Tag Archives: p2p

What am I working on now? Oh no, It’s yet another music streaming report.

Right now I am writing a report on how music streaming services affect online music consumption habits. I have conducted a survey in Norway with 332 respondents (all students). I am about to start with my analysis of the survey, but thought I should keep you guys updated on my project angle (fyi I have removed all references in this post):

Historic perspective on music consumption

During an industry event in the early 90s, the now late record company executive Maurice Oberstein pointed out that the music industry practically was “giving away master tapes”. Oberstein was talking about the sale of CDs in a time when everybody was too busy counting cash to listen to what he had to say. Unfortunately for the record industry Oberstein was right.

The history of popular music is by far a history of developments in media and technology. Radio and the gramophone came into peoples home followed by the record player and the cassette deck. With the cassette tape came the ability of copying music as well as the social sharing of mixtapes and listening to music on the move (the car stereo and later the walkman).

With the introduction of the CD in 1982, music recordings changed from analogue to digital. The invention of the compact disc also underlined how the sale of music really was an issue of format change. The CD combined both portability and high audio quality. With this format change, the consumers of music not only started to buy CDs instead of vinyl records and cassettes; they updated their record collection with digitally remastered CD versions of already owned albums. For years, the recording industry was truly successful with a business model where you record and repeatedly sell music that people want to hear on preferred physical media.

With music being digitized and the emergence of the Internet, digital compression techniques came along. The birth of the MP3 provided a breeding ground for Napster (1999) and peer-to-peer (p2p) networks. For once the format change was not staged by the music industry. Digital compression techniques were simply developed by scientists, government agencies and computer hackers. Sharing music on this new digital format, which was not owned and controlled by the right holders, was obviously considered a crime. And the criminalization of sharing (known as piracy) has, for more than a decade been the biggest challenge for the music industry. However, many consumers and music fans experience illegal filesharing as the liberation of music. With even higher broadband connection and further development of compression techniques, we are now experiencing streaming services becoming more widespread as a substitute to physical formats and maybe also MP3 files.

Illustration photo: Arnbjørn Marklund

How does music streaming services affect online music consumption habits? Comparing Denmark with Norway.

Today, more than 10 years after the first launch of Napster, legal music streaming services are becoming accessible all over the world. However, what’s interesting here is that Denmark up until now has lagged behind with only one commonly known legal service available, TDC Play, which is only available to the people who subscribe to the company’s broadband, cable or mobile services. This stands in great contrast to neighbor country Norway, where streaming services have been available for more than a year (Spotify since October 2008 and Norwegian competitor Wimp since the summer of 2009).

Although Spotify is not yet available in Denmark, this is about to change as Wimp has recently launched in Denmark through Telenor (April 15, 2010). It is also important to mention that the Danish library will launch a music streaming service July 1, 2010. The IT and music industry is also speculating if Apple is about to launch “iTunes in the cloud”. That assumption is based on the Apple acquisition (and closing) of the web based streaming service LaLa. Rumor also has it that Google is planning to launch a music streaming service this fall, while it is realistic to presume that Spotify eventually will launch in Denmark in the very near future.

This overview shows that there is no doubt that the music market has developed into what Jeremy Rifkin (2001) describes as “The World of Access”. It is therefore realistic to assume that the music industry will experience an economic shift where access is more important than ownership. From an online marketing perspective it would therefore be highly relevant to look into how streaming services might affect music consumption habits, and how we can expect it to affect consumer behavior in Denmark.

It is with this market perspective in mind my main research question is:
How does music streaming services affect online music consumption habits and how can we expect such services to affect consumer behavior in Denmark?

Why is this relevant?

My main goal is to be able to point out how streaming services affect music consumption habits, and that way say whether or not such services will be a good thing for the music industry in Denmark (or in general for that matter). The argument against launching streaming services (mostly Spotify) in Denmark has for the most part been based on fear of low royalty payments to right holders (composers). This argument is fronted by KODA, the Danish Performing Rights Society. It is however pointed out by Chief Economist at PRS, the UK equivalent to KODA, Will Page, that it is important to look at legally available streaming services as “legal venues” that drives traffic from “illegal venues” such as Pirate Bay and Mininova. That way it is possible to say that streaming services will rather function as an important step to fight piracy than lead to a devaluation of music and decrease in royalty payments. At the same time the supporters of streaming services are convinced the business model will be economical beneficial in the long run.

Another argument that speaks for streaming services is that there, despite the fact that few of already available services are being used, seems to be a demand for certain music subscription services in Denmark. This might seem a bit confusing as I at the beginning of this report claim that TDC Play is the only commonly known legal service available. In this assertion it is important to outline the expression “commonly known”. There are more services available, in fact there are quite a few, but as previous research shows, TDC Play is the only legal service, which is commonly known. Yet it seems to be far from satisfying for Danish music consumers.

Services in use in Denmark.

