MIDEM(Net) Blog

StrategyEye Interview: Steve Purdham, We7

In this interview from our industry knowledge partner StrategyEye, Steve Purdham, CEO of We7, the Peter Gabriel-cofounded ad-supported free music service, talks about profitability, pirates and how to succeed in the treacherous online music sector. He also pulls no punches with much-hyped rival, Sweden's Spotify...


Why are ad-supported music services such as Imeem, Lala and SpiralFrog all suffering at the moment?
                              
It's a combination of things. In some situations it's just bad execution, but in other situations it's timing. If you look at SpiralFrog - that was a bad model and bad execution. The big debate in the music world was about how consumers didn't want digital rights management (DRM) music. The consumers just wanted the freedom to move music from their iPod to their PC. SpiralFrog was a download model with DRM that was only limited to a small number of labels, so it had all the ingredients of failure.

The one that surprised me was Imeem, because I think they executed very well. I think it just shows that the timing on that was wrong. The one who has been very strong, in the US in particular, is Pandora. They withdrew from markets when the economics were wrong, they focused upon the economics and they didn't get too carried away. They're expected to do about USD40m this year and break even.

Are any ad-funded models working at the moment?

No. Most of them are working off the back of venture capital. That includes We7. But can they work? The answer is yes. Given the right time, the right costing base, the right advertising infrastructure, it can actually work.

A lot of people look at this and say, the idea is flawed, because the amount of money that the music industry is expecting to get for the music is different to what the advertising inventory industry is prepared to pay for accessing the audience. But that is just a point in time based upon where those two industries happen to be and there are a lot of changes going.

                             
What is We7’s business model?

We7 is an online jukebox, which basically allows people to listen to as much music as they want for free. But in addition we've also integrated an MP3 download store so if you want to put it on your iPod then you can download and pay for MP3 files. So it gives people the choice of both environments.

Bruce Houghton: Music As Lone Works Of Genius vs. Music As Culture

"Put simply, copyright law assumes that creative works are either wholly original, or they represent theft. That idea is nonsensical, because no works are wholly original."

- Andrew Dubber

Some will consider it heresy to post a statement like that on an "industry" blog like MidemNet.  And this is usually a place where pundits like me espouse our views in longish diatribes, but I'm not going to follow that rule either.

I'll just simply say that I believe that what Andrew Dubber wrote is true. I admit that I have almost no idea how current laws or the way that we do licensing deals should change because of it. But I am 100% certain that this needs to be part of our conversations going forward.

Gerd Leonhard: The Browser is the new iPod, and the Mobile Application is the new CD

Access to music - i.e. a simple click-to-play, anywhere, anytime, anything - is replacing ownership. This trend will quickly accelerate due to the massive global build-up in cheap wireless broadband connectivity, leading us swiftly to the point where listening to a song will be exactly the same as downloading it (at least in practical terms, from the users' perspective). Some of us would argue that this is already the case, of course, but in terms of mass-scale user adoption I would say we are about 18 months away from the pivot point in the so-called developing countries.

The music industry needs to urgently get ready for this: sell access not (just) copies. Bundle. Package. Develop those new generatives. "When copies are free you need to sell things that can't be copied" (Kevin Kelly, The Technium).

Another important trend to embrace is the move to mobile devices that will pretty much replace the computer as primary access point to the Internet i.e. to all digital content. Mobile applications for smart-phones will take the place of sound-carriers; music will be sold as/in/via/with software. Read how Pandora is doing this, in the U.S.

Peter Jenner: Delayed thoughts on the latest Digital Britain P2P consultation.

...where Peter Jenner, emeritus president of the UK's International Music Managers' Forum (IMMF), shares his thoughts further to the publication of the UK government's Digital Britain report...

I was thinking I really should stop going on like a scratched record about my few oft- repeated thoughts, but like acne it resists any attempt at cure. This one is about P2P.

