Saturday, August 19, 2006

NARM 2006 Video - "Top 10 Reasons Indies Do It Better"

Here's a 6 minute VIDEO of the American Association of Music (a2im) President, Don Rose and Membership Director, Rob Weitzner, discussing the Top 10 Reasons Indies Do It Better. After only 1 year in existence, the a2im has over 125 member labels and 60 associate members. (sorry in advance for the room echo!)

The "Indie Show" panel was sponsored by San Diego-based Royaltyshare, who officially announced at NARM a new digital royalty infrastructure solution and service for record labels and music distributors to track mechanical and artist royalties for sound recordings. RoyaltyShare will provide indies Web-based services (with no upfront or set-up fees) to clients, who are then billed 1.5% of all royalty revenues from sales of content on services like iTunes, Rhapsody and eMusic. Called Digital Advantage, the management system allows labels and distributors to easily aggregate, monitor and interpret a broad array of digital sales receipts.


The 2nd research presentation of the day was presented by Chris Muratore and Rob Sisco, from Nielsen SoundScan. It was reported that Nielsen is currently the only pan-american music tracking service and they are now seeing the trending in Europe. One example of this is that mobile full-track downloads are outpacing PC downloads across the pond...(It's worth noting that SoundScan tracks over 300 labels and that all the online digital music services report sales totals every week...) While it's easy to get excited with all the reported growth in digital, it's extremely important to keep in mind that it's still only 6% of the market. (Maybe someday we can also factor in streams and mobile sales to get a clearer picture, eh...?) Listed below are some of the highlights.

- The industry just experienced a sharp decline - 2nd lowest week since 1994 - with only 8.9 million sales. (2006 has had 36,866 new album releases with 13,210 being digital only.)

- Although CD album sales were down almost 8%, overall music purchases (which includes albums, singles and digital tracks) exceeded 1 billion for the first time ever! In other words, even though CD's aren't flying off the shelves, there was a 23% increase in overall paid music consumption - which is great news for the industry.

- Mass merchant channels (i.e., Best Buy, Target) continue to grow, hitting a 40% marketshare for the very first time.

- Internet album sales were up 11% over 2004 and digital album sales had 200% growth in 2005. (2006's digital album sales are up 123% over last year.)

- For you trivia lovers, the Black Eyed Peas have sold the most digital tracks of all time of any band at 6.3 million. (Eminem is 2nd at 5.8 mil and Green Day is third at 5.5. mil)

NARM - Day 3

Friday's NARM/NPD part III research results were delivered by Russ Crupnick from The NPD Group. (NARM promised to send the almost-completed report to its members soon, but if you were smart enough to have attended, NPD also gave out free USB stick drives with Parts I&II on them.) It's important to note that NPD's research did not look at the impact of ringtones.)

- There are just over 150 million music shoppers in the U.S. and the average revenue per person over age 13 is $8.85. (19% of music buyers walk in into the store and only buy 1 item, but the existence of bundles do help purchasing decisions.)

- Music consumption is up 12% as physical sales slide 8%. (Apple held 76% of the market in June 2006 for downoads)

- Consumers are not becoming less loyal - the problem is that there's too many choices and they're being overstimlated. The result is that there's a lot of competition for their time and money and the channels for music buying are becoming blurry.

- For the lighter browsing segments new demand has to be created while they sit on the couch and awareness levels have to be built before they even get into the car.

- Consumers spend nearly a day per week listening to music (89% of music buyers are on the web and spend 21 hours a week online)

- People are actually consuming more music than ever. Physical sales are off but music consumption is up 12% - mostly through unpaid means of acquisition. Some good news from the research (which I personally find hard to believe) indicates that consumers believe that music is every bit as good a value as DVD's.

- One new trend is that people are getting conditioned to do one-stop-shopping (i.e., Super Walmart, Super Target) and tend to get all their errands done at less stores.

- Nearly 9 out of 10 physical music buyers are unaware of kiosks, which could be better utilized to offer deeper and out-of-print catalogue choices.

- Consumers are willing to pay for more actual content (i.e. DVD) but the expectation is more value for same price. The avg. DVD price is $15.98.

