Global Digital Music Sales Up 40 Percent, But Overall Sales Down 10 Percent

The sale of digital music globally hit $2.9 billion in 2007, up 40 percent from 2006. But, as we’ve seen in the U.S. alone, that was not enough to offset the 10 percent decline in overall music sales to 17.6 billion, according to a report by the International Federation of the Phonographic Industry. Digital sales now account for 15 percent of the global market. Compared to other industries, music is second only to games in its transition to digital revenues. For newspapers, it is 7 percent, for films it is 3 percent, and for books only 2 percent. (All of these are global figures).

In the U.S., however, digital sales account for 30 percent of industry sales, according to the IFPI. (Nielsen SoundScan, however, says digital music accounts for 23 percent of sales in the U.S., based on different data). The report also looks at mobile sales of digital music, including ringtones. While online sales of digital music in the U.S. are nearly double those of mobile sales, there is some evidence that gap might close (or even reverse) as mobile data networks become faster. In Japan, for instance, 91 percent of digital music sales are mobile and 40 percent are full-track mobile downloads (the rest are ringtones).

Other stats from the report:

—There are more than 500 legal music services worldwide, ten times as many as four years ago.
—About 6 million individual digital songs are available legally.
—1.7 billion digital tracks were downloaded legally last year, up 53 percent.
—Tens of billions of songs were swapped illegally.
—The ratio of unlicensed tracks to legal tracks downloaded is 20 to 1.

Link to TechCrunch Article

Yahoo Is Clearly Up To Something Big Around Music

There have been rumors that Yahoo Music is preparing to launch a big new product sometime soon. And when I read this overview of a presentation given by Yahoo Music’s VP of Product Development Ian Rogers last month it basically confirmed it for me: expect something new and interesting from Yahoo Music in the near future.

Some background: Rogers, along with former Yahoo music GM David Goldberg, was one of the first music industry insiders to actively call for the dismantling of the DRM machine (I interviewed both early last year).

Rogers also made an impassioned speech last October calling for sanity in the music industry. “Inconvenience doesn’t scale,” he said. And - suing Napster for popularizing music sharing was “like throwing Newton in jail for popularizing the concept of gravity.” He ended that talk by saying he wouldn’t let Yahoo spend any more money on flawed music models. He specifically called all-you-can-eat subscription models flawed; and Yahoo is a big provider of that service already.

He went even further in his most recent talk. The first part was a rehashing of previous presentations where he said “we’ve been trying to apply our physical world models to the digital space and then wondering why they don’t work. It’s like trying to live a normal life on the moon without adjusting to the changes in oxygen and gravity.” In one slide he suggests iTunes is nothing more than the application of old business models (represented by spreadsheets) and ownership over music content, resulting in an uninspiring product. People don’t want to just listen to what the record labels say they should listen to. They want to consume the content that people they trust recommend to them.

But he went further this time, saying “We’re in the process of redefining what Yahoo! Music is, and making it the Music destination in Yahoo!’s successful image.” He also says Yahoo isn’t a music retailer and suggests they won’t be in the future.

So what are they up to? He is championing the merger of content (which is what the labels control) with context (all the great user generated content around the passion of music - Last.fm popular songs, MySpace content, blog posts around new music, etc. This is a well of useful contextual information that helps people decide what they want to consume. He calls for the evolution of open standards to facilitate this goal - making media “a first-class object in HTML,” agreeing on ways to describe collections of media objects (playlists), standards for sharing user data, and defining services (search, resolution of media between services, and purchase or provisioning).

It’s clear that Yahoo wants to move in this direction. Their music site consists of great content but, other than the doomed subscription service, lacks any retail features. It’s unlikely Yahoo wants to get into the music sales game. Not only did Rogers say as much in the presentation, but it’s a very low margin business. Instead, and this is just an educated guess, it looks like Yahoo wants to spearhead an effort to create open standards around music buying, playing, managing and sharing. If that wasn’t the direction they were going, the presentation makes little sense.

