Innovation Papers #2: When will we learn to enjoy our music again?

When I recently pitched up to a publishing meeting in London – hosted by the MPA - to talk about ‘the future of music formats’, I had made a few notes about what music is and what it means to us. I was looking for those deeper insights if you will – an inspiration.

There was much discussion at the meeting about new models – with analysis and comment nicely covering the spectrum we’ve become familiar with – from ad-funded unlimited models to various cloud subscriptions – and talk of apps being the new album, etc.

As ever with these things my view is to look at it from the consumer’s point of view. In recent work on industry innovation (the previously mentioned Innovation Panel) we established the idea of a ‘digital music journey’ – which each and every digital music fan experiences. The journey begins with Discovery – how you find out about a band. It continues with Access – how you first get to hear the track or album. Further – it becomes about Acquisition needs – how you chose to keep or not to keep, pay or not to pay – etc.

So far, so simple. Then it gets much more interesting though. The next part of the journey is Management – how you manage your digital music library. For most consumers this is now the pressing issue – it’s not easy is it? Is all your music digitised? Where? In what file format and to what level of quality? Do you even know? In recent survey work, the industry is finding library management issues are increasingly important to consumers – including storing, arranging, moving, sharing, finding etc. It’s easy to think this is all solved by ‘the cloud’ – to some extent it is. But music fans still like ownership, still like permanence and still like to buy one at a time rather than subscribe.

The Management segment of the journey is really quite critical to all experienced digital music fans, but for me, the final segment of the journey is the most interesting. Enjoyment.

When I added this to the journey diagrams and graphics – everyone – without exception asked “what do you mean by Enjoyment”. I can quip here – that these days by the time we – the digital music fans – have spent endless hours Googling music, browsing on Last.fm, reading tweets about this or that new artist – snacking on tracks on Spotify and We7 – downloading free music from a million and one sources legal, illegal or ambiguous (there is such a thing – blogs for example) – how much are we really, honestly enjoying listening to our music?

I really mean it. For me this is bound up in the perception of music’s actual monetary value.

Music is in many ways the ideal content for digital – but it has one really big problem. For music to be at its most enjoyable it makes its own journey in each of us – from the new to the familiar. In some ways digital has enabled the journey, but in others it is getting in the way.

By way of example, think about your favourite records – your absolute Desert Island Discs – be they albums or songs. You’ve undoubtedly listened to these records countless times. You may actually have disliked some of them when you first heard them. In my own view, in what’s been a vintage year for music this year – the records I’ve enjoyed the most are the ones I’ve become the most familiar with. That, for me, takes at least three plays. If a record gets beyond three it can become endless from there – hence The National’s ‘High Violet’ has easily become my most played album this year – and my favourite.

I have found that digital discovery can make this process – of growing into a record – quite tricky. I’ll use Spotify to ‘preview’ a record (or I might stream it on a blog or download it from a legal free source, which seem to be abundant now). If I’m in ‘hunting’ mode this is less a preview and more a ‘gutting’ session in the way I often do with business books – just rip into it and hope to get a thin slice insight into whether I will eventually like it. This works, up to a point. But it could well be denying me the surprises, the revelations and the growers. I’ll sometimes choose to buy based on this initial instinct – an investment of sorts. But I find I pass on so much of what I sample.

I originally passed on Animal Collective's 'Merriweather' on this basis until I belatedly bought the album just recently. Really, the previewing of records doesn’t work in favour of any of those records that are in any way challenging or require some effort on the part of me, the listener.

I don’t think I would have gotten into The National's ‘High Violet’ through streaming. So ironically, despite the incredible value streaming represents as a music fan – in Access terms – it may have denied me the Enjoyment of a record I can now hardly put a monetary value on – ‘High Violet’ is virtually priceless to me – it’s the gift that keeps giving.

If this is too abstract a concept, let me put a bit more hard flesh on it. There’s a more direct way to improving the Enjoyment part of the journey for digital music fans and we are only just at the beginning in market development terms. If we put aside payment models and formats and think instead about the various ‘layers’ by which music is delivered to fans – there is obvious room for improvement in each and every layer. If we think about digital music in layers – then I suggest for music those layers are as follows:

Layer 1: The Music

Layer 2: The Data (as in metadata)

Layer 3: The User Interface (the presentation of the music to the user, including the recommendation engine)

Layer 4: The Social Layer (user-to-user)

On each and every layer, there is huge room for improvement in the current ways we get music to fans. Just a few suggestions for example:

Layer 1: More complete libraries, higher quality audio files, more live recordings etc.

Layer 2: Amazing metadata: song composer, the ‘story of the song’, track commentaries & liner notes, more simply: song visual data

Layer 3: Personalised home pages, shareable or switchable ‘music channels’, alternative ways to navigate music menus and libraries

Layer 4: Let’s leave this to Facebook, Twitter et al. But shareable playlists and social programming have plenty of room to develop beyond the current open API frameworks

There are new developments in every layer that are worth watching. In Layer 1 – high-end audio equipment makers like Linn now offer lossless 24-bit, FLAC or WAV downloads. I personally was never too convinced of the argument that song quality no longer matters in the age of MP3 files. I think more & more fans are realising it does matter, especially as we want to shift the music to household devices and in-car, where quality matters more than on headphones.

In Layer 2, new players like Decibel are working towards the ‘amazing metadata’ goal, where the marrying of content with context will make a notable difference the user experience – in terms of both library management and arrangement and they way we access information as & when we listen.

In Layer 3, we have brilliant new examples of music presentation, like Awedetorium – the iPad app developed by the team at the Sixty One – an indie brand yes – but with universal functionality in presenting quality over quantity, helping us to manage serendipity and avoid the blinding of choice that comes with searching from a menu of 11m+ songs. In music discovery terms, German research project GlobalMusic2One looks fascinating too and I hope it will bear fruit commercially at some point.

In Layer 4 you can bet that the social network geeks are working on the next mind-blowingly compelling way we can connect to music, through each other, using music. I’ll leave that in their capable hands and remain here to be convinced – I’ll use it if it works for me and helps me with Enjoyment more than with discovery or access.

So for me – in thinking about the future possibilities for music services, we need to begin to think beyond ‘models’ and ‘formats’ and get to the real drivers of why people love their music and what they want from it. Thinking in layers aids this process.

Juggernaut will be back for an essential end of 2010 music review and then for anyone travelling to MIDEM in the New Year I’ll see you there – especially anyone attending my Academy sessions on Tuesday 25^th January 2011.

Submitting to Digital

I’ve finally gone and done it. On Friday, I bought my last CD (arrived today, I am Kloot new album “Sky at Night” – along with the new Janelle Monae and Dark Night Of The Soul albums). And I picked up my final ever PAPER Guardian, with the ever brilliant and to me (previously) essential, “Film and Music” supplement.

This has been a long time coming of course, especially since, in theory anyway – I have been living & breathing digital music since the turn of the century. It’s my job to know about these things, so why haven’t I fully bought in yet as a consumer? Mostly during that time I have been horribly hedged between the two mediums – the physical and the digital.

I’ve become fed up with the physical side of physical – the constant rattling around in the cupboard or shed looking for that old gem I need to hear again, or even finger-searching down the spines of the ‘current play list’ only to open the jewel box (yuk) and find the CD is of course, in the car or somewhere or just plain gone. Plus it’s taking up too much space. As for my 'newspaper', too much of it goes unread and straight-to-recycling, which just seems ridiculous.

Mostly though, it all just seems so out-of-step with the times, technologically and environmentally.
So that’s me. I’ve officially ‘Gone Digital’.

I do however, harbour several anxieties about this decision. As I pour over the cover of Sky At Night, (fascinated to find Guy Garvey and Craig Potter of Elbow are co-producers) I’m already missing the tactile experience of having ‘record cover’ in hand while the music’s on. I’m doubtful that the digital metadata industry can deliver anything like the simple pleasures of this experience.

Also – since physical media plays a big part in my music discovery process (particularly aforementioned Guardian ‘Film & Music’) – I’m concerned I’ll actually start to miss some key album reviews. I love the Guardian iPhone App, but I’m not sure if the App has the complete content that the paper supplement has. Somewhat ironically, since digital has a reputation as a great discovery platform, I’ve never experienced it as such – not as a passionate and active music obsessive.