Sunday, August 06, 2006


Day two of NARM's annual meeting started off with a brief presentation by president Jim Donio, where he gave an insightful overview of the industry and shared several ways in which NARM is trying to help its members. For example, the organization's Media On Demand task force has evolved into a broader Digital Entertainment Council to deal with the wider range of challenges facing the industry. Key advocacy priorities on the horizon are: music licensing reform (i.e., SIRA), Anti-piracy, improved ratings & labeling as well as more emphasis on artist development. Donio also announced that next year's Spring NARM meeting will be held in Chicago from April 29 - May 2nd.

Last week's sales numbers were not pretty. According to Nielsen SoundScan figures, physical album sales were the lowest they've been since January 1994. Although physical CD sales continue to decline when compared to last year's numbers, the simple fact is: America's passion for music remains. With the plethora of entertainment choices brought on by new technology, this basic passion has evolved though and retailers need to continually adapt or get out of the game. [Too many choices = situational shopping.] Any business that's going to be successful needs to have parallel paths.

One of the main challenges the industry faces is how to get the consumer 'off of the couch' with so many entertainment choices. To effectively meet this challenge, retailers need a much more sophisticated understanding of their shopper base. In addition, NARM's members need to work tirelessly with the distribution companies to raise awareness of new product releases, especially for new media formats.

Another industry-wide problem is that the configuration of certain CD/DVD sales data may be misleading when you actually sit down and try to analyze certain data trends. For example, are CD's that are included with DVD box sets counted as CD sales or a DVD sale, etc...? With all the numbers flying around this year's conference, it's interesting to note that ringbacks, subscriptions, kiosks and streaming sales are not normally factored into the music industry's overall sales figures. This is due to the fact that Soundscan only reports on album sales and digital song downloads. However, from a macro level when these additional sources are factored in, there are many new types of revenue streams that help paint a much brighter picture for the health of the industry.

The "State of Music Retail Discussion" consisted of several big box retailers including Gary Arnold, Sr. VP of Entertainment from Best Buy Enterprise and Darrell Tucker, VP Merchandising, from Target Stores. The general mood was positive - although Arnold thinks that the overall retail industry is "choppy", especially when considering the fact that Best Buy made more money last year selling MP3 players than CD's. John Marmaduke, CEO of Hastings Entertainment, stated that "CD burning and increased competition from video games are the driving forces behind the lagging sales and digital by itself - is not a bad thing...We've got to figure out how to make a living selling the long tail artists....Formulaic promotions may help (i.e., focusing on the 80's slice of the catalogue)."

During the same panel it was also mentioned that reversing the multi-year downward sales trend can possibly be achieved through the practice and execution of flawless category management and product mix modifications. In other words, if the retail experience is designed and delivered effectively - consumers will still patronize retail stores. Case in point: people don't necessarily go to Starbucks just for the's for the EXPERIENCE. However, changing the retail experience requires a lot of effort - which will no doubt result in some heavy experimentation and failures. During this transitional phase, one of the keys to success will be to stay flexible.

According to Target's Tucker, "the digital format was chosen by the consumer in a non-retail friendly way, so we're going through a cultural shift as a result and we're now only at the tip of the iceberg." Digital IS the revolution and no one company or entity will own the music business in totality.

Today's youth are hungry for content and knowledge about it. The fact is, kids aren't hanging out anymore at listening stations in the stores. With hundreds of new releases every year, how is the consumer to know or choose what to buy? Any customer assistance in this area would be helpful and welcomed. Thanks to p2p and the internet though, the average consumer now knows more than most music store clerks. Best Buy is aware of this problem and has over 7,000 employees tasked specifically to media. Basically, they're trying to create a community inside the company where these media employees can share and inspire one another.According to Maramaduke, "The music industry needs to figure out that you can't continue to do business the old way and wait to release all of your best titles in the 4th quarter. Music can't effectively compete with video and video game sales because they own this part of the fiscal year because they spend over a billion dollars in advertising...Unfortunately, the music industry isn't based on research - It's based on habit."

The morning session ended with a keynote by Chris Sacca, Google's Head of Special Initiatives. Sacca said that "the big opportunity in digital music is in developing the ecosystem: one that allows consumers to move content from the home to the car and between devices with ease." I couldn't agree more. Google appears to have reconsidered rumours of it's desire to make a retail play in music and is putting the brakes on music and other areas of digital entertainment, which I'm sure was a sigh of relief for NARM members.

