Google Needs To Decide Which Side Of The Music Industry Fence It's On

Yesterday saw an interesting coincidence of stories hit the wires: on the European side of the Atlantic, the BPI announced that it had sent a cease-and-desist notice to Google in regard to links to copyright-infringed music files. Meanwhile, Stateside, the Wall Street Journal reported on (further) rumours that Google was planning to launch a music download store and subscription service to initially run on Android handsets.

A cynic might argue that the music service "leak" was bad news management from Google, aiming to portray itself as a doer of music industry good, not bad. Whether that was intended or not, it raises an important point. Some time or another (and it looks like it’s going to have to be sooner rather than later) Google is going to need to decide whose side it is on. If it's serious about throwing its weight behind becoming a major digital music player, it's going to need to start making concessions to its label partners. And of course it will start seeing more of a business rationale for doing so: How long will it be before ad revenues from keywords alongside P2P links start to look smaller than potential lost Google music revenue? (Remember we’re not talking about cutting the keyword inventory, just ensuring that legitimate links appear in searches for keywords to appear against).

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What EMI's Repositioning Means

On Friday EMI announced some major reshuffling to its org structure and additionally a repositioning of the company as a “comprehensive rights management company serving artists and songwriters worldwide.” Underpinning this is a closer alignment of EMI Recorded Music and EMI Publishing (which may have possible implications on EMI Publishing being sold as a standalone business).

The repositioning is the result of an internal strategic review, so it pays not to pass it off as consultant-speak window dressing for the re-org. Indeed Terra Firma has something of a track record of repivoting the structural focus of EMI.

So what does being a “comprehensive rights management company” mean? In principle it shouldn’t be that much different from what EMI and other labels and publishers already do (i.e., they create revenue for artists and songwriters by exploiting their works across multiple products and formats). Of course this core task is a much more complex one now than it was 10 years ago. As recorded music revenues continue to free fall, the importance of alternative revenue streams with brands, telcos, and device companies has risen exponentially. Add to that the numerous digital music formats, and you’ve got a complex mesh of revenue streams. And that’s without even considering other key revenue streams such as traditional synch and of 360 deals. The days of record labels just being record labels are long gone. 

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Forrester Consumer Product Strategy Podcast Episode 3

Click on the video below to view the latest episode in our podcast series "Find Your Popcorn." In this episode, CPS analyst James McQuivey answers the question "Will consumers ever pay for content again?"

Let us know your thoughts. Do you agree? Do you think consumers will ever pay for content again? Is charging for access to content the answer? Or is the fight against free unwinnable? (The registration process for commenting is now quick and easy.)

Why Ofcom's Code Of Practice Won't Fix The Piracy Problem

Today the UK telecoms regulator Ofcom released its anticipated Code of Practice for ISPs to help combat digital piracy (following hot on the heels of the tough Irish anti-piracy strategy). The Code forms part of the provisions of the Digital Economy Act and is a series of best practices for ISPs to follow rather than a new set of regulations. The intention is that copyright infringement will be seriously dented without need for more formal state intervention (such as the reserve powers of the Secretary of State to cut off repeat offenders’ broadband connections). I will be amazed if any statistically significant decrease in copyright infringement happens because of this Code being followed. Simply advising ISPs when and how to notify subscribers who are infringing copyright is not enough.

But I’m not saying that draconian state intervention is inherently necessary. Indeed, the preferred option is for legislation to establish clear limits and consequences but for consumers to be lured away from the illegal sector by compelling cheap and free alternatives. If ISPs and mobile operators are empowered with truly engaging services that give on-demand access to content on the terms consumers want and with most or all of the cost hidden, then file sharing will meet its match.

File sharing (on network and off network) exists because it fills a needs vacuum. A vacuum which neither iTunes nor Spotify sufficiently fill on their own. Subsidized, unlimited MP3 subscriptions would nip file sharing in the bud. Why would a teenager use BitTorrent when they can get the same music at higher quality and with clean meta data and that they can use however they like, all as part of their parents’ ISP bill?

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Android Music Versus iTunes: When Open Isn’t Quite As Open As It Might Appear

Forget the Football World Cup; summer 2010 is shaping up to be one of the most exciting periods in digital music’s short history. Spotify is preparing to launch in the US (still), Nokia is rolling out multiple new Comes With Music territories, MOG is finding its feet as a premium subscription service and a number of exciting new services are primed for launch.  But just as with the World Cup we’ve already got a decent idea of who the finalists are likely to be: Apple and Google.  Continuing the World Cup analogy a little, Apple is Argentina, the once great force that have lost their way a little but have arguably the best array of talent and look like they may just be about to have the engine purring like a tiger again.  Whereas Google takes the role of Holland: a slick, skillful team who take all before them with their total football but have never won the World Cup. (Football aficionados will have noticed I left out Spain - the 3rd and possibly strongest favourite - but they didn’t quite fit my framework!)

