Digital Music Trends – Episode 48

This Week: a report from the Future Music Camp in Mannheim and an interview with one of its organizers. In the news: Wolfgang’s vault and Boxee, Limewire closing shop?, Japanise digital sales and Ofcom regulation over the three strikes UK law.

Digital Music trends – Episode 48 – 31st of May 2009.

Hello everyone and welcome to digital music trends – the main feature of this week’s show is Future Music Camp the music conference/barcamp that took place in Mannheim this week-end. I only just flew back from there and I’ll be talking about the event, the presentations and keynotes that took place starting off with a short interview with one of the organizers, Ryan Rauscher.

Also as usual a few nuggets of digital music news for this week’s show which include Wonfgang’s Vault deal with Boxee, Limewire’s last appeal as it risks being shut down in a week, the decline of digital music sales in Japan in 2009, Ofcom’s release of some details about its forthcoming crackdown on file sharing and finally many of my listeners in the States will be mourning the death of Lala, as today is its last day – will Steve Jobs resurrect it as early as tomorrow by unveiling a new iTunes service? I’m not so sure but what the hell you gotta hope so!

But let’s start with the Future Music Camp and and introduction by one of the organizers, Ryan Rauscher. So here’s the introduction, but what happened exactly during the week-end? Basically as Ryan explained the event was structured as part conference and part barcamp. So there were scheduled presentations and workshops and then sessions that were put forward and organized by the camp’s participants. On Saturday there were many very interesting presentations – the event was kicked off by Nikhil Shah, co-founder of Mixcloud – who ran us through a presentation on how to build a business like Mixcloud and what people need to look out for in the process. He provided some great tips on how to build a successful start-up, his context naturally was music but that could be applied to really any business that is starting out online.  Some of the ideas that he shared with the audience really struck me during the presentation and I’m just going to run through although they made a little bit more sense through the context of the presentation itself. Number one is the concept of shouting from the rooftops about your service and your idea, there’s no point trying to protect it – if you don’t share it and get everyone on board it won’t be successful. Second Nikhil talked about the idea of getting the product out there before it’s 100% complete, if you try and wait until you launch the perfect product you’re going to waste time, whilst if you release a product that is  – even if not completely stable – 80 to 85% complete you may have some problems but those are issues that can be solved very very quickly once you know what they are.  Third Nikhil talked about the idea of building a cool product first and foremost, sorting through the issues and having a great implementation since no matter how much funding you have if the idea or the product have issues they are not going to go away by throwing money at them – those are the first things that need to be sorted out which means that  funding is not as important as having a great idea and a great product. Fourth point Nikhil made was regarding the supply versus demand – one problem that often faces digital music services is that it’s very hard to get the content without listeners and it’s pretty much impossible to get listeners without content. So Nikhil’s suggestion in this case is to try and build a great library of content during the beta phase of a service so that when it goes out of beta the content is already there and the company will be able to draw a lot more listeners. Finally Nikhil talked about implementing a top down and bottom up strategy, meaning that you need both the guy in the bedroom that is doing his own thing for a handful of people and the more high-profile content provider who can guarantee you thousands of listeners with a single tweet about a release, these two approaches combined can grow the user base of a service quickly.

After this presentation was the presentation from Simfy. I had heard the name mentioned before but I couldn’t frankly remember what the company was about. Basically it’s a streaming service that is comparable to the likes of Spotify and We7 – although not without a few differences – the key here is that they are German-based and have licenses to use over six million tracks having deals in place with all the majors and also recently with Merlin. What’s interesting is that collection society Gema is often characterized as giving new digital services a real headache when it comes to negotiating terms for licensing music – so the Simfy story is an interesting one as it has managed to overcome all these problems and create a really large business. Simfy actually started right next to the Popakademie in Mannheim – it relocated recently due to a round of funding that meant they had to move to Colone. The platform already has 1.7 million users and is based on the freemium model – so advertising for the free service and monthly subscriptions to get ad-free content. One interesting difference with the likes of Spotify and We7 is that so far it has been running as a web service and as a  mobile applications but is now about to launch a desktop application as well. So it will have all three – whilst in the UK you have the choice of going web-based with We7 or desktop-based with the Spotify software, both of which have their own mobile app. simfy is aiming at having 80,000 paying subscribers by the end of the year and is certainly a very dynamic new company. The player and many of the features are not at all dissimilar from what we have already seen here in the UK, but i guess that there are only so many ways to slice a pie as the saying goes. In this field the important thing is to obtain the licenses and Simfy certainly beat Spotify to it in the German market.