The a2im's acting presdient Don Rose hosted the "Indie Show" skit in the afternoon which was tailored after David Letterman's show. Licensing opportunities in new arenas were discussed and the humorous approach was quite refreshing. Attendees heard from Bob French, Mix & Burn, Adam Sexton, Groove Mobile and Amaechi Uzoigwe, from World's Fair.To end the day in style, the Sony/BGM cocktail party was held on a massive 60 foot sailboat moored in the Gaylord's salt water lagoon and was as tropical as you could get without the humidity. (The entire resort is housed under a gigantic glass dome resulting in a theme-park- like atrium atmosphere with no insects and cool air conditioning everywhere you go).

Also noteworthy for NARM's history book, Sprint was onsite mobile-casting some of the nightly performances directly onto its Power Vision network. Loyal fans who couldn't make the show could tune in to a channel on Sprint TV and watch the performance stream live on their cell phones, which is an interesting new broadcast channel and delivery method...

NARM 2006 Photos

I've posted 20 photos of the 4-day NARM show just held at the Gaylord Palms in Kissimee, FL.Click HERE to see them on Flickr. I'm still working on summarizing my notes and editing some video footage. Check back soon as I will post more info and media from Days 2-4...


The 48th annual NARM show is officially underway at the spectacular new Gaylord Palms Resort in Kissimmee, FL with over 1,300 expected attendees. Established in 1958, NJ-based National Association of Recording Merchandisers (NARM) is a not-for-profit trade association that serves the music retailing community in the areas of networking, advocacy, information, education and promotion. NARM's members operate 7,000 storefronts that account for almost 85 percent of the music sold in the 12 billion U.S. music market.

If you're not familiar with what some insiders call "the event of the year", InSights & Sounds 06 is a 4-day conference where the industry comes to do business and prepare for the fourth quarter. Jim Donio, NARM president, states "Its mission is to help you meet the future armed with new business partners, critical analysis, fresh ideas and the camaraderie of a shared passion for music." Through multiple panel discussions, presentations and keynotes, valuable insights from the entertainment industry's top leaders are shared with members and attendees. All of this information is designed to give you an overview of where the industry is now, where it's going and where it could be. In addition, there's an eclectic line-up of established and undiscovered world class performing artists. Tonight's performances start at 9:30pm:

- Paolo Nutini, Atlantic Records
- PF Sloan, Hightone Records/Rhino
- Lupe Fiasco, 1st & 15th / Atlantic Records
- Tego Calderon, Jiggiri / Atlantic Records

Today's afternoon action started with a morphed version of Speed Dating from 2-5pm, where one-on-one meeting opportunities were arranged in advance to easily help you discover and develop important business contacts. This year, NARM has extended these unique meetings to last 3 days and participants can use this focused time to get to know potential new trading partners.

One innovative new product I learned about was from Marware. The company has invented a retractable cord wrap and stand for the video iPod called the Sidewinder.Very cool! Also, the well stuffed conference goodie bag had 10 Cd's, 1 cassette, a live double DVD set from Jimmy Buffet, a t-shirt and more...

Background Music For Your Cell Phone?

As if Ringtones, ringbacks and drop-tones weren't enough, Indian cellular provider has launched a customized background music (BGM) solution as its latest offering, allowing users to play music in the background during a call..."Technically, it is a conference service, which involves the calling party, called party and the music playing entity, which is also, part of the conference. This entity is responsible for playing back music during the conversation." Apparently, 170,000 mobile subscribers have already tried the service but don't hold your breath - this is just another idea thrown at the wall to see if there is stickiness - and there's not!

Phanfare vs. YouTube

Apparently, many people are surprised that when they post their user-generated digital media content to online places like MySpace and YouTube, they're actually giving these popular destinations the right to distribute it, sell ads against it, and generally make money from it...But don't be surprised...this is a new type of business model - aggregating an audience around consumer generated content and then making money by selling access to that audience in one way, shape or form.

Phanfare, however, claims to be a little different. 'With Phanfare, you are paying to publish and archive your video. Not only do you retain the rights to your content, but we claim no right to distribute, remarket, or otherwise make money on your content. Phanfare’ s positioning and business model fits better with the needs of the mainstream who are not seeking anonymous attention but instead seek to maintain a semi-private collection of photos and videos."