I’m also concerned about the system of managing my music digitally. My CD shelves are not particularly well ordered, but like a mechanic with his tools, I have a photographic memory of where I left each CD. I know which pile my previous I Am Kloot albums sit in. My CDs are taking up too much space for sure, but at least I know they are there, because I can see them. By quickly scanning any one of the ‘most recent’ piles I can easily remind myself I still need to listen to Paul Weller or Joanna Newsome. But I recently realised just how many downloaded albums I’ve yet to listen to – some from last year. I’d literally forgotten about these, buried as they are into my iTunes library.

I love how smoothly Amazon downloads now embed straight to that library, but almost preferred the old way, when I could at least check my Amazon (or 7 Digital) folders to look at recent or not so recent, purchases. I’d like iTunes to make the ‘recently added’ list both more accessible and more present either online or on the device.

Nevertheless, I’m still going digital. It has to be one way or the other. I will just have to get over my digital discovery issues (with the great help of Spotify, MFlow, the Genius bar and of course, my beloved US indie goldmine ‘Daytrotter’.com).

I’ll do my best to get over my physical needs too, since I’m literally running out of shelf & cupboard space. I’ll undertake to make an effort to improve my digital file management.  I’m still nervous that my digital music collection will evaporate somewhere, but perhaps I’ll put my faith in the cloud (if I can get over my ‘ownership’ issues) or a digital locker service, as it looks like I’ll have a good choice of those next year.

However, this all leaves me with one overriding issue and that’s listening. Actually taking the time to enjoy what I’ve worked hard to discover, access, acquire and manage. I just love playing music back through my (pride and joy) Bowers & Wilkins 806’s. They sound great.

Also, the recently acquired new family Renault came with an integral Bose sound system which rocks. Both have iPod docks, but both have CD trays too. Somehow – the CD – once I’ve got it to hand – goes into the tray with – well – with a more satisfying feeling – than plugging the iPod into the dock. It also encourages me to become more familiar with that particular record, not snack like a junkie on the 6000 tracks in my device. 

Mmm, perhaps I’m not quite through the hedge yet, but still on the fence.

Apologies for not posting much lately. I've been busy, working on some great music industry projects, looking after my kids, and sitting in the sun for five-minute spells of peace & quiet (when I could probably be twittering). The JB blog will be out for the rest of the summer, but you might want to read my post on Google & music on the midemnet blog and also look out for some pieces in the various trusted Music Industry publications over the coming months...all exciting stuff. JB will resume as & when...

Unpop.com – the music store that’s different

Before I launch into my solution for ‘music that’s different’ it’s worth pausing first to consider something amazing about 2009 (a year of otherwise distinctly gloomy trappings – a real annus horribilis as The Queen might put it) and it’s this:

2009 is the 20th anniversary year for Real World Records and the 20th anniversary year for Warp Records. It is also the 40th anniversary year for (dare I say the word ‘iconic’) jazz label ECM. And it is the 70th anniversary year for legendary folk label Topic. Of course, joining this label anniversary bonanza are Island Records (50), Bella Union (10) and Transgressive (5).

So one way or the other – music that’s different and/or eclectic is thriving. Though who knows what the bottom line looks like in these labels, there’s no denying their individual and collective endurance – as both commercial and cultural entities.

This is some ten years after Napster of course, when the first declarations were being made on the ‘death of the record label’. What a time for Simon Raymonde to launch Bella Union – a label that has since blossomed as a home for indie music with a twist. The label is home once again to my favourite recording artist of the moment – the wonderful Laura Veirs – her new album July Flame will no doubt welcome in 2010 with a refreshing air of optimism and loveliness.

It’s worth paying some dues also, to a bunch of music services – many already mentioned previously on this blog – that are making a concerted effort to serve natural niches in the marketplace, rather than aim to serve the homogenous mass that are ‘music consumers’. These would include Calabash/Mondomix (world), Bleep (dance), Lost Tunes (heritage pop), Society of Sound (lossless downloads) e-music (indie, mostly) and Boomkat (indie) among a few others. I also think it’s interesting that Naxos seems to have quietly cracked the problem of how to make music subscription model work commercially – did anyone notice?

Still, as analysed in the previous post – niche genres that so often appeal to older, wealthier and more committed music buyers – have yet to reach more than the sum of their parts. As the digital market has developed, the global long tail aggregators for niche music have yet to arrive in any way that scales beyond say, those services mentioned above. Meanwhile in the great fire of brick & mortar music retail, the ‘jazz, classical and world’ sections seem to be the first ones to shrink then disappear.

So here’s my suggestion – there for the taking for any major music retail brand currently in existence – or for any brave new music venture willing to use peripheral vision – as opposed to another vain attempt to ‘own the digital music space’ by way of a more radical pricing model.

Let’s call it ‘Unpop.com’ (though you wouldn’t actually call it that of course – that would be commercial suicide). Unpop.com stacks up as follows: for £4.99 per month (an established ‘sweet spot’ subscription price according to the surveys I read) you get access to all the niche music you want to stream + the option to buy high-quality MP3 or CD albums at a decent discount – knock a pound or two off the Amazon retail price, say. You get ‘Unpop’ quarterly – a feature catalogue with high quality editorial about classic recordings and forthcoming releases – this makes you feel special. You get one featured free MP3 download each and every week day – nicely manageable, delivered through your in-box, if you want it. A few pre-programmed or socially programmed radio channels wouldn’t hurt.

Thus the market secures a minimum of £60 per year and probably a good deal more for a-la-carte purchases on top. Offering this sort of value proposition for this market doesn’t hurt mainstream music at all – no cannibalisation. ‘Unpop’ is differentiated from mainstream ‘pop’ stuff, so the overall music market economics are unaffected – ‘Unpop.com’ customers don’t care how much standard music prices are – the mainstream can go on being mainstream.

Meanwhile ‘Unpop’ opens up a whole new world of discovery while obtaining underlying revenue from subscriptions. Now that would be different...

Music is a different business – it should do more for music that’s different

A week or so ago, I made five recommendations of music that’s a bit different to my (& maybe your) usual tastes, as part of my strategy to prioritise my music consumption – as set out in this previous post.

Those records were new or recent releases by Portico Quartet, Spiro, Steve Martin, Bill Frisell, The Unthanks and Pink Martini. None of them are ‘popular’ – but each album does fall into a category of sorts – one the many hundreds of music genres or sub-genres. Even Pink Martini – a blend of just about everything except pop, is described on Wikipedia as ‘vintage music’ – a sub genre probably, of ‘easy listening’.

As an industry – if you can really refer to the distribution of commercial music as an industry (a worthy post-grad paper perhaps) – the incredible, bewildering variety of products is what makes the music business totally unique. No other business that I know of puts full-blown produced products out there on the market without any prior knowledge of what will happen next. Sure, if you have a major pop artist with a known commercial track record and the whole dashboard of modern demand metrics, you might be able to put together a half-decent sales forecast – but you’d still be pushing it to be within + or – 100%.

But forget those, if you have any one of the above records – in niche genres – how on earth do you know if you can even hope to break even on releasing the record commercially – i.e. having funded its discovery, production, marketing and distribution? Because the one thing you do know is that you will not have a global hit on your hands.

In this sense, the music business is also unique – in that there are few genuinely ‘independent’ or ‘alternative genre’ records that become global smash hits. The movie business is different – it produces - even if it’s just a couple - of real indie smashes each year, pretty consistently. Be it Blair Witch, The March Of The Penguins, Slumdog, or the very latest example - Paranormal Activity – the small guys can make it really, really big in film.

It happens less so in music – if you look at the top fifty selling albums each year they are dominated by pop records released by majors. Neither small independent’s or niche genre artists get a look in. There are clear reasons based on industry structure. Film has an established independent film network that is supported by major festivals around the world – many of which are celebrated as significant cultural events. It has an ‘art-house’ cinema distribution network too. Film also gets significant government support on the investment side.

The music industry doesn’t have the equivalents. Yes there are numerous small venues that cater to the alternative – but they are not effectively networked and so do not make up more than the sum of their parts. Same for independent labels, really – hence there have been recent initiatives to give the sector a much needed leg-up – such as independent charts. But these often confuse ‘independence’ between source – i.e. label and actual musical style. As for retail, well we can see what’s happened there and it is almost too painful to keep watching.

Music that’s genuinely different, alternative or niche must simply submit to being commercially second-rate. The only global phenomenon of the same nature I can recall is the success of the Buena Vista Social Club Cuban music movement – and that all started with – an independent movie!

I applaud initiatives that try up the ante for the ‘movement’ that is niche music – such as the upcoming January 2010 Reverb festival of concerts at the Roundhouse, which has some support from the Arts Council of England and local Camden Council – though only small commercial sponsors.