Music DNA also had a presentation which i was looking forwards to since I was hoping to see a real product over five months after I attended the MIDEM press conference where the format was announced. In case you didn’t hear my Midem coverage from a few months ago Music DNA is a new format that wants to replace the MP3 and offer a better experience to the user. .DNA files will be able to include better metadata, multimedia files like videos and images, links to all the sites that have content from that artist, to their twitter feeds and to tour dates and the idea is that these files will be able to upgrade themselves via the net every time you listen to them. The format was developed by a company called Back technology that is really very ambitious in its plan as many are skeptical that the users will accept moving away from the MP3 without a large amount of resistance.  At the presentation there was a limited showcase of the software that didn’t really give me a clear idea regarding how responsive and complete it is. They plan to penetrate the market by allowing users to upgrade their entire collections with media-rich .DNA files free of charge. They will release their software at the end of July so you and I will be finally able to play with this soon – and personally i can’t wait to give it a go. but if you’re not inclined to change your habits and preferred music platform fear not – during the presentation they announced that they will be launching plug-ins for iTunes, windows media player and other music platforms by the end of October 2010. Finally they are pushing hard on the hardware front and established an office in China to present and push the music DNA SDK to electronics manufacturers – will your mobile handset be DNA-enabled in two years time? we’ll have to wait and see!

Presentation on P2P by Janko Röttgers. Janko Rottogers is a German-born but San Francisco based journalist that has been covering for many years the evolution of P2P technology. Janko’s presentation centered around the question of if and how it’s possible to monetize P2P. Whilst the industry is fighting hard to have P2P disappear from the face of the earth this is not likely to happen anytime soon. So the option is to let P2p networks continue their work outside the law or to try and monetize what they do to bring some revenue to the artists. the problem is that allowing P2P networks to do that would basically be an acceptance of their service so the industry would not be able to sue them and get them to shut down an longer. This is the problem that happened with Limewire for example- the service had developed a FAN artist network a couple of years ago to sell contextual advertising based on the searches and to share the revenue with the rightsholders but it was not possible to reach an agreement and we all know where things stand now… Another product that is currently trying to monetize P2P is a revamped version of Audio Galaxy, that brings back some memories of it being the late 90s and me trying to download an mp3 on a dial-up connection and giving up after two hours… They are now planning to get licenses for the content although there’s nothing concrete in place yet, just like with the Choruss initiative that aimed at legalizing P2P within university campuses for a flat fee of 5 dollars per month per user. Flattr

The last possible solution is the crowd source donation and here Janko talked about a service that I’d never heard of but that sounds really fantastic. the service is called flattr and was started by Peter Sunde, the face of the pirate bay and it’s all about compensating rightsholder. Currently in a closed beta phase, Flattr is a bit like the .digg button but for donations where people decide to donate right there and then by clicking on the icon. If you register on flatter as a user you can decide to direct between 5 and 10 euros per month to what you find on the net, so you are never going to spend any more than that no matter how many content sources you Flattr, what happens instead is that at the end of the month flatter does a tally and divides the money between the number of clicks you made and distributes it amongst the sites, it’s a very distributive model with low barrier of entry for people to donate. So if you donate 5 euros a month and you click on 20 sites in may, they get 25 cents each, whilst if you click on 10 sites in July they will get 50 cents each, It sounds like an amazing idea and I’m checking it out right now just got my login details for the beta. will let you know more on it soon!