Microsoft Will Pay You To Leave iTunes

According to Engadget, Microsoft is actually going to pay for users to switch to Zune - which is quite a risky (but compelling) value proposition..."To attract current iPod users Microsoft is going to let you download for free any songs you've already bought from the iTunes Music Store. They'll actually scan iTunes for purchased tracks and then automatically add those to your account. Microsoft will still have to pay the rights-holders for the songs, but they believe it'll be worth it to acquire converts to their new player."

Microsoft Confirms Competition for iTunes/iPod

Well it's official...Last week, MSFT confirmed a new music and entertainment project called Zune which promises to deliver a family of hardware and software products expected to compete with Apple's market leading ecosystem consisting of the iTunes / iPod. The Zune brand is being billed as a "music and entertainment" project aimed at connecting with others to discover new music and entertainment and will deliver a family of hardware and software products.

Billboard reports that "additional Zune-branded devices will follow, including a portable video player and, potentially, a portable game device," as well as an initial device offering WiFi and drive-based storage. The WiFi won't just be for moving around music files, as in the MusicGremlin, however. Apparently other "seven or eight" wireless usage scenarios are envisioned, as suspected, and aims at providing "ubiquitous access to digital media from a wide range of Windows-powered devices in what ultimately aspires to be one part MySpace, one part iTunes and one part Xbox Live."

Open Source Linux DRM Grows Up

An open source DRM (digital rights management) software project started in 2002 that supports embedded Linux has apparently achieved its second major release. OpenIPMP v2 adds support for additional open DRM standards, along with structural and development improvements aimed at making the software easier to port, build, and integrate. The OpenIPMP project aims to provide open standards-based DRM software that can be easily ported to any platform. Along with an SDK (software development kit) for adding DRM to media encoders and players, OpenIPMP includes a J2EE (Java 2 Enterprise Edition) server application for rights management and license issuing.

OpenIPMP v2 supports open DRM standards that include: Motion Picture Expert Group IPMP (intellectual property management and protection) specifications for MPEG-2 and MPEG-4,OMA (Open Mobile Alliance) DRM v2 specification and ISMA (Internet streaming media alliance) encryption and DRM signaling specifications for MPEG-4 streaming and local playback (ISMAcryp)

In addition, OpenIPMP v2 adds a better integration interface, pluggable key management, a full crypto system interface, and an upgraded client-server protocol based on SOAP web services. OpenIPMP v2 is available now for download at SourceForge and its integrated by default with MPEG4IP, although it should support any MPEG-2 or MPEG-4 management system. Additionally, OpenIPMP plug-ins for Windows Media Player and Apple Quicktime player are said to be commercially available from various third-party codec vendors.

Democrats Using BitTorrent

According to a recent report on, John Edwards, one of the democratic presidential candidates in 2004, is apparently using BitTorrent to efficiently distribute and share some of his campaign video content. He's likely to run for President again, so if you want a hip president that understands and supports powerful and disruptive technologies like BitTorrent - vote for Edwards in 2008!

The World’s First P2P Webathon

(via press release) - London-based RawFlow, a leading provider of live peer-to-peer (P2P) streaming technology, has started working with NexusLive, an internet broadcast specialist. RawFlow will support NexusLive in a major webcast happening on the July 19th to promote the emerging Edinburgh act Amplifico. The event is the world’s first ever live web broadcast album fundraiser.

The band has been endorsed by singer KT Tunstall and has received a fair share of media attention worldwide after the launch of a donations campaign for getting their first album produced. The cash strapped, unsigned four-piece have already recorded half their debut album, but now the band intend to complete their album solely by donations generated via a unique webathon fundraiser. So far they have raised around £3,000 from people from all over the world on their Webathon website (they need £10,000). In exchange for a donation to the Amplifico album appeal fans will receive a mention in the thanks and see their face appear in a photo-collage included in the artwork to accompany the CD.The webcast is predicted to reach a larger audience than Sandi Thom’s Tooting flat gigs online, and Amplifico has been heavily featured in blogs and forums online. The band will also be featured on BBC 1 Scotland today promoting their webcast and webathon.

The webcast will commence on the 19.07.06 at 8 PM GMT will stream directly from The Bongo Club, Edinburgh. The 3 hour event will include sets from 3 fantastic Scottish bands, followed by a set from Amplifico and will be broadcast live from NexusLive's site: simultaneously. There will be live donations feeds to see how much is being raised over the course of the event.