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    The Year in Digital Music and Predictions for 2010

    by Jason Feinberg
    December 16, 2009
    Image by dusk-photography via Flickr

    As 2009 comes to a close, and the music industry shifts focus to 2010, it’s worth looking back at some of the noteworthy events of the past 12 months. This is also the right time to look ahead and predict what will happen next year.

    For some in the business, this year brought trouble after trouble; for others, 2009 was a time for growing revenue, relevance and positioning. Whichever end of the spectrum you are on, there have been few dull moments for digital music this year. And next year promises even more change and growth.

    Innovation and Acquisitions Abound

    A number of high-profile acquisitions in recent months have shifted the digital music landscape.

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    Apple’s recent purchase of streaming/download service Lala has sparked much speculation. Articles from the New York Times, PC World, and Apple Insider have discussed possible reasons for the purchase, and most tend to focus on the creation of an Apple-powered music streaming platform.

    i-4b254e6318b623db5d04b3c339613937-lala.jpg

    Unlike iTunes, Lala allows users to stream music they own from the web, effectively creating an anything/anywhere platform. It would give users the ability to listen to music via the web and mobile phones without having to download the content to different devices. There’s still a scramble for a sustainable streaming model, and Apple wants in.

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    This is interesting on its own, as it adds a dimension to music consumption that is basically the opposite of how iTunes was built from day one. But this is only one part of why industry players are talking; everyone loves drama, and this story has plenty.

    Just one month prior to Apple’s acquisition, Lala made headlines as one of the key partners in the new Google Music service. Lala, along with a number of other partners, now powers streaming music search results through Google. When a user searches for music on the search engine, the option to stream the song (as well as purchase, get lyrics, and find tour dates) appears at the top of the results. With Apple’s buyout of the company, people are left to wonder what may come of this service.

    MySpace was also busy on the acquisition front, recently absorbing two music streaming services, iLike and imeem. Each of these companies had built a solid user base, but had not found the profitability investors expected. A buyout wasn’t a surprise. Speculation abounds here as well: Both of these companies offer enhancements to what MySpace currently provides, but they do not bring anything particularly new or unique to the table.

    i-ad12c57d441ba1b911a35543f5726b0b-ilike.jpg

    That said, these deals are not without their own drama. iLike has powered Facebook’s most popular music service for years, so this acquisition creates an interesting relationship between MySpace and Facebook. There are many other music applications on Facebook, so this development probably won’t be significantly disruptive.

    The same can’t be said for imeem. It built its massive user base by allowing fans to create streaming playlists and embed them across the web. Bloggers and others relied on these players, as did web technologies such as twt.fm, which allowed users to easily tweet a link to an imeem-powered streaming track.

    These services immediately broke last week when, without warning, MySpace completely pulled the plug on the imeem service. All traffic to the imeem.com domain now points to MySpace Music, and all backend access to the site (via its APIs) is turned off. This has created unhappy fans, bloggers, and developers.

    Is innovation flourishing, or is the herd thinning out? These were only some of the more high-profile acquisitions this year. Expect to see more in 2010.

    Direct-To-Consumer Continues Ascent

    Another important trend this year was the continued emergence of a hyper-charged direct-to-consumer business model. Companies such as Topspin, Audiolife, Nimbit, and Reverb Nation are enabling artists to interact with — and sell to — their audiences in many new ways. I wrote about this topic in a MediaShift article earlier in the year.

    The idea of direct-to-fan goes back decades. Massive value can be created when an artist engages their audience directly. This has been demonstrated for years at concert merchandise booths, and online in the form of things such as newsletters and e-commerce using PayPal.

    i-d1eac83a6e1d7c8e522ffe94cb89bf84-nimbit.jpg

    The difference, and the reason this topic is on people’s minds, is that technology has quickly propelled the D2C marketplace both downward and forward. Direct-to-fan has always worked well for large bands, or for artists with momentum. Now, small artists — if, and only if, they are creative and good — have the tools to recreate this revenue stream at their level. It doesn’t mean every garage band can quit their day jobs, but it does mean more artists have new opportunities to make a living.

    Forecasting, marketing, commerce, distribution, customer service, analytics, and deep fan engagement are all now available to artists at any stage of their career. This year saw some highly innovative and often successful campaigns run by emerging artists. In 2010, more artists will embrace this model, which means a lot of noise and competition. It will be more of a challenge for the brilliant acts to shine through.

