music business

Rick Rubin’s subscription strategy: Right idea, Wrong price

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The record producer and co-founder of Def Jam has only been “co-head” of Sony’s Columbia Records since May, but he’s already setting about destroying the old business so a new one can be built in its place.

It remains to be seen how effective he will be, but for now Rubin is prepared to say what seasoned executives think, but can’t say out loud. And he spelled out the future of the record label in a lengthy profile in this week’s New York Times:

“Columbia is stuck in the dark ages. I have great confidence that we will have the best record company in the industry, but the reality is, in today’s world, we might have the best dinosaur. Until a new model is agreed upon and rolling, we can be the best at the existing paradigm, but until the paradigm shifts, it’s going to be a declining business. This model is done.”

Rubin advocates a subscription model instead. Not one with a capped number of discrete downloads, but one where music “will come anywhere you’d like … a virtual library accessible from your car, from your cellphone, from your computer, from your television. Anywhere.”

Once that’s accepted, the music business will be much bigger than it is today, he believes.

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‘Fucked’ record companies in ‘cataclysmic’ meltdown – Tim Clark

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As some of the biggest figures in the music business weighed in on the future of music this week, there were very mixed views on its future.

“If Ford’s revenues were down 40 per cent, the shareholders would be revolting,” said Tim Clark, former Island Records MD and co-founder of management company IE Music, whose roster includes Robbie Williams.

The latest CD revenue figures suggest 40 per cent declines in some markets. “Their model is fucked. It is. Physical revenues are going down like nobody’s business and it’s cataclysmic,” Clark told a panel at the London Calling music expo at Earl’s Court.

Clark hears the sound of pigeons are coming home to roost, and outlined a post-major label future that would be a lot more flexible.

“Deals have been struck with ISPs, but I’ve yet to hear of a single penny going back to an artist. Leaving aside the black boxes, is it anybody’s surprise that an artist doesn’t trust the record company?” he asked.

“Record companies deserve to be attacked for many of the things they’ve done,” he added. “There are great A&R people and great marketeers at these companies, but they haven’t been serving artists [or] fans over the years.”

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Rob Lewis on MusicStation

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MusicStation, the service that aims to give unlimited mobile access to music worldwide for a small weekly fee, finally went live today.

The success of the venture, from British start-up Omnifone, will tell us a lot about whether punters are prepared to pay for digital music, rather than scoop it up for free. MusicStation is a Rhapsody-like service customised for mobiles: there are no extra data charges over the £1.99 weekly subscription, which goes on your mobile bill, and “file sharing” is encouraged – at least with other MusicStation users.

Omnifone has signed up the big four labels, made inroads into the indie sector, and has 30 carriers around the world. Today sees Norwegian-based Telenor, with 80 million subscribers, push MusicStation out first.

Founder and CEO Rob Lewis said the aim was simply giving people a service they can’t do legitimately today:

“Customers are forced to do this illegally now. We’re trying to give very easy access that’s intuitive, doesn’t need credit cards or wires, so they can discover and recommend music among themselves,” he said. “And artists get paid.”

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Free music has never looked so cheap

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For the major record labels, yesterday’s deal between EMI and Apple doesn’t herald a new beginning, but the beginning of the end.

From next month, EMI will distribute much of its repertoire without DRM through Apple’s iTunes store. Independent labels have been distributing DRM-free songs for three years, avoiding the lock-ins created by competing hardware manufacturers. But EMI is the first of the “Big Four” majors to recognise that artificially recreating the inconveniences of physical product in a digital form isn’t good business.

Let’s leave aside the many gotchas in the announcement, such as the price increase which takes the cost of an unencumbered song to almost $2 (that’s the UK price converted to US dollars, folks), the absence of the Beatles’ catalogue, and the continuation of DRM as “on by default”.

Let’s also leave aside the mutual panic which brought Apple and EMI together yesterday. EMI is in financial free-fall, it’s unsuccessfully tried to find a buyer for several years, and it’s now so desperate it will try anything. Apple is under regulatory pressure not only to modify its DRM consumer lock-in but, along with EMI and the labels, faces an EU anti-trust probe into its pricing. Both companies jumped before they were pushed.

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Orb turns MySpace into a personal radio station

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Just as you thought the MySpace phenomenon was running out of steam, tomorrow will see the biggest innovation to the site since it launched.

This one doesn’t come from MySpace itself, however, but Orb Networks. Orb already allows you to listen to or view media stored on your home PC (music, playlists, photos or TV channels), at work, or on a mobile via it’s “MyCasting” service. Now it’s added MySpace integration to the list of features. Using the Orb client MySpace users can upload songs to their MySpace page – and stream them.

A drag and drop client makes the operation trivially simple.

Last year, El Reg was the first to notice how MySpace is really a radio set of sorts: you push a button, and out streams music. There’s only four songs per station, and there’s millions of stations – but it’s still radio.

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“The biggest attempt at recording theft ever attempted”

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The husband of the late classical pianist Joyce Hatto has apparently admitted to “doctoring” sound recordings issued on his own record label.

William Barrington-Coupe issued over 100 CDs of his wife, who hadn’t performed in public for 30 years, on his label Concert Artists Recordings. Recently Hatto, who died last year, had been rediscovered to great critical acclaim.