However, I’m absolutely convinced this music can scale better than it does, if only it had the right platform. After all, this is the digital age where niche content was in fact supposed to have become the heir to the Blockbuster King, by now according to the uber-thinking-journalists.

Take this simple insight. I have three Pink Martini CDs so I like them – they have grown on me over the years without necessarily becoming an act I would recommend to others regularly. But I know I could name maybe 20-30 other people in my life who would like them as much as me if not more so – but who have never even heard of them. My feeling is that Portico Quartet could achieve the same sort of crossover potential in the UK that Jazz trio E.S.T. achieved in their native Sweden – where they regularly made the mainstream charts.

While I wouldn’t say the same for Spiro or The Unthanks – I’m am pretty convinced that they could probably triple whatever little they do sell - easily – if only they could get some effective, targeted exposure to their receptive audiences, and that could well be the difference between loss & profit.

Steve Martin, well, he doesn’t exactly need to have a hit – and has in fact spent extravagant amounts of his own money on making and touring his ‘The Crow’. But it is such a good record it deserves success in its own right, not just as some kind of vanity project. As for Bill Frisell – at least he is on exactly the right label to connect with his audience – Nonesuch – which specialises in route-to-market for eclectic, different music aimed at the more mature, discerning ear.

And here is the second insight for today. I’m a mature and enthusiastic music fan who has listened to so much stuff that I am receptive – in a state of absolute readiness – to hear more music that’s different. Where do I connect with my fellow audience? I’ve no doubt that audience is large (huge globally); fairly well-off and fairly uninterested in piracy – probably even pro-actively disposed to paying top whack for music - as the rich cultural good that it is. The reason we don’t buy much these days is we are uninspired and ill-informed. No one is putting this music in front of us.

Now I know there is the BBC and in the US, ‘public radio’ – and this is great. Programmes like ‘Late Junction’ are the equivalent of splendid cuisine for the ears – even if you sometimes have to work at it to acquire the taste first. But I don’t really do radio. I want to check this stuff out on demand and then buy it and keep playing it until I love it.

Also, I know these artists could get greater exposure in a number of ways – like what if Portico could get a support slot for Radiohead, or if Spiro got a great synch opportunity? That could break ground, but only as a one-off, transient thing – it might serve those artists well if they are lucky – but it’s not reaching that huge global audience of un-served, unlucky listeners.

And finally here’s the irony. In the UK we are about to get bombarded with new music services (again) – each one upping the ante on the ‘business model’ – more & more music for less & less cash. But the music is always the same stuff. The front-line recommendations are the big artists about to assault the radio networks, the TV and press. Spotify this week has the exclusive with Robbie Williams (do they really need each other?). Sky Songs has launched – in a promotion with The Sun newspaper. It’s like daytime radio all over again - the same music to the broadest audience possible.

Even out of those six million songs in the impressively large catalogues, there’s nothing for we-who-want-different, since we don’t know what we’re looking for, or if we do and hit search, it will not be there more than half the time.

Why don’t we do something different for those people who want something different? I’m on the case...the next post will show us the way...

Can The Beatles finally realise their ambitions?

In Richard DeLillo’s book The Longest Cocktail Party there’s an amusing passage around the release of The White Album (I think, from memory, I can no longer find my copy to check) whereby Apple Corps, the then recently formed Beatles operating company, were positively vexed by the album’s sales performance. The album – an expensive double – was comfortably installed at number one of course, but someone in the Apple camp had calculated that only one in ten households had bought the record. ‘One in ten’ seemed like an outrage – nine out of every ten households hadn’t (yet) bought it! The marketing plan – if such things existed in 1968 – became a ‘how do we get the other nine to buy it’.

Even in their heyday, The Beatles didn’t quite achieve ubiquity (indeed, another band on the EMI label – Queen – has sold more albums to date, worldwide, if my copy of Mojo rock trivia is to be believed). But the remarkable fact is, The Beatles have – as a commercial musical entity – never stopped striving for it and probably never will. Thirty years after the band split, 2000’s “1” compilation of the collective number 1 singles, broke sales records around the world and introduced the band to a whole new set of audiences. Throughout the nineties The Beatles had seen a steady renewal of interest, thanks to the rise of Britpop during that decade.

Now 2009 marks another landmark year in The Beatles commercial career, with the re-masters releases and the arrival of the band into the gaming world via Rock Band. The early sales analysis on the re-masters is impressive, with sales of 2.25 million in the first four days. See the country breakdown on Hypebot here. The campaign seems easily sustainable as Christmas approaches with those two juicy box sets to choose from – there’ll be plenty of fans who want to own both.

With the re-issue campaign being ‘insight-based’ I’m curious to know more about who has bought what of the re-masters – not just the country-based data. I’m intrigued as to whether the re-issues have found truly wide audiences as “1” did, or whether the majority of purchases have been made by the owners of previous recordings. What does the audiophile market make of the re-masters? Did they rate the stereo mixes or stick with the mono?

Also, I’m wondering if many consumers have been tempted to make their first CD purchases for a good while having otherwise ‘gone digital’ – or whether indeed the digital audience has shown any interest at all. Have any digital natives bought their first CD from this collection? If so, they may now understand what they’ve missed in never having a physical relationship with music.

Sifting through these beautifully presented packages (EMI & Apple have got this packaging decision right – no ugly jewel boxes - but attractive digipacks, with the Mono sets coming with a nicely replicated vinyl aesthetic). The Beatles records make so much sense as tangible objects. Playing back Revolver, The White Album, Abbey Road – I’ve found myself just staring at the back covers – something I haven’t done since I was a teenager, basically.

Among the Beatles’ many remarkable ‘firsts’ are breakthroughs so attached to the concept of albums – in physical form - it’s somehow hard to imagine a ‘digital Beatles’. The iconography of the cover art, the photogenic nature of the band, the sequencing of songs (alternating Lennon & McCartney-led compositions but throwing in the odd George & Ringo number in just the right spots), the fact that most of the albums are albums in the truest sense – with no actual singles taken from them at all.

Holding these products gives a sense of music worth the money – at a tenner a throw these packages and their contents are phenomenal value. This feeling is exactly (desperately) what music needs to instil in music fans – this sense of immense value from what we hold in our hands as the music plays. Can this ever be achieved with digital?

Perhaps it can, via ever more beautiful devices and with music as the killer application in those devices. But we have a long long way to go. The Beatles digitally, could deliver everything digital music so far lacks – an amazing library of context. I can imagine holding a device with which I could browse the incredibly rich vaults of artwork, photography and editorial as The Beatles’ music plays. For example, the absorbing stories of their songs as captured in Ian MacDonald’s remarkable book Revolution In The Head. That could add a new dimension to this music, but could it ever be achieved with all the rights clearances required? Would we buy it at a price that makes it all worthwhile?

Could the re-mastering process be applied to a lossless sound format for digital? If so maybe another new dimension is possible. But I guess these days, for The Beatles to finally achieve that modest ambition from 1968 to be in every household, it must come down to whether they get licensed for streaming – but I can’t see the value in that commercially for EMI & Apple. Why would they reduce a valuable, renewable asset like that to the common denominator of streaming?

The same reasoning lies behind a recent Sony decision to remove the Bob Dylan catalogue from streaming services. The classics live on forever, sell steadily and get a new lease of life every so often – a pattern that would be discontinued by availability on streaming platforms. Then again, every music fan – of any age - should hear these songs at some stage, especially now they have been re-tuned for the modern age and sound as fresh as they do timeless. For that to happen I guess The Beatles will need to join the great music library in the cloud, eventually.

Next: A new Pearl Jam album, followed by the return of Alice In Chains. Can any genre from the age of CD buying make a comeback before it’s too late?

post-note: Listening to the Beatles catalogue I had never realised how much their sound has influenced the music I've listened to most in recent years. If you are looking for a modern equivalent, try Elliot Smith, Spoon, I Am Kloot, Super Furry Animals, Brendon Benson - they all sound so much more Beatlesesque than anything from the britpop era.

Will the music industry ever extract real value from digital?

When Steve Jobs announced the launch of iTunes back in 2004 and queued up the slide for the song price – 79 pence – there were audible gasps among the audience. People were that little bit amazed. They were impressed that Jobs had pulled off the deal to sell individual songs - at a reasonable price. It worked too, with iTunes notching up over a billion songs for each year of operation since.

But the six billion songs sold on iTunes are part of a slowing curve – the overall digital business growing by just 25% in 2008 – to $3.8 billion, 20% of the global music business. With the business generating nearly $5 billion less in 2008 than five years before in 2004, before iTunes launched and digital kicked in, the ‘holy grail’ whereby new digital revenues more than made up for lost revenues from CD sales, never arrived. If digital sales grow by more than one fifth in 2009 we’ll be lucky and it still won’t be enough.