In one set of slides near the end of the presentation, he shows a use case where a user discovers music on Yahoo, links to purchase it at Amazon, and then manages it again back at Yahoo. My guess is this is exactly what Yahoo will be. They’ll abandon their subscription music service (Rogers previously said the model was deeply flawed and has failed to get many users) and promote third party music download sites like Amazon instead. But I also imagine they’ll do this via a set of open standards where any service can participate. Yahoo is the worlds largest music site, so they can afford to be inclusive. It’s likely they’ll manage to keep their fair share of the users, even in an open world.

Half of me hopes that Yahoo pulls the plug on the project before it launches. What I’d really like to see is Rogers leave Yahoo and create a new startup based on the principles he believes in, without any compromise. Now that could be something interesting.

Link to TechCrunch Article

Digital Music: Just A Band-Aid For Music Industry's Gaping Wound

DIGITAL MUSIC WON'T SAVE THE recording industry, according to a new study.

Despite the growth of digital spending to one-third of the U.S. consumer music market by 2012, it won't be enough to offset the decline in CD sales, according to JupiterResearch, a New York-based research company.

The study projects that digital music sales, including subscription services and downloads, will triple to $3.4 billion in 2012 from $1.04 billion in 2006. Digital sales this year are expected to hit $1.3 billion. But gains in the online business aren't expected to reverse the industry's overall slide--with total revenues estimated in 2012 at $10.1 billion, down from $11.6 billion in 2006.

"Digital music won't be enough to restore growth for the industry or replace the lost CD sales of the past," according to the report authored by Jupiter research director David Card. "But it's the only sector where there's significant growth."

Digital sales haven't replaced CDs on a one-to-one basis because on-demand subscription services appeal only to a niche audience of serious music fans, while downloads generally amount to only a few a year. Online spending geared toward singles priced at 99 cents each can't make up for the declining dollars spent on albums priced at $13 or $14 apiece.

"Everybody listens to music...but a lot of people don't spend a lot on music," Card tells Online Media Daily.

The study doesn't envision advertising playing a big role in online music anytime soon. On one hand, users say they would prefer an ad-supported on-demand music service to a typical subscription model that charges $10 to $15 a month. But Jupiter finds that existing licensing practices make ad-driven music ventures difficult. "It's hard to imagine anyone selling $8 to $10 worth of ads per user per month, when there is hardly any audio advertising online," according to the report.

SpiralFrog, the most high-profile ad-supported music effort, launched last August after a series of delays and the departure of then-CEO Robin Kent. On Tuesday, privately held SpiralFrog reported a third-quarter loss of $3.4 million on revenue of just $20,400. In exchange for free tunes, users view advertising on the site while downloading music. But SpiralFrog so far offers only about 800,000 songs compared to other services such as iTunes and Rhapsody, which have at least 2 million songs each.

"There's no question in my mind that there will be an ad-supported business model that will emerge eventually, but not one that will emerge right away to make up for declining CD sales," Card says. The report notes, for instance, that Rhapsody and Napster have both introduced limited ad-supported offerings to lure new customers.

Despite the challenges, the study encourages music labels and publishers to seek out new licensing revenue streams through advertising and ringtones, as well as both online and terrestrial digital radio. "The industry needs to work hard on these things and experiment boldly, because artists have to get paid at end of the day," Card says.

Link to MediaPost Article

British Paid Downloads Cross 150 Million Mark

The British recording industry has now sold 150 million paid downloads, according to information shared by the Official UK Charts Company and label trade group BPI. The tally represents a modest acceleration for the UK-based paid download market, and the BPI appeared bullish on both digital and physical trends.

In March of this year, paid download sales topped the symbolic 100 million mark, a per-month rate of roughly 5 million purchases. The latest benchmark ups that monthly rate to roughly 6.25 million. Across the pond, the United States is experiencing far headier sales levels, and concerns of a possible market plateau.

