Music Ally

In the eight 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, part five on 2004, part six on 2005 and part seven on 2006) we examine 2007.

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 2007, as we reported it at the time.

January 11 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070111/MusicAlly_070111.pdf

Kazaa / Skype founders keen to prove that they’re merchants, not thieves. Janus Friis describes himself as a “disruptive entrepreneur” – and after founding Kazaa and Skype with his business partner Niklas Zennstrom, it’s not hard to see why. Without ever being truly pioneering, the pair took peer to peer technology and cleverly used it first to disrupt the music industry and then the telephony business. Now it’s TV’s turn. The Venice Project is a broadband TV service, much like MTV’s Overdrive, but with a visual pizazz

When Virgin Digital was launched in 2004, Sir Richard Branson was quoted in the accompanying press release as saying, “We’re going to redefine the way that our customers relate to their music – we’re going to take digital music into the stratosphere.” That stratosphere is now looking a decidedly unpalatable place with the news that Virgin has shut down the US version of the service. Now the US site redirects users to Napster who have bought up Virgin Digital’s user list.

January 25 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070125/MusicAlly_070125.pdf

Last week Music Ally was the first to break the news of the sackings and shenanigans at the ad-supported music service Spiralfrog. This week we exclusively reveal some of the fascinating details behind the story.

The campaign to force Apple to open up to interoperability has moved forward in Norway following the decision of the country’s consumer ombudsman Bjørn Erik Thon to issue the company with an ultimatum.

Steve Jobs writes open letter on DRM: So Steve Jobs has said that DRM is bad. Good on him, and impeccable timing as ever. But the statementreleased on the Apple website on Tuesday evening is almost as revealing in whatitleaves out as whatitseeks to address. Steve Jobs posted the open letteron Tuesday under the heading ‘Thoughts on Music’ on Apple’s website as a means of responding publicly to criticism levelled againstthe company, primarily by EU countries, who feltthatthe failure to make the iTunes DRM interoperable was illegal. He essentially claims that the requirement to use DRM to protect music on iTunes was forced on him by majorlabels as a means of protecting theircontent,

05 April 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070405/MusicAlly_070405.pdf

US publishers left with just $2.5m from Kazaa: In October last year Kazaa reached a settlement with music publishers in the US to follow the earlier deals with major labels and movie studios. The terms of that settlement are now out, leaving the music publishing and writer community with a guaranteed sum of just $2.5m. So Music Ally considers if this is really a good deal for publishers?

EMI has finally bitten the bullet and become the first major label to release a substantial amount of material digitally without DRM. But while EMI is publicly lauded, behind the scenes there is consternation from the other majors

Apple introduces ‘Complete My Album’ for iTunes: It’s actually quite a big deal, even if it is somewhat dwarfed by their next move. Still, the ability for users to buy albums without having to pay twice for individual tracks they have already downloaded from iTunes is nice and is the kind of thing that’s needed to help keep relevant the idea of a digital album.

Apple could be forgiven that the European Commission has got it in for them: the day after Steve Jobs announces his DRM free deal, the EC wades in with another investigation into iTunes.

Twitter is the talk of the town right now and a perfect illustration of how web fads come and go quicker than you can say “hula-hoop”. It’s a micro blogging service allowing ultra-brief 140 character posts which friends can subscribe to receive; a cross between SMS, instant message and train of thought communication. All the rage at SXSW it’s already featured in the Wall Street Journal and a week later been made into a load of widgets, including one for iTunes, and subsequently derided by the all too quickly-bored web community.

19 April 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070419/MusicAlly_070419.pdf

100 million iPod sales: Apple racked up its 100 millionth iPod sale over the weekend. It’s taken just five and a half years to reach the milestone, and Apple says there are now more than 4,000 iPod accessories available, while “iPod connectivity” is now offered in more than 70% of 2007-model US cars.

Seven years after Sony UK last offered unsigned bands the chance to submit their music to A&R execs over the net, the record label group has banned unsolicited CDs altogether in favour of a blog-based approach.

