Exclusive series – “The Digital Decade” – part six: 2005
In the fifth part of our series looking back at the Decade of Digital (read part one on 2000, part two on 2001, part three on 2002, part four on 2003 and part five on 2004 published earlier this week) we examine 2005. 
Sign up for a free two-week trial to Music Ally and get access to all our past reports and bulletins plus a suite of research tools including market data, a deal tracker and an analyst forecast tracker. In the most recent PDF Report you can find a rundown of 2009’s big events plus an extensive timeline detailing the key digital music happenings of the past ten years.
And continue reading after the jump to take a look back at the year 2005, as we reported it at the time.
13 January 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050113/MusicAlly_050113.pdf
More than just individual tracks (which p2p fans have often claimed are downloaded to “sample” bits of an album before buying it), BitTorrent users are packaging up entire albums, and often at very high quality audio bitrates. Box sets are being traded. Collections of albums and EPs are banded together and swapped; so-called “discographies” featuring a band’s entire recorded output; even compilations containing every single track in a given week’s UK Top 40, available with one click
The iPod Shuffle deviates from the iPod we’ve come to know and love in several fundamental ways. First of all, it’s not a luxury item. In common with the other major Apple product released this week (the Mac Mini), the iPod Shuffle is directed at the bottom end of the market – the first time in recent memory that Apple has pulled away from its ‘BMW of computing’ image to reach out to the average consumer.
Much has been made of the news that legal downloads have outsold physical singles sales for the first time in the UK. But what’s the reality behind the spin? According to figures released by the Official Charts Company, the decline of the physical singles market is represented by a 14% drop in sales since 2003; meanwhile 312,000 licensed downloads were sold in the last week of 2004, compared to 282,000 physical CDs during the same period. Peter Jamieson of the BPI described the close of 2004 as an “important milestone in the growth of download sales and a sign of things to come.” However, it’s important to note that the digital downloads covered by the statistic represent all digital sales, including back catalogue material, not just Top 40 tracks. And back catalogue makes up for a good deal of the tracks purchased each week on digital services, whereas for the most part physical singles sales are of current or newly-released material. Our sources suggest that the average number one in the digital chart might sell from around 2,500 copies – whereas a physical number one might sell 25,000.
27 January 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050127/MusicAlly_050127.pdf
Online entertainment company Yahoo is to open a huge new office in Los Angeles as part of its continuing strategy to strengthen its position as a media company. The new Yahoo Media Group will be headed up by Lloyd Braun, former chairman of ABC TV, who will oversee the company’s relationship with the film, news, sports, games and music industries. Yahoo’s ambitions are not small. The lease on the new offices for the media group was reported to be USD $100 million last year – one of the largest commercial real estate deals in California. And Yahoo can afford it too, having posted its best ever quarter last week. Quarterly revenue topped a billion dollars for the first time, with $785 million in income. Over 2004 Yahoo announced profits of $840 million on sales of $3.575 billion. As a result Merrill Lynch has upgraded the company to ‘buy’ from ‘neutral’ and has simultaneously lowered estimates on one of Yahoo’s perceived rivals Google.
Vodafone has announced that 600,000 full audio tracks have been downloaded on its new 3G music service since the company launched in thirteen markets in mid November. The download figures are the first from a European operator even though there have been around ten services available in Europe prior to Vodafone’s launch, some of which have been running for over a year.
10 February 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050210/MusicAlly_050210.pdf
Microsoft’s subscription portability technology, codenamed Janus, has hit primetime in the UK with the launch of Napster To Go. The GBP £15 per month service relies on the recent Windows Media version 10 digital rights management system, allowing customers to move songs onto their portable player as long as they keep paying the membership fee.
As we reported in last week’s Bulletin, MP3.com founder Michael Robertson is back with a brand new online music venture which once again is built on unprotected MP3s. His new music store Mp3Tunes went live yesterday and has already been suffering under the weight of all the interest.
