Digital Music Trends – Episode 34

This Week: Real Networks to spin off Rhapsody into a separate company, the CEO of Myspace Owen Van Natta steps down and the company starts to introduce pre-roll audio adverts, Tunewiki raises a new round of funding, the new Swrv music channel launches in the US and Apple is counting down to 10 billion track downloads. Shownotes

Real Networks to Spin off Rhapsody

Only a month after Real’s founder Rob Glazer stepped down as CEO of the company – Real Network decided to separate itself from the music subscription service Rhapsody, which counts over 700,000 subscribers in the US.
The most important part of the deal is that the ownership structure of Rhapsody will be altered so that Real Networks will own 49% of the service and Viacom’s MTV the other 49%, with a 2% remaining to be held by minority stakeholders.
This should have 2 effects:
First it will get the money-losing Rhapsody operation off Real Network’s books
Second it will make it easier for the service to be bought out by a third party- which is a possibility floated by Peter Kafka from All things Digital.
Another important side-effect is that it will allow Real Networks to re-focus on the technology side of things.

Real networks has been on the digital music scene longer than most but it has so far failed to capitalize on its experience and the use of its products has definitely slipped over the last couple of years, I can hardly remember a time when a website has required me to use the RealPlayer plug-in. I do hope that this move helps them bring the company back in the game.

Myspace CEO steps down
OK a long section of Myspace news now. Just a few days ago it was announced that the company’s CEO Owen Van Natta stepped down and left, to be replaced by a co-presidency of the Chief Operating Officer Mike Jones and Chief Product Officer  Jason Hirschhorn. This is certainly a surprising move as i saw Mr Van Natta speak at Midem and his performance  in Cannes – if he indeed was aware that something of this kind was even remotely possible – was that of a seasoned actor.

In the past couple of days there were many columns spent over the possible reason why he left or was made to leave with internal conflicts being at the top of the list. After all Rupert Murdoch had made it clear not so long ago that he was not happy with the performance of Myspace. I don’t want to join in the speculations as to why Mr Van Natta left, and I’m more interested in evaluating the effects this will have on the company itself. First of all Myspace seemed to be on the right track, they had stepped up development, openness, band support and brand partnerships to provide an immersive experience. I wonder if this process will be at all disrupted by the change in leadership. Second I have rarely seen a company that rumor has it is full of internal conflicts to fare well under a co-presidency – that’s likely to lead to a lot of half baked compromises that are no good to stir the group in a brave new direction. Third, I think that the only way in which Myspace is likely to succeed is for Newscorp and Murdoch to leave the company alone to do its thing. Myspace is primarily a technology company, it does not work like a newspaper and if it is run as one there’s no chance that it will recover even a small slice of the market share it has lost to Facebook.

Indicative of Myspace’s problems is the departure of Stream Architect Monica Keller who decided to jump to Facebook, as reported by Jason Kincaid from TechCrunch. Tech Crunch quotes her as writing: “But I have chosen to leave. While I was able to have some temporary creative freedom this is not the norm or part of what other engineers enjoy and I do not feel there is one cohesive push to deliver the best we can deliver anymore. To my friends and colleagues at MySpace, some parting advice: It is imperative that MySpace puts in place strong technical leadership who can attract good technical talent and make well-informed decisions. It is important that they stay connected to rest of the world and work on interoperable standards and solid products which benefit the end user. Many of my fellow engineers have fantastic ideas and a plan for phased delivery.”

Myspace introducing audio ads

Billboard reports that Myspace is  beginning to introduce audio pre-roll adverts to music tracks in an effort to ramp up advertising revenue. This model is comparable to the way in which We7 and Spotify’s free services support themselves. A     key difference as highlighted by  Music Week is that whilst the adverts are going to be long – a whole 30 seconds – Myspace will then allow the users to stream an entire album or even a 100 tracks playlist without further interruptions.

It’s debatable whether this model works better than a shorter advert introduced more frequently and considering that a lot of Myspace users are very young 30 seconds could prove too long. The most important factor in my opinion for this model to be successful is the relevance and quality of the advert itself. If Myspace was to blanket users with car adverts that could be a disastrous move, but if the advertising was intelligent and tailored to the user according to their profile and interests then things could get much more engaging. After all, Myspace holds a great deal more personal information about its users than a Spotify or a We7, and therefore their targeted advertising could prove more valuable.