03 May 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070503/MusicAlly_070503.pdf

Warner settles with Bertelsmann over (bad) Napster: After years of legal wranglings, Warner finally receives a USD $110m payout from Bertelsmann for the latter’s company investment in the old illegal Napster. Further proof of the healthy business that can be had from suing rather than licensing online music companies.

BBC iPlayer to go ahead: The BBC Trust gives the green light to the UK public broadcaster’s iPlayer which will allow viewers to watch shows on their computer on demand seven days after the programmes have been broadcast and keep those shows for up to 30 days.

17 May 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070517/MusicAlly_070517.pdf

Pandora blocks service outside US: Company founder Tim Westergren sends an email to registered non US listeners, stating “Other than in the UK, we have not yet been able to make significant progress in our efforts to obtain a sufficient number of international licences at terms that would enable to run a viable business.” Pandora will now check a listener’s country of origin via its IP address.

Amazon finally announces its digital store: it will, as expected, only sell songs in unrestricted MP3 format. EMI is already onboard, as are over 12,000 independent labels.

14 June 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070614/MusicAlly_070614.pdf

Apple opens up iPhone to Web 2.0 developers: Steve Jobs announces that developers will be able to create Web 2.0 applications for the iPhone. This potentially opens up the doors to everything from Last.fm to MySpace, MOG and Omnifone’s Music Station.

27 June 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070628/MusicAlly_070628.pdf

Sony Connect to get disconnected: Sony is reportedly planning to wind down its Sony Connect service in the next two months, axeing the music and video services, and reassigning the engineering team to support Sony’s PlayStation division. More than 20 jobs will be phased out as a result of the closure. Connect endured a troubled lifetime, with criticisms of its usability.

iMeem: Pitching itself as a community for creative tastemakers, US-based social network imeem is proving to be something of a dark horse – building a user-base of 16m active users, as well as the obligatory major label lawsuit from Warner Music Group; all without any of the headlines of, say, a Facebook.

July 12 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070712/MusicAlly_070712.pdf

2007 is the year of the ISP. Both the IFPI and BPI have made it clear that getting the ISPs to take more responsibility for the file sharing on their networks is a top priority. Now a court in Belgium has provided some much needed legal ammunition to help to bring the ISPs to the negotiating table. Last week’s ruling that the Belgian internet service provider Scarlet (formerly Tiscali) must implement a filtering technology to help to prevent file sharing via its network has been hailed by music rightsowners as a landmark legal judgment. “This is a decision that we hope will set the mould for government policy and for courts in other countries in Europe and around the world,” was IFPI Chairman and CEO John Kennedy’s reaction. The decision itself was based on

Apple sold 525,000 iPhones in opening weekend: the figure represents a huge success for Apple – both in terms of consumer demand for its first handset, and the logistics of getting that many phones into stores to be sold in its first weekend. However, some iPhones have since been sold at a loss on eBay; according to one probably quite bored analyst, the average profit was just $54.43

July 26 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070726/MusicAlly_070726.pdf

Last week’s UK Copyright Tribunal decision set a clear and decisive rate for online music which will have a huge impact for all companies connected with music; but what has also emerged is that iTunes, has revealed ambitions to launch an ad-supported music service.

Best Buy ditches Napster for Rhapsody: US retailer Best Buy ends its two-year strategic partnership with Napster and signs a new deal with RealNetworks to create a Best Buy-branded version of Rhapsody. Interestingly, Best Buy will continue to sell gift cards for Rhapsody rivals iTunes and eMusic in-store, but has whipped its Napster gift cards off the shelves. Miaaow. More on Napster’s fortunes on page 5.

