a sounder return on investment for the people that are involved.

AL: Well that’s fantastic, thank you very much or joining me on the show and I look forward to meeting you at Sounds Digital.

DR: Thank you very much, take care.

And thanks again to David for joining me on the show.

And now for the news:

– The iPad was released this week-end, what will be the repercussions on the music and music interactivity world?

http://www.wired.com/epicenter/2010/04/ipad-interactive-music/

So the iPad finally went on sale this week-end and Wired dedicated an article to Michael Breinderbruecker’s new app called RJ Voyager as an example of what’s to come for interactive music. The app allows you to tweak and modify music based on very accurate tactile controls that take full advantage of the iPad’s large screen real estate. Michael is one of the founders of Last.fm and is also the head of Reality Jockey which is the company behind RJDJ, so he knows a thing or two about interactive music. It’s no surprise then to see him take full advantage of the iPad’s hardware to allow full control of instruments, effects, patterns in a way that can make the average Joe feel a lot closer to an accomplished producer. This is a great way to show that a new type of technology needs to be developed that can really showcase the iPad’s creative potential – whilst most of the press in the past week has been focusing on the iPad as a consumption device only. If the technology and the licensing of great music come together on this platform there is a great deal more that developers can do to keep the public entertained than there is on the iPhone. In the meantime, I’m sure that interactive music tech companies like MXP4 are already developing for this platform just like most probably the guys at RjDj are. The key here is not in rushing out an app that has been scaled up from the iPhone but to take some time in figuring out how people are interacting with this new device, how they’re holding it, if they are able to hold it in a certain way for a long time before getting tired – i’m already hearing reports that extended reading sessions may require a stand. So there’s a huge amount of unexplored territory and simply scaling up the iPhone experience would really be a bad call at this point. But I already have Michael and the rest of the RJDJ team booked in for an interview in a few weeks’ time so I’m sure that you’ll be hearing more about their strategy towards the iPad then.

– Guvera Launches in public beta in the US.

http://www.musicweek.com/story.asp?sectioncode=1&storycode=1040636&c=1

http://www.billboard.biz/bbbiz/content_display/industry/e3i539277d81ea4a9b116d25c6d60e21c64

Guvera, the Australian start-up offering ad-funded free Mp3 downloads went in to public beta in the US – although the launch was kept low-key and functionality was limited. Out of Music week, Hypebot and Billboard business it was definitely the latter that made the actual process clearer and I suggest you check out their article from the link in the show-notes of you want to have a sneak peek at the screenshots of the service. Guvera at the moment is operating in a limited fashion – probably because they don’t want to end up giving away too much free music too soon and apparently even registered users are not allowed to start downloading tracks straight away. At the moment there are two services operating in the US offering licensed free music – Guvera and Freeallmusic, but their approach is quite different. On Guvera, users have to choose the brands they want to be involved with from the very start and the whole process incorporates that – you could say that the exposure that the brand gets in this way is much greater although their presence could be felt as more intrusive by the user. FreeAllMusic, the Georgia-based start-up, works instead in a more immediate way, which is possibly less memorable to the end users who are made to watch a fairly long advert before being allowed to download the MP3s, without having prior introduction or involvement with the brand. Guvera is now able to give away selected tracks from Universal Music, EMI and IODA and although as usual we have no idea as to what their financial arrangements may be it’s a safe bet to say that if the service catches on they will have to be fairly strict regarding the number of tracks each user gets to download and as to if and how much money they are prepared to lose at the start of this venture. If they are able to cover the cost of the music with the sponsorship money already then great, otherwise as usual it’ll be a race against time to prove that the model works before the VC funds run out.

– Spotify and e-books?

http://musically.com/blog/2010/04/01/spotify-makes-its-move-into-e-books/

It looks like Spotify is really aiming at becoming a home entertainment hub. After their first successful foray into video streaming with the Amy MacDonald event the company launched an e-book section available both on its desktop and mobile clients. The new venture launched with 20,000 books which means that they must have been working on this for quite a while, and it proves the company’s ambitions to really take on iTunes and steal customers away from them whilst Apple is still tinkering with its 1 billion dollars data centre and pushing back the launch of its streaming service. If Spotify was able to 1) add videos and movies successfully 2) team up in a considerable way and across many devices with Android 3) garner enough interest in the US to really get the public’s attention – then it could really have a stab at taking – if not iTunes’ crown – at least a few million of its customers. Naturally adding all these media would cost the company considerably more in terms of licenses, a cost that could either be compensated by scale if the service is popular enough or by extra charges to access the movie and e-book sections in the future. In any case, I think that Spotify is making a really decent case for its future and I look forward to multi-tasking on the iPhone to re-start my premium subscription.

