Music Ally

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, part five on 2004, part six on 2005, part seven on 2006 and part eight on 2007) we examine 2008.

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 2008, as we reported it at the time.

10 January 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080110/MusicAlly_080110.pdf

In the space of a month unshackling digital music has changed from a philosophical debate that has raged for nearly a decade to becoming a barely celebrated business fact. With DRM seemingly on the way out there should be a number of big new opportunities for the entire music business which has, we hope, finally decided to embrace the MP3.

WMG launches DRM-free downloads on Amazon: Warner Music Group allowed DRM free tracks to go on sale on 27 December through Amazon’s music store. Digital albums and exclusive tracks will also be made available.

Sony BMG drops DRM: More big news. Sony BMG confirmed a tentative plan to allow at least some of its catalogue to be downloaded in a DRM-free format. The promotion will kick in next month in a giveaway with Amazon and Pepsi surrounding the Super Bowl.

Apple found guilty by EC: Guilty of rigging prices across Europe that is, and now UK iTunes users will be able to buy tracks for the same price as mainland Europe – around GBP 0.74 pence rather than 79 pence. It’s lucky for Apple that the Euro is riding high at the moment anyway, although we wonder whether consumers won’t be able to ask Apple for their 5p back on previous full price purchases.

UK to tighten up on secondary ticketing: The committee has recommended that a voluntary code of practice be drawn which would block the resale of tickets for charity events, such as the Live 8 concert in 2005 when eBay was forced to withdraw tickets that had been put up for auction. The committee also supported a plan to allow promoters to license touts in return for a share of their profits

Next week will see the popular quasi-interactive streaming radio service Pandora close its virtual doors to UK users. So who’s to blame for this sorry state of affairs? The service claims that it is unable to afford the rates being offered by UK licensing bodies, the MCPS-PRS Alliance and PPL. Pandora shut off the rest of world except for the US back in August last year due to licensing issues but it kept the UK active as it was already in active licensing negotiations. Pandora claims that the big stumbling block is the minimum per track rates being asked of the largely ad-funded service. Pandora has to pay at least 2.5p per hour for each stream to each user under the current rates. PPL is demanding 0.0773p per track per stream and the MCPS-PRS is asking for an even higher rate of 0.085p per track. Pandora argues that a service which is mo

24 January 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080124/MusicAlly_080124.pdf

EMI confirms up to 2,000 job cuts: Up to 2,000 jobs will go in an effort to save £200 million a year. The restructuring will focus around four areas: repositioning EMI’s labels, developing deeper partnerships with artists, and expanding income from new digital services and corporate sponsorships.

HMV UK launches new streaming service: The streaming service, currently in beta costs £5.99 a month and is extremely basic providing only one functionality – the ability to add tracks to a single playlist. It’s all too little too late now that Last.fm provides free on demand streams. iTunes sales pass the 4bn mark: Apple boss Steve Jobs said that the company has now sold more than four billion songs through its iTunes Store, passing the milestone last week. At last year’s show, the company announced two billion downloads.

Last.fm announces free streaming music service: The company has announced plans to launch a free ad-supported music streaming service with songs from all four major labels plus thousands of independents. 3.5 million tracks are available at launch, with the caveat that individual tracks can only be played three times by a user. Last.fm says it’s working with them to allow more plays and is advertising an unlimited subscription service once the three plays are up. Digital reaches 15% of revenues in 2007: Digital was worth an estimated US$2.9 billion in 2007, up roughly 40 per cent from US$2.1 billion in 2006. See p5 for more.

07 February 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080207/MusicAlly_080207.pdf

The launch of Brilliant Technologies’ Qtrax ad-supported music download service at MidemNet began with glitz, but quickly turned into a farce. In fact, all four major labels quickly denied they had deals with Qtrax, leaving the company floundering. So was it all the media’s fault? The launch press release was certainly vague on the subject of deals: “Qtrax is the first free P2P service to be fully embraced by the music industry. With a base catalog estimated at between 25 and 30 million copyrighted tracks from all the major labels, publishers and a host of leading indies, Qtrax has the largest legal library of any music service on the market.” Supportive quotes came from a mixture of publishers and labels, giving the impression that the company had deals with all four major labels.

US labels face investigation over Total Music: Music Ally understands that the US Department of Justice has served notices to both Universal and Sony BMG over the as yet unlaunched, Total Music initiative. It seems that the DoJ is considering launching an investigation into potential anticompetitive practices. This is the second time that the two majors have come under the scrutiny of the US regulators.