Notably the Recording Industry Association of America (RIAA), perhaps trying to follow up its infamous “suing a 12 year old girl” headline-grabber, has been accused of trying to take legal action against a dead woman. According to reports, lawyers representing the major labels wrote a letter stating that now deceased 83-year old grandmother Gertrude Walton had been sharing hundreds of copyrighted tracks via the screen name “smittenedkitten”. Walton’s daughter Robin Chianumba, who claims that her dear old mum didn’t even “know how to turn on a computer”, says she even sent lawyers a copy of Mrs. Walton’s death certificate.
Jamster.com follows the European model which lures customers into signing up for a ringtone subscription and then bills users on a regular basis. Subscription services on mobile are not necessarily a con – they can make a lot of sense – but only if the pricing is transparent and the user can easily unsubscribe. According to a number of Jamster customers this is not necessarily the case with one internet user complaining of being “Billed 9 seperate (sic) times for what was supposedly 1.99 a week per plan.” Meanwhile, over here, rogue subscription practitioners will begin to feel the bite from mobile operators who have apparently had enough with consumers phoning mobile helplines to gripe about these services. The UK industry announced a (second) set of guidelines back in December designed specifically to clamp down on unscrupulous subscription providers and according to Vodafone UK head of commercial partnerships Jeremy Flynn, these have come into force in the last couple of weeks. Under the guidelines, ringtone services must have no minimum subscription period. A reminder should be sent to subscribers every month pointing out they are paying and informing them how to stop. Every time a subscriber has spent GBP £20 the same reminder should be sent.
The iPod Mini’s colours have been made slightly more vibrant and there’s a new peripheral for the iPod photo allowing pictures to be loaded into it directly from a camera. But potentially the most powerful new factor is the way that Apple has amended pricing and capacity of its range of players so that there are now seven flavours of iPod to suit every budget from USD $99 to USD $449 in fifty dollar increments. To manage this, Apple has dropped the price of its four gigabyte iPod Mini by fifty dollars to USD $149 and dropped the price of the top end iPod Photo by USD $150 to $449. These manoeuvrings mean that there’s little incentive for anyone considering buying a digital music player to invest in anything other than an iPod; though still perceived as a luxury product, the iPod can outprice most of its rivals.
10 March 05
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050310/MusicAlly_050310.pdf
A month ago we brought you the news of a policy decision from Universal Music Group (UMG) to start charging for all kinds of music video use online and on mobile. Now UMG has been implementing the strategy by sending out cease and desist letters to sites offering streaming videos for free in return for advertising revenues. These are believed to have included Yahoo (which offers a huge range of on demand videos, all sponsored by Coca Cola), Rap News Direct and CMT.com, a division of MTV. Indeed, MTV is a particularly apt choice since UMG’s move clearly harks back to old disagreements between MTV and the labels, which accused MTV of building a business on music content without having to pay for it.
Vodafone has announced that one million songs have been downloaded over its 3G mobile music service since the company launched downloads in seven markets in November 2004. The million announcement came five weeks after Vodafone revealed that 600,000 tracks had been downloaded at the end of January, so we now have some idea of size and momentum. But is a million good?
21 April 05
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050421/MusicAlly_050421.pdf
The first ever combined physical and download chart has launched amidst much media fanfare and, sadly, considerable amounts of industry squabbling. Indie label trade body AIM awaits the result of its referral of the new chart to the UK’s Office of Fair Trading, claiming that the chart unfairly prejudices the interests of its independent label members.
UBC will partner with a digital radio set manufacturer (believed to be Samsung) to produce a new range of devices with a click to buy button, specifically for music downloads only.
Gartner has predicted that the number of mobile users worldwide will double from 1.5 billion people to more than 3 billion people by 2010.
