Technology News of Note

November 2012


1.    Will Royalties Kill The Streaming Rdio Star?

The ongoing tug-of-war among musicians, record labels and digital content providers inched a little more towards artists with the introduction of an innovative paid-referral plan from streaming provider Rdio. The new program pays artists a flat $10 fee for every user they refer, a rare form of direct-to-artist revenue in the music streaming business. If artists can help boost Rdio's current 10-million-user subscriber base to challenge Spotify’s reported 33 million users, that should also increase overall payments to artists from royalties down the road.  Of course, other than that up-front fee, Rdio’s royalty payments won’t provide much padding for musicians’ wallets, primarily because Rdio, like competing services Spotify and MOG, pays royalties directly to the record labels, not to the artists.   (Source: Readwrite.com)


2.    Financial Firm Rates Spotify as 'Unsustainable,' 'Alarming,' 'Broken...'

Financial data firm PrivCo raised some serious questions about the sustainability of Spotify's financial model, based on year-2011 losses of nearly $60 million. "Spotify's financials show that the bigger the company gets, the bigger its losses," the company assessed, "...while Spotify's revenue growth is impressive, its overall financial results are alarming….In fact, virtually every new dollar of revenue went directly to music companies as royalty payments, evidencing the fact that the more members Spotify adds, the more money the company loses. No matter how we slice the math, it is patently clear that something's gotta change soon on Spotify's business model if the company is to survive."   (Source: Digital Music News)


3.    Music royalty bills don't address problem

The coming conflict facing Congress over Internet radio royalty rates looks to be as knotted as any in recent memory.  The most pressing issue concerns the wildly divergent royalty rates paid by various radio platforms. At present, terrestrial radio stations pay no performance royalties to artists. Cable and satellite radio pay a statutory fee, which for Sirius XM amounted to around 7.5% of its annual revenue last year. And Internet radio provider Pandora pays well over 50% of its revenue in royalties.  Last month, a pair of bills were introduced in Congress that would dramatically change this structure. One, the Internet Radio Fairness Act, would lower the rates paid by webcasters like Pandora to the same "801(b)" rate paid by satellite broadcasters like Sirius. An opposing bill, dubbed the Interim First Act, would take a reverse approach, raising the rates of satcasters and cable stations to the same rate as Pandora's. In other words, the options on the table are as follows: Keep the current rates and let Internet radio feel a disproportionate squeeze; pass the IRFA and put a further burden on already squeezed musicians, who would lose out on significant royalty payments; or raise satellite radio's rates out of solidarity, at the risk of crushing it along with Internet radio. To put it mildly, while all sides can pose passionate, persuasive arguments, none of these final scenarios is ideal.   (Source: Variety)


4.    Music streaming: what do songwriters really get from YouTube or Pandora?

Song writers are angry about the small royalties they get when their tracks are played on audio streaming services, such as Pandora, and video streaming platforms, such as YouTube.  Ellen Shipley, the co-writer (with a 50% share) of Belinda Carlisle's “Heaven Is a Place On Earth” reported receiving $38.49 for the 2,118,200 streams the track had accumulated on YouTube in the last quarter.   Now, some may claim that YouTube, Pandora and Spotify are just discovery tools and so, like MTV back in the day, should not be an income stream for artists and songwriters. But, as with MTV, record labels have realized that they're spending millions on the recording of music from which YouTube and others – without having to pay anything for the content it hosts – are earning significant revenue, which they believe should be shared more equitably.   (Source: The Guardian)
 
5.    YouTube to charge fee for some content

YouTube will start experimenting with charging subscription fees for some of its branded content following the announcement of partnerships with European TV content providers to feed 60 new channels.  The partners themselves -- which at this stage include BBC Worldwide, Endemol and FremantleMedia -- will decide if they want to pursue that traditional pay TV broadcasting business model or stay with an advertising supported approach.   (Source: Variety)

6.    Changes to Charts by Billboard Draw Fire

Recently, the editors at Billboard, who for decades have defined what makes an American hit, shook up the song charts for various genres by counting digital sales and online streams along with radio airplay in its tallies for most major formats.   The results have given stars with a pop-oriented sound and broad crossover appeal an advantage over other artists, upsetting and puzzling some music fans.   Bill Werde, Billboard’s editorial director, said the shake-up was necessary to reflect changes in the way people consume music these days.   There was a time when radio programmers — and the record labels who lobbied them — largely defined the charts, using surveys of their listeners and their gut instincts to select hits. Now the Internet gives fans a greater say, as people buy music from online stores, stream it through services like Spotify or listen to it on video sites like YouTube and Vevo.   (Source: New York Times)