06 March 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080306/MusicAlly_080306.pdf

Perez Hilton lands Warner A&R role: celebrity blogger Perez Hilton is on the verge of signing a deal with Warner Brothers Records to have his own imprint, allowing him to sign up artists. On top of this, he’ll apparently receive $100,000 a year as an advance against 50% of any profits generated by his signings

20 March 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080320/MusicAlly_080320.pdf

Within a matter of weeks the concept of a voluntary agreement between ISPs and copyright holders to manage copyright infringement has shifted from a theoretical debate to a reality.

AOL to buy Bebo for $850 million: AOL announced that it’s buying social network Bebo for $850 million in cash (News Corp paid USD $580m for MySpace in 2005). According to Paidcontent, Bebo will make USD $50m in advertising income this year.

03 April 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080403/MusicAlly_080403.pdf

Last Friday Portfolio.com in the US broke the not so secret news of Warner music’s appointment of net guru and industry veteran Jim Griffin to head up a radical licensing initiative. Is the so-called ‘Griffin initiative’ a liberal attempt to accept file sharing or is it just a way of imposing a regressive cultural tax? Firstly we should be clear about just exactly what Griffin is supposed to be doing for Warner. According to Portfolio.com he has been hired by Warner’s Edgar Bronfman Jr to “spearhead a controversial plan to bundle a monthly fee into consumers’ internet-service bills for unlimited access to music”. It’s an idea that has been touted by Griffin for some time now (see breakout) and which is based upon a view that there is little value to be had in continuing to pursue the a la carte purchasing consumption model. It’s also seen as the only effective way of dealing with file sharing. As Griffin likes to put it, “payment for music has become voluntary”.

Live Nation signs 12-year deal with U2: It’s not a full 360 deal, as the band’s recording contract with Universal Music Group remains in place. Instead, Live Nation will handle U2’s touring, merchandising and its website. Rolling Stones release back catalogue for free: OK who spotted our April Fool’s gag? A fine Rick roll if we say so ourselves. Wednesday 2nd April EMI poaches Google exec to head digital: Google’s VP of engineering Douglas Merrill will become the new digital president, tasked with putting together a new business model for the label. “I believe that fans will pay for music. I think the only question is who they”ll pay and what they”ll pay bundled,” he said. Red Bull still planning own-brand label: The New York Post has published an article claiming the Red Bull label will launch later this year, and that the drinks brand has already spent millions of dollars on a purpose-built recording studio in Santa Monica.

MySpace Music rumours come true: the new service was announced today with three major labels – Universal Music Group, Warner Music Group and Sony BMG. MySpace is calling the music service a complete ‘360’ offering with mobile services provided by Jamba. UMG’s involvement is reportedly the result of a “huge” cash payment from MySpace to settle the existing lawsuit between the two while the labels will get equity in the new venture.

17 April 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080417/MusicAlly_080417.pdf

Europe opposed to three-strikes legislation: The European Parliament has narrowly voted to signal its opposition to the idea of a three strikes and out policy for filesharers. “big measures like cutting off Internet access shouldn’t be used” says the Parliament, but the vote isn’t binding, so it won’t stop voluntary agreements between ISPs and the music industry, or even government legislation in this area.

01 May 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080501/MusicAlly_080501.pdf

Universal Music Group confirmed that it invested part of the $25 million funding round recently secured by music firm Buzznet, which proceeded to buy music blogs Idolator and Stereogum. UMG will license its catalogue for full-song streaming and music videos on the blogs, while also providing “editorial content directly from artists who will participate as guest bloggers”.

MySpace Music open to equity deals with indie distributors: Answering the question around how MySpace Music plans to include independent labels when it launches, MySpace CEO Chris DeWolfe said: “We’re open to extending our equity deals to the right partners, but at a certain point, you can’t extend equity to everyone. We don’t really have the mechanism right not to develop an affiliate program or a payout structure for millions and millions of bands…”

Starbucks steps back from Hear Music label: The coffee chain has stepped back from the dayto- day operations of its Hear Music Label, and handed them over to partner Concord Music Group (a 50-50 joint venture). The company appears to be focusing more on digital promotions, such as its high-profile involvement with Apple, giving away iTunes tracks .

Coldplay gave it away: Starting at 12.15pm UK time, Coldplay offered their latest single `Violet Hill’ as a free download from the band’s website. Taken from forthcoming album `Viva La Vida or Death and all his Friends’ the download is available for one week only before it officially ships as the next single on 6 May. EMI reported over 600,000 downloads in the first 24 hours but some users have also reported problems with the site.

