I’ve always liked Apple. They may not have invented digital music, or the portable digital player, but they fine-tuned them and distributed them to mass markets to perfection. More music is being heard by more people in more places than ever before, and for that, we should be grateful. (Figuring out how to strategize and monetize these new markets is a different matter.)

It seems that iTunes has ruled the mp3 generation, but times and trends are moving ever faster, and there’s now a whole new generation of consumers that may never even own an mp3. Streaming is big business these days. Enter Lala, one of several successful (read: popular but not entirely profitable (yet?)) online music streaming services that has established itself with the non-owning and mobile music markets. Being able to listen to music through a web browser is something that gives music fans greater freedom, and access to their collection from any computer, smart phone or other mobile device, and is something that Apple lacks within iTunes.

Apple may well be looking at using the Lala team and functionality to enter into the streaming market, and with the way they have revolutionized similar parts of the music industry, who knows what may be in store.

One thing I hope Apple does figure out, is if they are paying $17m or $80m+ for Lala assets. Either way, it is a lot of money for a service that has et to find a profitable business model. Moving from CD-swapping to a (comparative to Pandora and Spotify) complicated streaming system has proved difficult, and investor Warner Music wrote down $11 million of the original $20 million it put down.

Lala had recently struck deals with both Google and Facebook, hoping to widen it’s user base with new search traffic and gift options. Apparently Google was also looking at acquiring Lala, and having narrowly missed out they may try and pursue other deals in the near future. Finding a way to tie it’s music search division in with either a download or freemium/ ad-funded streaming service seems inevitable, and well within Google’s scope. In fact, there have been several similar deals in recent months. Imeem was bought by Myspace, whom also previously acquired iLike.

Although Apple’s future movements may not be yet announced, I am certain they will continue to push the digital music industry forward (and outwards) with their services and reach new listeners across the globe.

Lee Jarvis.

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To bring everyone up to speed, there has been an ongoing case in Swedish court that the four owners and heads of Peer2Peer (file sharing) site The Pirate Bay were in mass breach of copyright laws, not just within the music industry but also regarding movies and video games. The case has received a lot of attention and also incredible support from torrent and P2P websites and their users. Roger Wallis, who spoke in favour of The Pirate Bay at the trial, received a colossal amount of floral tributes, sent to his wife at their home.

The verdict was announced today, and all four men (Peter Sunde, Fredrik Neij, Gottfrid Svartholm, and Carl Lundström) received 1 year in jail each and fines totaling $3,620,000. The prosecutors were aiming for much higher compensation, although their calculations are often very misguided; 10,000 free transfers of your song does not mean you lost 10,000 times the sale price of that record. Do they take into account the people who downloaded a few free tracks and then bought the actual album? I thought not.

Having said that, I am not in favour of people setting up software allowing the public to trade music and other files for free without artists’ consent. Let alone the people who shoot their mouth off, claiming “all music is free” and the like. Yes, all music is probably available for free if you wanted to find it online, but I am in favour of letting the artists (and the copyright owners) make that decision, controlling and profiting from the distribution of their work in some way, be that financially or by building their contact list. As content creators, that is their choice, and one of the reasons I am a huge fan of Creative Commons licenses.

People are using over-stretched analogies such as ‘if you hold the P2P site accountable then you must also prosecute ISPs’. There are also many, many comments across the web from people claiming it is a sad day and that there is no way this should have happened. I’d like to hear them come up with a solution, as to how artists can retain control of their work, be compensated where appropriate, and how they will be able to fund and market future creations and music projects.

You can’t really go and prosecute the millions of end users who take the music and other files. The RIAA have tried and failed more than 35,000 times, receiving nothing but bad press, fueling angst and probably instigating further file sharing. If there was a system in place by the websites to charge the users a subscription fee, then maybe that could work, and they could then reimburse the labels and artists. But they have not chose this route. So, do you hold the P2P sites and owners viable? Maybe. If their business model does not compensate the artist in any way, then I think they should be charged somehow. Governing bodies should aim to control this cause though, rather than react to the aftermath. The P2P sites could avoid legal wranglings themselves by striking up deals with labels, but as they are sworn enemies, how about independent artists? If the artists can register their music with a site and give permission to distribute and share globally then the P2P sites can still aid the discovery and sharing of new music and building of artists careers, which they are so fond of using as their mission statement.

What will the devastating effect be on the music industry? Not much. For a start there will be months of appeals, more uneducated blabberings in the press, and probably more flowers. ‘Pirates’ will continue to vent and despise the major labels and government prosecutors. P2P file sharing is rampant, and as much a part of a schoolkid’s daily life today as dolls, toy cars and baseballs were decades ago – it’s not going to disappear. Major labels will continue to push in this wrong direction instead of focusing their efforts on restructuring their business models, and to get to the route of the problem, that is that they have mistreated musicians and music fans for many years now. Creating value, authenticity and transparency within their brands should be at the top of their agenda, not ‘hire more lawyers’.

Who wins? Neither side. Certainly not the Pirate Bay owners (lend me $905,000 will you, mate?), and not the labels who struggle to recoup a few million bucks when they have just spent the same amount on forcing untalented acts into their hit-machine mould, only to be forgotten by this time next year. There are some people out there who have a collection of thousands of unpurchased songs that they will hardly listen to who think they are on the winning side. Congratulations, you’re very clever.

Who loses? Artists. Artists may move to gigging like crazy in order to subsidise the record sales gap in their revenue compared to previous years. Which is fine if they are able to do so and the people who listen to their music online genuinely like them and willingly support them when they come to town.

