Digital Music Digest


    Digital Music Digest



    July 10, 2013

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    Nielsen: Download Sales Plunge As Music Streaming Gains Traction


    Decrease     According to the most recent data from Nielsen SoundScan, U.S. consumers used Spotify, YouTube, and similar on-demand music services to listen to 70.3 billion songs in the first half of 2014 – an increase of 42% vs. the same period last year. While impressive, this growth could be considered bad news for the recorded music industry, because 120.9 million albums have been sold so far this year, a whopping 14.9% drop from the first half of 2013 – and of those albums, 62.9 million were on CD (down 19.6%) and 53.8 million were digital downloads (down 11.6%).

    As The New York Times reports, download sales – a major revenue source for the music industry since the launch of Apple’s iTunes store in 2003 – began to cool several years ago, but their plunge from growth to decline has come suddenly. Last year, downloads of individual tracks fell for the first time, by 6%, and in the first half of 2014 they dropped 13%, to 593.6 million.

    Against this backdrop, the top album thus far in 2014 is Disney’s “Frozen” soundtrack, with just under 2.7 million units sold since January and about three million since it came out in November. The most-downloaded track is “Happy” by Pharrell Williams with 5.6 million sales, and the most-streamed track is “Dark Horse” by Katy Perry, which has been listened to 188 million times. [Note: This figure does not count listens on Pandora, which is not tracked by Nielsen.]

    “We’re in a period of transition,” Nielsen senior analyst David Bakula told the Times. “Two years ago I don’t think anyone would have expected sales numbers to go down this dramatically.” Indeed, a critical question for record labels and artists alike is whether the increasing income from streaming services – which pay fractions of pennies in royalties each time a song is listened to – will offset the drop in sales. While many industry executives claim to be bullish on this question, Nielsen’s own analysis suggests that, at least so far, it is not enough.

    One note of interest: Nielsen’s report indicated that sales of vinyl albums, which were largely abandoned by the mainstream music industry during the CD boom, grew 40% in the first half of this year, to 4 million. [Full story: New York Times]

    Study: Don’t Count On Streaming To Cure Music Industry’s Woes


         Recorded music industry revenues are set to decline through the rest of this decade as physical revenue (primarily sales of CDs) will decline an estimated 44% by 2019, while the transition to streaming and music subscriptions will push download revenues down 39% over the same period. That was the blunt assessment from MiDIA Research, which early this week released a study that strongly suggested the long term outlook of the industry is “a story of revenue transition and incumbent revenue decline [as] music industry revenues will bottom out, not grow.”

    Furthermore, label execs who are expecting streaming and subscriptions to turn the industry’s fiscal woes around had better think again. “These two segments are the great hope and are growing at unprecedented rates,” report author Mark Mulligan says. “But the $9.99 products are not enough on their own. Affordable mass market products are needed, too, [and] without them revenues will shrink at pace and scale.”

    Other key findings of the report:

    • The industry is entering the fourth phase of digital music, one that will be defined by curation, programming, and affordable subscription pricing.
    • Following a 21% decline between 2008 and 2013, 2014 global music revenues will drop by a further 3%, dragged down by a 9% fall in Japan, the world’s second largest music market.
    • Download revenue will fall nearly as quickly as CD revenue but, despite revenue decimation, the CD will remain a hugely important product, with physical sales accounting for 32% of global revenue in 2019.
    • Similarly, despite a decline in download revenue, this segment will remain the majority “paid-for” digital music base in 2019

    The report almost chides the music industry for not understanding its marketplace in audience terms. “Record labels will need to take a leaf out of the playbook of TV broadcasters, and complement their obsession with market share and revenue with a keen understanding of audience share,” Mulligan states. “Just 6% of consumers pay for subscription services yet streaming accounts for 28% of global digital revenue.  Relying on so small a customer base for so large a share of revenues leaves the marketplace vulnerable to sudden disruption.” [Full story: MiDIA Research]

    Broadcasters Foundation

    Google Acquires Songza To Enhance Digital Music Platform

    Songza     Google last week announced it is buying Songza Media in an attempt to strengthen its streaming music service and lure listeners away rival Apple Inc. and other competitors. Terms of the deal weren’t disclosed, but the search giant said it has no immediate plans to change the song service, which selects tunes for listeners based on a person’s activities and the time of day, as it integrates Songza into its Google Play platform.

    Google rolled out its “Plus” music service last year and recently announced it would add a similar feature to YouTube. Facing stiff competition from Apple’s iTunes Radio, Amazon Prime, and Microsoft Inc., Google Plus offers a locker that lets users store thousands of songs and that includes a feature for buying new songs. The acquisition of Songza is expected to enhance these offerings, including “contextual expert-curated playlists to give you the right music at the right time,” the company said in a statement.