The above image shows services which are in use in Denmark today (Octover 2009). The graph is based on previous research done by the undersigned and three other students at ITU (as a research project in Media and Communication). The research showed that 32% are using a subscription service in Denmark. It also shows that 43% of the people using a subscription service download less pirated music after they started using one. The interesting part is however that about 80% of those who do less pirating, either use a service that is not legal or legally available in Denmark (the majory use either Spotify or Grooveshark).

I have now spent the last couple of months diving into how this is different in Norway and  that way say something about how we may expect such services to affect consumer behavior in Denmark (if Spotify launch today, how will consumers act a year from now?)?

…I will make sure to post the final report by the end of the summer.

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Kill your band?

A little while ago I wrote a blog post commenting an article in Wired Magazine by Paul Boutin. The article in Wired was titled “Kill your blog” and claims that you should stop writing a blog if you already do so, and definitely forget about it if you’re planning to start one (sorry for repeating myself, but some of you might need to refresh your memory, and most of you didn’t read the blog post in the first place). One of my immediate thoughts after reading this article was that this is very much transferable to the music industry. If you should kill your blog, for the exact same reasons, maybe you should also kill your band?

...or not?

...or not?

The last couple of years I’ve been thinking that there’s way too many bands out there, and actually a lot of those bands are really good, but it is impossible for them to stand out of the overwhelming multitude of other bands. In Wired, Paul Boutin writes about how it might be impossible for new bloggers to compete with established blogs with several daily updates. The same way I think it is nearly impossible for new bands to stand out of the “myspace jungle”. Most upcoming bands are the best band around, at least that’s what they think, and guess what? Even though you might be great, there’s a long way to the top if you wanna rock and roll. In many ways the best advice anyone can give a new band is: kill your band and focus on your day-job. And why is that? I will answer that question with two words: (1)  Cultural (2) inflation.

New York CD storage

New York CD storage

When I first moved to New York, I felt like I was in myspace hell. There was a million bands, some good, but most of them crap. A totally different world compared to Scandinavia, and Copenhagen where I had spent the last two years of my humble life (will move back in about 5 weeks, so please don’t get the wrong idea. I’m not claiming to be a New Yorker). There’s tons of bands in Scandinavia too, so the same thing goes for everywhere, but New York is just bigger. All of a sudden whatever electronic indie act from Skovlunde was not the hippest band around. In New York “everyone” is in a band and “everyone” is trying (or hoping) to be the new shooting star on indie heaven, making it impossible for any promising act from Skovlunde (Skovlunde is a suburb to Copenhagen btw) to make it “over here”. I’m not trying to be a scenester, telling you what is good and what’s not. This is just cold facts. But hey, some of the music I dislike, other people might enjoy. Either way, the question is how does a great new band stand out in an enormous pile of shit?

I guess there’s several answers to this question. The only thing I’m certain about is that my musical taste does not count. Or let me put it this way; it does count, but only together with what a large amount of other people think. The thing is, If I had a label, there would have been tons of bands I really enjoyed that I would not dare to put out. With so many bands around, unless there’s a crowd willing to buy their music or support them in any way, whether it is buying concert tickets, CDs, mp3s or other merchandise, there’s no use for a record label. And even though there are good ways to promote your music the DIY way, let’s face it: Any band out there would kill to be on a great label. Most record labels do a great job marketing the music and most labels still function as the filter separating the cream from the crop. Therefore most bands still need a label.

But this is where the door hits you in the face on your way to the rehearsal room. Labels won’t invest time and money into something unless most of the filtering is already done. I still believe labels function as an important filter, but in a world of cultural inflation, we are in desperate need of a bigger funnel to do the main siftering.

This funnel is a two headed monster and it is called “Internet”. It actually goes by many names, as it is also known as “mp3 blogs” and some might know it by the name of “piracy” (the apostle John wrote about it in the bible, he called it “Antichrist”). As soon as something leaks, I would assume it means that someone is dying to share it with the rest of the world, and as long as someone is dying to share it with the rest of the world, I guess that means that it is good. At least there’s someone enjoying it, and as long as more people share the same music, it means that more people feel the same way about whatever band or artist. This means that when I find an illegal download of the Norwegian band Lukestar (they might as well have been from Skovlunde) on whatever credible mp3 blog or on a P2P service where a lot of peers share the same album, something tells me that this band has a bigger potential than any other act that’s not on on the same blog, or a band with lesser peers sharing their music. Of course, this is not necessarily true, hopefully there will still be bands breaking outside the blog-sphere and P2P services, but In my opinion leaks might just be the filter we need to be able to tell what’s hot and what’s not. Metallica leaked long before street date, so did AC/DC and also the new Guns n’ Roses album (see previeous blog post). Both Metallica and AC/DC sold and they are still selling really well. Most likely so will the new Guns n’ Roses album do. The fact that they leaked long before street date tells me that people want it, and because people want it, they sell as soon as they hit the stores. If they didn’t leak, I would have been a little more worried.