Elsewhere, the BPI pointed to a broader surge in holiday quarter sales, though year-end totals will be closely watched. The holiday action is being led by heavy-selling debut artist Leona Lewis, who threatens to outstrip a first week debut sales record previously established by the Arctic Monkeys. Elsewhere, a number of stars recently pushed past the 100,000 sales mark during their opening weeks, including James Blunt, Westlife, and the Eagles. But despite the strength, broader sales issues linger. During the summer, the BPI disclosed a rather pronounced dip in first half sales, a development that reversed an earlier resilience by the British recording industry.

Link to Digital Music News Article

Recorded Music Sales Hit a Downbeat

NOVEMBER 14, 2007

Who’s to blame? The artists? The recording companies? The Internet? All of the above?

The global recording industry is struggling in a rapidly changing marketplace.

"Digital formats such as online downloads, ringtones, mastertones, full tracks delivered to mobile handsets and Internet and mobile subscription services are providing new and growing revenue streams," says Paul Verna, eMarketer senior analyst and author of the new report Recorded Music: Digital Falls Short.

“But these new revenue streams are simply not enough to pick up the slack from free-falling CD sales,” he adds.

Bad news. But worse is that unless there is a sudden reversal of current trends, the recording industry can look forward to continued losses in the coming years.

eMarketer estimates that worldwide spending on recorded music will actually decline—falling from $31.8 billion in 2006 to $26.2 billion in 2011.

Similarly, US spending on recorded music is expected to drop from $11.5 billion to $9.3 billion during the same period.

“The situation in the industry has gotten so bad that many top recording artists are steering clear of music companies and signing up with brand marketers whose expertise lies outside of the recording industry,” says Mr. Verna. “Witness the alliances between Paul McCartney and Starbucks, the Spice Girls and Victoria’s Secret, and Madonna and Live Nation.”

Recently, the UK band Radiohead took the unprecedented step of issuing its latest album, “In Rainbows,” in digital form and allowing its fans to determine the download price.

“Digital distribution may be no panacea, though,” says Mr. Verna. “The results of the Radiohead experiment are discouraging for the industry and the value that music fans place on recorded product.”

According to comScore Networks, worldwide only 38% of those who downloaded the full-length album chose to pay for it.

And even then the average price paid by each downloader for “In Rainbows” was merely $2.26.

“There is one caveat in comScore’s findings, however,” says Mr. Verna. “The sample audience comprised ‘home and work locations’ but not colleges.”

Given Radiohead’s popularity among college-age fans, including that group in the survey might have yielded different results.

“The next few years will be critical as labels, online retailers, mobile carriers and artists attempt to find new models, or refine existing ones, in an effort to restore some of the gold and platinum shine that the business has lost in the digital era,” says Mr. Verna.

Link to eMarketer Article

Sony Ericsson Plans Music Store, Pushes DRM-Free Options

Sony Ericsson recently announced plans to deliver a broader music store offering, a move that closely follows entrances from both Nokia and Vodafone in the UK. Sony Ericsson is not planning its release until the spring of next year, according to information disclosed Monday. The mobile music heavyweight will offer a total of five million songs, licensed from major labels and various independents. Sony Ericsson also noted that a "majority" of its store will feature DRM-free content, though obvious licensing issues remain.

The store represents a broadening of PlayNow, an initiative that currently offers ringtones, themes, wallpapers, games, and a limited selection of full-track, over-the-air (OTA) downloads. The upcoming store will be multi-platform, a more common approach to mobile music commerce. Currently, PlayNow is planted in 32 countries, according to the company. The stepped-up, "PlayNow Arena" represents the next phase of the vision, which first started in 2004 as a ringtone-focused preview and purchasing concept.

Link to Digital Music News Article

Digital Music and the Museum Model

Since the beginning of the digital music revolution, artists have taken the lead on innovative ways to deliver music directly to their fans.

Some, like Prince, have given away front-line product free. Others, like Tori Amos and Alanis Morissette, have offered up Web-only exclusives, also free.

