[Notes from the 2006 Digital Media Conference]
Paul Towler: Mobile is an incredibly flexible distribution mechanism, but one of the key challenges that all the MVNOs have is that they don't own their own infrastructure, so they're forced to live at the whim of the mother network. To that degree on the data side, they're not in full control. The key attributes of a successful MVNO (Virgin Mobile comes to mind) is that they capitalize on their marketing ability instead of their segmentation capabilities. Being consumer-oriented can also carry over to this space...
Vince Shaw: You really have to educate the customer and this is a market challenge. eBay could potentially roll out a wireless device oriented towards making money off of non-talk uses...becasue of all the loyal customers...Believe it or not, John Deer has a pretty loyal community as well. Location based services offer tremendous opportunity too...the surface of that hasn't even been scratched. The technology always outpaces the business models...
Key Sar: Wi-Max is a threat to carriers as it eventually surpasses the 5-10 city block range. It's certainly something that we're looking at...But, one of the problems is that there's a lack of OEM in the devices...Building a Network is very expensive...ours cost us 30 billion dollars...
Alan Reiter: If you're thinking of getting into this business, you need to look at every single piece of your value chain. In wireless, if one of those links is missing it can really trip you up. At this point in time, ESPN and Disney are looking the like the best MVNO's for the longterm...Helio is probably 3rd...but needs to tweak their pricing...and AMP'd mobile is 4th, chasing the young adults - but their pricing is too high. In this fast moving business, "don't look at what's happening today - look at what's going to happen in the next 2 years." Also, think about the business processes...Very very soon, video-enabled phones are going to have a huge impact on user-generated sites like Youtube. (Camcorders aren't really going to be the dominant content source anymore.)
Jeff Lee: Text messaging is pretty easy to launch and is an easy way to get into the space; from there you can easily branch out. Don't agonize over the myriad of choices, but definitely start something. I agree with Alan's rankings. AMP is an anchor in this category, while Helio/SK telecom is heavily committed. 25% of our users have played a game on their handset, but when you look at downloading a brew/java application - that's quite a bit more complex, so you have to make these things easy...in order to become explosive.
Sunday, July 02, 2006
DMC2006: Keynote #3 - Michael Kelly, President, AOL Media Networks
[Notes from the 2006 Digital Media Conference]
The market has enjoyed 3 plus years of quarter over quarter growth in online advertising, which is big and it's getting even bigger... and becoming a huge part of our business at AOL. Keeping up with the demand is a challenge. The 4 big players (Google, Yahoo, AOL and MSN) control 50% of the advertising dollars. Each of these players enjoy over a 100M visitors a month. The spending gap between the 4 major portals and the non-portals is huge (i.e. a billion compared to 400k)
- The ability to assemble 3rd party networks will play a critical role...(Build large networks with lots of inventory.)
- The big macro-trend is that big media is losing viewers.
- It's always about the consumer's habits.
- Almost 20% of consumer usage is online.
- 63% of all online households have broadband today; this is an amazing transformation of medium and has ushered in a wave of opportunity and its taught the consumer that they can get way more out of being online. The consumer sees real value in having an online connection.
- 86% of internet usage is from broadband connectionthe new primetime is online (in the office)
- All advertisers want to be direct response advertisers.
- We're entering a world where traditional television is in a potential state of scatter...It's going to be hard for new players to enter the market.
Search has created a whole new life for content. Convergence was the digitization of all content, but we're still in the early stages...This mass digitization thrills the consumer. Social networking is also a key driver of growth. (i.e., AOL has a billion IM messages sent every day.) In the near future, however, different social networks will start to interact with each other.
Scale will continue to matter...It's very hard for a sub-scale player to generate the earnings required. 76% of the online traffic is being generated by an industry that generates 23% of its own revenue. The market will continue to be driven by the big players. We're a scale player in video; currently 200M streams a month and this will grow over time.
The advertising agencies of this world are all dealing with clients who are asking about, "what's going on with online advertising?" Unbelievably creative things are occurring, such as creative execution and creative mix of applications. But in the next few years, we're going to see a huge explosion in online advertising creativity; this will be very exciting.
