Friday 23 September 2011

Lets Face The Music, And Pass?

OK, this isn't strictly about copyright - its about the launch of the new Facebook Music service - which seemed to leave most cyberworld commentators somewhat under-awed. But I wonder if they (and the music industry) are missing the point. Its great to have a internet behemoth like Facebook promoting legal music platforms (isn't it ?) - but - isn't the real value of music being missed again? Facebook's new music service seems to be all about data collection - with the music services (or the 'copyright' element) just the bait to get users to share information with Facebook.

One of cyberworld's commentators, Gizmodo, tells us that Facebook has failed "To Let Fans Share Music Across Platforms". But of course Facebook has never (as yet) claimed to be a content provider itself. Instead, head honcho Mark Zuckerberg wants Facebook Music to be the "connective tissue" needed by music fans and the music industry alike, so that people would be able to share music with each other without friction - and without breaking the law. How will it do this? Well Facebook will let you see what your friends are listening to in a real-time "Ticker" feed that appears on the right side of a Facebook page. But if you want to hear full-length versions of those songs, you'll need to use the same music service as the person who shared it, with Zuckerberg explaining "I can see all the stuff [my friend] is listening to, and play it with whatever music player he used to play it. As Gizmodo rightly explains, it means that if Facebook friends want to become "friends with (musical) benefits," they'll both need to subscribe to the same music service - and users of any participating music service will need to allow Facebook to track their activity - what they are listening to - and to share that data with their friends and followers in real time via the new update stream, or 'Ticker'. So far, so good for the music industry - its pushing people to legal music services.

But one worry is that Facebook Music will ultimately reduce consumer choice - not widen it. The new Facebook Ticker and Timeline features may well be the "connective tissue" for music lovers who use Facebook - but only between listeners who pay to use the same music service. Gizmodo say that there will likely be only one winner in all of this as far as unlimited music subscriptions go, and that could well be Spotify, whose CEO Daniel Ek appeared with Zuckerberg at the recent F8 conference and whose app Zuckerberg said he "really loves": If Facebook Music was open to all platforms, music fans would need to install every (legal) music service their frends use on all of their computers, smartphones, and tablets, just in case they need to find a shared song from a service they otherwise wouldn't use. And I have to agree with Gizmodo, that scenario seems a tad unlikely, to say the least. So Gizmodo expects a single winner to emerge from the existing music subscription platforms - and thinks its Spotify, although there are of course other players such as MOG - and maybe Rhapsody - and Facebook CTO Bret Taylor spent quite some time at the Facebook Music launch explaining how Clear Channel's I Heart Radio venture will also take advantage of Facebook's new data sharing functionality.

The music industry seemed chuffed. Rhapsody President John Irwin told the New York Post "The more you help people discover music, the more social it is, the more they will be engaged. If they're more engaged, then they're more likely to subscribe" and VEVO CEO Rio Caraeff told the Guardian "Today's announcement is a big step forward in Vevo's mission to bring more music to more fans in more places. A deeper integration with Facebook will help VEVO grow its scale and reach to new heights, while better targeting our connected, socially-savvy audience".

And alongside this story is growing concern that the Spotify streaming model just doesn't work for everyone. Recently three small heavy metal labels have pulled their content from Spotify - Prosthetic Records followed Century Media and Metal Blade in withdrawing from the streaming platform with its co-owner EJ Johantgen telling LA Weekly "there [does] not appear to be an upside" to being part of the Spotify party and that payouts are "fractions of pennies". Its interesting that the four UK major labels (Universal, Warners, Sony and EMI) along with Merlin representing the major independent labels own an estimated18% of Spotify - a nice return for shareholderds as the company is now worth upwards of $1 billion - and Universal and Sony part own video streaming platform Vevo. But does this actually help the creators of music - the artists and the songwriters? Well with PRS for Music collecting just 0.085p per stream (or £850 per million streams) it won't be making songwriters rich, in the short term at least, and there have been a number of horror stories about the lack of transparency and low level of payments in general - with Lady Gaga reportedly earning just $167 from a million plays of Poker Face. An online debate about Spotify's payments to both labels and songwriters has been initiated by self-releasing indie-folk outfit Uniform Motion based around the royalties they earn on their sound recordings. Posting a blog about the economics of being a DIY artist, they provided some interesting insights into what artists can make from the various digital services - both download and mail-order - and streaming - and the blog led to an online debate comparing the money artists can make 'per download' via services such as iTunes and 'per stream' models such as Spotify. Spotify responded by pointing out the diffence between the two models and saying that they have paid out $100 million to rights owners and that they are the second largest source of digital revenue for European labels. And of course lets not forget that they DO provide a legal platform. But interestingly, Uniform Motion has since noted that their problem with Spotify and other streaming services isn't so much how much they get paid per stream, but rather how that fee relates to what the streaming firms earn for ad sales and subscriptions saying "What we dislike about Spotify is the lack of transparency in their business model. With Apple, it's simple. They take 30%. With Spotify, we don't know if we're getting a fair deal or not". With two million subscribers paying Spotify now, that's quite a lot of money to be concerned about.

Others say that Facebook Music is hardly a revolution at all. It MAY help new music services get a foothold and gain a more mainstream customer base. Conversely it may prioritise one clear winner. But surely the technology and capacity to capture data will be the greatest asset of all - and that asset will be owned by Facebook. If users allow Facebook to track their online lives and collect rich and important data about what they (and their on-line friends) do and this will have a real value to Facebook who will have the capacity to shape and build new services around users and user data - allowing some fairly specific targeting and predicting, something marketeers dream of. And actually it won't really cost Facebook anything, as they are just piggy-backing on the music services, albeit promoting them at the same time. So, a question for the recorded music and music publishing sectors of the music industry - is this really monetising copyright in the most profitable way for you and your artistes? Or another lost opportunity for the music industry to build a new business model fit for the digital age - outflanked by the Geeks again!

My take on the economics of Spotify here

and in Will New Music Streaming Business Models Survive The Dawn of the Digital Age? here

and here

For Neil Wilkof's interesting take on Amazon's idea for the book publishing industry on the IPKat - Can There Be an E-Book Library? - see here

Photo by 4ELEVEN Images

1 comment:

Anonymous said...

There was more discussion online yesterday after Spotify's decided that new users had to log in using their Facebook accounts, so that anyone signing up to the streaming music service for the first time would also have to have an account with the social network, although there did seem to be some opt outs available.