It seems that after months of slow economic starvation AllofMP3.com is finally no more. Over the last few years the IFPI and RIAA have mounted a sustained assault on the site, which followed the letter of Russian law, but sold music in a format (MP3) and for a price (cheap as hell) that the dying recording industry disliked. For the music industry this was a long, hard fight and their victory would be a whole lot sweeter if AllofMP3.com hadn’t already reopened under a different name. The new site called Mp3sparks, has all of the features and functionality you loved in Allofmp3.com. Your old Allofmp3.com username and password are supposed to work on Mp3sparks.com although it hasnt for me. Credit cards are still not accepted on the site but its unclear if thats due to the old credit card monopoly ban on ALLofMP3 or a simple technical glitch. Hopefully, MP3Sparks can fill the gap left by the hobbling (and now full closure of ALLofMP3.com) but until it gets credit card payments up I dont recommend you let your BitTorrent ratio’s slide.
Yesterday Big JG, the soup eater, posted a note about Universals Music’s mad dash to ends its tortured existence as the worlds largest purveyor of little plastics discs. In an act of classic Seppuku, Universal Music is reported to have told Apple that it was not going to renew its contract to sell music through iTunes. The move comes as a bit of a shock given that the Universal is reported to net somewhere in the $200 million dollar range through iTunes sales. Apple’s steadfast refusal to allow the labels to “wet their beaks” from iPod sales is widely believe to be the main reason behind the move by Universal.
There are two huge problems with Universal’s withdrawal from iTunes. First, they are the only ones doing it. Both Sony/BMG and EMI are on board with Apple and Warner Music is bleeding money and employees so fast it wouldnt dare walk away from any source of income. Second, by refusing to sell its music through iTunes, universal will not effect the consumption of its music, iPod sales or iTunes popularity. People will just get the content that isnt on iTunes they way they get 70-80% of the content on their iPod, from CD’s and P2P networks. The big loser therefore can only be Universal Music, which stands to loose a couple hundred million dollars along with a couple million paying customers. In these lean times for the music industry turning away either is the fastest way to quick death I can think of.
Here is a simple law of survival economics that all digital entertainment business MUST LEARN! “A little money is better then NO money.”
Trolling SSRN I came across another academic report destroying much of the FUD put out by the RIAA in their attempt to criminalize digital downloads. Like all good academic studies it has a cumbersome and wordy title, The Analog Hole and the Price of Music: An Empirical Study, which belies the rather simple text contained within.
The report starts off with an exploration of the analog hole , which frankly isnt that interesting but then goes into how the analog hole will effect the pricing of digital music. They set off to answer two questions: Do consumers perceive a difference between analog hole copies and the originals? Kinda. At what price would they be willing to sacrifice some quality? Twenty-five cents. The sample size is pretty small for the survey, only 66 respondents, but the findings are really interesting. Read the full report here and check out the abstract here:
Last week serial business starter and aging Internet super-star, Michael Robertson, launched the 6th iconoclastic Internet venture in his portfolio of disruptive ventures. The new business, called AnywhereCD, billed itself as an MP3 music vendor with a CD delivery option. And while the business itself is a bit of a yawner, its pricing and sales pitch are at least entertaining.
Explaining the AnywhereCD business model is a bit complex, largely because of how they are trying to market the service. Basically for around $15 bucks you can buy a CD from the site and get it sent to you in the mail. With each CD purchase you also get DRM-free files of songs from the CD int eh MP3 format. This is pretty impressive given the labels resistance to MP3 downloads even when they might make money from it. This is of course where things get kinda wonky. For $3 less than price of both the CD and MP3 files, AnywhereCD will sell you the CD and MP3 files but only give you the MP3 files. Confused?
The CD is clearly the basis of pricing on the site but their sales pitch is fashioned in a way to make it seem that the MP3 files are what’s being sold. The MP3 delivery and all the digital goodness that flows from having a DRM-free digital file is ancillary to the basic transaction of buying a CD for 12 bucks. The sites original pricing model featured two sets of prices one for MP3′s + a CD and the other for just the MP3′s. Thankfully, before anyone really had a chance to ask any questions or point out what was truly being offered, the MP3 album option disappeared.
