Digital Music Trends – Episode 50

This week on the show an interview with James Clarke, CEO of In the news, the launch of the iPhone 4 is used as an opportunity to cap “unlimited” data plans both in the US and in the UK, an update on the Limewire case from the courts, an interesting piece on the rise and fall of the RIAA, Spotify doubled its daily number of new premium subscribers with the new social media features, Believe digital opens and office in the UK and a Spanish court ruled that P2P networks are like lending libraries.

– The launch of iPhone 4 is used as an opportunity to cap “unlimited” data plans for mobile both in the US and in the UK. How will this affect music services like Pandora?

So last Monday the iPhone 4 was unveiled, and I have to admit that it’s a pretty cool phone. But behind the scenes the operators both in the US and in the UK are planning to use to launch of the new iPhone to change their stance on unlimited data plans that were in my opinion a very compelling reason to buy into the iPhone platform in the first place. AT&T – still the only carrier to offer the iPhone in the US although many are expecting a Verizon phone by the fall – effectively changed its data rates from $30 for unlimited data to $25 for a 2gb cap. The company says that only 2 or 3 per cent of its users go above that consumption every month and that therefore this should not affect the vast majority of its users, who actually will see a reduction in their monthly bills, since they also introduced a $15 rate for users who stay below 200 megabytes per month. Similarly a few days after the iPhone launch the UK operator O2 and now it seems also Orange announced changes to their data consumption policies. O2 is going further than At&t in the sense that their cap is going to be 500 megabytes from a previous unlimited plan – which is only a fourth of hat At&t offers with the option of paying an extra 5 pounds per 500 mb consumed every month. Orange is going as far as saying that their customers don’t generally use more than 200 megabytes so will they place their caps that low? Well, the individual figures are not the main problem here, and i can actually see the Operator’s argument for not wanting to fund the small majority that uses gigabytes and gigabytes of data (probably from jailbroken and tethered iPhone anways) – but how will this affect people’s perception of music streaming via 3g and how much does that streaming effectively consume in terms of bandwidth?

Well, on the site I found post where they detailed Pandora’s’ streaming data consumption on the iPad, and I assume that figure will be similar for the iPhone, in one hour of continuous streaming the data used was 38.9 megabytes. This is consistent with Maclife’s report that the average Pandora song stream uses just over 2 megabytes. this really put things into perspective for me in terms of how much streaming services will be affected by the new charges, especially in light of the multitasking features on the new iPhone. Currently, I’m a low data user, i use lots of email, Twitter, Facebook, maps throughout the day but no music streaming because of the lack of multitastking and my data consumption is between 150 and 200 MB per month. but one of the reasons I was looking forward to iPhone 4 was exactly the ability to play Spotify, We7 and company in the background even via 3g, the snag being that that uses over 30 megs per hour it would take less then half an hour per day of use to reach the cap established by O2, although with At&T things look a bit more relaxed in that respect. So what is happening here? Are operators clamping down on data use just when it’s about to explode via multi-tasking? are streaming music services going to be forced to use more caching within the phone in order to retain their customer base? How is Apple going to roll out a cloud-based music locker service when these new caps are in place? This is certainly an interesting and as of yet unexplored area. with faster phones, 3g-enabled Skype, streaming services, Youtube, gps, maps and virtual goggles it’s very likely that we’ll be using lots more data this year and I wonder just how much we’re going to have to pay for it.

– An update on the Limewire case from the courts

PcWorld, CNET and itBusinessedge reported this week on the news from the Limewire’s trial front. As expected, this week the RIAA asked the court to shut down Limewire immediately, arguing that for each day the site stays open the recording industry is losing millions of dollars in revenues. The judge Kimba Wood actually gave Limewire 2 week of extra life in order to prepare a response to the RIAA’s request, after that there’s a high probability that the service will be shut down unless they can come up with an extremely good argument for their survival. In the meantime it looks like the RIAA together with a number of record labels will be asking for billions in damages from Limewire, a sum that they are unlikely to obtain naturally. 13 Record labels reportedly filed a suit last week to freeze Limewire’s assets including those of the founder Mark Gorton – although it may take a few months for the damages trial to take place.