Then there have been the famous holdouts: Metallica, which joined the fight to shut down Napster, and the Beatles, who, despite years of rumors to the contrary, are still conspicuously absent from iTunes and the rest of the legal Web.

Now comes Radiohead with potentially the most ground-breaking move of all: putting its new album, "In Rainbows," out there for fans to pay what they want.

This museum model of a "suggested donation" is entirely untested, and the industry will be watching closely to see how the experiment plays out.

That said, it is important to keep in mind that this is a niche play from a band that already has a huge, loyal audience, not to mention ownership of its own masters. Whether fans pay for this album will have little bearing on the decisions of rank-and-file artists who don't have Radiohead's clout.

Nor is this move likely to affect the labels' digital strategies. Even if the gambit is wildly successful, it will not change the fact that the industry is staring down the barrel of free-falling CD sales and insufficient digital volume to make up the slack.

Link to eMarketer Article

Still, it will be interesting to see what happens with "In Rainbows." Some of Radiohead's legions may actually pony up some serious dough, if nothing else to reward the band for not treating its fans as if they were criminals.

While most fans will probably help themselves to the album gratis, inevitably there will be a few crackpots who will pay obscene sums for it, maybe for the attention, or maybe just because they have money to burn and can't help themselves.

It will take only a few of those to give Radiohead a much bigger and more immediate payday than it would have ever gotten from Capitol, its former label.

Link to eMarketer Article

Finding DRM-Free Music Online

Over the past half year we have seen arguably the most significant change in the online music industry since Apple launched their iTunes store in 2003. Following Steve Jobs’ open letter clarifying Apple’s position on digital rights management (DRM) in Februrary, major record companies have begun providing their music online free of piracy protection mechanisms.

The first major label to take the plunge was EMI Music, which teamed up with Apple in May to release its entire online catalog through a DRM-free area of the Apple music store called iTunes Plus. Also in May, Amazon announced that it would launch an MP3-only online music store with songs from major labels by the end of the year.

Just this week, Wal-Mart began selling unprotected MP3s of many Universal Music Groupteamed up to launch Rhapsody America, a music service catered toward mobile phone users that will provide DRM-free downloads, in the near future. Even LimeWare, a P2P software maker, has recently announced that it plans to be part of the DRM-free movement (this time legitimately). and EMI songs through its website. RealNetworks, MTV, and Verizon have also

Some of the major music companies have been more tentative than others. EMI has thrown the most weight into the DRM-free movement by unlocking all of its online music. While Universal has agreed to release thousands of unprotected albums and tracks through several online retailers - RealNetworks, Google, Best Buy, Wal-Mart, Amazon, and gBox - it has done so on a trial basis that will extend only until January 2008, at which point the company will decide whether it thinks DRM-free music boosts or hurts sales. Sony BMG Music Entertainment and Warner Music Group are still standing on the sidelines of the DRM-free movement and appear to be waiting to see how EMI and Universal fare by opening up.

While the progression of things suggests that all online music will eventually be DRM-free, there’s no need to wait to get in on the DRM-free action. Check out the DRM-free online music retailers below to get better quality music that plays on virtually any handheld music device, on any computer, and with any music program. The retailers covered provide music from both major and minor labels.

Update: We have been informed by a RealNetworks representative that “there are no current plans for a major overhaul of Rhapsody’s store front when Rhapsody America launches” and “there are no plans to increase the number of DRM-free songs available for sale. The number will only change if Universal Music Group decides to offer more albums.” So don’t hold out for Rhapsody America, because apparently the DRM-free offering of that service will be the same as that of the current version of Rhapsody.

iTunes Plus

Apple is the eight hundred pound gorilla, controlling something like 70 to 80% of the online music retail market. CEO Steve Jobs predicted in MayiTunes Store would be DRM-free by the end of this year. that over half of the songs provided through the

While most of us are familiar with the iTunes Store, you may not have noticed the discreet link to the iTunes Plus sub-store under “Quick Links” on the store’s homepage. iTunes Plus provides 256kbps DRM-free AAC files for $1.29 per song or $9.99+ per album. That’s a 30 cent per-song premium over DRM-protected songs sold through the iTunes Store.

