music_news 91 posts

The compact disc has turned 25 on August 17. The technology was jointly developed by Philips and Sony and the first CD was manufactured in Germany on August 17, 1982. Since then 200 billion CD have been sold worldwide.

In the beginning it was mostly classical music sold on CDs as manufacturers believed that classical music lovers were more likely to pay the high price for the CDs and CD players. The first pop CD on sale was ABBA’s The Visitors.

By 1988 CDs outsold records. Now some reports predict that this format in turn will be overtaken by digital distribution on global scale by 2011.

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Compact disc hits 25th birthday, BBC News
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The SpiralFrog ad-supported music service has finally been launched. For the time being it’s only available for a selected group of users for beta-testing though.

Users will be able to download music for free. However, they will have to wait for 90 seconds for the download to complete. During that time users will have to see some advertisement or browse the site. The video downloads will take even more time to downloads. Files are protected with some kind of DRM and aren’t iPod compatible.

The owners promise a fill scale launch by the end of the year. (That’ll be a one-year delay from the previous announcement in December 2006). SpiralFrog claims it has taken so long to finish negotiations with the copyright owners. At the moment only the Warner Music Group has agreed to offer its content. 700 000 tracks are available now, hopefully by the end of the year this figure might grow to 1 500 000. According to some reports the content owners will receive 10% of the advertising revenues.


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Music publishing companies representing Eminem filed a multimillion-dollar lawsuit against Apple on grounds of copyright infringement. Allegedly the iTunes store have been offering Eminem’s songs for download without his permission, only having the consent of the EMI record label. According to the singer’s lawyers, the record label doesn’t hold the right to allow downloads exclusively (as it is with selling the artist’s CDs). Also the singer wants a fairer division of the revenue from downloads. At the moment iTunes charges around 99 cents a song, 70 cents go to the record label. It, in turn, typically, pays 9,1 cents to the music publisher.

According to the artist’s lawyer the issue “is how the 60.9 cents the recording label has left after it pays the music publisher should be divided between the recording label and the artist. If downloads are treated as licensing agreements, the 60.9 cents would be split equally, he said. But if a download is treated as a sale, which is typical, the artist only gets a royalty, or a much smaller share... read more

Apple has announced on Tuesday that its iTunes store has sold more than three billion songs. This makes it the world’s largest online music store. Also iTunes “recently surpassed Amazon and Target to become the third largest music retailer in the US”.


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iTunes Store Tops Three Billion Songs, Apple

A survey by Entertainment Media Research revealed that illegal downloading has reached its highest level ever and the number of people concerned about being prosecuted is falling. (The Guardian).

Out of 1700 people who participated in the survey 43% claimed they’re illegally downloading tracks (last year it was 36%). Only 33% are concerned about the risk of prosecution compared to 42% in 2006.

The report suggests that price is the key factor for such situation and that the industry has to consider differential pricing.

The music industry association BPI replied that: “future success was not just down to new business models but also better protection against piracy, particularly from internet service providers.” "Industry cannot do it alone," said a spokesman. "ISPs as gatekeepers, and government as legislators, must also play an active role in tackling copyright theft if the UK is to thrive as a knowledge... read more

According to the annual Global Entertainment and Media Outlook report issued by PricewaterhouseCoopers last week digital distribution of music will overtake physical sales on global scale by 2011. In Asia Pacific this will happen as soon as 2009, than in U.S. in 2010.

According to the report global spending on music will reach $40.4 billion by 2011 (that’s 12% up from $36.1 billion spent in 2006).

Spending in the U.S. will continue to fall till 2009, but will start to recover that year reaching $11.3 billion in 2011 (However, still less than $11.5 billion spent in 2006).

Music to mobiles and Internet purchases will grow more than 3 times to $6.56 billion in 2011. Conversely, market for CDs will half from last year's $9.65 to $4.5 billion by 2011.
”Album downloads, in the U.S. in 2011, will hit 135 million units while 2 billion single tracks will be purchased on the Internet that year, the report noted. That's a 37.9% increase for albums and a 32.8% increase for singles from 2006.” (Variety.com)

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Warner reported its second quarter financial results this week. The label had a “net loss of $27 million, or 19 cents a share, compared with a loss of $7 million, or 5 cents a share, a year earlier,» according to Reuters.

