This week: an interview with Kami Knake, host of the Bands Under the Radar (BUTR) music Podcast as well as being a consultant for Topspin, Brite Revolution and Mobile Roadie. In the news: Warner Music quarter one figures reveal digital revenues gaining weight, Google sues a small US label seeking a court ruling that would once and for all declare that the corporation is not liable for including copyright infringing search results, digital distributor Tunecore shows with its latest figures that the album may indeed be a dead format, the Ning platform is going to phase out free and to conclude a revenues update from RealNetworks.
Google is looking for judicial clarity by effectively suing a small indie label.
Google made a bold move last week and decided to effectively sue Blue Destiny Records, a small blues label based in Florida. But wait a second, why is google bothering? Well, because there is quite a bit of back-story to this. Blue Destiny had sued google, Microsoft and Rapidshare, stating that google and Microsoft were favoring the exchange of copyrighted material by offering search results which consisted effectively of rapidshare links that were offering that content. Blue Destiny then withdrew its suit in March – the articles I read do not state exactly why that was. In short, Google decided it was time once and for all to have a court rule that they do not have responsibility for the links provided in the search results in case these lead to copyright infringing material, so it decided to file a counter-suit in a court in California which apparently would be more friendly to Google’s arguments than, say, one in Arizona. google is asking the court to provide declaratory judgement as to whether links to cyberlockers constitute infringement or not. So from what I understand the suit is not against the label itself, but it’s a way of settling a debate that had been left hanging in the air and set a precedent with the courts that providing links to site such as Rapidshare does not in itself constitute infringement. Problem google versus Blue Destiny equals to David versus Goliath – let’s not forget as billboard points out that Google’s revenues are much larger than the entire revenue of the world’s entire music industry. This is both a smart and very dangerous move for Google – as flexing their legal muscles will make it very clear that there is no way of winning against a corporation as powerful as they are and could generate a backlash.
Ning moves away from free, reveals pricing details.
Streams are definitely rising and represent 57% of sales, whilst single track downloads, though definitely growing in terms of number, only made up 40% of units. One thing that I personally found confusing about the articles covering this story is that although the incredibly poor performance of the albums is evident the graphs refer to the number of tracks sold as singles, sold as albums or streamed. This naturally in no way relates to the income that was generated by those assets, because I would bet that even though streams represent 57% of sales they didn’t generate a great deal more if at all more than the 2.3% of album sales and that the lion’s share of the income came from single sales. Unfortunately I could not find a link to the actual figures relating the number of sales to the dollars generated so at this stage it’s all speculation… Billboard Business also reports that the company has entered a partnership with Myspace that will allow any band with a Myspace account to receive a half price discount on Tunecore’s services – which means pretty much every band on the planet will be able to take advantage of this offer. Also, users taking advantage of this offer will also receive $50 in MyAds credits so they will be able to advertise the release on MySpace. I personally have never used the Myspace advertising platform though I’ve used Facebook’s ads several times. If you have any experience advertising your own project or band drop me a line, it’d be interesting to know if it was useful or not!
And finally let’s close with another quarterly earnings report from RealNetworks. Although revenue fell 9% to 128.6 million dollars, the net profits rose from a loss of 12.1 millions a year earlier to a profit of 3.2 millions. The revenues actually beat analysts expectations but Rhapsody as a service is still having a hard time, having lost another 25,000 subscribers. AP reports that even though the company has reduced the subscription price by 5 dollars and implemented changes in its mobile application that allow for the cashing of tracks on mobile for offline access this has not reversed the fortunes of the service whose ownership – as i reported earlier this year – is now evenly split between Viacom and RealNetworks, neither of whom is majority stakeholder. RealNetworks is a well-known name in the States as is Rhapsody, but users don’t seem to be responding well to the subscription model given that their numbers are reducing. RealNetworks in fact, being now a separate company from Rhapsody is concentrating on producing a whole other host of web-related products including games. The lack of traction for Rhapsody may indicate that the public is not keen on subscription or – more likely – that other services have come along that more than fulfill their music needs, like Pandora for example. This is also interesting news for Spotify – the company is supposedly planning a roll-out of their service in the States in quarter three of 2010, and to succeed it needs the same momentum it achieved in markets like the UK for example. This momentum though could only be guaranteed by maintaining the free ad-funded feature that spurred its viral spread over here and was used to convert users to pay for the monthly subscription which includes mobile access. At the moment though it is not clear whether Spotify will be introducing a free version in the States – a factor that could greatly reduce its viral spread. The first question is – do people want subscription? And the second is – is a service in this space by Apple likely to kill all competition in a short amount of time? The second question is interesting in that if the majors felt that they could get more money through a successful Spotify (let’s not forget that all the majors have a steak in the company) than from an Apple-led subscription model – they could ostracize a streaming deal with Apple to prevent their service from killing off Spotify before it even has a chance. As far as I can understand the agreements that Lala had with major labels do not automatically transfer to Apple so the terms and fees paid for streaming and other cloud-based services would have to be renegotiated. It’s definitely an interesting time for streaming models…
Don’t forget that I will be at the Future Music Camp in Manheim in the last weekend of May so if you are planning to attend drop me an email (firstname.lastname@example.org) Have a great week and ’till next time!