However, sound analysis commissioned by Gramophone magazine revealed very strong evidence that the CDs issued under her name were actually the clumsily-manipulated recordings of other performers.

Audio expert and sound restorer Andrew Rose of Pristine Audio told us last week it was “the biggest attempt at recording theft ever attempted”.

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‘Hoax’ stuns classical music world

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Joyce Hatto

Gramophone magazine has unearthed what one sound recording expert describes as “the biggest attempt at recording theft ever.”

Thanks to the internet, the formerly obscure British classical pianist Joyce Hatto had become a critical favorite shortly before her death last year.

In 2005, the Boston Globe described her as “the greatest living pianist that almost no one has heard of”.

The Guardian‘s music critic Jeremy Nicholas called the recordings “the most extraordinary recordings I have ever heard.”

“Best of all is her musical imagination, which finds original things to say about the most familiar music,” wrote a thrilled Globe critic.

The problem is, experts who have analysed her recordings say, is that they’re not original at all.

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Unlimited mobile music for £1.99 a week

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In what may prove to be the most far-reaching digital music launch since iTunes, Omnifone today took the wraps off its MusicStation service.

The service gives mobile phone users access to the big four labels’ music catalogs on-demand for £1.99 (€2.99) a week, using a player that runs on mid-range feature phones and GPRS or EDGE networks, as well as high-end 3G phones – which Omnifone reckons gives it access to 70 per cent of the world’s phone users. Indie content will follow, it’s expected, as the indies are in the process of setting up their one-stop licensing arm Merlin, announced earlier this month.

As well as signing up the major four labels – UMG, Sony-BMG, Warner Music and EMI – Omnifone has inked deals with 23 network operators across the globe for MusicStation. The first of these rollouts – Telenor in Scandinavia and Vodafone’s Vodacom in South Africa – are confirmed for launch in Q2, with many of the others following in Q3.

In addition to the mobile-only service, a PC and Mac version of the MusicStation client will be available as part of a premium service costing £2.99 (€3.99) a week. With each plan, there will be no data charges.

Users will be able to receive share playlists, create personalized charts, and receive information about artists, concerts and promotions in the MusicStation player.

Omnifone, then offers a full-on challenge not only to Apple’s iTunes, but quite probably to MySpace too.

“Selling music is a legacy business,” CEO Rob Lewis told us. Lewis believes per-unit pricing is dead and the winners will be companies who offer the best subscription services.

He also believes MusicStation’s willingness to partner with carriers casts the Apple’s iPhone announce in a new light. Cingular agreed to Apple’s terms and disabled over-the-air music downloads to the iPhone – granting Apple exclusivity over acquiring content for the device, which must either be ripped from a CD or else be purchased through Apple’s own iTunes store. Verizon had balked at similar terms.

“iPhone is not good for operators,” Lewis said. “MusicStation is an all you can eat iTunes you can access from the bus, or anywhere.”

Partnering with the operators also gives Omnifone a global roll-out that PC-based companies can only envy, another contrast with Apple’s country-by-country exclusive world tour. Apple launched the US version of the iTunes store in spring 2003, with the UK following in summer of 2004, and Japan more than two years after the original launch. Lewis notes that in each market, 50 per cent of the catalog is local, something ignored by rivals.

So you can see why networks are keen on the start-up: all the music is sent over the networks directly to the phone. But what does it do for us?

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An interview with Keith Harris

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Keith Harris

Keith Harris was general manager of Motown, has managed Stevie Wonder for 30 years, is currently director of performer affairs at collecting society the PPL and chairman of the MusicTank network at the University of Westminster.

Were you disappointed there wasn’t more public support for extending copyright on sound recordings? When the issue was raised, it was all about Cliff Richard, and no one wants Sir Cliff to get richer…

In my opinion the record industry has absolutely made a rod for its own back. We’ve not really endeared ourselves to the public over the years.

And journalists have found it easy pickings in terms of creating a story about the big bad record company out to get as much money as possible. And you know, a lot of that is because of the way the industry has operated.

The more you get artists who are dissatisfied – and in many cases they’re entitled to be, given the way deals have worked out financially – the more that reinforces that view. But it’s lazy journalism a lot of the time because if you just knock the record company and support the artist, you’re always going to win.

Where the industry’s at fault is that we haven’t really taken any steps to explain the issues.

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Universal exec – say goodbye to the old record co.

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An RIAA board member and executive from the world’s biggest record company has said the old way of doing business has gone forever now.

Larry Kenswil, president of Universal Music Group’s eLabs, might not speak for all of Universal Music, but he does speak for an important part of it. Kenswil today said labels could no longer “count units” but had to license rights.

The eLabs chief’s comments caused a few jaws to drop here in Cannes, but it’s part of a sea change in strategy at UMG. The DRM gurus have departed – Barney Wragg left Universal last summer – and Universal is striking deals with anyryone who can hold a pen and scrawl an X. Towards the end of 2006, MySpace, YouTube and Microsoft all agreed to pay Universal for rights to their catalog – material crucial to the success of their products or services.

“We can’t think of it as counting unit sales anymore,” said Kenswil. “We have to license … and think like the publishers.”

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