Nearly six years on from Apple’s genuinely sensational announcement, that same service dominates the digital space, to the satisfaction of no one, much. Earlier this month Apple’s iTunes related announcement – the iTunes LP, in contrast to six years ago, distinctly underwhelmed. Just a few titles in stock, and looking distinctively expensive.

There’s nothing wrong with the attempt to add value to digital albums by adding extra content – iTunes LP, CMX etc. Other than it’s too little too late. I was all for it back in the day, but the world has since moved on. The market is polarising with high-end CD box sets still in healthy demand but digital pretty much becoming established as the way to get your music for cheap.

The digital market hasn’t developed in a logical order – and has therefore struggled to add value year-on-year – like pushing a boulder up an increasingly steep hill. Had digital albums been launched with extra content originally, or quickly after the iTunes launch, it might have worked. It might have convinced consumers that they are losing packaging, but gaining content.

But while iTunes had DRM strangling its value and held its prices at a constant, CD prices fell by one third over five years. CDs albums are now routinely cheaper than digital – that’s counterintuitive to every music fan interested in ownership.

Meanwhile, digital song value has headed south, first with subscription packages, then with free to stream ad funded services. It’s a journey that has led at least, to a challenge to iTunes’ unhealthy market dominance, but at a potentially heavy price to the industry as a whole.

I love Spotify as much as the next music fan, but its struggle to extract value is in danger of becoming a spectacle. To consumers it’s a miracle, to the industry it’s a problem to be solved. The strategy looks right – drive a developing ad-products business as much as possible, while trying to upscale users to a pay model for a better experience. It has to be the test case and I would strongly argue, deserves all the help it can get from its music partners.

We need to begin to realise though, Spotify’s potential. It has the potential to generate revenues equivalent to a large niche, while at the same time eating further into CD revenues. This is the future music market – fragmentation into a number of niches.

iTunes (i.e. the a-la-carte song market) carved a niche, delivering 10-15% of revenues to the business. Subscription services carved another, smaller nice at under 5% revenues. E-music’s hybrid model carved another niche –delivering 10-15% of revenues for its indie label partners. Ad-funded streaming will be similar. All-you-can-eat services through ISP providers similar again. With each niche there is some natural cannibalisation – gradually creating another niche – the CD market.

This is not an unhealthy long-term picture – provided each of these niches can be sustained – serviced through good partnership and the positioning of the right content and payment models. Forrester’s latest angle in content windowing provides one example of how to do this. It’s something all smart labels know is a good way forward – account managing these relationships and managing the channel conflict that is bound to arise on an almost constant basis, using shared insights and data.

What’s more – this multi-channel, multi-audience niche scenario obliterates the random thoughts of the ‘free economists’ – increasingly supercilious, unconstructive and pretty dumb. There’s value in these niches – little patches of gold in them there hills.

There is value here provided each new wave of services is not met with the expectation that it will be the next big thing – making redundant what’s gone before. Instead it’s a landscape that needs to be cultivated, managed, serviced, through shared vision, insight and data. The answer is yes, but it’s more a ‘yes we can and we will’.

Today's question: Why didn't In Rainbows open the music industry floodgates?

Back in 2007, Radiohead exited its record deal with EMI and promptly self-released their new album In Rainbows as a ‘pay what you want’ download. This I know did not escape your attention.

The genius of the strategy was multi-layered. The move generated such a huge wave of PR that the record hardly needed a marketing budget. And ironically, the band themselves avoided the need to do the usual round of publicity appearances and interviews – an established system the band loathed. It made them look forward thinking and brave.

Best of all, the release of In Rainbows demonstrated Radiohead’s complete understanding of today’s music market, efficiently skewering both ends of the polarised demand for music: digital - the get it now, get it cheap (or free) no frills option; while the high-end £40 box-set satisfied the insatiable appetite for quality stuff that still exists amongst die-hard fans and music collectors.

I know you’ve reflected on all of that as well. But how about this – why didn’t Radiohead’s phenomenally successful strategy with In Rainbows catch on with other established bands?
How come the vast majority of major releases by established artists are non-innovative, conventional, publicity-machine driven affairs involving the usual parade of press, radio and TV mainstream slots, maybe with the odd free download, social networking or viral video strategy thrown-in for appearance’s sake.

For example, the world's biggest band U2. U2 hardly needs a leg-up, but the band still blitzed the BBC - the mainstream of mainstream - when it launched their last record. Although the band did exclusive streaming deals prior to release (Spotify in the UK) it was still a conventional release. Ironically, that record sold disappointingly. Maybe a more innovative, devil may care approach might have stoked up more interest? Who knows.

It might look obvious what the explanation is. That U2 and so many other major bands with a global footprint – Coldplay, Kings of Leon etc. – are on major labels, so the release method has to be by numbers. When the machine cranks up, who will try & stop it?

But there’s no reason why the label and the band couldn’t come up with something genuinely different. Coldplay is on EMI, but the ‘Viva campaign’ was impressive at least – and brave too when you consider the revolutionary costume styling – risqué even! But it was still conventional, big budget stuff.

The tipping point then – whereby bands can explore valid go-to-market strategies beyond the press, radio, TV and tour treadmill – is yet to arrive. I guess two things need to happen to tip the current record marketing establishment:

1. More established bands do an ‘In Rainbows’ (either without, or with, their labels). Coldplay for one seems to be chomping at the bit for the chance to do something that can put them in that kind of light. Next time perhaps.
   
2. A platform emerges that somehow democratises promotion – giving many more artists – especially new ones – fairer access to (the equivalent of) mainstream promo slots. Any one of Slice The Pie, Reverb Nation et al. Are attempting to do just that. The problem is that many don’t get beyond early adopter niches, or reach young but ultimately low-purchase audiences.

One small but significant step – announced last week – was the CBS and Last.fm initiative that facilitates Last.fm to programme a number of CBS’s HD radio slots in large US cities. That could lead to some genuinely interesting eclectic daytime radio in the US. This deal was obviously enabled by CBS’s outright ownership of Last.fm but that shouldn’t be a necessity. With Spotify, We7, Yahoo, AOL, Myspace and others (Twitter if we must), we surely have now mass market platforms to rival the old guard media.

Surprising then, how many established artists are not taking these platforms seriously. Is it a lack of belief, a lack of interest? Or is it that the old media platforms are better connected to music buying audiences rather than simply music listening or music-social audiences?

What we really need is more collaborative initiatives between new & old media - that focus on new artists not those we know already. These initiatives need to be new aggregator brands for music – doing what Top Of The Pops or MTV Unplugged did back in the halcyon days.

Why aren’t there more music brands like this today? That’s another question.

Why doesn't the music industry have answers to the big questions?

It will not have escaped your attention that for the past two weeks the UK music industry has been ‘debating’ (in public, via the press) the Government’s latest proposal to clamp down on file-sharers by forcing ISP’s to issue temporary suspension notices to persistent file-sharers.

Lord Mandelson announced the move, got mixed reviews but industry-wide support from BPI, PPL and HMV, underlined his position vaguely in The Times, but then the FAC (together with BASCA & MPG) – waded in with various comments amounting to ‘serious reservations’. The main thrust of their argument being summed up by Dave Rowntree as “taking a sledgehammer to crack a nut”. UK Music (how many music-based associations are there?) has stepped in to try & broker common ground.

It’s good to see artists voice their opinions in the debate, with Lily Allen blogging and writing an op-ed in The Times against the FAC, followed by Matt Bellamy from Muse chipping in with the ‘solution’ of the compulsory collective licensing of music for digital platforms.

Having read a bunch of press about all this I have at least one observation and it’s this:

What’s happened to the facts?

Where’s the established evidence – empirical & researched – that clearly benchmarks the position that file-sharing has damaged the music industry in terms of sales, artist development, investment in new artists & creativity, and jobs? In the various articles I haven’t seen a single figure, specific or contextual. The work just hasn’t been done. Or if it has, it hasn’t been well communicated.

No wonder it’s proving difficult to get unified agreement. Some members of the FAC have wheeled out the old adage that ‘file-sharers are also music buyers’ – an established fact, sure, until the issue of causality is considered, until the changing nature of that relationship is explored.

