hypebot

A Look Back At The Music Industry In 2005 And Predictions For 2006

2005 is finally over and it was an eventful one for the music industry.  CD sales were down, downloads were up but not by enough.  New technologies offered increasing promise for music discovery and distribution, but it also caused great harm with DRM and the Sony rootkit mess.  Elliot Spitzer changed the radio promo landscape forever and may not be done with the music industry yet.

Most of us know the big industry stories of 2005 all to well, but Hits Magazine online did a particularly good job of looking behind the scenes of 2005's industry events and hinting what might happen in 2005. 

2005—ANOTHER ONE BITES THE DUST: The music industry lost ground again in 2005, with year-to-date sales off around 10%. Nonetheless, for some it was a decent year and for a handful it was cause for celebration. Here are the major plotlines of 2005…

Hypebot predicts more shakeouts and consolidation in 2006 as the last of the old school get put out to pasture.  Technology will continue to level the indie/major playing field with internet and satellite radio along with web communities like MySpace and more niche players becoming the places that new bands are broken.  The best of these bands will strive for and begin to achieve longer careers albeit at a lower level.  The live scene will continue to struggle with pricing issues and consumer satisfaction; and adult music buyers will increasingly be seen as a potential savior of the industry. 

Onward to a fascinating 2006!

Sony BMG Settles DRM Lawsuits

According to published reports Sony BMG is close to settling one of the consumer class action lawsuits stemming from it's recent digital rights management/rookit debacle.

The New York Times writes that the  proposed settlement . "...would let some consumers receive free downloads to compensate them for Sony having surreptitiously included spy ware on millions of CD's....(and) require Sony BMG to stop making compact discs with MediaMax software or with extended copy protection, or XCP, software that could leave computers vulnerable to hackers."

"...The proposed settlement was submitted to Federal District Court in Manhattan on Wednesday. A judge was expected to decide in January whether to tentatively approve it."

"Under the settlement, Sony BMG...will let consumers who bought the CD's receive replacement discs without the antipiracy technology and will let them choose one of two compensation packages."

"The first package would allow consumers a cash payment of $7.50 and a promotion code allowing them to download one additional album from a list of more than 200 titles...The second package would permit them to download three additional albums from the list...Those who bought MediaMax CD's would receive additional compensation."

Read the full story here.

No Surprises As CD Sales Remain Down For Year As Download Soar

It should come as no surprise that US music sales were down 7% as 2005 ended, but music downloads more than doubled over last year according to Nielson Soundscan figures released Wednesday.

CD sales for 2005 through last Sunday were 602.2 million compared with 650.8 million for last year. Combined album and singles sales were down around 8%. Downloaded tracks were up a dramatic 148% to 332.7 million this year from 134.2 million in 2004. 

For more news coverage and analysis of this story read the Associated Press story in the LA Daily News here.

Internet Levels Playing Field For Indy Labels

Under the headline "The Net Is A Boon For Indie Labels" the New York Times gives a good overview of how new technologies and the Internet are leveling the playing field for indie artists and labels.

"...Exploiting online message boards, music blogs and social networks, independent music companies are making big advances at the expense of the four global music conglomerates, whose established business model of blockbuster hits promoted through radio airplay now looks increasingly outdated..."

"...dozens of independent labels are faring well with steady-selling releases by, among others, the Miami rapper Pitbull and the indie bands Hawthorne Heights, Bright Eyes, Interpol and the Arcade Fire. Independent labels account for more than 18 percent of album sales this year - their biggest share of the market in at least five years, according to Nielsen SoundScan data. (If several big independent companies whose music is marketed by the major music labels distribution units are included, the figure exceeds 27 percent.).."

"There are several signs that as more consumers develop the habit of exploring music online they are drawn to other musical choices besides hitmakers at the top of the Billboard chart..."

"On the Rhapsody subscription music service, for example, the 100 most popular artists account for only about 24 percent of the music that consumers chose to play from its catalog last month, said Tim Quirk, Rhapsody's executive editor. In the brick-and-mortar world, he estimates, the 100 most popular acts might account for more than 48 percent of a mass retailer's sales."

Read the full article here.  Free registration is required.

The Big Takeover's Critique Of Our Manifesto For Change In The Music Industry

Recently we published Hypebot's Manifesto For Change In The Music Industry (read it here).  The music magazine The Big Takeover and it's online counterpart published a blow by blow critique of it.  Can't say we agree with it totally, but he makes some valid points. Worth a read.

