Aboriginal Music Program

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The New Free (or Free is So Done)

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From a marketing perspective, free music may already be overdone.

Seth Godin writes: The first time a previously expensive good or service is made free, we’re drawn to it precisely because of the freeness. The fifth time or tenth time, not so much.On value in music and "the new free", Kate at Outlandos Music writes:
Things to think about:

What’s the effectiveness of your free? To lure in new fans? To solidify current fans?
What’s the strategy of your free? Is your free creative? Why do I want it over someone else’s?
What’s the bottom line of your free? To get me to pay for something else? Free can’t be JUST free anymore. And how the hell can you beat free?

So that’s my question: What’s the new free? Thinking that the answer is in fact the opposite of free. The complete opposite. Fucking expensive.

Take the new food for example (thanks Erik!). $5 Kashi anyone? $4 local, farm-raised, cage-free eggs? $8 Pom Wonderful? $5 rice milk? Are we (me included) out of our minds? Perhaps. But clearly, somehow those foodies did it. We’re willing to pay ridiculously high prices for incredible quality. What’s more is we often drive way out of our way to get it...

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EMI Digital Non-Strategy Might be Working?

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Last May, we wrote about EMI Music's appointment of former Google CIO Douglas Merrill as head of digital strategy. Then in March of this year, Merrill moved on with a claim from EMI that digital was becoming central to all of their operations, rather than it's own stand alone department.

Now, the numbers coming out of EMI's year of digital confusion seem to indicate that profits are up significantly (£163 million over 2008's £51 million) and digital is to thank. The numbers show that while physical sales were down 10%, digital sales have moved in to represent 35% of the company's income, up from 20% last year.

Their digital activity in the last year has included a number of quirky licensing deals including a deal with The Fairmont Hotel chain, music-themed scratch-off lottery games, and a music Visa card.

In fact, the real secret to increased profits at EMI may well be the strong British Pound (against the US dollar) and internal cost cutting (such as letting go their head of digital strategy?).

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The New METRIC System - Direct to iTunes

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Metric released it's new record in March. The band is still affiliated with Last Gang records in Canada. But this time around, they went without a label in the US, and did a deal directly with iTunes. Two weeks in, it seems to be paying off.

The following is an excerpt from the LA Times Business section:

The 10-track "Fantasies" has sold 24,000 digital downloads since its release March 31. With direct access to iTunes, as well as sales via the band's website, Metric has already brought in more gross revenue than it did on 2005's "Live It Out," which sold more than 45,000 copies.
 
According to Mathieu Drouin, the band's co-manager, "without any intermediary, we're making 77 cents on the dollar for every record we sell" on iTunes. Under a label deal, based on Drouin's estimate, Metric would have earned closer to 22 cents.
 
Metric also took a page from album rollouts employed by much bigger artists such as Radiohead and Nine Inch Nails. Fans could purchase the album directly from Metric's own site (www.ilovemetric.com), which sold "Fantasies" at five price points, ranging from an $8.99 album download -- with an extra track not available on iTunes -- to a $64.99...

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Uncertainty for Digital Music Business Models (Still)

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Last week I wrote about a downward trend in peer-to-peer downloading - many observers see this in part as a result of the increased use of free and easy streaming music services such as imeem, Pandora, Last.fm, and Spotify. Why download and store files, when you can have access to anything you want, from any location, on demand?

Well, in the last few days, much has been written about the sorry state of business for these services. In the UK, where the artists are much more organized and active in demanding that they be written into the deals (not just as a footnote in their labels' deals with these services), google/youtube is currently in a battle with the PRS, claiming that they can't afford to pay artists for content. Other streaming music companies are lining up behind google, hoping to benefit from the behemoth's bargaining clout. Meanwhile, the companies themselves are still scrambling to come up with a homerun service that users actually like and use. The much heralded MySpace music, for example, was a major flop and is in the process of re-inventing itself again.

In many cases, it seems to me that it's inking deals with the major labels that is at the heart of...

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EMI Changes Digital Direction, Again

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Back in May, I wrote about EMI Music's appointment of former Google CIO Douglas Merrill as head of digital strategy. The move seemed to indicate that EMI was serious about rethinking their approach to digital distribution.

But now, less than a year later, EMI has announced in an internal memo that Merrill is "moving on." They have appointed Cory Ondrejka to the position of executive vice president of digital marketing - essentially signaling that they will no longer have a digital department, but that digital strategies will permeate all aspects of the company's business. It's probably the right idea, but many observers seem unconvinced.

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Digital Jumps, Vinyl Soars, CDs Slump in 2008

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Neilsen SoundsScan released sales numbers for music in the United States last week, and for Canada this week.

The good news is that music sales are up. Overall units sold in Canada increased in 2008 by 11.5%. The bad news for the industry is that album sales are down, and album sales have the largest impact on profitability. Overall album sales dropped by 8.5%. Sales of digital albums rose by nearly 70%, but still represent only a fraction, less than 10%, of overall sales.

The cool thing, is that vinyl sales in the US (I can't put my finger on Canadian numbers) doubled in 2008 to 1.88 million units. I think we've all noticed vinyl on the merch table at more and more shows lately, often accompanied with a digital download. In the spirit of making music as accessible as possible through digital downloads but also providing value-added physical packaging to entice consumers to buy a physical product, vinyl seems to fit the bill nicely, and it seems that young music fans are leading this trend.

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Mobile Digital Content Delivery on the Move

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Researchers believe that music distribution via mobile devices is the way of the future. Back in Janurary, CISAC released a study stating that by 2010, mobile will exceed internet for content delivery. 

A new study by Jupiter Research finds that demand for mobile subscription-based services will surge in the next few years, outstripping pay by track services by 2012. According to the author: Music rental services such as those offered by Omnifone are incredibly 'sticky,' in that once consumers have taken the time and effort to build up an extensive playlist, they will be increasingly reluctant to unsubscribe from that service and from the operator, thereby providing a significant boost to ARPU levels.

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Byrne in Wired on The Biz

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The latest issue of Wired Magazine features two articles by David Byrne on the future of music. The first is an interview with Radiohead's Thom Yorke about their experiment in pay-what-you-want digital music distribution. The second is an overview of the current state of music distribution and the new spectrum of options available to artists. Byrne outlines six different kinds of deals that artists can strike with labels, marketing companies, and or live promotion companies. Of course the six categories are generalization, but pretty apt I thought. A concise and cogent snapshot of the current state of the music industry.

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Music Copyright in the News

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It's a little joke among my colleagues in the MARIA office that I get a little too excited about copyright. But who could have guessed that 2007 would end with so much buzz about copyright, and already in 2008 copyright stories are back in the media. Here's a couple:

iPod Levy - On Thursday, the Canadian court of appeal struck down a Copyright Board of Canada decision to move ahead with a private copying levy on iPods and other digital music storage devices. This levy is akin to the levy that is paid on blank CDs and cassettes and is designed to compensate copyright owners for the copies that consumers make of songs for their own private use. CRIA opposed the new levy, even though it would provide a whole new bundle of cash for its members (record labels) because it felt that the levy was an acknowledgement that people were using these digital devices to make illegal copies of music. CRIA chose to stand on its ideological position, and continue to pursue copyright reform that would allow them to sue music users who make illegal copies of music, rather than be compensated for private copying.

Michael Giest writes about the levy decision, and its demise. Other recent...

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