    What Else is Next

    A few more thoughts about the year ahead:

    • 2010 will be the year of analytics. Digital marketing and sales departments have been cobbling together metrics for years. Many things are trackable, but it’s often impossible to access the data or find the means to implement structured analysis. Platforms such as Next Big Sound, RockDex and BandMetrics are looking to fill this need. As APIs and data sources continue to open up, these services will get better and better.
    • The conversation about an ISP tax for unlimited downloads will continue. The big players working to combat piracy will continue to focus on this.
    • Spotify is still gearing up for a U.S. launch, but in light of imeem’s troubles, the ad-supported streaming model is under further scrutiny. There are fundamental differences in their ad structures, but ad-supported is ad-supported.
    • I am curious to see where advertising goes on Twitter. The Huffington Post has one idea, trying to sell ads into feeds.

    There are many more things on the horizon. I’d love to hear your thoughts on the state of the digital music industry, and what’s next.

    Jason Feinberg is the president and founder of On Target Media Group, a music industry online marketing and promotion company. He is responsible for business development, formulation and management of online marketing campaigns, and media relations with over 1,000 websites and media outlets. The company has served clients including Warner Bros. Records, Universal Music Enterprises, EMI, Concord Music Group, Roadrunner Records, and others with an artist roster that includes Har Mar Superstar, Flipper, George Thorogood, Steve Vai, Robben Ford, Chick Corea, and many more. You can follow Jason on Twitter @otmg

    Tagged: acquisitions digital music direct to fan direct-to-consumer streaming
    • Phenomenal post!

      I completely agree with your prediction that 2010 will be the year of analytics. Now more than ever, music has become a data driven business and I think that artists will start seeking best practices, benchmarks and the proper metrics to see if they can quantify thier marketing efforts.

      I am personally really interested in seeing how musicians integrate geo location services such as foursquare, or even augmented reality apps like Layar into their promotions.

      Thanks for posting, this is def worth a retweet :-)

      – Danny

    • I’m a few days behind on getting my next blog post up, but I’m writing about the iPhone as a way for the average person to create and participate in music.

      Looking ahead to where music will be in the future, I think the democratization of music will continue. More people will think of themselves as music creators/producers/promoters. What they create may not be great art, but they will use the tools available to them to interject themselves into the process as much as they wish.

      I notice that one of the innovators in this space, Smule, just got an additional $8 million in VC funding.

    • Hey Jason — great post. I’m working with the guys at RockDex, and we’re very excited about the coming year. It’s so important right now for artists to take power into their own hands — from tracking their own metrics to getting their music directly to fans. I guess that’s always been important, but now it’s actually doable.

      One listening service I’ve become intrigued by lately is MOG. It seems faster, fresher and more comprehensive than Pandora, and using it is a truly immersive experience, thanks, in part, to its integration with the wider blog community. The $5 a month subscription fee seems worth it, but I haven’t dropped the five-spot yet. Maybe if MOG created something for mobile users?

    • Great article, Jason. I think 2010 will be a great year for indie artists when it comes to their online presence and how to maximize it efficiently. It is now easier than ever to push your content out from one location and even do so on-the-go with your mobile device. I am constantly educating musicians about this.

      My favorites services that have made strides all year and will continue to do so in 2010 are:

      ReverbNation, FanBridge, RockDex, HootSuite, Ping.fm, and Tweetie.

      I think RockDex will be the breakout of 2010 with social networks being intensely analytic driven. Most artists I talk to don’t understand analytics but RockDex makes it so easy to “get”.

      My two cents.

    • @Suzanne

      Check out what Mobbase is doing, the most affordable and completely self serve white labeled iphone app platform for artists.

      http://www.mobbase.com/

      I have created 4 different apps which are now in the itunes store and I can vouch for the service.

    • @Suzanne

      Check out what Mobbase is doing, the most affordable and completely self serve white labeled iphone app platform for artists.

      http://www.mobbase.com/

      I have created 4 different apps which are now in the itunes store and I can vouch for the service.

    • Jason,

      Fantastic piece. I think you lay out the landscape precisely.

      This line, in particular, jumped out at me:

      “Now, small artists — if, and only if, they are creative and good — have the tools to recreate this revenue stream at their level.”

      The parenthetical, “if and only if, they are creative and good,” is real important and telling.

      For too long artists have had excuses:
      •I need a label
      •I need distro
      •I need radio
      •I need a publicist
      •I need a booking agent

      All of these caveats – my music is great, and if I had [one/all of the above] everyone would know it – don’t hold water any longer.

      If, as you say, an artist is good and creative, they have as much of a shot as anyone else; irrespective of their status (unsigned, signed, rich, poor, etc.).

      We are all perilously close to having the same tools. The analogy, I suppose is chefs. For the most part (and I understand geography plays a role) all chefs have the same access to ingredients. However, only a handful succeed in any meaningful level. Their success is predicated, again, as you say, on how good they are and on their creativity.