– Michael Robertson launches BYO.com

http://news.cnet.com/8301-31001_3-20001334-261.html

Michael Robertson, who is no stranger to stirring the waters of digital consumption with sites like MP3.com, has now directed his attention to online radio to try and create the prefect service. The new platform is called BYO.fm or Bring Your Own, and merges the concept of the digital locker as a cloud service that matches your own music library and resembles the likes of Tunesbag.com with the idea of personalized radio that is created with text-to-speech technology and is inserted within the playlist. So you could ask for playlist X to run and to intersperse it with the latest news on US politics or the latest Baseball coverage from your favorite minor league team that would probably never be covered on your normal radio. This is a very intriguing idea, especially if the text-to-speech works as promised – but it could be hindered by the fact that content providers are increasingly turning to subscriptions in order to ensure their profitability. The service would then have to make deals with the likes of the New York Times or CNN in order to use their material, which could hinder its development. In the CNET article about this new service there was no mention of monetization although I assume this would have to be a subscription or an ad-based model – also there was no mention as to whether the digital lockers were created with the license of content owners or not – but I guess that since MP3.com eventually closed down due to to multiple lawsuits by content owners Mr Robertson probably has a less litigation-prone plan to guarantee BYO’s future.

Well, that’s all for this week, thanks a lot for tuning in and remember that you can access all of Digital Music Trends’ content on www.digitalmusictrends.com. To follow me on twitter the handle is digimusictrends and if you’d like to post any feedback or news items or if you know or work for a company that I should feature on the show the email is digitalmusictrends@gmail.com.

Have a great week and ’till next time!

Digital Music Trends – Episode 39

This week: an interview with David Nelson from Muziic.com and one with Megan Elliot from XMediaLabs. In the news the IMHO Player, Rapidshare tough on piracy, Spotify may be set for a Q3 launch in the States and finally some Shazam and Last.fm updates!

www.muziic.com

www.sounds-digital.com
IMO Entertainment launches IMHO, a new social media player blending music, videos, games and advertising.

http://www.billboard.biz/bbbiz/content_display/industry/e3ibfd213a270515452350214f913243ada
http://musically.com/blog/2010/03/25/former-sony-music-boss-launches-imho-social-content-player/
http://www.pamil-visions.net/imho-cloud-content-distribution-is-a-game/213195/
http://preview.imhomedia.com/facebook_connect
http://www.prnewswire.com/news-releases/former-sony-chief-ienner-launches-imho-alpha-89013107.html

Various news outlets such as Billboard Business and Music Ally reported on the launch of the IMHO social media player this week. The player is produced by IMO Entertainment, a company lead by Don Ienner, previously CEO of Sony Music Label group and Columbia Records. The idea behind the player is that it brings together music, video and gaming under a single roof that is cloud-based and geared towards social sharing. The player’s monetization revolves around virtual money that can be purchased outright via Paypal or earned through the exposure to advertising the level of which can be customized within the player, the virtual IMHO money that can be spent to purchase content, personalize your avatar or purchase virtual goods. At the moment the player features 150 radio stations, a partnership with digital distributor the Orchard as far as the music is concerned and over 900 games provided by RealNetworks. The player is geared primarily towards Facebook users, who have demonstrated time and time again how virtual goods done right can generate a huge cash flow – see Farmville’s history for details. The idea seems certainly pretty solid, but the real problem will be finding a balance between free content and paid content. If relatively new users were to experience that the majority of the content on the player requires payment they will soon be turned off by the experience, but just like in Farmville, if enough is given away for free to get them hooked to the platform then they will probably agree to buy almost anything, no matter how daft the purchase may appear. Due to Facebook’s fundamentally unsuccessful strategy up to now in regards to content distribution of music and videos many companies are competing to create an experience that can capture the imagination of the hundreds of millions of people who use the platform every day. IMHO has now captured the industry’s attention, it’s now up to them to demonstrate whether they can live up to their own hype and reach a mainstream audience.

Rapidshare goes all-out against piracy and wants to direct pirates to legal sites for the purchase of content.

http://torrentfreak.com/rapidshare-aims-to-convert-pirates-into-customers-100326/
http://musically.com/blog/2010/03/24/rapidshare-finally-getting-tough-on-illegal-downloads/

Rapidshare, the online file storage and delivery service, has decided to crack down on piracy. The service, which has been widely known to be a sort-of safe harbor for sharing copyright protected material, interestingly decided to start cutting off accounts of known file uploaders and started issuing warning letters to downloaders, probably in a bid to avoid a crippling lawsuit by the entertainment industry. The move took many by surprise as after all Rapidshare’s business had grown dramatically thanks to its sharing-friendly reputation. Torrentfreak, though, offered a different angle on the story after unveiling a letter that was written by the company’s General Manager Bobby Chang addressed to representatives of the entertainment industries. In the letter, Mr Chang condemns new companies that are cropping up with the sole purpose of being cyberlockers for the safe exchange of copyrighted material. He also refers to infringing users as criminals and makes the interesting proposal to deny access to copyrighted material when searched for and replace it with links to sites where the users would be able to buy a legitimate copy of the same item he searched for.