Now it’s easier said than done, I know. I’ve had enough experience, in music and other industries, to know that when you do work to try & know something (as opposed to a quick & dirty bit of lazy desk research to try & back-up a PR position) you open up a can of worms. People will argue over costs, methodology, timing, objectivity & god knows that else. You must be ready for that debate – and the facts, the evidence, the methodology, is what makes you ready.

It’s not a luxury. It’s necessary to try & research – from multiple sources if you have to – some kind of impact analysis that can form the basis of debate, policy and decisions. The music industry doesn’t have a great track record in this area however, due to the sheer complexity of the industry value chain, but also due to the lack of will and resources when it comes to factual, evidence-based understanding.

There shouldn’t be any room for debate left about the impact of file-sharing on the music business. But the press, academics and sizeable elements of the artist community and music consumers, remain unconvinced or at best sceptical.

It’s partly a symptom of legacy. Home taping didn’t kill music – that particular relationship was badly communicated and poorly understood and still leaves a bad taste. But the music industry has never had a good handle on other major relationships, like radio airplay and record sales (i.e. overall record sales not just for those artists on heavy rotation). Like singles and albums (it’s never been concluded whether singles promoted or cannibalised album sales). More recently, we seem to have no real analysis of the substitution effects of music streaming services (to be fair, it’s a little too early to say, but I know what my hypothesis would be).

As the current ISP & file-sharing enforcement debate moves on (hopefully soon) in the direction of alternative solutions, we will again be revisiting the idea of the collective license and whether that is a viable solution for the music industry.

I’m a sceptic of this solution – directly because of the analytical work I’ve done in this area – on a couple of separate occasions working with different parts of the industry. But that was over two years ago and things have moved on since then, what with ad-funded streaming, ISP mooted solutions and a dangerous slowdown in digital music growth.

Soon might be the time to look at collective licenses again. But once again, who is now developing the methodologies and gathering the objective facts and evidence to understand the impact for artists, music providers, ISPs, consumers and the Government?

It needs work – a budget, a methodology and a consultation process. Maybe the Government could facilitate the music and ISP industries to collaborate on doing that?

This blog asks a major question of the industry each day this week. Tomorrow's big question - Why didn't In Rainbows open the music industry floodgates?

The State of independents #1

In eight years working in the music business I never attended an AIM meeting, until this week’s 10th Anniversary AGM. I have to say I rather took to it. There was an informal and certainly collective, feel to the proceedings. And a celebratory feel too but in a modest, nicely understated way. Nothing seemed too staged or rehearsed.

Hearing Alison Wenham reflect back on the ten years since AIMs inception and give her ten wishes for the new era, it wasn’t difficult to get a sense of just how much AIM has managed to achieve, against the odds I suppose, when the job in hand is basically herding cats. And what cats. Alley cats that’s for sure. As Chris Blackwell says in his forward to the AIM Anniversary brochure “The indies will always be the lifeblood, usually started by misfits who are passionate about music and the excitement of youth culture”.

Having worked on a project lately that has required partnership with a number of indie labels I can see the spot they’re in and it’s a very sticky one. If we assume a future scenario of gradual continued devaluation of recorded music (can you see any other?) then the only means to long-term survival for record labels is diversification into other revenue streams and rights ownership. In which case, only the Majors (& not all of them!) have the muscle to wrestle their way through, surely? If you run an indie label, record sales are your lifeblood – not gigs, T-shirts etc. And that means that soon enough, you’ll be relying on the true misfits of society – record buyers – to keep you going.

But surely, someone somewhere will come up with a more effective platform for indie music than those currently on the market. There are so few around, most notably e-music – the world’s number 2 music service by value. The others – Bleep.com, Beatport – are small – smaller than the sum of their parts basically.

The indie scene in the USA is a little more dynamic, but mainly due to the proliferation and popularity of music blogs – Stereogum, Aquarium Drunkard, Brooklyn Vegan et al. including my own favourites Daytrotter.com and Ear Farm. But blogs are also less than the sum of their parts. Blog aggregators like Hype Machine and Elbo.ws do a good but perfunctory job of corralling blog content, but these hardly make compelling music store experiences. The indies could do with a branded platform (digital and physical) to help them do exactly what these others fail to do – punch above weight, not below.

There cannot be a more marked indicator of indies punching below their collective weight than a glance at the annual best-seller lists. The IFPI publishes the top fifty best-selling albums worldwide each year. Over the past two years (i.e. out of 100 slots) indie label albums have featured just four times, with all of those from one label in one fanatical marketplace – Japan (Indie label Avex is basically a Major in Japan).

Small Labels, Big Ideas

At the AIM meet, board members sponsored individuals to shout out their big idea for AIM and the indie sector going forward. This was both intriguing and engaging, and the ideas were pretty good too – many of them pragmatic – like an industry database of media contacts to assist indies with their low-cost marketing efforts (a tie-in with The Guardian Media Guide perhaps?).

My favourite big idea was ‘Death to the CD promo’ – an industry wide switch to promo streaming. This is one of those no brainers for the modern age – creating a greener and more secure network for digital distribution of all promo tracks to media and brands. Not only that, but the flow of information from this network could be so much more effective than now, i.e. phoning around in vain to see if anyone in the media received or has listened to, your tracks. Not only that, with services like SoundCloud on the market, this could be achieved within a year. I’m sure it would be supported by the Majors but would be a nice one for AIM to lead. However, the idea was voted number 2, runner up.

Number 1 was this: ‘Lobby the BBC to encourage them to play a wider range of independent music on Radio 1 and Radio 2’. Now it’s easy to see why this got the most votes even in the absence of knowing what the other eight big ideas were (they’ll be on the AIM web pages by now if you’re interested). I’ve no doubt that if I switch on the radio right now (lunchtime basically) I’ll get one of Take That, Pixie Lott or if a commercial UK radio channel, inexplicably, ‘Halo’ by Texas. Either those, or (Still) Chasing Cars by Snow Patrol (aren’t they really an indie band though?).

I’ve mentioned a few times on this blog in the past how radio has a lot to answer for, in the UK and even more so in the US. Radio is still the number one music discovery platform according to surveys (though I’m convinced the surveys are wrong and that radio’s position as tastemaker is secondary to its role as background music for people who can’t be bothered to like music that much). And because of the huge audiences radio reaches it remains priority 1 for record promotion.

However, the strategic dilemma for indies is whether AIM should bother lobbying the BBC about the R1 and 2 playlists or whether it is better off working with alternative promotional platforms to get a greater presence for indies on those. To my mind it’s the latter, because I can’t see a huge audience of indie music buyers regularly tuning in to R1 and 2 during daytime, but I can see them streaming more alternative radio shows via digital channels or reading about new music in Clash, or streaming new music on Spotify.

And so to the other great dilemma of the day for indies – to license or not to license (or perhaps more how & when to license and at what price) – new digital services like Spotify. This was also a big idea: to ‘persuade digital service providers that independent music is essential for any complete, compelling and successful music service’. This idea didn’t get such a big vote on the day, but probably only because AIMs members felt this is already very much in hand – which it is, through licensing body Merlin and through digital distributors like The Orchard, IODA and Vital.

However, speaking with my strategist hat on, I’m not sure if the indies collectively aren’t missing a trick with digital licensing. Fighting your corner on deal terms is one thing, but AIM should consider if it’s worth licensing to digital streaming services at all. I’m not advocating that the indies don’t license, I’m saying that it would be a valid strategic decision not to, on the basis of unquantifiable net value (i.e. after substitution effects and relative assessment of deal terms compared with Majors).

It would be an even more valid strategy if the indies could create an alternative platform to the current crop of streaming services. On the day, several members emphasized the exclusivity and ‘quality’ of indie music and I can’t help but think that there are better ways to leverage this than licensing to a slew of services as second fiddle to Majors catalogues. They could opt to support e-music more proactively, giving it another push, though it seems that with e-music now actively courting Majors, the opportunity is lost. Or the indies could look at creating a platform of their own – perhaps working with more innovative technologies like Songbird or similar.

Perhaps the biggest obstacle to an alternative platform strategy for indies is the music itself. Yes it is exclusive and of quality, and comes from a place of passion first, above commercial priorities. But that’s true of plenty of the repertoire on Major labels too. One out of 2 of my own favourite ‘indie’ bands are in fact released on major labels. While there is still a gap in the market for an indie music platform, consumers simply don’t divide music between Major and indie labels in that way.

So finally, to my big idea (with the benefit of a review of the ten presented on the day of course) as follows:

Launch a new branded platform for independent music (not exclusively indie label music, but it could begin there) that focuses on emphasizing the passion behind the music – the exclusivity, the quality etc. - everything that isn’t just availability, basically.

