Looking back at the SanFran MusicTech Summit earlier this week, a few notable moments stand out that reflect on the state of the digital music business and how a new crop of startups may shape its future.
Perhaps the greatest challenges to companies like MySpace Music and Facebook may not be from the big players, but startups that offer artists greater control over their work and pricing flexibility.
In one of the sessions, I asked a panel of digital music executives how they see business faring when revenue comes from advertising. Anthony Batt of Buzznet said he was too busy thinking about the fourth quarter. “I’m not an economist,” Batt said. I pressed and asked what they were projecting for 2009. He said the market looks “uncertain.” Josh Brooks, vice president of MySpace Music, said that as the economy worsens, people will spend less money on entertainment. They will spend more time at home. They will go online more often. Advertisers will want to reach those people where they are spending their time.
This is fair picture. Forecasts generally call for moderate growth in online advertising through 2009. eMarketer expects the market to increase 14.5 percent in 2009.
Even with this outlook, digital music companies face challenges above and beyond what lies ahead with the economy.
MySpace Music is definitely the big player, but criticism about the service ranges from a poor UI to how they treat indie labels. Add to that a potential competitor like Facebook and the issues intensify. Brooks took repeated questions about why they gave the major labels preferential treatment. Brooks said that MySpace Music will phase in new services to provide the indies more of a presence. That reality materialized today. Digital music distributor IODA has signed on to make its catalog available on MySpace Music.
But perhaps the greatest challenges to companies like MySpace Music and Facebook may not be from the big players, but startups that offer artists greater control over their work and pricing flexibility.
Rise of the Band Blogs?
Of the startups that presented at the conference. Bandcamp received some of the highest acclaim. BandCamp is a blog platform designed for musicians. The platform is similar to Blogger or WordPress but with limited flexibility. The service is free. Sites are designed for search engine optimization. The site has a Flash player but everything around it is HTML. BandCamp includes an analytics platform that details page views, music sales and what tracks musicians played. The service integrates with Paypal. Tracks may be offered for free.
Artists determine the price for their music. The artist uploads their tracks as .AIF or .WAV files. BandCamp converts the file and then offers the artist a selection of different formats for their play list. Artists may choose to sell the music as an mp3, for instance, at a high or low bit rate, setting the price accordingly. There even appears to be the ability to do variable pricing, something the majors have wanted to do for quite some time. BandCamp takes no cut from the sale. Musicians host their own sites.
For BandCamp Founder Ethan Diamond, the service is about giving artists control. He likes to call themselves the “very nerdy” fifth Beatle who takes care of all the geeky stuff so the band may do what they do best.
In his presentation, Diamond sharply criticized the practices of companies that do not provide artists with complete ownership of their works. Diamond has said before that Imeem and MySpace Music both fit into this camp. The companies that engage in this practice he called “online sharecroppers.”
Already The Dynamics Are Changing
Steve Jang, vice president of marketing and business development at imeem, sat on the panel with Brooks and Batt. He seemed pretty quiet compared to his colleagues.
He must have had a lot on his mind, listening to his counterparts talk about the business. As we reported this week, Imeem is up for sale. They’ve laid off 25 percent of their staff. Warner Bros, as you may recall, sued Imeem earlier this year. They later dropped the suit in exchange for an equity stake in the company.
And so, who will purchase Imeem? Is this a play for Facebook?
Oh, these times are a changin’. 🙂