The market has enjoyed 3 plus years of quarter over quarter growth in online advertising, which is big and it's getting even bigger... and becoming a huge part of our business at AOL. Keeping up with the demand is a challenge. The 4 big players (Google, Yahoo, AOL and MSN) control 50% of the advertising dollars. Each of these players enjoy over a 100M visitors a month. The spending gap between the 4 major portals and the non-portals is huge (i.e. a billion compared to 400k)
- The ability to assemble 3rd party networks will play a critical role...(Build large networks with lots of inventory.)
- The big macro-trend is that big media is losing viewers.
- It's always about the consumer's habits.
- Almost 20% of consumer usage is online.
- 63% of all online households have broadband today; this is an amazing transformation of medium and has ushered in a wave of opportunity and its taught the consumer that they can get way more out of being online. The consumer sees real value in having an online connection.
- 86% of internet usage is from broadband connectionthe new primetime is online (in the office)
- All advertisers want to be direct response advertisers.
- We're entering a world where traditional television is in a potential state of scatter...It's going to be hard for new players to enter the market.
Search has created a whole new life for content. Convergence was the digitization of all content, but we're still in the early stages...This mass digitization thrills the consumer. Social networking is also a key driver of growth. (i.e., AOL has a billion IM messages sent every day.) In the near future, however, different social networks will start to interact with each other.
Scale will continue to matter...It's very hard for a sub-scale player to generate the earnings required. 76% of the online traffic is being generated by an industry that generates 23% of its own revenue. The market will continue to be driven by the big players. We're a scale player in video; currently 200M streams a month and this will grow over time.
The advertising agencies of this world are all dealing with clients who are asking about, "what's going on with online advertising?" Unbelievably creative things are occurring, such as creative execution and creative mix of applications. But in the next few years, we're going to see a huge explosion in online advertising creativity; this will be very exciting.
DMC2006: Panel 3 - Television - The Future Is Now
[Notes from the 2006 Digital Media Conference]
Larry Gerbrandt: The digital genie has been let out of the lamp. Case in point: Google has recently surpassed 44 million streams a day…From a macro-perspective, we're looking at 110 million households here in the U.S....User-generated content is clearly the hottest ticket of the day, but just how big of a game changer is it? The bottom line of this panel is "to follow the eyeballs..."
Daniel Blackman: What's interesting is that as we move forward, we can experiment with different models (i.e. day pass, syndication, etc...) Overall, the future is going to be positive because we can hook advertisers and customers together with better granularity that we really never had before and have more level of control. Targeting is also going to be very powerful...We're trying to create the infrastructure and the platforms to reach those new consumers. How do you define user-generated content? (Stuff that's professionally produced that then gets uploaded...or the lo-fi stuff that's created by the actual user?) How do we leverage all this content from the long tail to the torso to the premium content? It's all over the map in terms of capabilities and opportunities now. What we find exciting is the maturation towards premium content. Niche advertising is going to be a very big story down the line...Our video is primarily download video-to-own...
Paul Condolora: The landscape is largely positive. Historically speaking, technology clearly helps the media industry. Our brand translates incredibly well into the new media space. Fortunately, cannibalization of our linear format is not occurring for us...each channel is reinforcing the other. Primarily it's a net win for the incumbents...Competition is great and it forces to rethink your strategy and forces you to raise your game. As we move forward, its still too early to make any comments or predictions. One thing is for sure, User-generated content is only going to grow...However, just because content is uploaded doesn't mean its going to find an audience. And people aren't always going to accept the status quo.
Joshua Freeman: Anytime a new distribution channel opens up, the ultimate winner is the content owner. Many companies in the space are tripping up over rights issues, which is inhibiting growth. The more that we all see and enable this explosion of content, the better for the industry. This is really about incremental growth by opening up shelf space. Use of the internet opens up new windows. Traditional television usage will suffer some...Short-form "snack sized" content is working best for AOL and is probably the best current viewing experience on a PC. Consumers will move the content where it needs to be. This year we've seen the addition of two pieces to the puzzle: 1) user-generated content - which is here to stay, but how do you monetize it? and 2) distributed content (i.e. warner brothers) the redistribution of a branded content.
Ray Hopkins: We feel that we have the best content and we try to maximize that content across a bunch of different platforms. We're not too concerned with competition from user-generated content. We just launched MLB.com last week...where we add programming that you can't see on our linear channel. This is another area that we can exploit.