A boutique brand for indie music is what springs to mind. By necessity it would have a digital presence (downloads, streaming, radio and a licensing platform for blogs), but also very much a physical one as well – after all the brick & mortar space is somewhat less competitive these days. This could be through a small network of new stores or through a network arrangement of indie shops.

It’s contrarian, sure, but that’s the essence of indie culture, isn’t it?

The AIM meeting was the culmination of a week of events celebrating the tenth birthday and ‘Independents Day’ – when we are all meant to flock to our local indie music retailer to buy CDs & support the biz. I didn’t get around to shopping for indie music from an indie store on Independents Day, sadly. In the end I was too busy and not near an indie record shop – and in truth I would not know where to find one. Besides I suspect they wouldn’t be stocking my current wish-list of music. If I could have though, I would have!

My current indie music wish-list is the entire back catalogues of Spoon, Dinosaur Junior, Death Cab and Laura Veirs (only two of which are on Major labels).

Newsflash for latecomers: Glenn Peoples from Billboard (and formerly Coolfer of course) has alerted me to exactly what I refer to above - a new indie platform - in the US, called Thinkindie, here...http://digital.thinkindie.com/...which is interesting innit?
Nice use of the black sheep mascot too. One to keep an eye on.

Digital State of the Nation # 2: partnerships - when will it all go right?

[As promised, the second part of my assessment of the current digital space. This is a slightly longer version of what became an opinion piece in Music Week a couple of weeks ago. In the two weeks since, it’s been interesting to see the PRS change its license rates for streaming music and the commentary about Warner and other majors bleeding the horse for some ad-funded streaming services including iMeem. It was also interesting to read Hilary Rosen’s retrospective in Billboard - http://bit.ly/WTZoE Clearly things continue to move at a dazzling pace in the digital music business even if we’re no closer to figuring out which models will last it out. This piece is a call for a more strategic perspective on licensing and partnership, until we do].

Following recent developments in the relationships between music producers and their evolving digital partners, a fairly messy picture of the digital music landscape emerges. On the one hand, we have had the recent failures of new music start-ups including Muxtape, Mixwit and FabChannel – all of which have pointed the finger firmly at the record labels’ (and music publishers) collective lack of a flexible licensing policy. Seeqpod seems to be rapidly going the same way.

Perhaps most significantly given the overall direction of the business (towards music streaming) are recent grumblings by digital juggernauts like YouTube, iMeem, iLike and Last.fm that licensing costs are, erm, making life difficult. On the other hand, we have the buzz of Spotify and the tenacity of iTunes, continuing to make the best of its market leader position and loyal audience, if lately pushing it a little with price changes.

Such is the uncertainty of the digital music business however, that no one can say, hand-on-heart, which services will still be around in say, five years time. Spotify could be the new improved Last.fm with all the same commercial problems in the end. As for iTunes, it could either go the way of the streaming models or simply tough it out as the last man standing in downloads.

In each & every case the central issue is the same – that of the commercial value of music. In recent weeks I have had discussions with a number of young digital businesses all with a stake in music. Not one of them holds a belief anything other than music (at least, digital music) will be free within five years. I’m not going to argue with that notion here, as much as I’d like to - there isn’t enough room to do so.

My point here is to argue that the digital music business – suppliers and partners – have a choice in whether digital music is to be free in five years or not. Music doesn’t have to be free if the business cannot find a way to deliver it for free. I don’t care what Mike Masnick or Chris Andersen or whoever super-geek thinks about it. Are the movie or games businesses considering a free model? I don’t think they are. The music industry might not look too smart in five years if music’s free but digital films & games are commanding good prices.

It seems clear to my mind that an unambiguous licensing policy might help to start with. I don’t mean stubborn, or prohibitively expensive, just clear. For an innovative new music model that is non-threatening (one that for example passes my test of ‘natural friction’- not DRM or price friction, but repertoire based when set by users themselves – such as playlists, which don’t replace albums even when shared), licensing should be nice and flexible. It should represent good value, thereby incentivising innovation.

I hope the recent deals between ProjectPlaylist and at least two of the major labels fall under that category. Music providers can even support such services in other ways, through direct investment or content development, such as exclusives. It would mean label digital departments doing much more than deal-making and accepting cheques. It would mean Content Services and Account Management teams really working to support & sustain service partners in innovative ways. And both parties need to share and use collective consumer data better to iterate service development in line with users needs.

For a major ground-shifting service that potentially speeds up cannibalisation, licensing is much trickier and therefore by necessity of managing risk, more expensive. This challenges the service provider to find a workable model at the point of usage. If that model doesn’t exist or cannot be created, it can’t afford the license. Buying up content in advance distorts this picture longer term, adding to ambiguity in defining what is successful and leading to more market uncertainty.

If a clearer, more strategic licensing means a potentially smaller short-term digital business I think that is a fair trade-off for one of potential longer-term value. I don’t know if this is what the UK Government was driving at with its recent recommendation for a Licensing Agency – maybe it was, maybe it wasn’t quite sure itself. Maybe we'll see later this month when the full Digital Britain Report comes out.

It doesn’t take a government initiative, but it does mean music providers need some more collective clarity. With a clearer set of criteria for digital licensing, the music industry can meanwhile develop its other products and revenues more confidently, including improvements in physical product, merchandise et al.

Music discovery Spoon fed, courtesy Daytrotter

Do you ever become utterly gripped by just one song? This one song becomes your adopted theme tune of choice, pushing aside all other songs in your current consciousness. More than that, the song seems to be a perfectly apt soundtrack – a response, to just about everything that happens to be going on in your life. You literally can’t get the song out of your head and don’t want to, necessarily.

That’s happened to me very occasionally and it happened all last week. The song is by Spoon and it’s called “The Ghost of You Lingers”. It’s from their last album Ga Ga Ga Ga Ga, though I only just came across it.

This track has infected me. There’s something strangely compelling about it – the way it pulses nervously, urgently along (the keyboard on the track is used as a rhythm instrument, which is a sound I have always been attracted to). It’s experimental in structure, but melodic too – nearly all of the melody supplied by the vocal. I don’t think I could ever get bored of listening to this track. It is however, a bit menacing – it’s an anxiety trip – especially with some weird interference sound buzzing towards the end (this is what first caught me ear with the track).

The lyrics and the music could not be any more together. And the lyrics are to a pop song what Pinter prose is to a play. There’s something mysterious going on with this song. The singer’s voice is concerned, reflective. The lyrics are a riddle:

Put on a clinic till we hit the wall
Just like a sailor with his wounds being salted
Come on
I had a nightmare nothing could be put back together
Would you settle the score?
If you were here
Would you calm me down?
The ghost of you lingers
It lingers
And I always think about it

A little detailed so far I know, but stay with me. A little cursory interweb research unveils the impact on the world of “Ghost of You Lingers” and it is not insignificant. A (what looks like an unofficial art) video for the track is approaching 111k views on YouTube. But on the band’s current Myspace page, the track clocks up over 635k plays – and has over 470k on Last.fm - so plenty of web activity around this track.


Daytrotter - new music, timeless values

But I didn’t discover the track on these titans of web music real estate. I found it on Daytrotter.com. And Daytrotter has amazed me these past few weeks I can tell you. I first came across it after reading about it in Chris Salmon’s ‘Click-to-Download’ column in the Guardian’s Music & Film supplement.

The concept is beautifully simple. Band’s drop by The Horseshack studios in Rock Island, Illinois (while passing through on US tours) and record a 4-5 track session – usually new or recent material – sometimes un-released songs. The session tracks are offered as free MP3 downloads and the site itself is funded through banner advertising (it wouldn’t be right somehow for audio ads to be part of this set up).

Now I’m pretty late to this party. Daytrotter has been going since 2006 and with the frequency of one band every day, has amassed an impressive session archive – all of which is still available for download. I have been like a kid let loose at the pick ‘n mix counter the past couple of weeks raiding this archive. It’s hard to distinguish which sessions are best – that depends on your tastes. But if it’s any help at all, I have listed below my favourite ten songs I’ve been living with lately from the Daytrotter sessions, including the Spoon song.

[Btw, you'll have finished with the YouTube Spoon clip now, so click on the Daytrotter radio player on the right to stream Lonely Dear - number 2 in my Daytrotter session top ten].

I don’t often gush about individual music services on the JB blog so now to the justification to do so with Daytrotter. Daytrotter isn’t just another music blog. It’s done with such care, and so nicely wrapped in its own indie music ethos, it’s immediately attractive for fans of this type of music. And it’s sticky as hell - I just can’t stop dropping by on the site to see who has recorded a new session. It’s marvellous for real, lasting discovery and connection – I’ve found Spoon, Ingrid Michaelson and The Local Natives on there and I suspect I will listen to a lot more by each of them and many others.