5 May 05
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050505/MusicAlly_050505.pdf
Amidst much fanfare, Real’s Rhapsody music service was relaunched at the end of last month – and though Rhapsody is still only available to US customers, we have been able to test the new version 3.0 and can share with you its ups and downs. The most significant addition is the Napster-esque “Rhapsody To Go” element allowing songs to be transferred to compatible portable players for USD $15 per month, five dollars per month more than the regular all-you-can-eat streaming Rhapsody. Rhapsody 3.0 has borrowed heavily from the Napster hybrid model, unfortunately encountering some of its pitfalls along the way.
19 May 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050519/MusicAlly_050519.pdf
The new Yahoo Music Unlimited store is powered by MusicNet – an ironic development given that Yahoo was once one of the main marketing partners for Pressplay, MusicNe
Yahoo’s big contribution is low pricing. In what will come as something of a blow to the other subscription music players, Yahoo is charging USD $6.99 a month, or as little as $4.99 per month when paid as a year upfront. At the latter pricing level, Yahoo is three times cheaper than Napster or Rhapsody for what is fundamentally a similar technology; the individual downloads are also cheaper, at 79 cents each.
But now that the technology has been around few months (Napster To Go stepped out from behind the curtains in February), we have to confess that Janus isn’t living up to the hype. In fact, worse than that – our experience has led us to believe it’s a lame technology due some revision before it’s ready for primetime.
02 June 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050602/MusicAlly_050602.pdf
TuneTribe is the brainchild of John Strickland. Strickland is a serial entrepreneur who has been involved with eight different startups, three of which have been sold, enabling him to put some of his own money behind TuneTribe. The company has been lent some seed finance (and music industry credibility) from an old schoolfriend of Strickland’s Groove Armada’s Tom Findlay.
Weblisten shut by court: the site was taken to the court by Spanish labels but maintained that since it was involved in “communicating works to the public” rather than “distribution” that it did not need to seek direct label licences. The service paid money into escrow for the labels in the absence of any formal agreement. But just yesterday the site was finally forced to close by the Spanish courts with the company’s owners now facing a possible prison sentence, though it would likely be suspended.
16 June 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050616/MusicAlly_050616.pdf
Earlier this month, internet monitoring agency Web Sheriff issued a press release stating that Pirate Bay had been shut down “in the immediate aftermath of a high profile dispute with the UK’s Web Sheriff”. But within less than 24 hours, The Pirate Bay was back online, claiming that the disappearance was the result of an expected server move. Childish though it undoubtedly is, TPB’s legal threats page – which reprints the ceaseand- desist letters of copyright holders along with the site’s acerbic responses, is hilarious and well worth a visit. The site asks Web Sheriff for “a shiny star and a sixshooter” and tells rocker Billy Corgan’s representatives that “The DMCA is a USspecific legislation and TBP is hosted in the land of Vikings, reindeers, Aurora Borealis and cute blonde girls.”
The next piece in the legal peer to peer puzzle is beginning to fall into place – as Snocap, the content registry founded by Napster inventor Shawn Fanning (see issue 101, 4 November 2004) – opens its books to independent copyright owners for the first time. However, it’s not quite a case of a label visiting the site, entering a few details and finding its material suddenly cleared for sale or blocked completely. Instead, at least for the time being, the process relies on the more old-fashioned technologies of pen, paper and postal mail.
30 June 05
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050630/MusicAlly_050630.pdf
Geeks investigating the code have found an “iPod Phone Prefs” panel which allows users to specify how much space on their phone is dedicated to music transferred across from iTunes. Since rumoured images of a Motorola iTunes phone are doing the rounds (US operator Cingular may be the first to market), it seems the iPod / mobile crossover may not be too far away.
12 July 05
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050714/MusicAlly_050714.pdf
HMV succeeded in assembling an impressive turnout of nearly 200 representatives from UK labels to a preview of its HMV Digital service this week
UK media group UBC Media is hoping to blur the boundaries between broadcast and delivery of music when it kicks off a trial of music downloads over DAB (digital audio broadcasting) later this year
Third-generation high speed mobile network 3 gave its audio download service only the quietest of launches in June, perhaps nervous of raising hopes on what is still a nascent technology. But the company boasted in February that over ten million videos had been downloaded by its customers. So how do the music-only audio downloads compare? Tracks can only be downloaded through the phone’s music player itself and not from the music section of the 3 portal that we were browsing on the phone. This is an area of confusion that should be made more explicit on the 3 site – though after half an hour of fiddling we figured it out and were able to buy a few songs (£1.50 per full length track saved to the phone.)
