A digital music service launched by Sony could never be said to have flown under the radar exactly, but with Spotify and Apple’s iCloud hogging the headlines in 2011, perhaps more attention should have been paid to Sony’s launch of Music Unlimited. After all, it combines the key features of both: unlimited streams and scan-and-match cloud respectively.
At Midem this afternoon, Sony Entertainment Network held a roundtable and Q&A event to talk about Music Unlimited. President Tim Schaaff took the stage alongside Sony Music’s president of global business Dennis Kooker, Gracenote’s president Stephen White and Omnifone’s legal counsel Paul Jones – Omnifone provides the platform that Music Unlimited runs on, with Gracenote’s technology also tied in.
Schaaff kicked off. “We’re now operating live in 13 territories,” he said. “We’ve almost tripled the catalogue size: we’ve now got access to a global catalogue of almost 15m tracks.” And Schaaff pointed out that Music Unlimited is available on more than a dozen different Sony product categories, as well as non-Sony Android handsets and tablets, with iOS support on the way soon.
He talked PlayStation, which has more than 90m registered accounts around the world, providing a base for Music Unlimited to be marketed to. Sony is predicting that it will have another 300m connected devices in people’s homes and/or hands in the next three years, according to Schaaff.
How much of a priority is Music Unlimited within the Sony corporation as a whole? “It’s a big bet that we’re placing that really goes to the heart of one of the fundamental considerations facing the consumer electronics industry,” he said. “How will the user experience be adapted in these tradiitonal form factors to meet the needs of consumers in this internet age?.. It’s a very big deal for the company.”
Over to Sony Music’s new digital boss Dennis Kooker, who gave the record label’s views on this kind of service.
“Digital is very very important to us, and growing the digital business. It’s an incredibly important part not only of our revenue efforts but also our marketing efforts,” he said.
“Services like Music Unlimited have a lot of the discovery element to them… In developing artists it’s really about getting them discovered, and getting them the opportunities to get in front of consumers in every way possible. Certainly services like Music Unlimited are very good at allowing consumers to take the risk to try something new, and from that standpoint are very critical in the artist development process.”
Kooker said that it’s still too difficult for consumers to experience their music across all their devices. “The computer has been the hub, and moving away from that hub to the devices that we use every day is only going to increase the opportunity for music,” he said.
Kooker also said that Sony Music is very focused on helping its catalogue artists make the most of the new breed of digital services to find new, younger audiences.
“We’re at the beginning stages. We’re all learning a lot so we need to be able to be flexible, and keep learning,’ he said. “There are a lot of ways we can present better to the consumer both from an editorial standpoint, and from the way we send what is an enormous amount of data to the services… As we learn more, the adoption will move from small numbers and the early adopters, to the masses.”
Gracenote’s White talked next about his company’s work with Sony – its parent company – to beef up the metadata elements to Music Unlimited, and thus improve the music discovery process on the service.
He was asked what’s coming next, in terms of technology from Gracenote. “We’re starting to see true convergence actually happen,” he said. “Connectivity coming meaningfully to the automotive world… and then connectivity in the living room. We’re starting to see true connectivity everywhere, and you’ll be able to have these pervasive experiences to leverage content in the cloud, and bring that wherever you are.”
He also talked about improvements in personalisation for music services. “We’re starting to be able to build these profiles of users and then apply those in smart ways, all in an attempt to cut through these large amounts of content” and provide better recommendations.
Finally, Omnifone’s Jones spoke. “The download business is obviously a huge business, illegitimate downloading is still a very big problem, and music subscription services have been around for a number of years now,” he said.
“They are becoming an increasingly compelling alternative to downloading… The accelerating growth we’re currently experiencing with subscription services will continue to accelerate, and it will not be long until there are significant numbers of people who might have gone down the download route who will be subscribing to subscription services.”
Schaaff was asked if cloud music services will go mainstream, and how soon? “Cloud’s kind of a marketing word that we use to make everything sound smarter. The reality is that cloud just means internet,” he said. “It’s extremely mainstream.”
However, Schaaff said work needs to be done to make the new breed of digital music services simpler to use. “For most consumers it’s still too hard, too complicated, too many steps involved for them to really participate in this new digital entertainment world,” he said.
Back to Kooker, who agreed.
“It still is very very difficult for most users – it’s just too hard work to be able to integrate all of your devices with multiple services, with all of the things you own and created yourself, and to make it simple to use. Because of all of that, we’re still at the beginning.”
He also addressed – briefly – the debate around whether streaming music services are cannibalising existing digital and physical music sales. “To us, this is additive. This is not substitutional. It’s about making it easier for consumers, and maing them want to be more involevd with media and content.”
Omnifone’s Jones talked about some of the licensing challenges involved in this kind of service. Is it easier than it was a year ago to get a licence? “It’s easier if you don’t want to be too innovative,” he said, before rowing back a little.
“I don’t want to give the content owners the reputation for being difficult. The content owners have one asset, and that’s their content… We have some very robust discussion with them, we sometimes scream and shout at one another, but we never fail to close a deal.”
Kooker was asked if he could expand on that additive versus substitutional point: whether streaming services are cannibalising downloads.
“We are constantly watching our business very closely and looking at how different channels are affecting and impacting each other,” he said.
“At this point we don’t see any evidence that any one area is significantly cannibalistic to any other. Is there substitution? There is always going to be some as people move around and have choice. At this point there is no evidence that any one model is seriously danaging any other model.”
“Ultimately, what we see is that our business is growing in the areas where subscription services are the predominant player in the market, and as a result we’re very convinced that consumers ultimately want to experience music in different ways. Sometimes they want to own, other times they want to experience and listen. As a result of that consumer behaviour, we are looking at growing the business overall.”
Kooker also said the labels are having to focus on an “education process” for managers and artists about the benefits of these new streaming/cloud models, just as they are for consumers. “If these models do prove to be beneficial to the business overall, we have to explain how and why.”
Shaaf chimed in at this point on how the music industry has changed, in terms of rightsholder attitudes towards new services.
“Talking with the labels, what I observe that’s very encouraging is that we’re not talking about whether we should launch these services – the labels’ interest is not should we do it or should we not do it? Their interest is how can it be successful? They don’t want to see us fail,” he said.
“That dynamic is a good sign that the industry has crossed the line and is reorienting itself to a growth mindset. Five years ago, it was more of a protective and holding-on-to-what-we-have mindset.”
Schaaff was asked about user numbers for Music Unlimited, and he reiterated Sony’s recent milestone: “More than a million active users, and that’s growing.”
Meanwhile, Kooker said that these are exciting times for the music industry, especially with the global nature of the new breed of digital music services. “It’s going to be much easier for us to sell music from all countries to all countries, which has not always been the way our business has worked in the past,” he said.