Sunday, February 10, 2008

MidemNet The Future of Digital Music

Allen L. Johnston - The Music Specialist

The music business’s future is being rebuilt and the originators of the most popular music on the planet are not even aware of what is happening. In the past year several new business models have been created that will totally change the direction of how music is served and received worldwide. Labels have become retailers and TV channels, mobile phone companies have been turned into multi-media companies while expanding on to the PC platform, live music promoters have signed recording artists and are selling music, merchandizing and licensing their artist’s works while still selling massive amounts of tickets. We have seen the iPod go from music to movies and now become a mobile phone and above everything else all of this new social networking connection has caused advertising to become KING.

Web 2.0
Unknowingly to millions of people Web 2.0 has taken over the way people communicate online. Just in case you don’t know, Web 2.0 is the proliferation of social networking sites such as MySpace, Facebook and YouTube. This growth has occurred so fast that individual artists now have Web 2.0 sites, and Internet leaders such as MySpace have created spin-offs of their own site to capture more users. These sites allow users to communicate between one another at unprecedented levels while sharing personal tastes, ideas and generating massive opportunities for advertising.

Music has become an integral part of these sites with the addition of widgets (specialized software that either plays music or captures information concerning usage) that now effectively gives online subscribers personal players for uploading and downloading music either from their own websites or over social networking sites.

Social networking has also afforded great opportunities to many bands and individual artists. Radiohead showed the world what the consumer wanted was the ability to make up their individual mind about music pricing. Amy Street, an online retailer using the Amazon backbone, offers buyers free music until the downloads become popular then their pricing structure starts increasing with the popularity of the download to a maximum .98 cents (US) with the artist retaining 70% of the revenues and their copyright.

From the Netherlands SellaBand allows unsigned acts to upload their music to its website and offers listeners the opportunity to financially invest in the artist they like. As soon as the act raises $50,000 from its investors, SellaBand provides the professional resources to record the album. Since its launch in August 2006, 11 different acts have raised the required funds and all 11 have placed either major label deals, licensing deals or enormous digital distribution deals.

What is becoming a beast of a concern among labels, retailers and subscription services is the new concept of music for free.

There is a growing swell of advertiser funded digital music services around the world and during this MIDEMNET this became the hotbed of controversy. On one side of the aisle are the traditionalists that believe music must ALWAYS be paid for, irregardless of the format it is in. On the other side are the people that see the web creating a 61 BILLION dollar advertising industry by 2010. These people point to the current figures of 35 Billion for 2007 and only see upward growth. The largest unauthorized music download site today on the web is LimeWire and estimates place this software on one out of every six pc’s in the world, thus proving that consumers still want to receive music FREE.

Advertising supported sites now include Spiral Frog, MySpace, InGrooves, Qtrax, the college targeted Ruckus Network and the French site Deezer. Advertising is also being considered for mobile-distributed music MVNO (mobile virtual network operator) a new concept is the basis for Blyk a new service that offers free airtime for voice and text as long as it users are prepared to receive advertising messages. Participating musical artists will use their websites to invite fans to register with Blyk, which will setup an account and a free mobile communication line to enable artists to reach their fans directly.

Major labels, major publishers, retailers and more argue that advertising based free services will give music fans the impression that they should never pay for music, what I see is that this is a “front” to disguise the fact that the music industry has failed to react to the consumers demand for more digital music free. The fact that the music industry failed to deliver economic models that matched the consumers needs digitally is not the consumers fault. So why should consumers be held liable?

With the proliferation of mobile phone handset makers worldwide Nokia leads the globe with an unprecedented 40% market share. They have manufactured handsets that allow new forms of digital media delivery. Social networking, broadband internet, mobile TV, handsets that can hold up to 6000 songs have made downloading a viable business. Last year when the iPhone hit the market Nokia released the Nokia Music Store, a dual delivery service for mobile and PC downloads, unlike iTunes and other services Nokia Music Store allows users the capability to transfer music to other devices and if you lose your phone you can still have your music on your PC or any other digital device capable of housing mp3’s. NOKIA and UNIVERSAL struck a deal last year that calls for NOKIA to offer music fans access to unlimited digital music for a period of time with the cost built into the price of the portable mobile phone sometime this year.

This has changed the way the world listens to and treats music. Worldwide mobile phone delivery of music and now video is ever increasing and the only thing stopping a wider penetration of delivery is content. This is where you, my reader, can join the new world order. You are the ORIGINATORS of the most widely popular and listened to music in the world and you have a responsibility to uphold. Content is needed for every style of music / video imaginable, content is the deciding factor when people from other countries want to know more about YOUR country. Content is a superior form of education for the masses and a revenue builder for the content creator.

MidemNet made one thing extremely clear. There will be multiple new delivery systems and business models, however without the creative creation of content there can be NO FUTURE.

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