Spitzer Takes On Labels For Download Price Fixing

As the year comes to a close, news reports confirm that NY Attorney General and gubernatorial candidate Eliot Spitzer has subpoenaed the big four record conglomerates in a new probe to determine if they participated in price fixing in the digital realm.  While the labels have paid big fines to settle price fixing charges by Spitser and others on physical product in recent years; this is the first such probe of digital distribution.

Ironically it comes at a time when a number of label heads are calling loudly for more variable pricing at the download services hoping to reach higher profit margins by charging a premium for hit product.  Apple and the other download services are resisting claiming  that variable pricing is  unfair to consumers and poses a programming nightmare.

One has to wonder if the real insider discussions this holiday on the slopes of Aspen and poolside at the Canyon Ranch aren't about starting an A.B.E. (Anybody But Eliot) Campaign Fund rather than wring an extra nickle out of the few folsk who actually download music legally.

NOMINATE TOP DIGITAL MUSIC STORIES OF 2005

Send us your nominations today for the top technology and promotion stories of 2005 to hypebot@skylineonline.com.

Have a great holidays !

HYPEBOT'S MANIFESTO FOR CHANGE IN THE MUSIC INDUSTRY

1. Stop blaming a lack of hit product and start nurturing new talent.
2. Stop suing individual file sharers and drop all copy protection to regain consumer confidence.
3. Stop blaming P2P and start embracing new technologies: legal P2P, podcasting , subscription services and technologies that haven't even been invented yet.
4. Stop flirting with value-added schemes like CD Plus and CD/DVD hybrids and embrace them. Why shouldn't every release (physical or downloaded) include bonus files of lyrics, interviews, cards, videos, and more?
5. Stop charging consumers more for a CD than they pay for a DVD and start aggressively experimenting with variable pricing both in stores and with downloads.  Hit singles may sometimes cost more, but why not price more developing artists much  lower to encourage discovery. And why aren't there more super low price samplers of new artists?
6. Stop worrying about commercial radio and start supporting non-commercial, satellite and Internet broadcasting as well as mp3 blogs, online music sites and communities, and print and net delivered magazines and fan zines.
7. Stop thinking that every act has to go platinum and start creating a profitable business around artists who consistently sell 50,000 - 250,000 CD's.  Fragmented media is already leading to fewer superstars and a lot more mid-level artists.  But when the artist's "output" resides on a hard drive rather than gathering expensive dust on store shelves or in warehouses; can't smaller but longer term sales numbers be profitable?
8. Stop trying to hide your head in the sand and embrace the change.  It can be profitable and it might even be fun! 

Mon Dieu! French Lawmakers Consider Collective P2P Licensing

P2P may causing headaches in major label offices now, but the pain n may have just begun. In France"...an amendment supporting free P2P-based downloads has now passed the lower house of parliament...approval would open the door for a legal P2P environment, which would include ISP-based surcharges and subsequent redistributions to content creators. Ironically, the amendment is attached to a larger intellectual property rights bill, which would authorize content holders to embed DRM protections onto CDs and DVDs," reports Digital Music News.

"...opposition is already mounting. Major media companies are likely to assault the initiative relentlessly...Regardless, the initiative has planted the seed, and France would join Canada by permitting P2P downloads for private use if the amendment is passed...".

Perhaps US media companies should consider subscription P2P before it's forced upon them.

Music's Contribution To Web Growth Continues

Music related traffic is growing on the web and represents some of it's top traffic. 

Nielson has published a list of the fastest growing web sites and it includes MySpace, Facebook (a youth community site), and P2P application LimeWire which jumped 345% last year to 7.6 unique visitors. Meanwhile among the sites with the highest overall traffic Apple and iTunes now attract 30.8 million unique visitors monthly, a 57 percent jump  over November of last year.  Apple is the strongest of the top ten websites with Yahoo (#1 with 104 million visitors), MSN and Google holding on to the top three slots measured by total unique visitors.  All three sites have recently stepped up their music initiatives after reporting increasing consumer demand.

Further proving that - declining sales to the contrary  -  music still matters, musicians topped the rankings on Yahoo's search engine. Their recently released annual "Buzz Index" of top searches showed Britney Spears was the most searched overall with 50 Cent, Green Day, Jessica Simpson, Eminem, Ciara, and Lindsay Lohan also landing in the top 10 beating other celebrities from film, TV and politics.