This news follows the announcement that Warner Music Group was about to lay off 400 of its staff.

Among the reasons for the revenue decline the label marks out piracy, “changing consumption patterns in the shift from physical sales to new forms of digital music".

Nevertheless, Warner expects the situation to improve when the company implements its restructuring plan and boosts digital distribution of its music. “…we'll start to see benefits of that over a couple quarters after that, so certainly early fiscal 2008,” said their statement.


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Warner Music posts wider loss, Reuters

According the Nielsen SoundScan data, CD sales in US have declined 20% in the first quarter of 2007 compared to same period in 2006. Only 89 million CDs were sold from the start of 2007 till March 18 and in the first quarter of 2006 the figure was 112 million units.

Although digital downloads are up the overall album sales are down 10% (the researcher counted every 10 downloaded tracks as an album). Sales of individual downloads rose from 242 million tracks to 288 million this year. However in terms of albums digital sales dropped from 119 million in 2006 to 99 million in 2007.

Among the reasons suggested for the decline are piracy, closure of stores (800 music stores were closed in US in 2006) and competition from DVDs. Also it might be that consumers are buying in a different way now. People can and do buy the single song they like and do not purchase the whole album. DRM is putting off potential buyers as well.


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US CD sales... read more

Patrick Faucher, CEO of Nimbit* gives his thoughts on the transition that music industry is undergoing (CNET News.com).

Starting from the times when the music business became a stagnant pond “mucked up with greed, laziness, contempt and excess” he proceeds to the changes delivered by the Internet. “The industry has become decentralized. Major labels no longer have the market muscle or control over the distribution channels as they once did. Technology and consumer choice have caused a shift from the traditional music business model of major labels throwing copious amounts of money behind a few big hits to that of a vast collection of individual artists creating pockets of more moderate success among passionate fan bases.”

Because of the new technologies and marketing opportunities both the artists and the labels cannot continue to do business the old way.

“There... read more

Universal is testing offering music downloads without DRM. The label admits these are “some micro tests” which do not indicate immediate change of policy. Indeed, only one album by a French artist Emilie Simon has been made available only in France. The cost of the DRM-free album is €9.99.

Similar tests by EMI last year had been very short and did not lead to any changes in the label’s business model.

Other labels haven’t even yet allowed a possibility of DRM free music downloads.


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Universal begins DRM-free downloads trial, PC Pro

Digital music downloads shouldn’t be considered “public performances” and therefore no additional royalties should be paid, the Digital Media Association (DiMA*) advises to federal court counter to claims “by the American Society of Composers, Authors and Publishers (ASCAP**) that digital music downloads are “public performances” and should, therefore, be subject to a public performance license and royalty”. (DiMa)

“ASCAP’s assertion in federal court that digital distributions of music and video are also public performances confounds legal, business and technological reality,” said Jonathan Potter, DiMA’s Executive Director. “For a decade ASCAP and BMI have successfully preyed on less-confident or underfinanced companies that were willing to pay double-dip royalties. Now, however, we are confident that a judge will finally end this travesty… ASCAP and BMI claim that a download or even its “transmission” to a consumer – even if the media file is never opened and made audible... read more

Yesterday Steve Jobs, Apple’s chief executive posted an open letter on the company’s site in which he defended Apple and put all the blame for the inefficient DRM system on labels.

Jobs denies that Apple tries to lock customers who bought iPods into using the iTunes store and hasn’t been using its DRM system for that purpose. He argues that on average there’s 22 songs purchased from the iTunes for each iPod ever sold. However, average iPod now holds around 1000 songs. Thus users are not being locked into the iTunes store as 97% of their music comes from elsewhere.

Moreover, Apple sees abolishing DRM as a way forward as neither the current situation with many proprietary music stores nor opening its FairPlay standard will work. “Imagine a world where every online store sells DRM-free music encoded in open licensable formats. In such a world, any player can play music purchased from any store, and any store can sell music which is playable on all players.... read more

On January 20, some of the leading indie labels and artists launched a new agency which will be responsible for their digital licensing deals. This new organization called Merlin should become the “5th major” representing the growing indie sector which by some estimates accounts for 30% of world music sales.

