Record Industry In Shift To Streaming?

[koganbot]

A Jukebox on MySpace

Article in New York Times a couple of days ago, saying that the three largest record companies and some indies plan to stream huge hunks of their music through MySpace (not clear how much: all of it?). Not sure how to interpret this:

(1) Record cos. belatedly recognizing inevitable and shifting focus to using music to sell advertising rather than just downloads and CDs, but this is too late because illegal downloads and iTunes and YouTube have already gotten the jump and that's where people will continue to go.

OR

(2) This actually is a significant shift because it makes streaming the main vehicle for music consumption and makes advertising the main product (so the record cos. are doing an end-run around iTunes and going head-to-head with YouTube).

OR

(3) Somewhere in-between, record cos. using this to promote downloads as well as seeing if people will shift from buying to streaming if virtually everything is streamed.

Comments

[freakytigger.livejournal.com]

The initial issue is going to be portability, but I assume that handheld wireless devices connecting to the stored playlist will be the norm before too long - but then how do those users get served the advertising? Is that the achilles heel of the scheme: most people listen to music while they're doing other stuff, so where/when does their exposure to the advertising happen if they just open the window then minimise it immediately? Or am I being naive?

[skyecaptain.livejournal.com]

I don't see why a streaming jukebox couldn't incorporate ads. If it means the viability of internet streaming in the future, I wouldn't completely mind it, but I also wonder whether or not better options (like Pandora) will continue to be attacked -- maybe more strongly -- if the record companies court other streaming options?

[skyecaptain.livejournal.com]

*ads within the actual broadcast, I mean.

[freakytigger.livejournal.com]

Sure, but if it's a visual ad presumably they want people to see it - how does MySpace Music guarantee that, particularly on portable players? And if it's an audio ad then basically you're asking people to swap their ipod for a personalised portable radio, aren't you?

[freakytigger.livejournal.com]

And how long till an audio TiVo turns up :)

[skyecaptain.livejournal.com]

Well, personalized portable radio is probably what they're going for here anyway, isn't it? Especially since the trend in radio has been just that -- making a more "iPod-like" format (was just listening to one last night for about ten minutes, and it was a totally insane playlist!). I can't imagine any of this will be very effective until they have more security that people have mobile technology that can use these applications. (I.e. until we start getting phone/internet plans that are as cheap as phone plans got after the cell phone boom.)

[koganbot]

A question is whether there will be audio commercials, as on radio. My guess is that would be suicidal, just driving people to YouTube when they're at home on PCs and to their own illegally downloaded product on their portables.

[koganbot]

Portability is one issue, but it's hardly the only issue. I don't own an iPod and probably never will, just as I never used a walkman, since I don't want to be listening to music while walking. Not sure what percentage of downloaded music is used in what way.

But yes, I do think you've put your finger on a big issue: how are you going to get people to even see the advertising, and if they do see it, click or respond? Newspapers would be in fine shape if they could get people to click ads online, but so far they can't. (I assume the huge huge huge volume of people using Google is what makes ads effective on Google. Most people still ignore them, but so many people are using Google that the small percentage who do click through the ads are nonetheless a sizable number of people.)

[freakytigger.livejournal.com]

Google is unusual in that - and I'm not an expert here, it's been years since I had much to do with the ad/media sector - it does sell ads based on clickthroughs. A lot of online advertising, probably including what Myspace Music would be looking to sell, is more akin to TV advertising: clickthroughs are a nice bonus, but the promotional message is all in the ad animation and execution. But it's getting people to accept those ads and sit through them that's the issue. (I don't know what kind of headway the freebies-for-ads models are making in other areas, though: it's been "about to take off" in mobile for a year or two, but perhaps it has now taken off - my eye is very much off the ball I fear.)

I think portability is a big issue in music - most phones sold now has some kind of music capacity, and MP3 players among younger people have reached huge penetration levels. But advertising is a bigger one.

[koganbot]

But my other question:

Is this a shift in the record industry, basically giving up on selling the music itself, rather than using the music to sell other stuff?

[freakytigger.livejournal.com]

It's a shift in that the r.i. would be a content provider existing to sell advertising, but the content it would be providing would still be music, no?

The key question would be: how much difference to clickthroughs, eyeball time, whatever metric they'd be using, would new product make? Would it make putting money into new releases more or less justifiable from a bottom-line perspective?

[koganbot]

I'm pondering whether this is a new issue or not. Already, there's the question of why do radio stations play new material (and not all do) and why do consumers listen to or buy new material. And part of what people are selling and buying is "newness." I don't think the switch to streaming would change that. But the question is whether the switch to streaming would eliminate most costs of making old music available, whereas new music still has the costs of recording it and getting the rights to it. Not sure if the switch to streaming makes a difference here, since the shift to mp3's is already accomplishing the same thing (gets rid of manufacturing costs for old music).

[brak55.livejournal.com]

I think its the record industry floundering to find ANYTHING that works.

I've used Spiralfrog for about a year and it's great for reviewing music from most independents and a couple of the majors. It's not streaming, it's downloads with very restrictive DRM (can only be transferred to Windows Media able devices, can't be burned to CD, etc.) and it's free. Supposedly, advertising revenue is distributed to the artists, but I just don't think there IS that much revenue if they are receiving it per-click.