Coalition Of Indy Music Stores Top 200 Chart For 12/21/05

• Label  Pos.   Artist  |   Title
• ISL 1 CASH*JOHNNY|LEGEND OF JOHNNY C
• INT 2 EMINEM|CURTAIN CALL
• ATLG 3 DEATH CAB FOR C|PLANS
• WAR 4 OUR NEW ORLEANS|OUR NEW ORLEAN
• BNTE 5 MONK/COLTRANE|THELONIOUS MONK
• COL 6 DIAMOND*NEIL|12 SONGS
• VRGN 7 KORN|SEE YOU ON THE OTHER SIDE
• WAR 8 MADONNA|CONFESSIONS ON A DANCE
• ATLG 9 BLUNT*JAMES|BACK TO BEDLAM
• WAR 10 YOUNG*NEIL|PRAIRIE WIND
• VERV 11 KRALL*DIANA|CHRISTMAS SONGS
• INT 12 BECK|GUEROLITO
• ATO 13 MY MORNING JACK|Z
• EPIC 14 MATISYAHU|LIVE AT STUBBS-AUSTI
• COL 15 SYSTEM OF A DOW|HYPNOTIZE
• WAR 16 WILCO|KICKING TELEVISION- LIVE
• EPIC 17 APPLE*FIONA|EXTRAORDINARY MACH
• COL 18 SPRINGSTEEN*BRU|BORN TO RUN-30
• VRGN 19 GORILLAZ|DEMON DAYS
• WAR 20 ENYA|AMARANTINE

eMusic Releases Critic & Fan 2005 Top Indy Music Polls

Independent digital download site eMusic just released two "Best Of" 2005 Indy music polls that prove the music diversity that the web makes possible.  The first comes from their cadre of 50 top music critics and the second is from a survey of 100,000 eMusic subscribers.

eMusic's Best of 2005 Writer Poll

1. Konono No. 1, Congotronics (Crammed Discs)

2. Antony & The Johnsons, I Am A Bird Now (Secretly Canadian)

3. Animal Collective, Feels (Fact Cat Records)

4. Sufjan Stevens, Illinoise (Asthmatic Kitty)

5. Hold Steady, Separation Sunday (French Kiss Records)

6. Mountain Goats, The Sunset Tree (4AD)

7. Annie, Anniemal (Big Beat)
8. Various Artists, Run the Road (Vice Records)

9. Slits, Cut (KOCH Records)

10. Bettye LaVette, I've Got My Own Hell to Raise (Anti Records)

Click below to see the full poll results and read more about the results.

eMusic Best of 2005 User Poll

1. Sufjan Stevens, Illinoise (Asthmatic Kitty)

2. New Pornographers, Twin Cinema (Matador Records)

3. Decemberists, Picaresque (Kill Rock Stars)

4. Spoon, Gimme Fiction (Merge Records)Bloc Party, Silent Alarm (Vice Records)

5. Antony & The Johnsons, I Am A Bird Now (Secretly Canadian)

6. Hold Steady, Separation Sunday (French Kiss Records)

7. The National, Alligator (Beggars Banquet)

8. Josh Rouse, Nashville( Rykodisc)

9. Danger Doom, The Mouse & The Mask (Epitaph)

10. Great Lake Swimmers, Great Lake Swimmers (Misra Records)

Click below to see the full poll results and read more about the results.

WEA Restructures

WEA today announced a strategic reorganization intended to better position the music giant in a rapidly evolving physical and digital retail environment.

Over the past several years, WEA Corp.'s role as WMG's retail sales and distribution arm has grown to include it's independent distribution network, label incubator initiative, a digital-only label, the e-Commerce group and the global management and distribution of WMG's digital assets.