The sessions themselves are quite something. I’m not really one for live session content, but something about the setting or the atmosphere or something definitely rubs off on the artists who record for Daytrotter. They seem to put in real performances and the sessions sound great – warm and capturing plenty of subtleties in the music – credit to both the artists and to the studio's sound engineers. These are so much better than your run-of-the-mill promo-circuit radio show sessions where the artist just shows up and plays with half their usual players or equipment and then have to suffer the DJ concluding with a cringe-worthy “that was just fantastic” (awkward moment of radio silence follows).

In short, the recordings made here are well worth the effort in downloading, listening and keeping. I’ve talked a lot in this blog about how the music industry desperately needs new content brands – nicely curated, edited and presented – in a way we the fans come to know, love and trust. I can think of very few that have so far emerged in the digital music space so far.

I wrote about Lost Tunes last month (which won a Music Week award last week, congratulations). I’ve featured Calabash-Mondomix as well. Pitchfork certainly qualifies these days as do a number of the more established music blogs (though these lack a substantial archive). Such music editorial brands are so few and far between however.

But Daytrotter is my new favourite music brand. I can’t see me getting bored of something so lovingly put together and superbly well executed. It’s so simple. Not only is the music great, but the editorial features written by founder Sean Moeller are briefly diverting and fun to read. A strong voice that’s never dull, and sure does justice to its quirky and individual subjects. The other aspects to the site work fine too – a radio player, some video, a cartoon strip, a merch shop. And it’s all beautifully signatured by Johnie Cluney’s highly attractive artwork. Everything about it smacks of an effortless (and perhaps even accidental) focus.

And in this focus is a great model for all of the endless technology-driven music services that show up week in week out and mostly, depart quietly sometime later by the rear exit. Being a valid, lasting contributor to the changing face of music discovery doesn’t have to mean a gargantuan library with all the music ever made, or the latest whizz bang recommendation engine that can rip that library apart with an algorithm.

Put some thought into it. Think about your audience, think about your artists, and think about how you can add real value to their needs in connecting. Word of mouth will do much of the rest.

I’d love to see Daytrotter move up to a gallop, perhaps syndicating its content onto the bigger music or ISP platforms so desperate for character development. But the Daytrotter crew aren’t as consumed by ambition as I am. By e-mail I asked Sean Moeller what his longer-term ambitions for the service are. His response was “long term goals are just to continue doing what we're doing really”. Once again, focus.

My top ten digital tracks from the sizeable archive:

1. Spoon. “The Ghost of You Lingers”.
2. Lonely Dear. “I Was Only Going Out”. (embedded for your listening pleasure).
3. The Maccabees. “Precious Time”.
4. The Local Natives. “Airplanes”.
5. Aimee Mann. “Little Tornadoes”.
6. Spanish Prisoners. “Mantequilla”.
7. Ingrid Michaelson. “Breakable”.
8. Death Cab For Cutie. “Styrofoam Cup”.
9. Foals. “Jam (Figure#3)”.
10. Deerhunter. “Dr. Glass”.

Quick & dirty digital state of the nation #1: Music’s future face-off - Streaming vs. Transactions

By almost popular request, this is number one of two brief posts forming a digital state-of-the-nation, so we can move on to see what could happen next and more importantly, in a post or two’s time, look at who actually decides what can happen next.

I occasionally write about music on this blog, not just the business of music. If I were to write about music that interests you, what are you most likely to do? a) park it for later/never b) stream some of the songs I mention on Spotify c) buy the music from a digital music store. File-sharing isn’t an option I’ll include for now but obviously if you really wanted to, you could. If I really wanted to know the answer I could add a voting widget on the blog, but the question is actually kind of rhetorical.

But it is no less critical for that. With Spotify probably coming in somewhere close to 1.5 million unique users by now, ad-funded streaming seems to have momentum, so you might answer b) stream it. On the other hand, if you have been persuaded by any of the arguments & threads on this blog at all, you might well opt for c) buy it. I’ve posted several times on the limitations of streaming for music discovery and enjoyment, but also many times on the lack of inspiration to buy digital. But both are accepted options on the future of recorded music’s rather limited, menu. The technology evangelists will insist that transactions aren’t even on the menu at all – and they are quite wrong about that.

State of the Nation for Digital Music: Streaming vs. Transactions

First, streaming music. Consumers love streaming when it’s free. The first generation of subscription-based streaming services (led by Rhapsody) found a limited niche. Even the free ad-funded options later released by Rhapsody & Napster couldn’t take them into the mainstream. The second generation ad-funded streaming services really worked. Last.fm gained traction as a music social network & recommendation service then introduced full-track streaming. iMeem followed. Then Spotify took off and flew in the UK and Europe.

So far so good, except for the weaknesses in music streaming we are learning more about as things unfold: the business model. It’s tough, tough, tough. These services pay the labels advances and the publishers per stream, and now operate in a recession where ad-funding isn’t flowing into digital platforms like it did last year. This has had a lot of coverage in the past few weeks but was first exposed by on Michael Robertson’s blog over a year ago.

Consumers won’t pay in numbers for streaming or recommendation. They will tolerate some advertising if the trade-off seems reasonable. They have yet to really work out how streaming music for free impacts on their overall, long-term music consumption, but the chances are they will use streaming services to listen to a greater variety of music and take the risk out of music purchases. Since this means more time listening than shopping, that will inevitably mean less music purchases.

Now, since I posted last time on this subject of streaming outweighing transactions, Spotify has done an affiliate deal with & Digital whereby all the tracks on Spotify are one or maybe two clicks away from being purchased. Good stuff. So is the problem solved? Not really. Streaming on Spotify is quite passive, quite lean back. It is unlikely users will stream on Spotify to screen music prior to any kind of purchase and then go ahead with gusto to 7 digital to buy. It’s unlikely that stream-like-buy will establish itself as a major pattern of consumer behaviour. The instant buy button for music was always overrated.

Now to transactions. Why do we buy a piece of music? We’ve been conditioned to and that trend is ingrained and is still strong – if you are over 30 at least. For under 30s not so strong perhaps, but still very much present. But plenty of under 30s music fans prefer CD to digital, which seems weird but is logical. We’ll buy digital because it’s quicker than physical, usually – slightly more convenient and slightly cheaper. Now DRM is gone it’s less risky & confusing.

We mostly buy digital to add to a device, hence iTunes has the market sewn up, occupying 80% of a large niche. As opposed to streaming, all second generation market entrants have struggled like hell. Smaller brands have made no headway into iTunes market share and Amazon & Play have done okay with aggressive pricing but not shifted the needle for the market, really.

Interestingly, none of these digital stores have introduced the ability for customers to stream the songs in full before they buy. Unlike the streamers introducing click-to-buys, these established retailers know the game too well to expect full sampling to shift their sales up. It’s likely to go the other way, they know that.

On the other hand the innovation in the transaction market has been poor compared with streaming. iTunes isn’t sexy anymore it’s a 7-11. DRM got stripped, so what. Genius is okay but not game changing. Differential pricing isn’t the same as dynamic pricing and it looks like it will leverage some standard prices up as well as down. Amazon has gone aggressive with pricing, not impressing anyone, much.

But there have been, and still are, some interesting takes on selling music. Amie Street’s dynamic pricing model. E-music’s hybrid, great value music club-type subscription for indie content. Some higher-quality & lossless song-file services etc. – all niche. We’ve had music market-places such as Burnlounge and now we have the Peoplesmusicstore (I like this, more about it in a later post).

Finally, as I wrote a few posts ago, some services are, at last, focusing around particular audiences and repertoire rather than getting hung-up on payment models - Lost Tunes for example.

That’s the digital market covered (minus file-sharing and a few mobile services, granted) – in total worth roughly $3billion, under one fifth of music and not making up for lost CD sales. Growth is slowing down already at around 25% in 2008. In short we’re in a bit of a spot. But it is early days let’s use this brief history to see what might happen next.

Digital Music: What happens next?