7.    DVR changing landscape of smallscreen success

The big question raised by the growing influence of DVR numbers is how the increase in delayed viewing may shake up industry practices -- in everything from how a show's performance is evaluated to how and when networks spin ratings results.   Industry insiders say overnight ratings can still clearly indicate whether a show is a big hit or a colossal miss, but for the majority of programs that land somewhere in the middle, the process of determining whether a show deserves a passing or failing grade is getting ever more complicated, as it requires waiting a week or two for the DVR playback numbers to roll in.   (Source: Variety)


8.    Facebook Accused Of Changing A Key Algorithm To Hurt Advertisers

Two prominent social media marketing executives have gone on record to accuse Facebook of quietly altering one of its key algorithms in September, so that companies with pages that have large numbers of followers can now only reach a fraction of the followers they used to with each post.   Facebook can fix this at any time, and may be forced to, considering the backlash they are about to receive from the very advertisers that are practically their sole source of revenue.   In response, Facebook said, “We’re continuing to optimize the news feed to show the posts that people are most likely to engage with, ensuring they see the most interesting stories. This aligns with our vision that all content should be as engaging as the posts you see from friends and family.”  Facebook is betting that its advertisers either can't or won't stop paying for promoted posts, even if they reach fewer people.  (Source: Business Insider)

9.    Fight Builds Over Online Royalties

There is a debate playing out in Washington over the obscure but increasingly vital issue of royalty rates for streaming music online. The issue pits the survival of Pandora Media and other Internet radio services against the diminished paychecks of musicians in the digital age.  This fight has raged on and off for more than a decade and was renewed recently with a bill in Congress that would change the way digital royalty rates are set.  Rates are set by three judges on the federal Copyright Royalty Board, but they apply a different standard to Internet radio services like Pandora than they do to satellite and cable radio outlets like Sirius XM and Music Choice.  Sirius, for example, pays 8 percent of its revenue to record companies and artists. Pandora pays a fraction of a cent each time a song is streamed, which last year amounted to about 54 percent of its revenue, or $149 million.  The Internet Radio Fairness Act, introduced in September, would move Internet radio companies from their “willing buyer, willing seller” standard — which critics like Pandora say results in an unrealistically high rate — to the one used for satellite and cable radio.   Music industry groups also want one standard, but one that keeps rates high.   (Source: New York Times)


10.    French Music Streaming Service Is Taking On the World, but Omitting America

Deezer, one of the biggest players in digital music streaming, hopes to turn itself into a global powerhouse by ignoring America.   Like the market leader Spotify, Deezer, with headquarters in Paris, offers subscribers unlimited access to millions of songs on demand, via PCs, mobile phones and other devices.   With more than two million paying customers, Deezer trails Spotify, which has more than four million, but plans to grow by focusing on expansion in 160 countries.  Deezer has turned its back on the United States, however, because of worry about competition here, where Spotify competes with services like Rhapsody, Pandora and Rdio, even though their business models all vary slightly.  (Source: New York Times)

11.    Let’s Get Physical: In Music, Bits Take on Appearance of Atoms

Some in the recording world are trying to increase the value of their intangible digital content by re-imagining it as though it were “ye olde packaged goods.”  Singer Ellie Goulding is holding “the world’s first digital album signing” to promote her latest release, Halcyon – the latest high-profile celebrity chat facilitated by Google’s increasingly media-savvy Google+ Hangout team.  With physical album sales plummeting, displaced by the success of digital downloads, artists who still attach importance to the physical album hope that “signing” digital content will draw fans to buy the whole digital collection, not just individual favored tracks.  That remains to be seen from the Goulding event, when meeting her in a video chat will likely be the bigger draw. The takeaway is this – buyers value an experiential piece of the creator.   (Source: PaidContent.org)


12.    How and When Should Your Nonprofit Organization Invest in Mobile

Many non-profit organizations are working with very limited financial resources, particularly when it comes to technology. This requires organizations to set priorities in how they will spend their technology dollars.   Although nonprofits will limited budgets may be tempted to embark on app development, it may make more sense to first work on responsive web design before moving on to app development.   With the growing number of people accessing websites, email, blogs and more via mobile devices and tablets, sites must be equally easy to navigate, regardless of how visitors get there. If this isn’t the case, visitors will leave the site. Although an app may be a valuable tool, the website is probably a higher priority for most organizations.   (Source: Beth’s Blog)