Chris Maxcy: Our success is incremental. In our view, we're not hurting opportunities for the content owners; some are more forward looking than others. It really boils down to consumer choice and content is still king. The difference now is that there's a new way to look at it...Obviously, an internet platform can help build awareness. We're currently experiencing 70 million streams a day and the average length is 1-2 minutes... "I tell people that we cater to the ADD generation." (laugh...laugh...) We think that advertising is the way to monetize free. Consumers are basically used to consuming television video in a free format...We look at our company as an advertising supported model. User-generated content has been around for a long time and it will continue to be, but the difference now is how its being delivered and who's creating it. Our advertising model is going to evolve, but we're going to be very careful not to alienate the users or the advertisers - make it relevant...but not annoying.
Larry Gerbrandt: The digital genie has been let out of the lamp. Case in point: Google has recently surpassed 44 million streams a day…From a macro-perspective, we're looking at 110 million households here in the U.S....User-generated content is clearly the hottest ticket of the day, but just how big of a game changer is it? The bottom line of this panel is "to follow the eyeballs..."
Daniel Blackman: What's interesting is that as we move forward, we can experiment with different models (i.e. day pass, syndication, etc...) Overall, the future is going to be positive because we can hook advertisers and customers together with better granularity that we really never had before and have more level of control. Targeting is also going to be very powerful...We're trying to create the infrastructure and the platforms to reach those new consumers. How do you define user-generated content? (Stuff that's professionally produced that then gets uploaded...or the lo-fi stuff that's created by the actual user?) How do we leverage all this content from the long tail to the torso to the premium content? It's all over the map in terms of capabilities and opportunities now. What we find exciting is the maturation towards premium content. Niche advertising is going to be a very big story down the line...Our video is primarily download video-to-own...
Paul Condolora: The landscape is largely positive. Historically speaking, technology clearly helps the media industry. Our brand translates incredibly well into the new media space. Fortunately, cannibalization of our linear format is not occurring for us...each channel is reinforcing the other. Primarily it's a net win for the incumbents...Competition is great and it forces to rethink your strategy and forces you to raise your game. As we move forward, its still too early to make any comments or predictions. One thing is for sure, User-generated content is only going to grow...However, just because content is uploaded doesn't mean its going to find an audience. And people aren't always going to accept the status quo.
Joshua Freeman: Anytime a new distribution channel opens up, the ultimate winner is the content owner. Many companies in the space are tripping up over rights issues, which is inhibiting growth. The more that we all see and enable this explosion of content, the better for the industry. This is really about incremental growth by opening up shelf space. Use of the internet opens up new windows. Traditional television usage will suffer some...Short-form "snack sized" content is working best for AOL and is probably the best current viewing experience on a PC. Consumers will move the content where it needs to be. This year we've seen the addition of two pieces to the puzzle: 1) user-generated content - which is here to stay, but how do you monetize it? and 2) distributed content (i.e. warner brothers) the redistribution of a branded content.
Ray Hopkins: We feel that we have the best content and we try to maximize that content across a bunch of different platforms. We're not too concerned with competition from user-generated content. We just launched MLB.com last week...where we add programming that you can't see on our linear channel. This is another area that we can exploit.
Chris Maxcy: Our success is incremental. In our view, we're not hurting opportunities for the content owners; some are more forward looking than others. It really boils down to consumer choice and content is still king. The difference now is that there's a new way to look at it...Obviously, an internet platform can help build awareness. We're currently experiencing 70 million streams a day and the average length is 1-2 minutes... "I tell people that we cater to the ADD generation." (laugh...laugh...) We think that advertising is the way to monetize free. Consumers are basically used to consuming television video in a free format...We look at our company as an advertising supported model. User-generated content has been around for a long time and it will continue to be, but the difference now is how its being delivered and who's creating it. Our advertising model is going to evolve, but we're going to be very careful not to alienate the users or the advertisers - make it relevant...but not annoying.
DMC2006: Panel 1 - The Battle For The Digital Consumer
[Notes from the 2006 Digital Media Conference]
Ok, I missed the first part of this panel saying "HI" to a few people on the break, but here's what I heard during the second half...In general, the consumer now has complete control over their television viewing habits and the advertisers need to respect that. The 1980-2000 generation is not really watching tv screens and is much more interested in dealing with content that they've generated and in sharing it thereby building community.
Colin Dixon: The traditional thirty second spot does not work anymore. So how then do we reach the consumer?