According to the press release the new WEA structure will encompass four distinct units:

• OPERATIONS AND ADMINISTRATION: This function will be led by Mike Jbara who has been elevated to Executive Vice President and Chief Operating Officer. Jbara joined WEA in 1996 and most recently, as Senior Vice President, Production and Media Operations, oversaw all operational aspects of the pre-production, production and distribution of WMG content. 
• SALES ANALYSIS, CREDIT AND FINANCE: This function will be led by Matt Signore who has been promoted to Chief Financial Officer (CFO) and General Manager. Signore joined WEA in August 2005 as CFO and was previously CFO and General Manager of Island Def Jam.
• SALES, MARKETING AND DEVELOPING MARKETS: This function will be led by   Todd Van Gorp who has been promoted to Senior Vice President, Sales and Marketing. Van Gorp joined WEA in 2003 and most recently was WEA's Vice President, Field Sales for the Northeast, Southeast and Southwest regions.
• E-COMMERCE: E-Commerce continues to be led by Adam Mirabella, Senior   Vice President, e-Commerce. Mirabella oversees WEA's team of account managers who coordinate directly with WMG's digital service providers and wireless carrier partners. Mirabella joined WEA Corp. in 2003 after positions at Atlantic Records and Coca-Cola.  

Asylum and East West, WMG's incubator labels, and Alternative Distribution Alliance (ADA) also part of WEA are not impacted by today's announcement. The company also announced the departure of Executive Vice President, Sales and Marketing, John Madison.

Apparently few if any other staff reductions will result of today's announcement. The changes announced today are effective immediately.

Read the full press release here.

BreakThru Radio Features All New Music In Very Listenable Mix

Internet broadcaster BreakThru Radio showcases only unsigned and Indy music from a wide variety of genres.  So much disparate music music can often be almost unlistenable.  But thanks to seven skillful DJ's (seemingly  one for each day of the week) supplemented by well done web site BreakThru Radio makes discovering new - and I don't mean the stuff music the critics are writing about yet either - an enjoyable and worthwhile experience.

BreakThru Radio is a shining example of net-empowered music discovery at it's best.

Renegades Like Chris Blackwell & Bob Lefsetz Provide Music Industry Insight With New Podcasts

In The City is a growing UK music convention that seems to still have some of the excitement and openness that is missing in so many industry gatherings.   

Podcasts of two convention keynotes by a pair of  the music industry's most outspoken renegades - commentator Bob Lefsetz and label head Chris Blackwell - have recently been posted on iTunes.  More episodes are promised and you can sign up free subscription to the series there.  The Lefsetz rant can also be downloaded directly here. Worth a listen if for no other reason than to hear someone from the music business speak the truth.

Despite Industry Efforts P2P Use Rises

Despite music and film company efforts to stem the tide, P2P file sharing levels are continuing to climb. According to data from tracking firm BigChampagne, the average number of simultaneous P2P users reached 6.86 million in the US and 9.47 million globally in November. For the US this represents a 4.78% increase over October figures and a 20.6 percent jump over November 2004. Worldwide the numbers represents a 3.14% increase month-over-month and a 21.3% increase year-over-year.

BigChampagne tracks average simultaneous users and most P2P users grab a multiple amount tracks during each session generating billions of monthly song swaps. Then there is the growing number of direct swaps via email, instant messenger, direct download or even old fashioned CD burning.

Yes the music industry has a huge problem; and despite the fact that the water is figuratively pouring over the levees, too many still have their heads underwater either trying to fix holes in the dam or praying they can hold their breadth until early retirement. Only by fully embracing change, embracing new technologies and once again giving customers a reason to buy, do they have a chance of survival.

Once again we publish...

HYPEBOT'S MANIFESTO FOR CHANGE IN THE MUSIC INDUSTRY

• Stop blaming a lack of hit product and start nurturing new talent.
• Stop suing individual file sharers and drop all copy protection to regain consumer confidence.
• Stop blaming P2P and start embracing new technologies: legal P2P, podcasting , subscription services and technologies that haven't even been invented yet.
• Stop flirting with value-added schemes like CD Plus and CD/DVD hybrids and embrace them. Why shouldn't every release (physical or downloaded) include bonus files of lyrics, interviews, cards, videos, and more?
• Stop charging consumers more for a CD than they pay for a DVD and start aggressively experimenting with variable pricing both in stores and with downloads.  Hit singles may sometimes cost more, but why not price more developing artists much  lower to encourage discovery. And why aren't there more super low price samplers of new artists?
• Stop worrying about commercial radio and start supporting non-commercial, satellite and Internet broadcasting as well as mp3 blogs, online music sites and communities, and print and net delivered magazines and fan zines.
• Stop thinking that every act has to go platinum and start creating a profitable business around artists who consistently sell 50,000 - 250,000 CD's.  Fragmented media is already leading to fewer superstars and a lot more mid-level artists.  But when the artist's "output" resides on a hard drive rather than gathering expensive dust on store shelves or in warehouses; can't smaller but longer term sales numbers be profitable?
• Stop trying to hide your head in the sand and embrace the change.  It can be profitable and it might even be fun!