Will Page, chief economist at PRS for Music and Oliver Tuerke, who also works there as international manager, gave a presentation entitled Comforting lies and Unpleasant truths – Copyright 101. They ran the audience through a whirlwind of incredibly interesting facts and figures about copyright, the worldwide music market and collection societies. Unfortunately I didn’t record the event and I really couldn’t keep up with the presentation in terms of taking coherent notes that i could present on the podcast but I think that the guys at the future music camp have filmed all the main keynotes and will be uploading them to the site so I’ll let you know when that happens so you can enjoy this fantastic presentation. I’ll be watching it again too knowing that I can happily pause and finish taking my notes!

And finally I can’t forget to mention the fantastic Reactable instrument developed by Günter Geiger and his team that was on showcase at the camp it’s basically a completely new way to interact with music and create music. You really need to check out the website and also google Bjork and Reactable to watch videos of her perform with one of the prototypes a couple of years ago on her last tour. I was there and I have to tell you that when I saw the very same table right in front of me at the Future Music Camp I drooled a little!! A portable version of the Reactable table is now being produced – although in small numbers – so if you can afford it ( i sure as hell can’t unfortunately ) go and treat yourself to one!!

In terms of the barcamp side of things i must admit that unfortunately I didn’t attend a great deal of sessions as they were all run in German and although I can get by on basic things like introductions food and most importantly beer at that level of conversation all I could do was  staring blankly without being able to take much in, but hopefully I’ll manage to get Ryan to tell me more about them once he’s recovered from organizing this event!

Wolfgang’s vault deal with Boxee

OK for this story first of all a premise – if you have never heard of Wolfgang’s vault – well it’s a site that allows users to live recordings by famous artists – usually recordings of gigs that are not usually available elsewhere and has a catalogue of hundreds of recordings. The site is legal and makes its money primarily by selling concert memorabilia to the visitors. Although the music streaming is mostly a loss-leader for the memorabilia sales it has also developed a premium subscription for intensive users called WVIP. Well this week Wolfgang’s Vault has announced a deal that will allow it to enter the living rooms of Boxee users that will be able to stream up to ten hours of content each month for free. Additional streaming will require them to pay the site’s $48 annual subscription fee. Boxee is gaining traction in the US as the way to bring Internet content on your TV and naturally the more visibility the site has the better.

Limewire may only have a week to live

So, June the 7th is the day when Limewire’s long and troubled history may come to a screeching halt. the court has established a hearing for that day following on from the recent ruling that established that its business model was in fact was to make money by facilitating the exchange of copyrighted material. The RIAA on June the 7th may well – and there’s no reason why they shouldn’t – seek an injunction against the service which would mean that Limewire would have go offline pretty quickly. Limewire has launched a last ditch attempt to appeal the court’s decision. Billboard reports that Limewire argues that the court made errors in its analysis of liability, including whether the company had the ability to supervise copyright infringement. Limewire also maintains that in the case there was conflicting evidence and they had to be given the benefit of the doubt. Apparently it’s unlikely that this argument is going to have any hold on the court and the company is likely to shut its doors soon. But naturally there’s a hundred of other services that are planning to pick up Limewire’s users should it go down for good!

Japanese digital sales declined in 2009

For the first time in 2009 Japan’s digital music sales slipped by 3%. The mobile market, which represents 90% of digital sales in japan fell by 4% whilst the computer-based song downloads grew by 9%, but given the difference in market share between these two options the 9% growth was not enough to offset the 4% decline. The value of the sales remained flat at 90.6 billion yen. This is a surprising news – everyone expects digital sales to go up year-on-year because it’s large market with many new adopters every month, has the Japanese economy been saturated by digital content or are the price points still wrong?

OfCom reveals some details regarding the forthcoming anti-piracy measures

And finally UK  regulator ofcom released a draft code of practice that contains some important details about the anti-piracy measures to be taken in the UK. Music Labels and Movie Studioes will be able to request details from the lists of individuals who have been infringing and send warning letters that could then escalate if the infringement kept happening. One interesting thing is that an infrtingment will not hang over your head forever as the three strikes only works if you have infringed in the same 12 months period, after that you get a clean slate. Controversially OfCom decided not to apply these measure to ISPs smaller than 400, 000 people which prompted some to say that the pirates will just end up moving to a smaller company. BT was quick to respond saying that the draft is not fair because it singles out the larger companies pushing customer onto smaller ones.

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