What we have to realise is that the consumer adoption curve is law. The mass market simply does not go for things that aren’t convenient, simple and good value compared with the alternative. We have no right to believe that digital will grow significantly unless we see greater innovation and value arrive on the supply side. There might not be one big breakthrough to rival iTunes initial impact, but some clear ways to go as follows, with my view on the medium-term (say five year) potential:

Ad-funded-streaming
The outlook isn’t too rosy. Is it really much more than personalised radio? With its simple functionality there isn’t room on the market for more than 2-3 key players and they’re already here, which becomes very challenging for new entrants like Myspace Music. Ad-funding on its own won’t sustain Spotify, but people love it, so a good chunk of users might be happy to pay around £2 per month to not have to live without it. Spotify might be able to earn £50m or so from direct subscriptions in addition to its ad-revenues. Medium-term potential: low

Music stores
Despite the dominance of iTunes there is still some ground to be made through targeting services better to audiences (particularly new digital adopters in the more mature demographic segments). See previous posts around product development in this area. Through more compelling services and some innovation around targeting the market for transactions could easily double, though in the longer term it depends how much music is commoditised in other ways. Potential: medium

Hybrid models
E-music was always a good idea, an innovative model. But it’s pricing is still way too aggressive for music producers and it is yet to convince the market that the ARPU model is an effective replacement for transactions. So it stays niche. But ISP’s (or even Spotify of Myspace) could offer a simple hybrid whereby 30 tracks per month are keep-able within a streaming subscription, maybe with some sharing capabilities. The pricing equation isn’t easy, but with a good value package and great presentation across multiple platforms this could shift the needle and could reach a hitherto indifferent digital consumer. Potential: high

Cloud-based models
These are still some way off. The cloud with everything available and consumers paying for access isn’t quite as inevitable as people think – it’s back to business models that actually work. Play Anywhere is an interesting B2B offer that bridges what we have now with some kind of future cloud-based mother jukebox but it’s too complex to be mass market. Potential: low

Recommendation
New technologies arrive weekly, but don’t seem to really get that much better. They come and go, with nothing making a mark more than Pandora or Last.fm has already. Even if someone perfected music recommendation it’s not something that consumers will pay for in itself and will not drive transactions for the same reason Spotify will struggle to – music purchases don’t work that way. Potential: low

Playlisting applications
On the brink for over a decade digitally, playlists have been a key music currency for as long as tapes existed. As with all things music though, what made mix tapes great – the time, thought and love it took to create them – has been commoditised by digital, with playlist services swamped with literally millions of crap compilations. Still, some services like Muxtape and Mixwit were built on traditional mix taping values and looked promising until licensing issues killed them off early. But now the labels are licensing project playlist, so the sector might yet deliver. Key to its potential are two factors: built-in natural friction on music use (keeping the industry comfortable and consumers tolerant) and the ability to offer great value since sales can be seen as incremental to all of the current product offers on the market, even commercial compilations. Potential: medium

Making it happen. Who decides?

I’m sure I’ve missed a few key developments above, but I hope to have demonstrated that there are plenty of elements that can still bring value to digital music and help the market grow significantly. However, most critical of all is how the various market players interact to bring these elements to consumers in coherent, sustainable ways. It’s the subject of the next post or one after so please keep a look out for it.

Spotify, 1000 songs & another paradigm shift for music? Probably not

All last week I was buying the Guardian and setting aside its (excellent) set of seven supplements of ‘1000 Songs Everyone Must Hear’. I’ve browsed through each of the seven categories: love, heartbreak, people & places, sex, protest & politics, life and death and party songs. These were really well put together and I found myself casually marking with a pencil the songs I wanted to hear – for the first time or again – in the old fashioned way (I haven’t done that since circling essential Christmas films in the Radio Times, centuries ago).

Being deliberately ruthless, I got to a tally of 49 songs that I became immediately interested in listening to. I virtually ignored the protest & politics section so it could’ve been higher. And like I said I was ruthless. My most popular category was heartbreak with 13 songs. That is irrelevant to but I thought I would share it with you anyway.

Now what’s missing from this story so far? Exactly right. Any intention on my behalf to buy the tracks.

Out of the 49 songs that caught my eye I already owned a copy of just over half of them, mostly strewn across my CD collection which spreads throughout lounge shelving (prime spot, my classics & recent bests), office shelving (current playlist, new releases, freebies) and boxed up in the shed (abandoned, just not forever). I had a handful of the 49 in my iTunes library, but since most were songs I hadn’t heard for ages - or at all - I’m unlikely to have them to hand.
With the sheer inconvenience associated with actually seeking out the 49 songs, the whole exercise was looking like a source of frustration - yet another small music project to put on hold.

But guess what? The people at the Guardian have, this time, been smart enough to link the series with a digital song platform, in this case Spotify. The Guardian’s (again, excellent) music blog has a simple hyperlink to Spotify under each song’s editorial. You can even copy & paste the HTML for a blog widget (I’ve installed one there on the right – my 13 irrelevant Heartbreak songs for you to check out).

Now, while this is fantastic and has indeed taken the inconvenience out of my little project perfectly, it also got me thinking about how the industry is making leaps & bounds forward so fast, that we might be missing a trick or two on route. Curiously, there is very little mention of the link anywhere on Spotify. Nor does The Guardian make it at all obvious in the published supplements. This seems to be either an unofficial arrangement, or a joint promotion done on the quiet (which kind of defeats the purpose doesn’t it?).

Two things occurred to me about this:

1. Here was an excellent chance to promote both The Guardian and Spotify (and for labels, the songs!), but even more critically, encourage consumer interaction between old & new media platforms (among a key high-value, mature consumer demographic to boot).
2. The link to Spotify made sense, but hang on a minute – Spotify is free – were there e-commerce, transactional opportunities missed here?

Both the above struck me as lost opportunities, with the latter a real issue in demonstrating how the digital music industry is currently positioned.

I’m still curious as to why it’s not made easier, in this digital day & age, for consumers to simply click-to-buy an album for which they have just read a glowing review. Last year I received some excellent music book gifts – Robert Dimmery’s ‘1001 Albums You Must Hear Before You Die’ and Garry Mulholland’s ‘This Is Uncool: The 500 Greatest Singles Since Punk and Disco’. On reading both I became eager to check out a shed-load of music. But again, with no linked incentive to buy digitally anywhere connected to the publications, I ended up making a less than pertinent mental note and buying one or two CDs on Amazon.

Of my 49 songs, let’s say I would buy 20 (I would!). Why didn’t the Guardian link up with iTunes or Amazon, or 7 Digital, to offer a simple menu of purchase options: 20 songs for £9.99 say? Or how about the whole 1,000 songs categorised by the seven sections for £99? Higher quality song files with a glossy collector’s booklet? Make that £149. Whatever, you get the idea. We are talking nicely incremental sales here, so incentivised pricing would work extremely well for both consumers and suppliers.

I know about the technical issues – metadata, bandwidth, dynamic pricing – all surmountable. Publishing is an issue of course – again surmountable. The logistical issues are well worth sorting out for a better digital future anyhow.

So why don’t we see more of this? More fundamentally, why does the industry now seem to be steamrolling forward inexorably toward ad-funded streaming models before we have explored more innovative transactional models?

It’s a key question. Rather than debate about whether all-you-can-eat streaming cannibalises existing sales, what about the opportunity cost of transactional opportunities not yet explored?
I have read in recent weeks at least a dozen articles about how Spotify’s momentum and the growth of ad-funded streaming services is tipping consumer behaviour into a new paradigm of access, not ownership. Tosh! Kind of – of course there is some truth in it, but the real picture of changing music consumption habits is far more varied.

Streaming music services represent snacking on music, the equivalent of browsing in one of those super-fancy-stationary stores where everything looks enticing and is mostly very affordable. But since you don’t need any of it, you pick up & flip a few things around in your hands and then walk away, empty handed. Or maybe you remember you actually did go into the store because you needed a new notebook.

Spotify is a form of music discovery and consumption, not a panacea. It is fun, convenient and superbly ripe for the kind of editorial tie-ins like the one with ‘1000 Songs’. It’s even better for background streaming while working on the laptop. But I for one am not ready to walk away from music ownership because of it.

I want to commit to certain records knowing that the pay-off comes from repeated listening in a range of environments, situations and emotional states. Streaming services are a way of filtering through the tide of new music and a way of snacking on new stuff, but that’s not how you discover what your primary collection of music for life sounds like. It’s unlikely I would have discovered Wilco or Sparklehorse or Merz on a streaming player. I certainly would not have warmed to the new Starsailor or Adela Diane records through that medium.

As that consumer who wants the deeper connection with music – who seeks out the next life-affirming records that can make the difference, I’m still here waiting for a reason to have a digital music collection, and for reasons & incentives to buy more music digitally. Until then, it’ll be Spotify, CDs and live shows. Not a paradigm shift for me.