13.    L.A. Philharmonic kills series of live broadcasts to cinemas

When the Los Angeles Philharmonic launched its series of live broadcasts to cinemas in 2011, the organization touted it as an innovative program intended to broaden the popular reach of the orchestra and its star conductor, Gustavo Dudamel.  But two seasons later, the orchestra has had to pull the plug on the series due to a difficult economic environment and an absence of sufficient future sponsorship. The orchestra partnered with NCM Fathom Events, a Denver company that specializes in live cinema transmissions, such as the Metropolitan Opera's Live in HD series and various sporting events. Although the L.A. Phil Live series reached as many as 460 movie theaters in the U.S., it did not get the attendance that was hoped for.  The orchestra said it was considering future presentations on a one-off basis.   (Source: Los Angeles Times)


14.    Remote Wipe of Customer’s Kindle Highlights Perils of DRM

Imagine having every book on your Kindle remotely wiped, with no way to get it back. If you’ve invested hundreds or even thousands of dollars, that may seem frightening, if unlikely. Yet it’s exactly what happened to one Amazon customer in Europe, whose Kindle content was deleted and Kindle account closed, for as yet unspecified violations to its terms of service. It is frightening evidence that when you buy into an ecosystem built on Digital Rights Management (DRM), while you may own your device, you don’t own the data that lives on it.  You may think you are buying books from Amazon — and it very much encourages that perception with its language interface that includes elements like “Buy now with 1-Click” — but that’s simply not the case. Apple’s iBookstore has similar rules about content licensing, rather than purchasing. You are buying a license, not a book. In other words, what you are buying is the right to read a book, not the book itself.   In response to a request for clarification, Amazon said, “Account status should not affect any customer’s ability to access their (sic) library.  If any customer has trouble accessing their content, he or she should contact customer service for help.”    (Source: Wired)


15.    Start Nears on Plan to Combat Online Infringement

Last year, five major Internet service providers and the big entertainment trade organizations announced a joint plan to fight illegal downloading through what might be called a strategy of annoyance. Instead of suing people suspected of copyright infringement, as the record labels have in the past, they would prod and poke people into good behavior through a “six strikes” system that escalate from friendly notices in their e-mail to, ultimately, throttled Internet access.  Progress has been slow on the project, called the Copyright Alert System, since it was announced 15 months ago. But recently, the group created to carry out the process said it would finally begin “over the course of the next two months.”   (Source: New York Times)


16.    Why The Music Industry Should Be Thanking Illegal Downloaders

Next month, people who download music illegally may start getting anti-piracy warnings from their Internet Service Providers. If recent research is any indication, maybe they should be getting "thank you" notes instead.  It turns out that people who frequently download music without paying for it actually end up buying 30% more music than everybody else, according to a study from the National Assembly at Columbia University. This isn't the first research that has shown file-sharing to be beneficial to artists, but this comprehensive study blows yet another good-sized hole in the conventional music industry wisdom.   (Source: ReadWrite.com)

17.    The instructive joy of artist-led labels

Labels owned by artists are nothing new or niche. Madonna co-founded Maverick, for instance, and Dave Matthews helps lead ATO, the label that has issued music by My Morning Jacket, Alabama Shakes and South African singer Vusi Mahlasela.  Many are coming to realize that little labels started by musicians work now because they understand the music industry and its oft-diminishing margins.  From a fan's vantage, band-run labels are also a lot of fun, offering the sort of engagement with a musician that all the meet-and-greets and stock question-and-answer features in the world can't.   (Source: IndyWeek)

18.    The Space: click here for culture

When online platform “The Space” launched, somewhat gingerly, in in the U.K. in May this year, it was intended as a six-month pilot. Over the summer, Arts Council England's free digital platform, run with the BBC, has carried film and other content tied to events around the UK – providing a record of the Cultural Olympiad for people unable to attend. The Lottery provided £3.7m. In June, the then culture secretary Jeremy Hunt praised the site, urging arts organizations to follow its lead, and floating the idea of "a permanent digital channel with live broadcasts every night."  Now Hunt's wish has been granted: the arts council has announced that The Space, due to close at the end of the month, has been granted an extension.  The aim is to establish The Space on a "more secure basis", explains Alan Davey, chief executive of the Arts Council: he is setting aside £8m from a digital fund to support the platform over the next two to three years.  (Source: The Guardian)

19.    Microsoft Makes New Push Into Music

Microsoft has announced it is starting a new service called Xbox Music that will offer access to a global catalog of about 30 million songs. The service will let consumers listen free to any song on computers and tablets running the latest version of its Windows software, as well as on the Xbox console. Microsoft will not initially limit how much music can be streamed, though that could change over time.  The service is part of a broad set of bets Microsoft is making this fall to help regain ground it has lost to competitors, especially Apple and Google.  Microsoft’s “do-over” in the market is a sign of how a strong music service has come to be seen as a prerequisite for any serious player in the gadget business.   (Source: New York Times)