– An interesting article on the rise and fall of the RIAA from TECHDIRT

This week there was an interesting article posted on TechDirt on the rise and fall of the RIAA – more specifically a graphic representation of the revenues of the labels that are represented by the RIAA in relation to the RIAA’s actions in terms of anti-piracy efforts and the customer-oriented lawsuits between 2003 and 2007. Well the result is a mixed picture, and whilst there are many, many other factors to the revenue of the record industry other than the RIAA’s direct actions i have to say that whilst during the four years of lawsuits the intakes of the RIAA represented labels had stabilized they dropped very quickly after the end of the mass-lawsuit policy. Is that related or is it just the natural evolution of the market? Well it’s up to you to decide I guess… but in any case go and explore this interesting graph, the link is in the shownotes!

– Spotify apparently doubled its subscriptions after introducing social features and partners with Scandinavian Telco to reach TVs.

Quite a few bits of Spotify News this week. Let’s start with Music Ally’s blog report that Spotify’s new social features have caused the company’s daily subscription rates to double. This revelation was made by Spotify’s UK Managing Director Paul Brown in an interview with Music Ally. This is a really interesting figure because Spotify didn’t actually limit the social features to the paid option, but the fact that people could share music with their friends must have tipped them over the edge and convinced them that the service was worth paying for. There are no recent official figures as to how many paying subscribers Spotify has in the UK so keep your eyes peeled for any future figures that may reveal whether Spotify’s bet on premium was accurate or not!

On Billboard business I found an article dedicated to Spotify’s latest partnership with Scandinavian telco Tellasonera to add its service to the company’s digital TV offering in Sweden and Finland. Daniel Ek, the founder of Spotify stated that “Introducing Spotify into the living room is a major step forward in our continued efforts to make Spotify available wherever you are”. For now the service will only be available to that portion of Tellasonera’s 120,000 customers who already pay for Spotify’s premium subscription, but who knows maybe in the future they’ll decide to give all the other customers a little free taster of what it’s like to have all the music you want at the tip of your fingers, and maybe already connected via the TV to a great-sounding surround system!

And finally Business Week on the 10th of June published a lengthy feature on why Spotify has not yet launched in the US. It’s well worth a read and the link is in the shownotes, but basically the piece focuses on the Major Label’s resistance to having a free Spotify service launch in the US in the same way in which it was rolled out in the UK and the rest of Europe. They want to make real money from it and i guess there are worries that it may cannibalize the a’ la carte download market that in the US is stronger than in Europe.

– Believe Digital launche office in the UK

The Music Industry News Network reported this week on the expansion of Digital Distributor Believe digital into the UK. Believe is not simply a digital distributor but it also also integrates marketing and strategic support options for labels and artists – the company in fact has offices in a number of countries now and the official launch of the London base will certainly bring a few more UK acts into the Believe fold. The new managing director for the UK will be artist manager Stephen King – who has guided the careers of The Libertines, The Hives, The Lighthouse Family and many others. I’ve been familiar with Believe’s work in the UK for a couple of years now so it does not come as a surprise that they decided to make a more permanent base here, but for me it’s interesting to see how a company like believe can start taking on some of the burden that was traditionally left to the record label in order to steer the careers of independent artists. for more information go to

– Spanish judge compares P2P to lending libraries?

And finally, in what is without a doubt another defeat for the anti-piracy front in Spain. Three judges ruled the site CVCDGO.COM whose headquarters in Madrid, Malaga and Seville were raided by police in 2005 not guilty of a crime since it did not host the actual copyright files and generated no profit directly from any infringements of copyright, they also maintained that the presence of advertising on the site was legitimate. The three judges went as far as saying that the exchange of digital files was comparable to the exchange, loan or sale of books and other mediums that has been happening since ancient times. In their view the internet only makes this exchange faster and of a higher quality. In Spain the music sales are crashing quickly and there are fears that many labels are going to stop developing acts in the country because of the widespread use of P2P networks and the politician’s aversion to taking a strong stance in that regard.

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