The move has got to be positive news for the music, film and games industry but ultimately pointless as many users who want to continue exchanging files without restrictions will probably just migrate to other services who may have kept a lower profile and therefore so far avoided legal problems. Although this new stance is likely to damage Rapidshare in the short term and reduce its user base it’s certainly a clever move. First of all it greatly reduces the chances of having to fight expensive lawsuits in court. Second the company has now reached millions of customers so even if some were to leave the service chances are that many would stay on and keep it a viable commercial enterprise. Third, if the re-direction of users to legitimate sources was to work I assume it would involve some sort of affiliate sales fee and that could slowly replace the revenues previously generated by copyright-infringing users. I am very interested in seeing how Rapidshare will fare in the next 12 months as the results of this gamble are at the moment completely unpredictable.

Spotify might be aiming at a Q3 launch in the United States

http://www.billboard.biz/bbbiz/content_display/industry/e3if745772b249372ddad2f9ebc7a21298b
http://www.businessweek.com/news/2010-03-26/spotify-online-music-site-targets-u-s-start-in-third-quarter.html

In An interview released to Bloomberg the VP of of Spotify Paul Brown hinted that the service is aiming to go live in the US in the third quarter of this year. Brown said that Spotify is buying server space in random parts of the United States to ensure the smooth running of the service once online and it is still ironing out the details of the licensing deals with the labels. Billboard Business writer Antony Bruno, who picked up on the story, reports that there are also fresh rumors regarding the relationship between Spotify and Google. A couple of months ago, when the Nexus One was first announced, rumor had it that it was going to feature Spotify as an embedded feature. This failed to materialize at the time – also probably because the deals with the labels are not yet finalized – but it does not mean that it won’t happen in the next iteration of the Google phone or that Spotify won’t become a more prominent feature in new versions of Google’s mobile operating system, Android.

Ovi Store starts gaining some traction as Shazam reaches 1 million downloads.

http://www.musicweek.com/story.asp?sectioncode=1&storycode=1040533&c=1
http://www.mobile-ent.biz/news/36462/Shazam-racks-up-1m-downloads-on-Ovi-Store
http://www.pocket-lint.com/news/32294/nokia-comes-with-music-rebranding

While I spend a lot of time talking about iPhone and Android apps I almost never cover the progress of other app stores. Nokia’s Ovi store, launched last year, is finally starting to gain some traction. The store, which offers apps for Nokia’s own symbian mobile operating system, announced that Shazam was the latest app to reach the 1 million downloads milestone. The store seems poised at becoming increasingly popular in 2010 as Nokia sells more and more symbian-based smartphones and although it may not yet make financial sense for smaller businesses to develop for it certainly starts to be a more appetizing market for larger players who can absorb the development costs. For example, Shazam has over 50 million customers so one million is a very small percentage, but given the scale it can still amount to significant revenues. The Ovi brand is becoming quite popular, so much so that Nokia decided to re-brand its Nokia Music Store as Ovi Music. Ovi Music will be rolled out to all Comes with Music customers around the world in 2010 and in many countries it has actually supplanted the Comes With Music brand – for example Russia, Malaysia and India. There are no plans for a re-brand in the UK where the marketing campaign for Comes With Music had been so extensive that any such move would really confuse consumers.

CBS aims at making Last.fm profitable this year.

http://paidcontent.org/article/419-interview-cbs-thinks-last.fm-will-turn-a-profit-this-year/

Robert Andrews from Paidcontent published a days ago an interesting interview with Last.fm’s Product VP Fred McIntyre – you can find it and listen to it via the link in the shownotes.
The key points are that CBS is as committed as ever to the Last.fm brand, seeing it as the only service that successfully ties in the listener’s music experience across multiple platforms and services. CBS aims at making the division profitable by 2010 by being very focused on the subscription business. Outside of the Uk, US and Germany last.fm requires a monthly subscription which currently drives about a quarter of the company’s revenues. In the interview, Mr McIntyre indicated that the number of subscribers is in the high tens of thousands. Rolling out new features for subscribers as well as enriching the way Last.fm integrates with different platforms and devices are both high on the list of priorities for the company. It seems that after a number high-profile departures last year, CBS is finally finding a way of turning things around at last.fm.

Well, that’s all for this week, i hope you enjoyed the show.

A few exciting developments for the podcast this week. First of all as I mentioned before I’ll be covering Sounds Digital in April, then at the end of May I will be covering Future Music Camp in Mannheim as well as hosting a workshop on interactive music services and I just confirmed that I’ll be at the Future Music Forum in Barcelona at the end of September. You can find links to all these events on the front page of the the site at www.digitalmusictrends.com, where you will also find links to the iTunes and RSS feeds, a contact form and other goodies.
To contact me directly with news stories, comments and feedback the email is digitalmusictrends@gmail.com and you can follow me on twitter, the handle is digimusictrends.
have a great week and ’till next time!