Lukestar - Lake Toba

Lukestar - Lake Toba

The evil side of the monster is of course the fact that some people claim that illegal downloading prevent people from buying the actual product, and let’s face it. It is hard to argue against that, even though I find it hard to see a clear link between piracy and decrease in CD sales, at least not when we look at whatever other aspects there might be to the ugly fall of physical sales. I can’t say I support piracy, I’m way too involved in the music business, but I think the spirit of the Internet makes it hard to change the fact that people want to share stuff for free. I grew up with mixtapes. Sharing my musical taste with friends made me aware of tons of great music. Internet made sharing easier, and because it is so easy, it is also a great way to filter the complex multitude of bands. With a little help from my friend Google and by skimming through good music blogs, I just recently stumbled across one of my new favorite bands, Gojira. I would never have started to listen to them if it wasn’t for people sharing their taste in music for free. Will I still buy their music? Yes, definitely, but honestly, I found them in the first place through illegal channels. To justify that, I can tell you that I have bought tickets to their show here in New York in December (with In Flames), while I’m there I will most definitely treat myself with a band t-shirt. On top of this I have recommended Gojira to a lot of friends, who now also enjoy this band. Without exaggeration I would say that at least 5 more music lovers are fans of Gojira because of my recommendations. This is how it works sometimes, and in the end, the band(s) benefit from it. There’s no doubt in my mind (5 times 5 times 5). But no matter how one looks at it, as long as it is illegal, you can’t really justify 100% and definitely not in court.

The RIAA and IFPI has the law on their side, and as long as something is illegal it is wrong to say that it is right (duh!). But looking at history it is hard to avoid the fact that laws have been changed in the light of breaking it. My intention is not to encourage piracy, please don’t misunderstand me. I will not risk my present or future job based on a misunderstanding. My point is just that it might be a good idea to look at the options and how to benefit from this great opportunity instead of spending way too many resources fighting it (and let’s face it, it feels kind of awkward to say this in November 2008, but still most people in the business are aware of this, so I guess the change will come. Eventually…). As I have already mentioned, I think Internet, as it is today, might just be the filter we need to cope a cultural inflation. And there are ways to pay the right-holders. I have already blogged about that.

So, should you kill your band? No, I love the fact that there’s a lot of bands around, and I love to check out new music. The best part is when you discover something great, something new and refreshing. It is hard to impress music lovers these days. You kind of feel that you have heard it all, but sometimes, when the moon and stars align, you might actually hear something that blows you away. And then it’s like candy. You can’t eat the whole bag all by yourself. You have to share it, and this mentality might be the new top of the pops. Viral distribution has proven itself to be one of the best ways to break new acts. Every band wants to stand out from the crowd, and will therefore spend a whole lot of time promoting themselves. Promotion has a tradition of being based on free marketing tools, whether it is handing out promotion copies for free or strive for editorial write-ups. Free is actually the natural way of doing promotion. The cultural inflation I’m jabbering about is not just based on the fact that there’s too many bands around. There has been an inflation in the value of physical products too. Too many units have been floating around and too many promotional copies have been handed out to so-called VIPs. Even if just your pinkie is in the music business, you either expect to, or you get free CDs thrown after you like white rice thrown at newly-weds.

So why fight a good marketing tool instead of working on making a profit from it? Right now it looks like mp3 blogs are under attack by the RIAA. Some bloggers that post illegal downloads are well aware of the fact that it is a crime, but some post mp3s that the labels ask them to post. This is also promotion, and there’s no difference in handing out mp3s for free in comparison to handing out free promotional CD copies. The only problem is that you are able to share stuff on the Internet way quicker compared to real life. The music industry actually loose control, and that is scary. The only thing I don’t really understand is the fact that for the most part the industry does not really have that much control when it comes to physical promotion copies either. Handing them out like flyers for a Broadway show on Times Square doesn’t really give you the perfect overview of the situation (just think about it. Where does the leaks come from?). Still I understand the frustration towards certain blogs. At least those posting whole albums without permission, and, for instance, blogspot urls are hard or impossible to track back to the people behind them. The problem is just that every mp3 blogger falls under the same category. For the most part I think mp3 bloggers tend to do the right thing. Therefore it is really sad that they are “all hunted down”, automatically removing legally posted mp3s from their blogs. I actually feel that the music business might just ruin a great marketing tool for future profit.

Let’s not kill your band. I encourage you to be creative. There’s legal ways to promote your music online, for free. Social networking and music sites on the Internet like last.fm and ilike are both based on the idea around sharing music and musical taste. For the most part it is free, and as long as you own the rights to your music, no one can bust your ass for giving it away for free. But keep in mind that your music is of great value. “Free” does not necessarily mean “out of value”. The whole idea is to share your music to increase the interest around your musical career. Sky is the limit. Good luck.

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