Already bought a ton of music from Apple? You can upgrade your DRM-protected collection to DRM-free for 30 cents per song, 30% of the current album price per album, and 60 cents per music video. Of course, you’ll only be able to upgrade those songs and videos in your collection that are offered through iTunes Plus.

Artists available on iTunes Plus include Coldplay, The Rolling Stones, Frank Sinatra, Gorillaz, and The Beastie Boys.

WalMart

Wal-Mart may not be as sexy as Apple but the retail giant does provide DRM-free music from both Universal and EMI. On Tuesday, Wal-Mart began offering 256kbps MP3 versions of much of its music for 94 cents per track or $9.22 per album. These DRM-free offerings are in addition to Wal-Mart’s previous 128kbps DRM-protected WMA files for 88 cents per song or $9.44 per album.

One big downside to Wal-Mart’s online store: you can only download music using a Windows machine. This limitation alone will make it very difficult for Wal-Mart to compete with Apple for mind share.

Artists include Amy Winehouse, Maroon 5, Pink Floyd, Nelly, and Bon Jovi.

gBox

Feeling generous? gBox, which we covered recently, lets you buy DRM-free music not just for yourself but for others as well. gBox users can create music wishlists that can be embedded in other websites and used by friends, family, and lovers to buy music for the list creator.

Universal is the one major label that has agreed to sell music DRM-free through gBox. Songs are 99 cents each and albums are $9.99 each.

Unfortunately, as with Wal-Mart, Mac users who would like to download from gBox are out of luck. This will put a damper on gBox’s otherwise highly viral business strategy of allowing wishlists to be embedded in social networks.

eMusic

You may not have heard of eMusic but the service, with over 2.5 million songs available, is second only to iTunes when it comes to online music sales. Founded in 1998, eMusic was the first company to sell MP3s, which it continues to do on a subscription, rather than per-unit, basis.

Subscriptions come in two flavors: $9.99 per month for up to 30 downloads per month, or $19.99 per month for up to 75 downloads per month. The coolest thing about their subscriptions: once they end, you still get to keep your music, unlike with other subscription services such as Napster. New users also get 25 songs for free.

While eMusic has a long tradition of selling DRM-free music, they still have yet to get in on any major label action. You won’t find any music from Universal, EMI, Sony BMG, or Warner here. But if you eschew popular music anyway, eMusic could be perfect for you.

Audio Lunchbox

If you like eMusic, you’ll probably like Audio Lunchbox as well. The company’s more than 2 million songs are DRM-free and completely indie.

Customers can choose to pay for their music on a subscription or per-unit basis.

Subscriptions range from $9.99 per month to $250 per year. On a per-unit basis, songs are 99 cents each and albums are $9.99 each.

All downloads are 192kbps VBR MP3 files.

AmieStreet

AmieStreet, which we have covered many times, like eMusic and Audio Lunchbox provides DRM-free songs from artists without major label contracts (although, AmieStreet has teamed up with Nettwerk Productions to provide music from big names like Barenaked Ladies and Sarah McLachlan).

The most interesting thing about AmieStreet is its pricing scheme. Tracks individually cost anywhere between 0 and 98 cents. Music offered on the website starts off free but goes up in price as more people download it. Therefore, the price reflects the actual popularity of the track in a similar spirit to an auction.

The tracks sold on AmieStreet are always in MP3 format, but the bit rate can vary as artists contribute songs directly to the website.

Link to TechCrunch Article

MySpace Prepares Talib Kweli, M.I.A. Album Exclusives

MySpace is now pushing a number of high-profile streaming album exclusives, part of its growing music initiative. Starting this Friday, MySpace is offering an exclusive peek at the upcoming Talib Kweli album, Eardrum. The preview, at myspace.com/talibkweli, will last through the album release date of August 21st. Kweli (Blacksmith/Warner Bros.) has roughly 200,000 MySpace friends.