Mark Walsh: Advertising will cease to be intrusive and become more of an opt-in. Refusal to share personal info online may result in a clunky entertainment experience and those who do will have a richer and more satisfying online experience. What new search engine will deliver what we want in entertainment? Who's going to be the source? Speech recognition is the next UI and could be an important future search technology. European ads are more sexy and funny than here. Agencies need to get back to persuading using humor, rather than hitting us over the head; this will be a real challenge. People love dumb stuff (i.e. the "Paris Hiltonization" effect) , but Darwin was right too...Entertainment that is 'smart' will appeal to people looking for smart entertainment.
Davina Kent: Let's give the consumer the opportunity to tell us what kind of advertising they actually want. The average length of these new targeted on-demand messages will be 2-4 minutes. In general, people still want to consume content on the television, but the content could still come from the internet, especially if the media search element works well. (Tivo is partnering with Comcast and positioning itself as the premium content choice.) In the near-term the consumers will be the winners and the losers will be the companies who don't think about the consumer first...
Marsh Marshall: From a privacy perspective, are you being careful with the information I'm giving you? Search systems used in Blink, Flickr and Delicious can eventually be far more powerful than Google is now. The recent proliferation of communication tools is a key driver of the media industry. The editorial function of the great newspapers is under threat. The technology is enabling a new generation to explore information in a new way.
Andrew Nachison: Services that figure how to "connect" and not control consumers will be the winners of tomorrow. Believe it or not, our research shows that young people have a massive and passionate interest in news and politics, but they consume it in a brand new way.
Ok, I missed the first part of this panel saying "HI" to a few people on the break, but here's what I heard during the second half...In general, the consumer now has complete control over their television viewing habits and the advertisers need to respect that. The 1980-2000 generation is not really watching tv screens and is much more interested in dealing with content that they've generated and in sharing it thereby building community.
Colin Dixon: The traditional thirty second spot does not work anymore. So how then do we reach the consumer?
Mark Walsh: Advertising will cease to be intrusive and become more of an opt-in. Refusal to share personal info online may result in a clunky entertainment experience and those who do will have a richer and more satisfying online experience. What new search engine will deliver what we want in entertainment? Who's going to be the source? Speech recognition is the next UI and could be an important future search technology. European ads are more sexy and funny than here. Agencies need to get back to persuading using humor, rather than hitting us over the head; this will be a real challenge. People love dumb stuff (i.e. the "Paris Hiltonization" effect) , but Darwin was right too...Entertainment that is 'smart' will appeal to people looking for smart entertainment.
Davina Kent: Let's give the consumer the opportunity to tell us what kind of advertising they actually want. The average length of these new targeted on-demand messages will be 2-4 minutes. In general, people still want to consume content on the television, but the content could still come from the internet, especially if the media search element works well. (Tivo is partnering with Comcast and positioning itself as the premium content choice.) In the near-term the consumers will be the winners and the losers will be the companies who don't think about the consumer first...
Marsh Marshall: From a privacy perspective, are you being careful with the information I'm giving you? Search systems used in Blink, Flickr and Delicious can eventually be far more powerful than Google is now. The recent proliferation of communication tools is a key driver of the media industry. The editorial function of the great newspapers is under threat. The technology is enabling a new generation to explore information in a new way.
Andrew Nachison: Services that figure how to "connect" and not control consumers will be the winners of tomorrow. Believe it or not, our research shows that young people have a massive and passionate interest in news and politics, but they consume it in a brand new way.
DMC2006: Keynote #1 - Dawn McCall, President, Discovery Networks Intl.
(Notes from the DMC 2006)
Discovery Networks International, (DNI) programs content for 704 million subscribers outside of the U.S. and it operates the largest international footprint in the industry. (i.e., consists of 17 brands, multiple continents, 100 unique feeds, 35 languages, 1000 employees in 24 offices throughout the world.) DNI is committed to ambitious growth in the next 5 years, investing in their viewers and brands. The company is currently delivering 731M in revenues and 109M in operating cash flow.
DNI is a longstanding supporter of platform neutrality. A key to their growth is the strength of the brand = customized programming and custom scheduling. "Trusted brands and quality will always win out." They possess an in-depth understanding of their audiences and cultures. They try to make their brands as relevant as possible by owning their own content. For example, each year they produce 5000 hours of content. Their massive library of footage can be easily be repurposed - making them one of the most nimble players in the space, which helps differentiate them in the marketplace. Lifestyle is the next big area of growth, with each of the 3 lifestyle brands targeting a different demographic group.
