snapshot 1/02/08

Global Market for Cellphone Ring Tones Is Shrinking
After years of double-digit growth rates, the global ring tone market appears to have come to the end of its crescendo, according to a variety of measures.

In some parts of the world, ring tone sales are actually declining, and the former ring tone kings, like Jamba of Germany and Musiwave of France, are refocusing their businesses on other ways to personalize cellphones.


10 predictions for 2008
DRM will die. The trendline is clear--Apple's been selling DRM-free tunes on iTunes since May, Amazon's DRM-free MP3 store has three of the four majors signed up, and eMusic has become the second-most-popular music download service (after iTunes) thanks in part to its longstanding insistence on selling DRM-free MP3s. A year from now, DRM will be irrelevant and hardly used in digital music. All four labels will agree sell their songs without DRM on Amazon. Nearly every iTunes audio (but not video) file will be DRM-free, and Apple will get rid of the "Plus" designation. Some music subscription services like Rhapsody and Microsoft's Zune Pass might retain DRM so that users can't cancel their subscriptions and keep the songs they've downloaded, but they'll be the last holdouts--and some of them might try eMusic's approach of limiting monthly downloads rather than limiting compatibility and usage with DRM.


Amazon Hits Trifecta: 3 Million Catalog, 3 Major Labels
Amazon is now playing a powerful game of threes, thanks to a well-timed DRM-free licensing move by Warner Music Group. The shift pushes the Amazon MP3 catalog total to nearly 3 million, or 2.9 million to be exact. It also brings the total number of participating major labels to three, a nice progression and validation of the Amazon digital music strategy.

In terms of pricing, all tracks will be sold for either 89- or 99-cents, and most most albums are priced from $5.99 to $9.99. Roughly one million tracks will be offered for 89-cents, and all songs withing the top 100 will carry the discount tag. All songs are offered at a fidelity of 256kbps.


New report claims 24-hour, variable price iTunes rentals
Adding to the media frenzy surrounding possible iTunes movie rentals, a Hollywood magazine alleges that Apple's rentals will only last for short stretches of time and will use a flexible price structure.


Digital album packaging should improve in 2008
There is a reason people still buy CDs more than they do digital albums. Actually there are several, but viruses that come along with music via peer-to-peer sites (P2P) and a concern over digital rights management (DRM) aren't the only culprits.

Digital music files just don't provide the same amount of content that a CD package does. That includes liner notes, extended album art and lyrics. Buy a digital album today and all you get are a list of tracks and (maybe) a thumbnail image of the album cover that you can't even read.

In 2008, look for Apple to make nice with its label partners by offering a bit more with each download, such as lyrics and more interactive album art.


Love, others may follow Radiohead's no-label lead
Rock band Radiohead's decision to release its new album "In Rainbows" by itself -- online, without a record label's help and at any price the user chose -- rocked the industry last fall. Some hailed it as the beginning of the end for record labels. Other dismissed it as merely a publicity stunt. Oasis frontman Liam Gallagher told Reuters the group would follow such a strategy "over my dead body."

But everyone wants to know: Who's next? The following 10 acts represent where the smart money is on such speculation. Let the games begin.


TheTrackShack Launches With Comprehensive Music Downloads - CD, Song, Stems, Lyrics, Sheet Music
TheTrackShack.com has officially launched their new online marketplace for musicians and fans to buy and sell CDs, Songs, and Track Stems. Featuring the first ever CD mastered to offer production-level individual song elements, “Bumped Up To First Class” — a new song by Huey Lewis, Edgar Winter, Lenny Pickett, Lydia Pense, and Stephen ‘Doc’ Kupka. The site also allows musicians to offer mix minus ones, videos, lyrics, and sheet music for sale.

In the past, a few artists released special mixes of their tunes to the general public; sometimes with alternate mixes or mixes minus a player. TheTrackShack.com allows artists, musicians, and labels to create a whole new music experience — offering both the original tune, as mastered, and individual instrument stems and mixes, allowing copyright holders to name their own price and set their own terms of use.