Also in the mix is M.I.A. (XL/Interscope), who is readying her second studio album, Kala. The Sri Lankan artist is now previewing the release on myspace.com/mia, though the action only lasts through Thursday. Additionally, MySpace is also featuring a preview from the New Young Ponys (Modular), a UK-based group that is now pushing their debut album in the United States.

MySpace now boasts a total band population of roughly three million. Previous album previews have come from the Black Eyed Peas, Weezer, Nine Inch Nails, Depeche Mode, Neil Diamond, Queens of the Stone Age, R.E.M. and Audioslave.

Link to Digital Music News Article

More Details Surface On Universal Music, DRM-Free Move

Additional details surfaced Friday on an upcoming, DRM-free experiment being triggered by Universal Music Group. The move, which first emerged Thursday, involves a broad range of online music retailers - except for iTunes. Universal previously disclosed experimental partnerships with RealNetworks, Google, Amazon, and Wal-Mart. On Friday morning, the mega-label also pointed Digital Music News to deals involving Best Buy, Trans World Entertainment, Passalong Networks and Puretracks. A number of artist and label websites will also position the content, including sum41.com, evefans.com, common-music.com, ryan-adams.com, blaqkaudio.com, dianakrall.com, sectionquartet.com, defjam.com, and islandrecords.com.

Participating partners will be given the liberty to offer tracks in the DRM-free codec of their choosing. In most cases, MP3 will be the selection, and RealNetworks has already confirmed this choice. Furthermore, Universal also indicated that most retailers will position the DRM-free tracks at the same price point as protected content.

Another interesting aspect of the play involves Google. Universal will offer its tracks as contextual advertisements within Google AdWords, and direct queries to ecommerce destination gbox.com. "Because many consumers are searching for music and music-related news and information online, Google is a powerful way to drive consumers to this test," a Universal representative said. The DRM experiment begins later this month, and continues through January.

Link to Digital Music News Article

Google Key to Latest ITunes Challenge

NEW YORK -

Add gBox Inc. to the growing list of online music services hoping to chip away at iTunes's dominance.

The Cupertino, Calif., startup was forced out of a stealth mode when Universal Music Group announced late Thursday it would test sales of some digital music without the customary copy-protection technology.

Under the program, gBox will get referrals through ads Universal will buy through search leader Google Inc., gBox Chief Executive Tammy Artim said Friday.

Google will get standard advertising fees rather than a cut of sales under the arrangement. The ads, which would appear when a Google user searches for specific terms such as the name of an artist, will direct the user to gBox.

The arrangement with Universal and gBox is separate from Google's music search service, which directs users to online music stores when they search for specific albums or artists. The company says it does not get paid for such referrals, and it does not restrict links to a single retailer.

Google, which has said it has no plans to create a music store of its own, described the new arrangement as strictly an advertising relationship.

Songs at gBox cost 99 cents each. For the Universal songs that are part of the test, gBox will offer an MP3 version free of copy-protection technology known as digital-rights management, or DRM. A DRM-enabled version will be available at the same price.

DRM technology is designed to block or set limits on copying and CD burning.

Although DRM can help stem illegal copying, it can also frustrate consumers by limiting the type of device or number of computers on which they can listen.

Copy-protected songs sold through Apple's market-leading iTunes store generally won't play on devices other than its popular iPod digital player, and iPods won't play DRM-enabled songs bought at rival music stores, including gBox.

Although many independent music labels have for years sold their tunes without copy restrictions, the major recording companies have resisted.

Earlier this year, Britain's EMI Group PLC became the first of the major labels to embrace DRM-free tunes, letting Apple sell versions of songs with higher audio quality and without any built-in copying hurdles.

The test by Vivendi SA's Universal Music Group, while only encompassing a portion of its catalog, is significant because Universal is the world's largest recording company. That raises the prospect that other major labels could follow.

