Napster

The push-pull relationship of streaming and albums

Wednesday, November 6, 2013 - 12:15pm

Can streaming music help album sales?

Last week’s SoundScan charted the lowest number of single-week album sales since 1991, when that measurement started informing Billboard charts, and there was immediate apocalyptic talk that streaming killed the album.

Pessimism might be justified when it comes to the album’s product legitimacy in 2013 and beyond. Bob Lefsetz applies his characteristically blunt futurism to the topic in a reaction to weak sales performance of Katy Perry’s new Prism collection.

Streaming music is not the cause of declining album sales, although it does reflect and support changing consumer demands and expectations. Consumer choice has been evolving for 15 years. Whether that marketplace shift is blindingly sudden or laboriously slow depends on whether your clock is set to Internet time or normal-world time.

The album suffered its first collision with digital reality when the mp3 format was unleashed, along with corresponding computer apps that enabled recording CD tracks. The term “ripping” resonated with illegality (“ripping off”), but copying tracks to mp3 files was just a legal as copying them to cassette tape.

It was the widespread sharing of mp3 tracks that was legally problematic. Sharing mix tapes on cassette was illegal, too, but so cumbersome and one-to-one that nobody much cared. When the original Napster hit the net in 1999, a one-to-many file-sharing revolution occurred. Horrified record labels complained that they couldn’t compete with free music, an obvious though arguable point, but two other values made Napster popular: a long tail of music unavailable elsewhere, and tracks separated from albums.

The iTunes Music Store rescued labels by wrapping a commerce solution around some Napster attractions. Doing so demystified and sanctioned single-track consumption. Steve Jobs had to talk the labels into breaking apart their albums for sale, and gave them digital rights management (DRM) in exchange, at least temporarily -- mostly solving the copy problem for iTunes-purchased tracks.

Music as e-commerce was off and running, but the album was a seriously broken product by 2003. A CNN Money article in 2010 reported skidding album sales in nine of the decade’s ten years.

Streaming music was operating in various forms before iTunes Music Store launched, including webcasts (AM/FM and pureplay), eMusic (subscription to download) and Rhapsody (subscription to stream). The combination of all these forces -- unauthorized file-sharing, iTunes price-per-download, subscription jukeboxes -- ushered the playlist era, a mix-your-own-album type of music consumption. Music became increasingly granular, smashed from album boulders into playlist gravel.

The mobile computing revolution, which started with laptops and accelerated with smartphones, furthered the trend. As cell phone data speeds increased in rapid technology cycles, the concept of accessing music from anywhere became viable for an enlarging class of well-equipped consumers.

Something else happened: a new streaming business framework based on advertising unlocked the “celestial jukebox” to people unwilling to pay for a music subscription. Spotify, Rdio, and their ilk offered an easy, no-charge on ramp to the so-called access model, where music exists as an always-on cloud of content available anywhere, synchronized across personal technology devices.

More than just granular, music has become atomized. The musicians’ complaint is that atoms of music consumption don’t pay as well as selling the big rocks (albums) or little rocks (price-per-track). The streaming industry’s response is that the liquification of music is still in early days, and when streams become tidal, everyone will prosper.

Recent experiments in iTunes Radio indicate that streaming access can stimulate old-world music purchase habits. iTunes Radio streamed Eminem’s new album for week before its release as a download or disc. The service did something similar with Justin Timberlake’s latest release; we noted then that “album release date” had taken a new, more liquid definition. We also noted that Timberlake’s album was perched atop the iTunes Store album-sales chart, while its individual tracks were far down the singles chart.

Whether streaming is driving album purchases is difficult to determine, but there does appear to be correlation of iTunes Radio pre-release streaming and iTunes Store chart performance. The Eminem experiment seems to be producing the same effect. The album’s pre-sales have propelled it to the #1 chart position. At the same time (either connected to pre-release streaming or not), Billboard reports that the Eminem album will start its Billboard 200 life in the top slot, and notch the second-highest album-sales week of the year.

So, while general music streaming might not support album sales, targeted promotional streaming on a major platform might funnel users who still enjoy outright ownership into traditional music stores. Especially when, as with Apple, the streaming service sits side-by-side with the music store.

Telefonica grabs stake in Rhapsody/Napster

Wednesday, October 16, 2013 - 10:20am

Telefonica, the Spanish telecom company with operations in four continents, has acquired a stake in Rhapsody International, the non-U.S. division of streaming platform Rhapsody, according to Billboard. Napster, owned by Rhapsody, is the primary European brand of the service.