Through John Hendricks' leadership , they delivered the 1st international HD factual international network operating 24/7. HD is currently in 7 markets outside of the U.S., making them the leading HD network in the entire world. DNI is also currently in 23 spanish speaking countries with 3 specific latin channels. The company embraces platform-neutrality. In a crowded media environment, trusted brands are critical. DNI has been active in the new media area for the last 6 years (i.e. they have a Made-for-mobile channel on Vodafone which contains 2 hours of streaming video that is refreshed weekly. Specific footage is carefully selected to complement current cell phone screen limitations.) DNI is also active in the development of new genres in mobile film-making, which offers a new type of online forum.
NEW PROJECTS: Google earth partnered with them this year to share video footage. "Cosmio" is another new venture which is basically a digital encyclopedia. The Discovery Atlas series is another new HD initiative. They've also recently done a deal with the video iPod. As soon as the ability is there to capture video elegantly, they will push the content out asap. They're always looking for new ways to inform and entertain their audience.
Discovery Networks International, (DNI) programs content for 704 million subscribers outside of the U.S. and it operates the largest international footprint in the industry. (i.e., consists of 17 brands, multiple continents, 100 unique feeds, 35 languages, 1000 employees in 24 offices throughout the world.) DNI is committed to ambitious growth in the next 5 years, investing in their viewers and brands. The company is currently delivering 731M in revenues and 109M in operating cash flow.
DNI is a longstanding supporter of platform neutrality. A key to their growth is the strength of the brand = customized programming and custom scheduling. "Trusted brands and quality will always win out." They possess an in-depth understanding of their audiences and cultures. They try to make their brands as relevant as possible by owning their own content. For example, each year they produce 5000 hours of content. Their massive library of footage can be easily be repurposed - making them one of the most nimble players in the space, which helps differentiate them in the marketplace. Lifestyle is the next big area of growth, with each of the 3 lifestyle brands targeting a different demographic group.
Through John Hendricks' leadership , they delivered the 1st international HD factual international network operating 24/7. HD is currently in 7 markets outside of the U.S., making them the leading HD network in the entire world. DNI is also currently in 23 spanish speaking countries with 3 specific latin channels. The company embraces platform-neutrality. In a crowded media environment, trusted brands are critical. DNI has been active in the new media area for the last 6 years (i.e. they have a Made-for-mobile channel on Vodafone which contains 2 hours of streaming video that is refreshed weekly. Specific footage is carefully selected to complement current cell phone screen limitations.) DNI is also active in the development of new genres in mobile film-making, which offers a new type of online forum.
NEW PROJECTS: Google earth partnered with them this year to share video footage. "Cosmio" is another new venture which is basically a digital encyclopedia. The Discovery Atlas series is another new HD initiative. They've also recently done a deal with the video iPod. As soon as the ability is there to capture video elegantly, they will push the content out asap. They're always looking for new ways to inform and entertain their audience.
Digital Media Conference: Music Matters
(Notes from the DMC 2006)
This year's Digital Media Conference (DMC2006) was produced by Digital Media Wire and held at the Ritz Carlton in Tyson's Corner, Virginia. Below, are some notes from last Friday's event called Music Matters, which as you can see, had the industry's real heavyweights weighing in on the issues...I've also posted some photos on Flickr HERE!
Aydin Caginalp: The Industry Perspective - The sale of music downloads (online/mobile) has doubled in the last year and has helped to offset the 7% drop in physical CD sales. Most iPods contain files which are 66% ripped from CD's and most are only half-filled. The empowerment of the internet is the empowerment of the artist.
Ted Cohen: Unfortunately, differential pricing went out the window at Apple's iTunes for the next 2 years and the consumer basically loses in that decision. DRM is still a problem and needs to be more transparent, although it is still necessary to support a variety of business models. He disagrees with Jim. The imperative that every kid has to fill their device with paid content is not true. He likes the value proposition with subscription services such as Rhapsody, Yahoo, MusicNow...which gives fantastic choice, but they still need good recommenders, filters and editorial to deliver the best consumer experience. It's too hard to sift through all the content out there...We have the ability to produce and deliver content much quicker now...