Starbuck's Hear Music Expanding

In some good news for adult music marketers Starbucks is rolling out more Hear Music coffeehouses which include digital download kiosks, custom CD burning stations and encourages new music discovery.  San Antonia opens today and South Beach, FL follow early next year following the flagship outlet in Santa Monica, CA, which opened in March, 2004. The stores will increase the amount of available tracks within the kiosks to one million, up from 250,000 according to Digital Music News.

"The new Hear Music Coffeehouses truly transform the way consumers discover and acquire music, both physically, through our CD inventory, and digitally, through our media bars," said Ken Lombard, president of Starbucks Entertainment said in a press release. "We're building upon the success of the Santa Monica Coffeehouse, by incorporating customer feedback to extend the experience even further by adding enhanced ambiance, more space and new technology." The store expansion follows a string of widely successful co-branded specialty CD's involving artists like Alanis Morissette, Ray Charles, Bob Dylan and The Rolling Stones and a Hear Music channel on satellite radio.

Google Adds Music Search Feature

Google this morning added a music search feature to it's popular search engine.  Type in for example "Pink Floyd" and the top result featured includes a photo of the artist, a bit of information, and a link to "More music results from Pink Floyd".

This takes the browser to a page filled with artist images, CD covers and many links including directly to sites selling CD's and downloads of specific albums and tracks.  According to SearchEngineWatch.com Google has no financial relationship with the sites and that searches only bring up vendors that sell the particular title.

Google is late to the game following Yahoo, MSN and others into the music search space.  But clicking on the top link in Yahoo and MSN takes you to their own music sites (Yahoo Music Unlimited and MSN Music respectively) whether or not they actually sell tracks by the artists.  Clicking on Google's music link leads you to a number of more accurate links with which the search giant has no affiliation.  It's this kind of smart "unselfish" move that Google has made repeatedly garnering immeasurable credibility  with consumers.

This attention by web giants also underscores music' s importance in people's lives and marketers' desire to profit from it. "When we did log analysis, we found a surprising number of users doing queries on Google for music," Marissa Mayer, Google Product Manager told SearchEngineWatch. 

Coalition of Independent Music Stores' Top 200 for Week Ending 12-11-05

Label Pos. Artist|Title

VRGN 1 KORN|SEE YOU ON THE OTHER SIDE

INT 2 EMINEM|CURTAIN CALL

UNCM 3 LIL' WAYNE|CARTER II

ISL 4 CASH*JOHNNY|LEGEND OF JOHNNY C

WAR 5 OUR NEW ORLEANS|OUR NEW ORLEAN

BNTE 6 MONK/COLTRANE|THELONIOUS MONK

ATLG 7 BLUNT*JAMES|BACK TO BEDLAM

ATLG 8 DEATH CAB FOR C|PLANS

COL 9 SYSTEM OF A DOW|HYPNOTIZE

WAR 10 MADONNA|CONFESSIONS ON A DANCE

CLICK BELOW FOR #11-200 ON THE CHART

Prince, Dylan And Others Embrace Multi-Platform Promo Push

There is an increasing need for artists to promote new releases across multiple platforms in an era of increasingly fractured media.  Digital Music News pointed to Prince whose new video Te Amo Corazon "which was blasted across a number of VH1 properties, including the flagship channel, VH1 Classic, VHUNO, Tempo, VH1 Soul, and VH1 broadband channel VSpot (vspot.vh1.com). Additionally, the video was also accessible on VCast, a mobile video service from Verizon Wireless..""

Madonna, Korn and even Neal Diamond have also recently used similar multi-platform promotional plans resulting in higher levels of awareness and strong intial sales. This smart strategy is designed to reach an increasingly fractured and distracted consumer base. Prince's particular effort deftly leveraged the celebrity power of Salma Hayak and Mia Maestro, both of whom were involved in the video,  The new CD 3121 will be released via Universal.

Even the venerable Bob Dylan is reaching out to new media to keep his name in the forefront.  Starting sometime next year he'll be hosting a weekly radio show on XM. "Songs and music have always inspired me. A lot of my own songs have been played on the radio, but this is the first time I've ever been on the other side of the mic," Dylan said in a press release. And "the other side of the mic" won't be a bad way to promote his own new projects either.