      This is exciting to me, and we’ll see this play out in a great degree in 2010; artists will sort of appear fully-formed out of nowhere. They’ll cobble together the tools they need to sell direct to their fans, and encourage their fans to spread the word (again, using roughly the same tools we all have access to).

      However, the one old skool constant that will not ever go away, is that in addition to being good and creative, even in this digital world, you have to tour a lot in order to succeed. There will be a small handful of artists that get some traction without touring, but most won’t. They’ll focus too much on the online world (it’s easier and more accessible) and forgo their offline strategy, and they’ll fail; and we’ll hear even more loudly and annoyingly: “if only I had a booking agent, I’d succeed.”

      My response, and the appropriate response to this is, “Fuck you. It ain’t t-ball, and not everyone gets to play.”

      It goes back to being good and creative. You have to apply that to your live performances too. As much as I love them, the circuit that REM and others before them blazed up and down the coasts in the rock clubs, ain’t really working any more. Be good, be creative.

      My big prediction, however (and I’ve buried it here, assuming that no one will have bothered to read to this point), is that we’ll leave the dark ages of online retail, and – via APIs, widgets, etc. – content filters (i.e. blogs, etc.) will be able to sell directly to their readers rather than directing them to amazon/itunes. In the not distant future we’ll look back on the time when we would introduce people to music and then send them *away from our site* to some other site for the purchase as unbelievably stupid.

      I feel safe in predicting this will happen because one of the sites I work on is going to launch this very practice in 2010. This is how I like to make predictions, knowing the outcome.

      Looking forward.

    • Jason,

      Fantastic piece. I think you lay out the landscape precisely.

      This line, in particular, jumped out at me:

      “Now, small artists — if, and only if, they are creative and good — have the tools to recreate this revenue stream at their level.”

      The parenthetical, “if and only if, they are creative and good,” is real important and telling.

      For too long artists have had excuses:
      •I need a label
      •I need distro
      •I need radio
      •I need a publicist
      •I need a booking agent

      All of these caveats – my music is great, and if I had [one/all of the above] everyone would know it – don’t hold water any longer.

      If, as you say, an artist is good and creative, they have as much of a shot as anyone else; irrespective of their status (unsigned, signed, rich, poor, etc.).

      We are all perilously close to having the same tools. The analogy, I suppose is chefs. For the most part (and I understand geography plays a role) all chefs have the same access to ingredients. However, only a handful succeed in any meaningful level. Their success is predicated, again, as you say, on how good they are and on their creativity.

      This is exciting to me, and we’ll see this play out in a great degree in 2010; artists will sort of appear fully-formed out of nowhere. They’ll cobble together the tools they need to sell direct to their fans, and encourage their fans to spread the word (again, using roughly the same tools we all have access to).

      However, the one old skool constant that will not ever go away, is that in addition to being good and creative, even in this digital world, you have to tour a lot in order to succeed. There will be a small handful of artists that get some traction without touring, but most won’t. They’ll focus too much on the online world (it’s easier and more accessible) and forgo their offline strategy, and they’ll fail; and we’ll hear even more loudly and annoyingly: “if only I had a booking agent, I’d succeed.”

      My response, and the appropriate response to this is, “Fuck you. It ain’t t-ball, and not everyone gets to play.”

      It goes back to being good and creative. You have to apply that to your live performances too. As much as I love them, the circuit that REM and others before them blazed up and down the coasts in the rock clubs, ain’t really working any more. Be good, be creative.

      My big prediction, however (and I’ve buried it here, assuming that no one will have bothered to read to this point), is that we’ll leave the dark ages of online retail, and – via APIs, widgets, etc. – content filters (i.e. blogs, etc.) will be able to sell directly to their readers rather than directing them to amazon/itunes. In the not distant future we’ll look back on the time when we would introduce people to music and then send them *away from our site* to some other site for the purchase as unbelievably stupid.

      I feel safe in predicting this will happen because one of the sites I work on is going to launch this very practice in 2010. This is how I like to make predictions, knowing the outcome.

      Looking forward.

    • We are all perilously close to having the same tools. The analogy, I suppose is chefs.

      Yes, I see that too. And I think musicians aren’t ready for it. A lot of live music isn’t about musical talent per se, but about giving the audience a good time. That’s why you sometimes see cover bands doing better than truly original bands.

      An even more telling example is karaoke. How many bar owners have told you that they draw bigger crowds with karaoke than with live music?

      As technology allows more people to create music or feel like they are creating music, more people are going to get involved in music creation. Even more than there are today.

      While the “1000 fans” model has been touted as the new way to create a class of working musicians, we’re also going to see tools that allow us to have music experiences built around our friends and family, i.e., the “5 fans” model. Maybe you can have everyone over to your house to play music rather than going out to a concert or to a music venue bar.