TuneWiki raises a new round of Funding

The Israel based start-up TuneWiki has secured a new round of funding for an undisclosed sum from a number of investors led by Motorola Ventures but also including Intellect Capital Ventures, HillsVen Capital LLC and Novel TMT along with Benchmark Israel who was a previous investor in the company.

Tech Crunch reports that the site The Marker (in Hebrew) valued the new round at about 7million dollars. TuneWiki is the only company that is creating a truly engaging experience in the Lyrics space, which is a field that has been underestimated by many companies and as we all know has generated huge link farms where a single lyric is surrounded by banners, pop-ups and fishy java and flash applications.
TuneWiki has developed apps for the iPhone, Android and Blackberry handsets – all of which are really engaging. The iPhone application pulls all the tracks on your phone and looks up whether these have been indexed in the Tunewiki site, if so it downloads the lyrics which start displaying like a karaoke. On the other hand, if Tunewiki has the lyrics but they are not synchronized to the music, the user has the option to do it himself just by tapping the screen every time a new line is spoken. This synch will then be usable by any other Tunewiki user in the world that wants to view the lyrics for that track. The application has a great mapping function to find out where people are playing similar tracks and I have personally synchronized a whole podcast transcript to it!

Swrv music channel resuscitates the on-demand format for video music television

Swrv video presentation:

In the very same week that MTV finally decided to drop “Music Television” from its logo a new channel was announced by Music Choice that puts music videos and user interactivity back a the centre of the attention. While MTV has decided to concentrate on reality TV programs at the expense of music videos Swrv is a channel focusing only on music videos that are chosen by the public. The channel aims at making the viewers feel in control of their experience and make them feel like real Vjs through a combination of video uploads, text based votes, website interaction and social media interaction through the likes of Facebook.

The channel is launching for Cox cable customers in Virginia and New England and is naturally planning to expand further once the model is tested. It will launch with ten shows all revolving around interactivity. One is called “Majority Rules” and will display a selection of three tracks during the previous music video that users can vote on – once the video ends the votes are counted in a matter of a second and the video that received the most clicks gets played. Another is called “SWRV takeover” and allows a viewer to literally take over the presentation of three tracks (for roughly 15 minutes) through videos submitted on the Internet or via mobile phones.

Of the two articles I found on this story the one presents what Swrv does as a medium extensively whilst the Digital Music News article concentrates on the business model. Essentially the channel was created because CPMs in television are still much much higher than Online CPMs and the experience of SWRV aim at driving a huge amount of 12-24 year old viewers who will be actively engaging with the channel, a very important demographic for many advertisers. The channel would make money not only from advertising but also from licensing itself to other networks and providers across the country. The interesting part of the deal is that Swrv will play the labels both a percentage of the CPMs and a percentage of the licensing fees, although the amounts remain undisclosed.

Now the question is: will the tweenies version of Music Box succeed in a YouTube driven on-demand and always-on environment? We’ll have to wait and see…

Apple approaching 10 Billion downloads with a contest.

So Apple is approaching 10 billion track sales on iTunes. I struggled a little when deciding whether to include this as “news” in the podcast because, after all, iTunes downloads are destined to go up in numbers and why does 10 billions matter more than 2billions?
But this milestone is impressive and making a big deal out of it is a smart move by Apple – it reiterates that the company is still the leading brand in the digital music market. Yes, its market share has shrunk thanks to the likes of Amazon MP3 s but it’s still a majority share in a market that has not stopped growing in the past seven years. The contest will award a $10,000 iTunes store gift card to whoever will get them to that 10 billion download threshold. The most interesting aspect of the story is that Apple had only gotten to 6 billion downloads in January 2009 and it had taken them over six years to do so, so the notion that only 13 months later they have amassed a further four billion sales is really impressive. Certainly the explosion of the iPhone and iPod Touch – which make it ridiculously easy to buy music over the air – as well as the opening of several more international stores over the past few months helped them reach this milestone.

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