Global expansion is top-of-mind for all the American music services, as they jockey for position in Canada, Latin America, Europe, Australia, New Zealand, and elsewhere. Telephone carriers are assumed to be valuable drivers for brand exposure and audience growth -- witness Muve Music which distributes exclusively on phones.

Telefonica is a telecom giant which already provides a music service called Sonoros to customers in Latin America. Those users will be offered the choice to transfer to Napster on November 1.

The investment comes soon after Rhapsody was shaken by hefty layoffs and a leadership change. Rhapsody’s subscription-only U.S. music service is one of the oldest, having started in 2000, and competes with Google All Access, Spotify, Rdio, and other cloud jukeboxes that offer random access to large music catalogs. It recently added artist-based creation of listening stations to its feature lineup, years after some competitors implemented similar functions.

Rhapsody's Irwin says Pandora's, Spotify's "freemium" approach won't work

Wednesday, January 16, 2013 - 12:25pm

Rhapsody Intl. president Jon Irwin told Inc. magazine he doesn't think Pandora's and Spotify's "freemium" model  (that's when a basic version of a service is available free, but a subscription is charged for the full-feature version) is the way to go.

Inc. reports Irwin believes Spotify's (and Pandora's) strategy is to "build a big name and a big user base by giving away the store, then do an IPO and leave the shareholders to figure out if the service can make money." He says his company's strategy is in building partnerships with automakers, mobile providers, and consumer electronics manufacturers (which, of course, Spotify and Pandora have done with wider success). Rhapsody did, in fact, launch its app for the Roku set-top device this week (more here).

Spotify has 5 million paying subscribers, plus 15 million more who use the service free. Pandora says in December it had 67.1 million "active listeners" (the vast majority of whom listen free). Rhapsody, which doesn't offer free usage, has 1 million paying customers.

Irwin reportedly revealed to GigaOm his company's plans to expand into 16 more European countries (see RAIN here) in the coming months (Rhapsody is available in the UK and Germany under the Napster brand name).

Read more from Inc. here.

Music subscription players Rhapsody, Spotify, Rdio reportedly plan to enter new territories in 2013

Tuesday, January 15, 2013 - 1:15pm

Leading music subscription services are ramping up their global expansions.

GigaOm reports Rhapsody will launch in 16 additional European countries in the first half of this year (but didn't mention which). This is the first "proper international launch" for Rhapsody, which is in the UK and Germany by way of acquiring Napster, (the brand under which it operates in those nations).

Meanwhile, Rhapsody competitors Spotify and Rdio are both rumored to be entering the Japanese market in the coming months. Sony's Music Unlimited is currently Japanese music subscribers' only option. Spotify is in 20 countries worldwide, Rdio in 17.

Read more on the Rhapsody news in GigaOm here; more on Spotify and Rdio in Japan Daily Press here.

Clear Channel's Pittman joins board of Parker/Fanning video start-up Airtime

Friday, June 1, 2012 - 11:35am

Napster co-founders Sean Parker and Shawn Fanning have recruited Clear Channel CEO Bob Pittman to serve on the board of their start-up Airtime, a live video platform for meeting new people.

Parker, who was Facebook's first president and is an investor in Spotify, told AllThingsDigital, (Pittman is) "the only media mogul who’s genuinely an entrepreneur." Pittman, who rode the success of Clear Channel's iHeartRadio initiative to the CEO post last year, returned the compliment: "Sean and Shawn have a unique ability to see opportunities in the consumer internet and create services that fundamentally change our culture."

Read more in AllThingsDigital here.

Music streaming/social network service iLike shuts down

Wednesday, February 8, 2012 - 11:05am

Like Imeem, Napster, and Lala before it, streaming music service iLike has now been shut down after years of slow decline following its acquisition by a larger company.

As one of the pioneering music streaming/social networking services, iLike attracted 55 million registered users and was one of the first music apps on Facebook, before Myspace bought it in 2009.

"Turns out, serving up free, ad-supported music is really, really hard," writes Janko Roettgers in GigaOm. He reminds the reader that Imeem offered a very similar service and was also absorbed and eventually shuttered by Myspace. Likewise, Rhapsody eventually shut down Napster after acquiring it, as did Apple with Lala.

Read Roettgers in GigaOm here.

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