Zune hits its magic million mark: Microsoft’s official earnings call confirms the company has already sold 1.2 million units of its personal media player. Small beer in the context of the company’s $50bn of annual revenue (and the $1.9bn loss posted by its entertainment and devices division thanks to Xbox 360 technical warranty problems), but

August 09 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070809/MusicAlly_070809.pdf

EMI shareholders accept buyout offer from Terra Firma: EMI Group announced that its shareholders have approved a $4.8 billion buyout offer from private equity group Terra Firma. Terra Firma plans to “build on EMI’s current position as one of the world’s leading music companies and accelerate the development of its digital and online strategy”. Apple passes the 3bn song downloads mark on iTunes: Apple’s iTunes has sold more than 3 billion songs and reports a catalogue of more than five million songs, 550 TV shows and 500 movies. Apple has used the announcement to trumpet again its status as the third largest music retailer in the US, having overtaken Amazon and Target according to the NPD Group.

SpiralFrog finally launches in beta, and plans mobile offering: After a quiet few months, adsupported music service SpiralFrog has finally launched a beta version, allowing users to get hands on with the site. The company says it’s now planning to launch commercially by the end of this year, with a catalogue of 700,000 songs.

Value recognition UK: the issue of just what some kind of value recognition scheme might look like is being taken increasingly seriously by the music industry including some very senior representatives from the major labels. The issue is a frequent topic of conversation at various industry events and a number of majors are now involved in the discussions which are centering on just what impact any scheme to compensate for file sharing might have. Music Ally understands that a consultancy report has now been commissioned and this is likely to play an important role in shaping future strategy on the topic. “What was once unthinkable is now becoming more a question of how is it going to be work,” claims music manager Pete Jenner, long time proponent of value recognition.

23 August 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070823/MusicAlly_070823.pdf

UMG to sell thousands of DRM-free tracks… but not through iTunes: Universal Music Group announced a major increase in its trials of DRM-free digital music. The label plans to start offering thousands of its albums and tracks DRM-free through several music services, except iTunes

Rhapsody to sell DRM-free UMG tracks for same price as protected files: RealNetworks has provided details on its plans for DRM-free tracks from Universal Music Group, which go on sale from 21st August. The tracks will be 256kbps MP3 files, and will cost the same as protected tracks – 89 cents for Rhapsody subscribers, and 99 cents for non-subscribers.

MTV shuts down Urge, teams up with Rhapsody / Verizon: MTV is closing its Urge online music service, to merge with RealNetworks’ Rhapsody service. The two have also brought US ISP and mobile company Verizon on board.

06 September 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=070906/MusicAlly_070906.pdf

The star of the show was the iPod Touch, a new version of the iPod based on the touchscreen capabilities of the iPhone. But, as such, there was nothing that new about the device. The Touch comes with 8Gbs or 16Gbs, has built-in wi-fi, a Safari browser, Google and Yahoo Search and YouTube buttons and a 3.5 inch screen (all like the iPhone). Basically, it’s an iPhone but without the phone capabilities, the camera, Google Maps and the notes function.

04 October 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=071004/MusicAlly_071004.pdf

Amazon launches DRM-free MP3 store with variable pricing: Amazon launched its AmazonMP3 music downloads store, selling DRMfree MP3 files from EMI, Universal Music Group artists and indies. Top 100 tracks are selling for $0.89, while others are priced at $0.99. Albums are priced between $5.99 and $9.99.

Radiohead let fans set digital price for new In Rainbows album: The band have officially announced the new ‘In Rainbows’ album, which they’re self-releasing in ten days time.

18 October 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=071018/MusicAlly_071018.pdf

Apple cuts iTunes Plus pricing: DRM free is no longer more expensive – in the US at least. Apple has now formally announced that it’s dropping the price of all its iTunes Plus DRM-free tracks to $0.99 – the same price as the DRM versions. iTunes is clearly

UMG planning “Total Music” service: The service is quite radical, providing an unlimited music streaming service to device manufacturers for $5 a month which could then be bundled into phones or wireless players. Sony BMG has also signed up as a potential partner. However the Total Music concept is restricted to the US right now

HMV Unlimited shuts its doors: In fact HMV’s closure happened a while ago, but nobody noticed until Wednesday when we reported on the latest music subscription service to go tits up. A revised streaming service will replace the old model sometime soon, although no official word yet from the company.