      It will be much like music used to be before recorded music and radio. People did it in churches and in dance halls and on front porches to amuse themselves and connect with their friends and neighbors.

    • @George

      My big prediction, however (and I’ve buried it here, assuming that no one will have bothered to read to this point), is that we’ll leave the dark ages of online retail, and – via APIs, widgets, etc. – content filters (i.e. blogs, etc.) will be able to sell directly to their readers rather than directing them to amazon/itunes. In the not distant future we’ll look back on the time when we would introduce people to music and then send them *away from our site* to some other site for the purchase as unbelievably stupid.

      I totally (and selfishly) agree, assuming artists are willing to take charge on that front — it’s a change of mindset and workflow, but one that will (hopefully) pay off immensely, at least in the ability to build and maintain an actionable fan base over time.

      Where I would take your prediction and turn it towards what I’d *like* to see happen in 2010 is to say we need better ways to drive fans TO the artist’s website. This is fairly easy from other artist-controlled channels (email, Twitter, Facebook, etc) but gets more difficult when you look at the places people are actually discovering music (Pandora, Last.fm, YouTube, traditional radio, music blogs, etc.). I’m hopeful we can find/create better ways to drive new fans down the funnel effectively.

    • @Suzanne

      sounds like a hobby. If more artists would be ok with making music for the joy of making it/sharing it with family, friends — essentially keeping it a hobby — it’d clear away a lot of the gunk, and allow for lower transaction costs, etc.

      I use the t-ball analogy again: not everyone gets to play. If you want it to be more than a hobby, you have to commit to it mind, body, and spirit. This is no different than if you want greatness at anything (chef, athelete, chess player, PhD, etc.). Few can achieve this level of mass appeal/success. Doesn’t mean people shouldn’t cook, shouldn’t play touch football on weekends, shouldn’t get their asses kicked at chess in Harvard Sq every now and then, shouldn’t read Goethe — and it doesn’t mean you shouldn’t bang away on the guitar and amuse/horrify your friends/family with your rendition of “Closer to Fine.”

      It does, however, mean you should not bother putting your music on itunes, amazon, setting up various online presences, and then waiting for the world to come banging on your door.

      there are dues to be paid.

      if you don’t want to pay the dues – keep it a hobby.

    • sounds like a hobby. If more artists would be ok with making music for the joy of making it/sharing it with family, friends — essentially keeping it a hobby — it’d clear away a lot of the gunk, and allow for lower transaction costs, etc.

      Many of the musicians who think they are in the music business aren’t making enough money to quit their day jobs, so music is really just a hobby for them, even if they don’t think of it that way. Music isn’t profitable for most who aspire to making a living at it, unless they are giving lessons or getting a regular paycheck from a music-related job.

      And yet, everyone is being told how now that the major labels have declined there are opportunities for DIY artists. That means there are even more people recording and uploading to iTunes, MySpace, etc. And since many of them are giving away their recorded music for free and trying to make up the difference from live shows and merchandise, the competition for those live gigs is that much more intense.

      When the pie gets sliced thin enough that lots of people are making music but relatively few of them are making money at it, I think people might begin to see that music isn’t the best way to make money, but everyone still can do it.

      I honestly don’t see how the result will be much different than giving everyone the tools to make music, having everyone showing off their music, and having everyone collecting relatively small audiences.

      Look who does have mass appeal. Susan Boyle. And I think that is great. I love her voice and her story. She is a new music phenomenon. If it weren’t for YouTube, most of us wouldn’t have seen her performance.

      But for many others involved in music, we are talking about those niche audiences. 1000 fans or less for most people.

    • Eric Jensen

      Jason,

      Thanks for the great article.

      I agree that analytics will be big in 2010. In addition to indies, the major labels and film studios are catching on to the value of data with the merger of YouTube’s Content ID and YouTube Insight.

      2010 will be an interesting year all the way around.

    • If you’re a music pro who is currently using digital direct-to-fan marketing and sales techniques be sure to participate in the 2010 Direct-to-Fan survey from Nimbit (mentioned in this article)

      Weigh in with your answers at
      bit.ly/nimbitnews-d2fsurvey

    • JOhn

      @Daniel

      Check out Guguchu. They are trying to bring it all together using one integrated engine

      http://www.guguchu.com

    • Stephany

      I completely agree with your predictions. I honestly don’t think there’s going to be a need for major labels anymore, especially with the huge rise in indie labels and artists. It’s amazing what Facebook and Myspace has done for musicians across the world, and it’s only going to get easier.

      As far as labels ceasing to exist…if they did do you think it would be better for the industry, worse, or not make too big of a difference?

    • I think musicians aren’t ready for this. A lot of people can create music and involved in.

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