29 July 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050728/MusicAlly_050728.pdf
A message of hope for the music industry came from an unusual source – music pirates. Filesharers who are buying fewer CDs as a result of piracy are in fact spending almost four-and-a-half times more on legal digital music (including downloads and subscriptions but not ringtones) than average music fans – GBP £5.52 per month compared to an overall average of GBP £1.27.
11 Aug 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050811/MusicAlly_050811.pdf
The IFPI claims that by mid-2005 record companies have been reporting digital (ie online and mobile) music as representing 4-5% of overall revenues (up from 1.5% in 2004). This follows the announcement from Warner Music earlier in the week that digital accounted for 6% of the company turnover in the last quarter
iTunes Japan has sold a million songs sold in four days, making iTunes Japan’s number one digital music store in less than a week – and that’s without any music from Sony Music Entertainment, the Japanese label which was not included in the deal when Sony and BMG merged in 2004.
25 Aug 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050825/MusicAlly_050825.pdf
Playlouder MSP has finally hit the jackpot and sealed a deal with a major label in the guise of Sony BMG and for once it really is fair enough to classify the deal as groundbreaking. The licence is the first major label filesharing deal outside the
8 Sep 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=050908/MusicAlly_050908.pdf
The UK’s music download landscape changed in a big way this week, with both HMV and Virgin launching new online stores. Besides the almost-simultaneous launch dates (Virgin on Friday, HMV the following Monday) the rivals have still more in common: both are driven by MusicNet’s backend, both companies had previously operated online stores but perceived that the time was right for a relaunch, and both are offering subscription services as well as track-by-track downloads and outright purchase. All music is in the protected Windows Media Audio (WMA) format.
An Australian court has found the Sharman Networks’ owned Kazaa service guilty of facilitating copyright infringement.
For the time being at least it seems that one of the most famous MP3 player brands is no more. As we mentioned in last week’s bulletin, Tokyo based D&M Holdings (which also owns the Denon, Marantz, and ReplayTV brands) has announced that it will cease production of the Rio players by the end of this month.
6 Oct 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=051006/MusicAlly_051006.pdf
The IFPI has reported official digital music sales statistics for the first time, and the news is encouraging with digital nearly making up for the physical sales decline. Digital music sales for the first half of 2005 amounted to USD $790 million, up from $220 million in the first half of 2004 and representing the equivalent of 6% of total record industry sales.
3 November 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=051103/MusicAlly_051103.pdf
Way back in issue 98 (23 September 2004), we reported that the band REM had launched an online streaming promotion of its new album in association with social networking site Myspace. Around the same time, MusicAlly heard tell from some contacts in Los Angeles that Myspace was spreading like wildfire amongst young indie kids and the little-known bands they like to follow.
17 Nov 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=051117/MusicAlly_051117.pdf
Sony BMG to re-release 52 titles without protection: as the record industry continues to hunt for the holy grail of CD copy prevention, Sony BMG has been forced to apologise and recall millions of First4Internet-protected CDs following a highly embarrassing “virus” controversy.
15 Dec 2005
http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=051215/MusicAlly_051215.pd
MTV has announced its rather belated entrance into the US digital retail market with a new download and subscription service called Urge.
Real’s US-only subscription service Rhapsody is now available through a web browser meaning that its subscription and download offering is no longer confined to the Windows PC world.
Browse past reports from across the decade
Sign up for a free two-week trial to Music Ally and get access to all our past reports and bulletins plus a suite of research tools including market data, a deal tracker and an analyst forecast tracker. In the most recent PDF Report you can find a rundown of 2009’s big events plus an extensive timeline detailing the key digital music happenings of the
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