In less then 12 hours after the sites launch, on April 12th, the MP3 only option was gone from the site. Apparently even the pretense of being able to buy albums exclusively as MP3 files is more then the labels can stomach. Gone is the “MP3 Album + CD” verbiage, replaced by the much safer and probably more truthful CD plus MP3 wording. Thus an interesting, if not truly new, online marketing and sales scheme was killed on the vine by the luddite music business. But wait, there’s more…
On April 20th Reuters reported that AnywhereCD had filed a lawsuit against Warner Music for breach of contract, business defamation and trade libel. Former liquor vendor and current Warner Music topper, Edgar Bronfman Jr., is reported to have said that selling digital music without DRM is illogical, clearly he believes not selling any music at all is the better option.
After Steve Jobs dropped his anti-DRM bomb on the labels people immediately started talking about which label would be the first to wake up to MP3. Early money was on EMI being the first to buckle, largely because they are in the toughest financial position and Ted Cohen used to run the show. We’ll looks like the early money was wrong as EMI signs a streaming deal with Last.fm.
Today EMI announced a deal with Last.fm, giving Last.fm users the ability to stream music from EMI artists including: Corinne Bailey Rae (a damned good album), Norah Jones (a great album), KT Tunstall (damned good for a long drive), Keith Urban (kill yourself) and Robbie Williams (who?). Paid content has a good blurb on this and you can check out the original release here. Rumors are also swirling that Last.fm may fall to Viacom in the coming weeks.
As a Pandora user myself I dont really get the appeal of Last.fm, which seems far more cluttered and confusing then the elegant and simple Pandora. Maybe I dont have enough friends, if your on Last.fm add me as a friend up (in fact I’m friendless on Orkut too…).
A central tenet of the RIAA/IFPI terror campaign against file downloading has been that file downloading causes the industry to loose billion of dollars a year. This point is hotly debated by many who point out that downloading is more like sampling then buying and has probably resulted in net growth for the industry. However, the
myopic, luddite brain-dead response of the music industry has been to ignore the mounting evidence of the negligible impact of file-sharing on music sales. Instead they prefer to sue old ladies and children and further poison their relationship with their customers.
Needless to say these arent the brightest folks in business. Fortunately, our good friends in the Ivory covered halls of academia have been busy crunching numbers and running models to see just what is what. Well the latest in a string of reports from some well lettered individuals is in and the numbers show that file-sharing is likely to have negatively impacted just .7% of CD sales. Ars Technica has the full story and its not good for the labels. You cant argue with science man.
Earlier this week the Chief Evangelical Officer of Apple
Computers Inc., Steve Jobs, channeled the spirit of Ronald Regan (media moguls tear down these digital walls) and wrote an open letter (read my post here) aimed at the music barron’s in their Bling’d-out offices. In it he basically says that DRM sucks, iPods rock and the labels dont grok the implications of either. Well it was a shot heard around the blogosphere and the commentary came fast a furious from low caste bloggers like myself.
Not to be outdone by the rabble, the unfortunately named IFPI strongman, John Kennedy, posted a retort to Steve (El Capitain) Jobs. His response could be summed up in two words: “You First!” In what I imagine is a whining monotone, he suggests that Steve drop DRM from Apple, Disney and Pixar products as an example to the industry.
The good folks at the IFPI released a report (pdf) today which pegged the size of the digital music industry at $2 billion. This is double the size it was in 2005 and while thats great news, but still doesnt cover the homaging in the rest of the industry. Music sales are expected to continue its on going decline by another 3% drop in global music sales this year. Besides the news that “digital is big and growing”, the most interesting bit of info in the report was the split between online and mobile, which music was generally evenly split 50/50 online/mobile. Who knew? The only other bit of the report worth reading was the quotes from various music industry executives.
The swash-buckling lads at the The Pirate Bay have started taking donations to buy a bankrupt, burnt-out, rusting hull in the North Sea off the coast of Britain called Sealand. The sheer audaciousness of the move is matched only by the opportunities it presents for the development and proliferation of new models in the sale and distribution of digital media, unfettered by the protectionist inclinations of dying industries. If the good folks at the Pirate Bay expand their plan and get the cash rich but time poor AllofMP3 involved it could usher in a new era of big media hand-wringing and headline worthy law suits.