Labels get a “wake-up call”: A leaked memo from new EMI owner Guy Hands describes Radiohead’s variable pricing album model as a “wake up call” to labels who need to be acting more like venture capitalists. On the same day Yahoo Music exec Ian Rogers wrote in his blog “If the licensing labels …put more barriers in front of the users, I’m not interested… I won’t let Yahoo! invest any more money in consumer inconvenience… I personally don’t have any more time to give and can’t bear to see any more money spent on pathetic attempts for control instead of building consumer valu

RIAA prevails in first US file-sharing jury trial: Defendant Jammie Thomas was ordered to pay a $220,000 fine: $9,250 for each of the 24 tracks she was proved to have shared. The case also sets some important precedents for future lawsuits: for example, the RIAA was able to prove liability without having to demonstrate that a.) Thomas’ computer had a file-sharing application installed when it inspected her hard drive, and b.) Thomas was even at the keyboard when RIAA

01 November 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=071101/MusicAlly_071101.pdf

Facebook valued at $15bn after Microsoft takes 1.6% stake for $240m: After a hard-fought battle with Google, Microsoft has won the race to invest in Facebook, taking a 1.6% stake in the social network for an eye-watering $240 million. That values Facebook at around the $15 billion mark, although Microsoft insists its investment will prove to be good value if Facebook continues its rapid growth

15 November 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=071115/MusicAlly_071115.pdf

UK chart to track subscription services: the Official UK Charts Company (OCC) has announced plans to launch a new weekly chart tracking songs that have been played and downloaded most often through online music subscription services like MSN’s Music Box, Omnifone’s MusicStation, and Napster UK. Monday 5th

29 November 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=071129/MusicAlly_071129.pdf

This week Universal CEO Doug Morris gave an astonishingly candid interview to Wired magazine in which he admitted that (in his opinion) at the end of the 1990s UMG had no idea how to deal with technology. “There’s no one in the record company that’s a technologist,” Morris is reported as saying. “That’s a misconception writers make all the time, that the record industry missed [the online revolution]. They didn’t. They just didn’t know what to do. It’s like if you were suddenly asked to operate on your dog to remove his kidney. What would you do? … We didn’t know who to hire…I wouldn’t be able to recognize a good technology person – anyone with a good bullshit story would have gotten past me.”

Given Doug Morris’ very public self confessed ignorance about all things digital it would be very easy to dismiss his latest plan Total Music as another crazy piece of control freakery that is doomed to failure. Indeed many already have. But given the current state of the business it’s an important strategy which deserves attention. The general idea is to enable phone and MP3 manufacturers to offer a built in music subscription plan which will allow unlimited access to portable digital music (see Issue 179, 1 November 2007). According to Morris’s Wired interview, such a plan involves the manufacturers paying Total Music up front for either a time limited plan (which would expire after six months) or one which would last for the lifetime of the device. The six month offer would still see users facing the prospect of the music failing to play after six months unless they start paying a monthly fee – not so tempting – whereas the ‘lifetime’ plan does at least overcome the objection that the labels are somehow trying to “take the music back”. The latter option is based on the fact that users normally upgrade their devices.

13 December 2007

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=071213/MusicAlly_071213.pdf

Nokia Comes With Music – is it the turning point for subscription? Nokia’s plan is to bundle a ‘Comes with Music subscription’ with certain high-end handsets so that the subscription effectively comes free to the end user. Each handset will carry a unique pin number which can then be used both as a key to allow unlimited downloads from Nokia’s music store and a ‘lock’ to authorize a single handset and a single computer to play the tracks. Users will have to pay a premium if they wish to be able to burn the tracks to CD. So far the world’s biggest label, Universal, is on board, and other labels seem set to follow.

Imeem signs UMG to complete the set of major labels: Music streaming service Imeem has signed a deal with Universal, meaning it now has deals in place with all four majors. UMG will make its entire digital catalogue available to Imeem members to stream, taking a cut of the site’s advertising revenues in return. The deal takes Imeem’s catalogue to over five million tracks, not far off the six million tracks being sold on iTunes.

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

Tags: 2007, Digital music history, digital music timeline

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