Jim Griffin: The medium is the message, and MP3's have won. That war is over. The format has been chosen...The labels already sell unprotected wave files since 1983 which is the number 2 file format. The business model of a buck-a-song is flawed and there is no 1 business model that wins. We have to think our way through it for the prime demographic - which is teenagers. We're moving to a service business. The battle of the business models is a waste of time. Our competition now is a dwindling share of the consumer's wallet and a clock that moves fast on people's schedule. Charging by the minute is old news...tiered usage works. Our struggle is with other industries that already know how to do this. Keep government out of the interoperability legislation! (The judges barely know what happened when they watch a webcast...) In the past, we've licensed video extensively as a service model. People just don't have the motive to record and keep/re-use video on their VCR's and Tivo's. Attack the motive NOT the mechanism.
David Pakman: You have to go with the consumer's choice for MP3 and stop fighting it. The 80/20 rule has not corrected and democratized itself. But in reality it's a 95/5 hit-driven situation. The industry has got to get better at selling the long tail material...and find the sweet spot other than the top hits. I don't look at the industry as one big giant pod. The independent segment has doubled in the last 12 years. Our indie sales at emusic are doubling every month. Return rates on portable music devices are between 40-70 % because of the device interoperability problem. The major labels created the interoperability problem because way back when - they required Apple to use DRM and unfortunately the license agreement doesn't allow the sale of music without it. Consumers are very smart and they make value propositions every day; so there is no right way or model...
Gary Cohen: I don't have a major issue with DRM, the problem is the implementation of it. The reason for the DRM has got to change and we can't wait for the politicians to do it. Nothing looks great on the horizon. We have 2.2 million songs on AOL's Music Now that are protected. In addition to the subscription model, we also offer the dollar-a-song model too...We're trying to become business model agnostic (i.e. a la carte, subs, ad-based). The problem becomes that once you get the content on your device - how are you going to access it? Having a flat-fee will grow the pie as music is everywhere. I'm a Mac fanatic and I love Apple and what they did, but I really believe that it's incumbent on them to open up the device and model in the near future. The interoperability thing is what's really holding things back. Everybody has to play nice...There's never been a better time to be an artist now...(i.e. record a sonically superior song for $200 and upload it to CD Baby)
Dave Ulmer: It's a phenomenal time for this industry, i.e., you can listen to practically anything that you want to - when you want to. Consumers are in control and they're actually paying for content. One of the problems though is that we don't know about the "non-hits." Most people buy new portable music players every 14 months. It's amazing when you think about that the total dollars of ringtones is three times what Apple generated from iTunes. Looking at the mobile space, purchasing over a phone is not free, compared to your always-on internet connection. The OTA distribution costs have come down, but they haven't come down to "0." I think we're moving to a multiple delivery system; i.e., one low bandwidth version for your phone and one .wma for your PC. This combination of OTA delivery and sideload capability will proliferate. Apple is the only game in town because they put it all together right. New hits are being created with no radio play because of online discovery.
This year's Digital Media Conference (DMC2006) was produced by Digital Media Wire and held at the Ritz Carlton in Tyson's Corner, Virginia. Below, are some notes from last Friday's event called Music Matters, which as you can see, had the industry's real heavyweights weighing in on the issues...I've also posted some photos on Flickr HERE!
Aydin Caginalp: The Industry Perspective - The sale of music downloads (online/mobile) has doubled in the last year and has helped to offset the 7% drop in physical CD sales. Most iPods contain files which are 66% ripped from CD's and most are only half-filled. The empowerment of the internet is the empowerment of the artist.
Ted Cohen: Unfortunately, differential pricing went out the window at Apple's iTunes for the next 2 years and the consumer basically loses in that decision. DRM is still a problem and needs to be more transparent, although it is still necessary to support a variety of business models. He disagrees with Jim. The imperative that every kid has to fill their device with paid content is not true. He likes the value proposition with subscription services such as Rhapsody, Yahoo, MusicNow...which gives fantastic choice, but they still need good recommenders, filters and editorial to deliver the best consumer experience. It's too hard to sift through all the content out there...We have the ability to produce and deliver content much quicker now...