Universal Music will make DRM-free songs available Aug. 21 to Jan. 31. Amazon.com Inc., Wal-Mart Stores Inc., Best Buy Co. and RealNetworks Inc.'s Rhapsody are among the other retailers selling such tracks, but only gBox will get Universal's Google referrals.

Although gBox won't formally launch until Aug. 21, it already has a site with music from Sony Corp. and independent labels. Artim said the company has negotiated deals with other labels, but could not disclose them until the launch.

She also said gBox was working with other major labels to sell DRM-free tracks like Universal's, but such talks are ongoing.

GBox now works only with Microsoft Corp.'s Internet Explorer browser on Windows-based computers, but Firefox support will come by the launch date, Artim said.

It won't be compatible with Apple's Macintosh computers, however. Even though DRM-free tracks can play on any computer, the DRM versions won't, and gBox didn't want to confuse customers, Artim said.

GBox also is developing a "wish list" feature - software code that users can place on their blogs or social-networking profiles at News Corp.'s MySpace, Facebook and other sites. Friends visiting the blog or profile can buy a song for that user through gBox.

In relying on referrals through Google and social-networking sites, gBox is taking a different approach to marketing. Other retailers tend to drive music buyers to the store's home page to discover new songs and make purchases there.

"Instead of doing marketing and (advertising on) billboards on Highway 101 to go to gBox," Artim said, "we want to take advantage of the viral element that has been so successful for companies in the past."

Link to Forbes Article

Passalong Broadens Into Video, Strikes CinemaNow Deal

Nashville-based Passalong Networks is now broadening its media scope, part of a trend among digital music backend providers. The company, which powers digital music storefronts for companies like Trans World Entertainment and Proctor & Gamble, is now moving into the world of digital film and video. On Tuesday, the company announced a deal with CinemaNow, a move that gives clients access to roughly 7,000 movies and music videos. "Over the past couple of years, a growing number of our clients have asked that we expand our catalog to include film, concert and music video content," said Dave Jaworski, cofounder and chief executive of the company. "We are excited to offer them these services."

Passalong clients have also been requesting MP3-based content, and that prompted a number of earlier deals involving independent labels and EMI Music. Meanwhile, the asset diversification play follows moves by competitors like MusicNet - which recently changed its name to MediaNet Digital - and 24-7 MusicShop - which recast itself as 24-7 Entertainment this week. From a broader perspective, those changes reflect a widening consumer appetite for digital media, a trend spurred by broader pipes and larger storage capacities.

Link to Digital Music News Article

Social Networks Impact Music Downloads; Piracy Growing

While music piracy is on the rise and legal downloads of music are slowing down, social networks are having a serious impact on the way users consume music, according to a survey by Entertainment Media Research (EMR) and law firm Olswang.

The survey interviewed 1,700 music consumers age 13-60 and found that music is important to social networkers: 39% have embedded music in their personal profiles.

70% said they embed music to show off their taste; half said music is a good way to reflect personality.

Some other survey findings:

• Some 53% of people actively surf social networking sites to find music.
• 30% said they went on to buy or download music that they had discovered on a social network site (for MySpace, the proportion is 36%).
• On popular sites the numbers of people who use sites to find music increase - for MySpace and Bebo, 75% and 72%, respectively, and 66% for YouTube.
• 46% say they wish it were easier to purchase music they had discovered on social networking sites - for example via a “buy now” button on the site.
• The number of those saying they illegally download music tracks has increased, from 40% in 2005 and 36% in 2006 to 43% in 2007.

• Only 33% cited the risk of being prosecuted as a deterrent against illegal downloading, compared with 42% in 2006.
• Nearly one in five respondents - 18% - claimed an intention to download more unauthorized tracks, up from 8% in 2006.
• After a dramatic 40% increase in the number of legal downloaders between 2005 and 2006, only 16% growth occurred in the number of legal downloaders from 2006 to 2007.
• 22% of legal downloaders admitted that they had not paid for a track in the last six months.
• 84% agreed that digital downloads of older music should be cheaper; 48% said they would be prepared to pay more for newly released music.

Link to Marketing Charts Article