15 May 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080515/MusicAlly_080515.pdf

Microsoft withdraws offer for Yahoo: After a frantic courtship, it seems Microsoft and Yahoo won’t be merging after all. Microsoft has walked away from the negotiating table, claiming that Yahoo was demanding too much money (reports suggest Microsoft wanted to pay $33 per share, but Yahoo insisted on $37).

29 May 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080529/MusicAlly_080529.pdf

Napster goes DRM-free: Napster has finally embraced DRM-free for its paid downloads. From now on its entire six-million strong catalogue will be available as 256kbps MP3 files, with all four major labels on board. Both Napster’s subscription service and the mobile service will continue to use DRM though.

Guitar Hero 3 sells a million on mobile: the game has also been a huge hit on consoles and now on mobile phones too, with publisher Hands- On Mobile reporting more than a million downloads of the game. However, there’s more revenue there for the music industry, since the mobile version also supports new track downloads every month, with users paying a subscription fee to continue playing the game.

12 June 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080612/MusicAlly_080612.pdf

EMI hires Second Life co-founder as digital strategy SVP: EMI is continuing to hire in executives from other industries to revamp its strategy. The latest is Cory Ondrejka, who joins as digital strategy SVP. He was previously co-founder and CTO of Linden Lab, which makes the virtual world Second Life.

Sony to re-enter digital music: Its Connect service flopped badly, but undeterred, Sony has announced a three-year plan for a more ambitious digital distribution service, covering music, films and TV shows. Content will work across computers, TVs, mobile phones, Wi-Fi enabled music and video players, and PS3 consoles. Sony plans to spend $16.8 billion building the distribution platform. Monday 30th June Rhapsody launches DRM-free MP3 Store: It’s the latest digital music store to launch a DRM–free alternative, and all four majors have signed up. Pricing is currently set at 99 cents per track and, for most albums $9.99. Tuesday 1st July: WMG signs up for Nokia Comes With Music: Warner Music Group became the third major to sign up for Nokia’s much anticipated Comes With Music service (EMI have yet to come on board) which will launch later in the year.

Sarkozy aims to take three-strikes filesharing law Europe-wide: The French government is looking to expand its much discussed three-strikes policy to disconnect persistent file sharers throughout Europe. Now that France has assumed the European presidency, it is looking to expand the policy across the EU. The plan is to make ammendents to the Telecoms Package, and the timing is in its favour: a review of the European telecoms law is currently going through the European Parliament.

24 July 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080724/MusicAlly_080724.pdf

The UK newswires have been buzzing with reports of today’s Government brokered agreement between rightsowners and ISPs. The Independent newspaper even proclaimed “Music industry to tax downloaders” as its front page headline. Is the much vaunted ISP levy finally on its way?

Apple launches App Store as 3G iPhone goes on sale: The much-anticipated 3G iPhone finally hit the stores in the UK and at the same time Apple launched the App store through iTunes which allows iPhone and iPod Touch owners to buy and download applications and games for their devices. A rundown of the best music apps is on page 4. Viva La Vida now the biggest paid album download ever: EMI Music claimed Coldplay’s new album ‘Viva La Vida’ is now the biggest ever paidfor album download. According to figures from Nielsen Soundscan in the US, the album shifted 394,000 digital copies in its first three weeks. Monday 14th July Guitar Hero music store to ‘take on iTunes’: It seems Bobby Kotick CEO of Activision Blizzard is not content with pushing EA out of its position as top games publisher, now he’s made loud noises about taking on Apple in the music sphere. He told the Financial Times that the company may launch its own iTunes –style digital music store as part of the Guitar Hero brand.

Sky announces subscription music service: combining elements of an Amazon-scale MP3 store, bundled MP3 downloads à la eMusic, Napster-style streaming music, and the whopping marketing muscle of Sky into millions of UK households, the newly announced Sky music service is the latest big ticket music play to hit the UK.

07 August 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080807/MusicAlly_080807.pdf

Sony pays $1.2bn to buy out Bertelsmann from Sony BMG: The company will be renamed as Sony Music Entertainment, and will sit within Sony’s North American division. Sony says it’ll be able to better integrate music with its other divisions.

21 August 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080821/MusicAlly_080821.pdf

Reports from US universities suggest that Napster is terminating its subsidised student deals. What does this mean for legal music on campus and what are the implications for the subscription model as a whole

19 September 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=080918/MusicAlly_080918.pdf

Google announced the launch of its own web browser, Chrome: The implications for music aren’t yet clear but we expect streaming content will be more closely integrated into the browser. In other Google news, two music apps were also named as winning finalists of the Android Developer Challenge (Google’s mobile initiative to challenge the iPhone apps store).