Music Startup SpiralFrog Raises $2 Million
The troubled online ad-supported music startup SpiralFrog has raised another $2 million. Not that this will help in any major way for the site to break through with consumers, but would certainly help as operational capital, something it has been looking for since earlier this year. The money was raised through a private placement of its senior secured notes. More in release. For a list of who all bought shares in this placement, see this series of SEC filings done on Friday.


Now hear this: surround sound for MP3
First, the surround-sound effect is coming from an MP3 file, a format best-known for making smaller versions of stereo music files. The Pink Floyd track, recorded using Thomson's MP3 Surround, is a much smaller file than the original digital Super Audio CD recording.

When the MP3 Surround song is played through headphones, much of the three-dimensional effect remains. Using another Thomson technology, Ensonido, two small speakers held against the ears approximate the surround system. The cash register sound continues to move as if it were coming from somewhere other than the headphones.


Holiday Offensive Pushes eMusic Past 400,000 Mark
A well-executed holiday blitz has now pushed eMusic past the 400,000 subscriber mark, according to information shared on Tuesday. The company pointed to a surge in music and audiobook downloads during the holidays, and a jump in trial subscriptions. "We had the most explosive December 25 and 26 in eMusic history, doubling our projections and blowing away our numbers," said David Pakman, president and chief executive of eMusic.

The accomplishment closely follows the announcement of subscriber number 350,000, achieved in early November of last year. And the company started 2007 with roughly 250,000 takers. Since eMusic shifted towards a subscription-based, bundled download architecture in November of 2003, customers have grabbed a total of 177 million music downloads.


All Eyes On Apple
MP3 players from the likes of iRiver, Microsoft, SanDisk, and Toshiba are getting slicker all the time, targeting the iPod at a fraction of the cost. Vivendi Universal scuttled a long-term licensing deal to offer its music on iTunes and is talking with other music companies about building a download store of their own. Likewise, Amazon has created its own iTunes antagonist, Wal-Mart has been low-balling its way into the market, and subscription music sites such as Rhapsody are spending mightily to win consumers over to vast Web-based music catalogs available for a flat monthly fee.

It's worth remembering that Apple lost money in 2001, the year the iPod was introduced, and had smallish profits in 2002 and 2003, when iTunes was created and the iPod took off. In other words, the iPod's success didn't come solely from elegant, simple, novel design, but also from the fact that the iPod and iTunes appeared together and, essentially, in a vacuum. The market in MP3 players was small at the time, and there were few legal ways to obtain music for them; Jobs was able to exploit both factors in taking control, then cemented that position by making iTunes available to Windows users. Today, Apple commands about 70% of music downloads.


Analyst: Online video poised for growth spurt; iTunes and Xbox Live are driving factors
While the online video market has been slower to grow than Hollywood and its technical partners anticipated, online video retail is nonetheless expected to expand more than fivefold in the next four years, from $252 million to $2.9 billion in consumer spending by 2011, according to research firm Understanding and Solutions.

"The market is currently underperforming for a variety of reasons," said Mai Hoang, an Understanding and Solutions analyst. "Online video services and title availability are limited, pricing strategies are embryonic and the technology infrastructure has yet to catch up. However, momentum is building, and by 2011, online video in the U.S. will represent 8% of total home entertainment revenue, with Western Europe close behind at 7%."


Music Recording Industry Will Be First Traditional Media Industry To Be Utterly Destroyed By Digital Technology
The maxim goes that new technologies don’t kill off old media — radio didn’t kill newspapers, TV didn’t kill radio, etc. But it’s not clear this maxim will hold true in the digital age. The first industry to suffer the slings and arrows of digital technology was the music recording industry, back when MP3s and Napster gave birth to digital music sharing. Now it seems likely that if digital technology is capable of utterly destroying an old media industry, the music recording industry will be its first victim.


Jay-Z launching record label with Apple
While this might be one of his many other venutures, we just heard that Jay-Z is launching a record label with Apple. No, Beyonce will not be formally attached. This is from a high-up person attached to Jay (no, not who you’re thinking), and it’s said to be a go! Jay is supposedly totally into the business model, and really wants this to happen.