Closed versus open is actually closed versus…er…closed. Google is playing the role of disruptive new entrant and mischievously played upon Apple’s original 1984 marketing, positioning Apple as being the Big Brother now. Google has also played strongly on being open versus Apple’s closed approach. But the bottom line is that Google’s music strategy looks likely to be pretty closed too. The fact that the Android Music Store is designed to work with Android devices means it will be similarly exclusive as the iTunes / iPhone / iPod / iPad ecosystems. The difference is Google is betting on a wide range of partners having a large installed base of customers on its platform so it will ‘feel’ open.

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Ireland Introduces 4 Strikes And You're Out: First Take

Eircom, the Irish incumbent telco, has introduced a ‘four strikes and you're out’ anti-piracy policy, making Ireland the first European country to take such measures, beating even France to the punch. Under the provisions of the policy, the Irish Recorded Music Association (Irma) will supply Eircom with IP addresses of thousands of infringers from which the ISP will select just 50 a week and match them against postal addresses. These 50 will then receive notification letters, a phone call, and potentially a browser pop-up. If they are identified a 3rd time, they will have their connection temporarily cut off, and if they are caught a 4th time, they will lose access for an entire year.

There are a number of interesting issues here:

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Thoughts And Reflections On The Great Escape

I’ve just come back from a day at the UK music event the ‘Great Escape’. Though it was a bit of a flying visit, I had the opportunity to listen to a Q&A with Universal Music Group International’s VP of Digital, Francis Keeling, and to co-judge a panel of new British digital music startups. Here are my highlights.

Universal Music understands the value of product innovation.

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New Podcast Episode: Find Your Popcorn, Monetizing Content In The Digital Age

Click the embedded video below to view our latest Consumer Product Strategy Podcast episode. This is episode two in our 'Find Your Popcorn' series in which analyst Nick Thomas looks at new ways to build revenue around content in the digital age.

This podcast series is part of the buildup to a major research report on the same topic, and we'd love your feedback and thoughts as we develop the thinking. So please feel free to make any comments and suggestions as we progress. Enjoy the podcast!

Forrester Consumer Product Strategy Podcast Series: Find Your Popcorn

Regular readers of the Consumer Product Strategy blog will know that we put a lot of store in the value of product innovation for media companies in the digital age. We’re taking this theme further with our latest initiative, the Forrester CPS podcast ‘Find Your Popcorn’, and in turn experimenting with some of our own research product innovation.

Over the coming month, CPS media analyst Nick Thomas will be recording podcast episodes and posting on the ‘Find Your Popcorn’ theme. This research theme investigates new ways to generate revenue from content in the digital age and the kinds of new product models that can and should be developed. It is essential information for product strategists at media companies and technology companies alike.

Throughout the ‘Find Your Popcorn’ series, our intention is to expose the report writing process to the external marketplace and to give you, the audience, the opportunity to participate in the discussion and debate. So over the coming weeks, we will be experimenting with different ways of using the podcast format and we encourage you to give us feedback both on the content and the deliverable itself.

Forrester clients will additionally get an exclusive full-length video deliverable to accompany the final report.

The first ‘Find Your Popcorn’ episode is already live and can be viewed here.

And if you want to get this and future episodes delivered straight to your iPhone or iPod you can subscribe at iTunes here.

If you prefer you can watch the podcast series directly on YouTube here.

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Nokia Launches Ovi Music in India: First Take

Nokia today announced the launch of the Indian implementation of Comes With Music.  The fact it is called Ovi Music indicates the degree to which this is a highly bespoke implementation of Nokia’s unlimited music offering, specifically tailored for the local market.  Nokia understand the dynamics of emerging markets more than any other global digital music player and they’re embarking on a first or early mover strategy across key emerging markets such as India, Russia and Mexico.  This is Nokia’s 30th unlimited music market.

Nokia have done a lot to address local market dynamics, such as a 90% local language, 4 million track catalogue, pinless activation directly on mobile devices without a PC (due to low PC penetration) and reducing the Ovi client from 60MB to 3MB to address connectivity issues.  The service will also have a new low end music phone (the X2) to drive its launch.

Even with those features though, the majority of the Indian market will not be addressable.  Most mobile phone users don’t have any download capability (either PC or mobile) and rely upon filling up their phones with illegal content from dodgy stalls set up outside mobile phone shops.  (Nokia’s focus on ‘clean meta data’ for Ovi Music in India is an intended differentiation point from these resellers). 

Of course Nokia fully understand these dynamics and they’ve chosen to launch a service with a remit of addressing a smaller, higher spending, more tech savvy segment, leaving their AM radio enabled phones as a means of delivering a music experience to rural areas etc.

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