Jim Griffin: The medium is the message, and MP3's have won. That war is over. The format has been chosen...The labels already sell unprotected wave files since 1983 which is the number 2 file format. The business model of a buck-a-song is flawed and there is no 1 business model that wins. We have to think our way through it for the prime demographic - which is teenagers. We're moving to a service business. The battle of the business models is a waste of time. Our competition now is a dwindling share of the consumer's wallet and a clock that moves fast on people's schedule. Charging by the minute is old news...tiered usage works. Our struggle is with other industries that already know how to do this. Keep government out of the interoperability legislation! (The judges barely know what happened when they watch a webcast...) In the past, we've licensed video extensively as a service model. People just don't have the motive to record and keep/re-use video on their VCR's and Tivo's. Attack the motive NOT the mechanism.
David Pakman: You have to go with the consumer's choice for MP3 and stop fighting it. The 80/20 rule has not corrected and democratized itself. But in reality it's a 95/5 hit-driven situation. The industry has got to get better at selling the long tail material...and find the sweet spot other than the top hits. I don't look at the industry as one big giant pod. The independent segment has doubled in the last 12 years. Our indie sales at emusic are doubling every month. Return rates on portable music devices are between 40-70 % because of the device interoperability problem. The major labels created the interoperability problem because way back when - they required Apple to use DRM and unfortunately the license agreement doesn't allow the sale of music without it. Consumers are very smart and they make value propositions every day; so there is no right way or model...
Gary Cohen: I don't have a major issue with DRM, the problem is the implementation of it. The reason for the DRM has got to change and we can't wait for the politicians to do it. Nothing looks great on the horizon. We have 2.2 million songs on AOL's Music Now that are protected. In addition to the subscription model, we also offer the dollar-a-song model too...We're trying to become business model agnostic (i.e. a la carte, subs, ad-based). The problem becomes that once you get the content on your device - how are you going to access it? Having a flat-fee will grow the pie as music is everywhere. I'm a Mac fanatic and I love Apple and what they did, but I really believe that it's incumbent on them to open up the device and model in the near future. The interoperability thing is what's really holding things back. Everybody has to play nice...There's never been a better time to be an artist now...(i.e. record a sonically superior song for $200 and upload it to CD Baby)
Dave Ulmer: It's a phenomenal time for this industry, i.e., you can listen to practically anything that you want to - when you want to. Consumers are in control and they're actually paying for content. One of the problems though is that we don't know about the "non-hits." Most people buy new portable music players every 14 months. It's amazing when you think about that the total dollars of ringtones is three times what Apple generated from iTunes. Looking at the mobile space, purchasing over a phone is not free, compared to your always-on internet connection. The OTA distribution costs have come down, but they haven't come down to "0." I think we're moving to a multiple delivery system; i.e., one low bandwidth version for your phone and one .wma for your PC. This combination of OTA delivery and sideload capability will proliferate. Apple is the only game in town because they put it all together right. New hits are being created with no radio play because of online discovery.
Original Music Needed for Fitness Project...
I'm currently working with a new upstart looking to license 100 songs for a unique and innovative fitness video project and thought I'd throw this out to you all before I start cold-calling. Right now, we're planning on delivering the workout videos in 4 distinct ways, but that could change as things progress...
1) on-demand (to be stored locally on the Mac/PC and/or portable music player)
2) streaming on the Mac/PC and on gym equipment
3) burn-to-DVD after downloading
4) mail order custom and pre-packaged DVD's...
Of course we're on a limited budget in stealth mode, but we're willing to cross-promote your artist/band AND pay mechanical and sync royalties...Please contact me if you own or have the master use/publishing rights for some broadcast quality independent musical content that needs exposure and is reasonably priced.
*The main genres are:*
- Rock
- Alternative
- Classical
- Jazz
- World
- Latin
- Reggae
- Kids Music
- Dance/Techno
- New Age/Ambient
- R&B/Hip Hop/Rap
- Golden Oldies
1) on-demand (to be stored locally on the Mac/PC and/or portable music player)
2) streaming on the Mac/PC and on gym equipment
3) burn-to-DVD after downloading
4) mail order custom and pre-packaged DVD's...
Of course we're on a limited budget in stealth mode, but we're willing to cross-promote your artist/band AND pay mechanical and sync royalties...Please contact me if you own or have the master use/publishing rights for some broadcast quality independent musical content that needs exposure and is reasonably priced.
*The main genres are:*
- Rock
- Alternative
- Classical
- Jazz
- World
- Latin
- Reggae
- Kids Music
- Dance/Techno
- New Age/Ambient
- R&B/Hip Hop/Rap
- Golden Oldies
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