Why is that considered the cause of all the ills of the recorded music industry? Just because business is declining why do we look outside for the causes? Maybe business is down because the music is not as clearly socially defining to the customers as it used to be? Maybe the competition for the disposable wallet is more intense, with cable TV, games, holidays, cheap fashion goods, mobile phones, getting drunk, going out to dinner etc, all competing for the available wallet share? Maybe it is because at the height of the industry’s boom we managed to get people to replace their favourite records with CDs as well as buying the new stuff, and now they have replaced their old favourites?

Maybe it is not our fault and it all the fault of those irritating people we have to deal with – our customers.

Bruce Houghton: Lately My Inspirations Come From Outside The Music Industry

From Bob Lefsetz to Glenn Peoples at Billboard and from Music Ally to Digital Music News and my own Hypebot, there are a plethora of music business commentators and analysts, each with our own perspective on the seismic changes effecting industry. There are also entrepreneurs like Ian Rogers, Terry McBride, Tom Silverman, Jeff Price and Jim Griffin who share their experience and ideas at conventions and in blog posts. There are even consultants like Ted Cohen and Ralph Simon who tie the pieces together for companies trying to make sense of it all.   Each has much to offer and as an eternal student of the music business, I listen to what they share carefully. 

But lately, I've found much of my inspiration coming from outside of the music industry. No offense to my colleagues, but we are all lucky that some of the brightest and boldest thinkers in fields from marketing to socio-economics and management to technology are, not surprisingly, also fans who often find inspiration in music and the music industry that informs and influences their work.

A partial list of my recent teachers from outside the music industry include:

Gerd Leonhard: Mobile Content is the Future - and allows for a restart, too

Greetings! I just did 2 presentations at the CommunicAsia tradeshow and (Future of Mobile Marketing and the Future of Mobile Content); while preparing for them I once again realized that content commerce on mobile devices is a totally different animal compared to what we have experienced on the more computer-centric, non-mobile "Web 1.0" so far. Here is a short summary of the most crucial points, below; as well as a video from my "Mobile Content Futures" presentation at Mobile Monday in Amsterdam. Enjoy. Posted by Gerd Leonhard.

MIDEM 2009 video: a conversation with Radiohead's co-manager, Brian Message

Brian Message - co-manager of Faithless, Kate Nash, Radiohead and a number of other artists - discussed the need for the music business to focus on the artist-fan relationship; the opportunities technology has thrown up for the future; and why the newly-formed Featured Artist Coalition has an important role to play in that future. Interviewer: Ajax Scott, founder, Woodshed Media.

MidemNet 2009 video: Conversation with J.Y. Park, JYP Entertainment

J. Y. Park, president & artist, JYP Entertainment, the Korean music mogul and producer of Asias biggest stars - such as Rain & Wonder Girls - explained how to turn artists into major entertainment properties.  Interviewer: Paul Brindley, managing director, Music Ally.

MidemNet 2009 panel: Listen up! Why knowing your fans matters

Understanding who an artist's audience is and how to make the most out of that data is now essential in today's music environment. This panel covered how to get access and collect valuable information on artists fans, as well as how to put it to good use to successfully maximise revenue opportunities. Speakers included, Eric Korman, Ticketmaster; Rob McDermott, manager of Linkin Park; and Cory Ondrejka, SVP, digital strategy, EMI Music. The session was moderated by MIDEM(Net) Blog contributor, Bruce Houghton, of Skyline Music & Hypebot.com.

MIDEM and MidemNet become one

We’re not ones to blow our own trumpet – honest! - but thought you might like to know about a big change due to take place from next January.

For the first time since its creation in 2000, MidemNet will be integrated into MIDEM as a whole. As such, full MidemNet access will for the first time be included in the MIDEM registration fee.

MidemNet will as such run from January 23-27; and MIDEM, January 24-27, 2010. MidemNet’s digital conference programme will extend throughout MIDEM; and on the showfloor, a new “MidemNet Lab” will showcase a selection of 15 of the most innovative and creative digital music companies, chosen by a network of industry thought-leaders.

The new area will also host a “MidemNet Academy”, with a series of digital education workshops covering subjects from “An introduction to digital marketing” to “How to market your artist on Twitter?”

In short, all things digital will be fully integrated within the world’s music market. Just as they should be! More on www.midem.com.