    Songza, based in New York, includes such investors as Lerer Ventures and Metamorphic Ventures. Songza’s executive team had sold an earlier music service, Amie Street, to Amazon in 2010. “No immediate changes to Songza are planned, other than making it faster, smarter, and even more fun to use,” the start-up this week said on its website. [Full story: Bloomberg]

    With Songza Acquisition, Google Is Seeking “Music Curation”


         While the price tag pales in comparison to the $3 billion Apple Inc. recently paid for Beats Electronics, Google’s $39 million acquisition of Songza – which specializes in custom playlists – signals the latest big thing in digital music: curation. That’s the word from Rolling Stonecorrespondent Steve Knopper, who says Google Play’s multifaceted digital-music service has yet to credibly compete against Spotify for streaming, iTunes for download sales, or Pandora for online radio. While Songza’s 5.5 million user base may not be huge, it’s still an affordable way for Google to help its users figure out what to listen to.

    As Nielsen SoundScan statistics illustrate, the recorded music industry is experiencing a significant shift from selling downloads and CDs to a surge in listening to streaming-music subscriptions (see story, above). “The download market is drying up, and it’s drying up more quickly,” RCA Music Group President told Rolling Stone. “If the streaming and subscription [model] catches on quickly, a la Netflix, we’ll potentially be in really good shape. Serving more targeted content that’s curated and customized is better for the user. It’s about discovery – people need to be guided, and if it’s managed the right way, [a service] is going to build trust.”

    Songza’s curation system allows music fans to find “pre-set” playlists selected by a staff of audiophiles. And although Google reps wouldn’t comment for the magazine story, the search giant is expected to integrate Songza with its YouTube subscription service, which has been rumored to be in the works for nearly a year and now is tentatively planned for launch in the next few months. [Full story: Rolling Stone]

    Digital Radio Tops Mobile App Usage; Pandora Leads The Charge


    Pandora Mobile     With U.S. consumers now spending 60% percent of their internet time on mobile devices -with the majority of that within apps – Pandora, Instagram, and Facebook are seeing a surge in mobile use. In fact, CNET reports time spent on mobile apps is at an all-time high and just keeps growing, with average time spent on them now 51%, higher than any other digital medium. Still, breaking down the data bit-by-bit, as comScore recently did, reveals that of all the app categories, digital radio is where people spend the most amount of time, with 96% of user engagement coming from mobile devices (and Pandora leads this category). Coming in a very close second in app usage, also with 96%, was photos, which was led by such apps as Instagram and Flickr.

    “While the mobile platform shift continues unabated, not every content category has experienced the shift at the same speed,” ComScore noted in its Media Metrix Multi-Platform report. “Amazingly, but perhaps not altogether unexpectedly, a couple of important categories have shifted almost exclusively to mobile.”

    The ComScore study also highlights the importance of growth in the social networking category, primarily Facebook and Twitter. While only 70% of user activity in this category comes from mobile, it has seen huge increases in the last year as total mobile engagement has grown 55%, and has accounted for 31% of all online growth since 2013. “While social networking does not rank at the very top of this list among the most mobile-skewing content categories, it is arguably the most important,” the ComScore report says. [Full story: CNET]

    Music Vault Unveils 13,000 Concert Videos On YouTube


         Earlier this week Music Vault unveiled more than 13,000 videos of concert footage on YouTube, with approximately 2,000 hours of exclusive video spanning the past 50 years and featuring rare performances by some of the biggest names in music history. Launched in April, Music Vault draws material from such legendary venues and archives as Bill Graham Presents, The King Biscuit Flower Hour, Woodstock, and the Newport Jazz and Folk festival.

    “After two years restoring, transferring, mixing, and mastering thousands of tapes from our enormous archive, we’re thrilled and extremely proud to share this massive treasure with the YouTube music community,” Music Vault content editor Bill Antonucci said in a company statement. “We believe this content deserves to be seen by the largest audience possible, and our partnership with YouTube allows us to do just that. Younger music fans will now be able to experience what it was like to see these classic bands at the peak of their powers while their parents relive the thrill of seeing shows they actually attended.”

    Music Vault is owned by online music memorabilia store Wolfgang’s Vault. The service already makes a wide range of audio recordings available on a subscription basis through Concert Vault, but with Music Vault it appears the company is opting for video ads as its main business model. [Full story: USA Today]

    Al Bell Presents American Soul Music … And American Soul TV

    Al BellIf you’re into classic and contemporary Soul, R&B, Blues, Gospel, Jazz, Hip-Hop Soul, Rap Soul, and Neo-Soul, we invite you to listen to Al Bell Presents American Soul Music. Former Stax Records owner and Motown Records Group President Al Bell personally has programmed this awesome radio station online, presenting your favorites from the 1960s and ’70s [and some ’80s], a lot of the best new music that’s being released today, and some real gems you haven’t heard in a long, long time. Come to www.AlBellPresents.Com and hear it for yourself!

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    Al Bell Presents:
    Chairman/Chief Executive Officer: Al Bell
    President: Jonathan Bell
    COO (and Digital Music Digest Editor): Reed Bunzel

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