So do me (or more accurately, the music industry) a favour. Find a new, upcoming artist / band / rapper / DJ-producer from your iPod collection who is performing in your town this weekend, and go out to see their show / gig / concert. Use the $15 you just saved from purchasing their album… you will then be giving something back to the industry that you ‘care about’ so much. Heck, you may even have a good time. Yo-ho-ho.

Lee Jarvis.

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This was the first MET summit, organised by Chicago Booth GSB Students and held at the Harper Center, and I’m sure I’m not the only one who considered it a great success. The summit focused on Media, Entertainment and Technology (there’s the ‘M’, ‘E’ and ‘T’ for those of you paying attention), and featured some well chosen panelists and keynote speakers from a variety of backgrounds. I chose to follow the Social Entertainment and Music panels and will touch on them here as I feel they all shared good advice that you can apply to promotion of your music career / artist management / online marketing / record labels and much more. (note: Part 2 next week will go into the keynote speeches)

Session 1 – Social Entertainment
Cliff Warner, Principal/CEO, Thinkwell Design & Production; Matt Freeman, CEO, Betawave Corporation; Anisha Ahluwalia, Associate Director, Denuo; David Goldberg, CEO, Youbet.com

The panel spoke well about various types of customer engagement in the digital world, touching on the gap between huge scale tools such as Yahoo adverts which can reach millions of consumers but may only return impression figures, and the kind of niche tools that really help you to understand your customers needs when you connect with them in a relaxed state of mind and retain their attention; finding the right combination for your business / career holds the best possibility of engagement and ultimately, success.

With less disposable income and more choice than ever before it is harder to keep customers interest and retain return visits, and any business having strong offline comparables will have to offer something more compelling online. This may be as simple as ‘being able to shop at home in your underwear’, it may mean creating more interesting additional features to support custom, displaying reams of data that could not be processed or viewed physically, or offering real-time updates allowing instant changes to orders / decisions. Nike plus did this well and brought the physical act of running to an online state by offering a community to share advice and support.

We also heard about brands that needed to actually discover what their brands mean before launching into social media, and perhaps when it is unsuitable or just plain weird they are better off partnering other companies or launching a community based on a related but diverted niche of the brand. The panel finished up by suggesting where they see social entertainment moving in the future, and the points raised are something that I agree strongly with and will feature in future blogs, namely ‘mobility’, ‘filtering’ and ‘authenticity’. Customer will want access and entertainment on the go, and products such as the iPhone allow new ways to engage them all the time. They will also want and need ‘filters’, meaning that with more and more content being created and shared online, recommendation and guidance will bring quality to the end user and create a strong appeal. Lastly, authenticity is something that people crave, and with people becoming numb to faceless internet spamming, that means that genuine conversations, a strong offline connection and authentic actions / reactions create trust and loyalty to your brand (company / artist).

Session 2 – Music
Beverly Jackson, Sr. Marketing Manager, The Recording Academy; Jonas Tempel, CEO/Co-founder, Beatport.com; Peter Strand, Founding Partner, The Law Offices of Peter Strand; Brenden Mulligan, President & Director of Business Development, ArtistData

Well, obviously here is my forte, and the very well chosen panelists meant that i could have happily listened to a two hour speech by each of them, but I feel we covered a fair bit of ground in the session. Upon entering the room, there were already postcards advertising the Grammys (3 weeks late?!) and Recording Academy artists on all the seats… hmmm. Speaking of the Grammys, quote of the day goes to Jonas Tempel, who said after seeing the Jonas Brothers and Stevie Wonder performance, “I’m not sure if I was confused or offended”. Jonas and the panel also offered a wealth of knowledge regarding the music industry, mentioning that publishing rights are one revenue stream that should be protected, although I was a bit concerned at how this evolved into ‘illegal downloading is wrong’ and ‘they will get you if you do so’ style comments (maybe because of the watchful eye of the RA representative?). 10 years after the Napster hooplah started I thought there would be less of that.

We did move on, and somewhere that the panelists saw potential growth is in the live music sector. Concert tickets may be high, but people are obviously willing to pay that and even more on ebay and the like, so the demand for shows and discovery of music doesn’t seem to have slowed at all. Best Buy is apparently making shelf space in their stores for low-end musical instruments, obviously as a demand reflex rather than a good-will incentive to encourage young music types.

A variety of music players / widgets / promotion sites were brought up, all available to aid artists’ careers, and the panel agreed that independent artists are in a strong position in this shift in the industry, and also the new interesting ways of artist promotion such as the Prince CD giveaway with the Mail on Sunday in England, himself being a music visionary and now a savvy industry marketer and businessman. I would have loved someone to emphasise that the giveaway almost certainly helped Prince sell out 15 of 21 shows at London’s O2 Arena within the first hour of tickets becoming available.

Something I consider very important and is quite a hot topic recently is the Creative Commons Licensing. I wanted to ask the panel their thoughts, especially as to if this relates to the remix competitions that Beatport offers and to what the Recording Academy thought of the huge popularity and financial success of Nine Inch Nails’ operation with this licensing, but unfortunately we had run out of time.

I thought the discussions such a success and inspiration that I will endeavour to contact the recent panelists and other music industry professionals and report back with some interviews / quotes in the near future.

For more info on each of the panelists and keynote speakers, as well as general MET summit details is at www.metsummit.com, and I strongly suggest that you keep an eye out for next year’s event; if it is carried out as passionately and as smoothly as this year’s then I see it being a great opportunity for young entrepreneurs to enhance their knowledge and a key event to forge interesting relationships with intelligent forward-thinking media companies in 2010.

Lee Jarvis.

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