02 October 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=081002/MusicAlly_081002.pdf

MySpace Music went live, to a chorus of protest from indie labels: All four majors were on board from day one, with a service that allows users to create playlists of up to 100 songs for unlimited streaming. In its first six days, a billion songs were streamed. However, indie labels and trade bodies including Merlin, Beggars Group and A2IM criticised MySpace for not carrying their tracks, and not offering them equity

Net radio firms hailed the US Webcaster Settlement Act: With doomy predictions that Pandora-style services would die if it wasn’t passed, the Webcaster Settlement Act made its way through the US House of Representatives and the Senate. It authorises SoundExchange to negotiate new royalty agreements for net radio firms, who’ve spent recent months protesting about the current punitive rates.

16 October 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=081016/MusicAlly_081016.pdf

Publisher Warner Chappell has revealed that In Rainbows has sold more than 3 million copies, including 1.75m physical CDs. The band’s digital publishing income from the release dwarfed all their previous digital publishing income

Personalised online radio service Pandora is getting a big boost from its recently released iPhone application. Initial reports that half the service’s users are on iPhone turned out to be wide of the mark, but Apple’s handset is accounting for half of the 40,000 new daily signups to Pandora. Founder Tim Westergren says the iPhone app’s success has changed Pandora’s growth trajectory.

Nokia’s first Comes With Music handset went on sale in the UK today. We bagged a 5310 XpressMusic handset and a login to test it out, and have been impressed most by the service’s ease of use, although not so much by some of the holes in its catalogue. The signup process is uber-simple – Nokia

30 October 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=081030/MusicAlly_081030.pdf

Microsoft said it’s doing 3.8 million track downloads a month through Xbox 360 music games. The company says it’s sold 45m tracks through games like Rock Band and Guitar Hero so far, and reckons this is more than 80% of all downloadable songs for music games, wiping the floor with PS3. More than two million copies of Rock Band have been sold for Xbox 360 in the US alone. Music is now the second most popular console genre, having overtaken sports in the la

13 November 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=081113/MusicAlly_081113.pdf

The Datz proposition is that UK consumers will get unlimited MP3 downloads for a year for £100. The store allows two users access via a USB dongle that has to be plugged into a computer for the service to work. The dongle is the clever bit. While Datz offers unprotected MP3s – and is therefore the first unlimited subscription type service with major label material to work with the iPod – there is still protection in as much as users need the USB dongle to download tracks. And selling a physical product helps pitch it to retailers like supermarket chain Sainsbury’s, which is in line to sell the service in 180 stores from tonight. Datz managing director Michael Richardson says Blockbuster and WHSmith will also stock the dongles.

EMI revealed plans to restructure into three separate business units: new music, catalogue, and music services. The news came with decent financial results for the six months to the end of September, with the company posting a profit of £59 million, compared to a £14 million loss in the same period in 2007. Meanwhile, this week it emerged that EMI is looking to outsource physical distribution in the US, although it’ll hang on to digital distribution, and also sales and marketing.

11 December 2008

http://www.musically.com/cgi-bin/displayPDF.cgi?pdf=081211/MusicAlly_081211.pdf

The collapse of physical distribution firms EUK and Pinnacle has left labels reeling in the UK in their busiest sales period of the year. Yet the launch of Amazon’s MP3 Store is having just as big an impact on the market

Warner Music Group has quietly made some tracks available as DRM-free downloads on iTunes. US bloggers spotted them via the iTunes upgrade feature, which tells consumers when tracks they’ve already bought become available as iTunes Plus downloads. Sony BMG is also rumoured to be following a similar path – while at the same time all this was being reported, the iTunes Plus link disappeared from the store’s homepage. Something’s up.

We look at Spotify: whether the company succeeds in that aim remains to be seen – competition will be fierce, and it’s unclear how well Spotify can monetise those banner and video ads if users simply have the app running in the background when playing an album or playlist. Launching deeper community features so users spend more time interacting with Spotify may be one solution.

UK Culture Secretary Andy Burnham said if ISPs and the music industry can’t work together, the government will weigh in. The deadline of April next year has been posited for the two sides to conclude a privately-negotiated deal. Burnham said the UK gov’t doesn’t favour the ‘three strikes’ approach adopted in France, but is bullish about the government’s possible role: “We will legislate if no solutions are found,” he said at the MusicTank event.

A presentation did the rounds online claiming to show WMG’s proposals for voluntary blanket music licensing. The label swiftly clarified that it wasn’t produced in-house, but it seems to be an accurate summary of WMG’s proposals to US universities that they pay a set fee per student into a central pot to be shared between labels, publishers and artists. 

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: 2008, Digital music history, digital music timeline

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