Merlin’s goal is to improve the "poor cousin" status of deals offered to independent labels and change the "growing assumption that, for emerging media, only the four majors need to be licensed”.

As the Merlin Chief Executive Charles Caldas said in a statement - "The form of copyright apartheid currently being applied to the value of independent rights is unacceptable."

Merlin has already struck its first web distribution deal with Snowcap. This will enable Merlin’s members to sell songs on MySpace, YouTube and alike in the MP3 format.



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At the end of 2006 research companies released some statistics and forecasts regarding the US music market.

In January 2007 US album sales reached 9.41 million units which is 17.6 % less than a year ago (Nielsen Soundscan). The chart-toping album Dreamgirls with 66 000 albums sold is a lowest ever figure for number 1 album sales since Nielsen Soundscan began publishing its figures in 1991.

The digital downloads share in the total volume of music sold is growing. However, digital sales will not compensate for lost CD sales. By 2011 22% of music will be sold in digital format and consumers will be spending $ 2.5 billion on it (JupiterResearch).

Another research company estimates that US consumers will spend much more than that on digital music. In 2010 the figure will be $4.9 bln - almost three times the current level of $1.9 billion (eMarketer).


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A recent report by Forrester Research titled Few iPod Owners Are Big iTunes Buyers  reveals some pessimistic findings about the iTunes service.

2,700 US iTunes debit and credit card transactions had been analyzed over a 27-month period and it turned out that only 3% of online households in US bought music from iTunes in 2006. In the past year an average user spent $35 in the iTunes store. Half of credit card transactions were less than $3.

An average iPod user has bought 20 songs since the launch of iTunes.

The report also claims that since January the monthly revenue of the store has fallen by 65%.

Apple shares fell 3% after the report. Shortly after another paper  was released by Piper Jaffray this time confirming “strong... read more

As Christmas holiday season is the most important time for music sales RIAA along with MPAA have launched a Holiday Blitz campaign aimed at “protecting holiday shoppers from purchasing illegal copies of their favorite movies and music and defending movie studios and the recording industry against the loss of crucial holiday sales, especially those from newly released — or even not-yet released — titles”. (www.riaa.com/news)

Significant attention will be devoted to peering as RIAA has much experience in dealing with file-sharers.

At the same time in Europe, German government announced that the fine for illegal music downloads should be limited to maximum of 50 euros (provided the downloading was... read more

2000 young people aged 13-24 submitted their views on digital music in the study carried out in UK by 3, a mobile phone operator.

- 60% think CDs will disappear in 5 years;
- 85% think downloading music rather than buying a CD can help to save the planet;
- 76% say downloading is more attractive because music can be accessed instantly which is much more convenient than going to a shop.

Also the mobile operator expects that mobile downloads will overtake downloads to a PC in 5 years if the current grow rate of mobile downloading stays the same.

More here:
Mobile - the Future of the Music Industry, 3
Music fans to leave CDs on shelf,Times Online

An article in the Guardian cites some executives talking about the future of the music industry at an industry conference in London last week.

Ged Doherty, the UK head of Sony BMG said that CD sales would drop 50% in just 3 years. The digital music sales will grow 25% per year and that will not offset the decline in CD sales leaving the industry 30% behind in terms of revenues by 2010. “We have to reinvent… we are running our businesses like it is 1982” said Mr Doherty.

There also were prediction that DRM will be abandoned soon.

Demand for CDs forecast to halve in three years, The Guardian

Sales of music on-line show record growth while the CD sales continue to decline. As recently released data from IFPI shows - in the first half 2006:

- Global legal digital music sales rose 106% to $945m (which is 11% of the total recorded music market and twice as much as at the end of 2005).
- The US music market has one of the biggest figures for digital music share (18%). In other countries this figure is: South Korea (51%), Japan (11%), Italy (9%), UK (8%), Germany (5%) and France (5%).
- In the US digital sales increased by 84%.
- Global music sales are down 4% (and are now $8.4bn in trade values, or $13.7bn at the retail level). In 2005, the sales declined by 3%.
- Revenues from sales of music in physical formats declined 10% (compared to the 6,7% decline in whole 2005.)

IFPI Chairman and CEO John Kennedy has said he expects digital sales to make up for the decline in physical sales.

As IFPI claims piracy and peering affects music sales to great extent. This notion is used to explain the... read more