Music Ally

YouTube is on course to generate more than $1.1 billion in revenue by 2011, with Google sharing $397 million of that with content owners – including record labels.

At least, that’s the prediction from Citigroup analyst Mark Mahaney, who’s been crunching numbers based on the revenue-to-page ad revenues at MySpace, applying that ratio to YouTube based on its comScore traffic numbers.

Mahaney thinks YouTube generated $727 million of gross revenues last year, sharing $254 million of it with content owners. The sharing figures are based on 50% of YouTube’s revenue coming from videos where it has a revenue-sharing deal with a partner, who get 70% of those revenues.

We could add an extra layer – although this is about as shonky maths as you get. Recently, analytics firm Sysomos claimed that music videos account for 30.7% of all views on YouTube. If music took a 30.7% share of the $254 million distributed to content owners last year, that’d be just under $78 million…

Forrester analyst James McQuivey has published an interesting presentation titled ‘Why Consumers Want to Pay for (Access to) Content’.

In it, he argues this: “Make no mistake: people don’t pay for content and never have. They pay for access to content. In the past, that access happened to be gated analog constraints like books, vinyl, theaters, and newsprint”.

He claims that 77% of the average American’s monthly spending on content is for access, rather than the content itself. “People will continue to pay for (access to content),” he continues.

“Whoever controls access, commands the highest share of revenue” – citing cable companies and telcos, monopoly content rights holders, and device makers as the likely beneficiaries. Read the full presentation above.

New research from NPD Group estimates that in 2009 there were 24 million less US music buyers than in 2007. That’s a 21% drop in numbers, although with the average amount spent by each buyer rising 2%, it implies a 19% drop in total music spending.

However, more worryingly for the industry, NPD’s numbers claim that the number of US people buying music downloads dropped from 35.2 million in 2008 to 34.6 million in 2009 – despite the fact that the number of files shared on P2P networks dropped sharply in the same time period.

Another stat which may partially explain this: NPD claims that free online radio leads to a 41% increase in paid downloads, but free on-demand music leads to a 13% decrease in paid downloads. A stat that may be seized upon by label bosses who are increasingly disillusioned with free on-demand models.

However, it’s worth noting that for some of the companies offering free on-demand music – notably Spotify – it’s as much about stimulating paid subscriptions as individual downloads – an upsell not covered by NPD’s figures, which were announced at the Digital Music East conference.

Research firm Music Matters presented the findings from its latest survey of global music consumption at MidemNet this morning, with president Jasper Donat taking the stage.

The research was based on 8,500 interviews in 13 countries in November last year. The good news? 63% of people surveyed claimed to be passionate about music – that’s an average, it’s over 80% in Spain, Brazil and the UK. What country scored the lowest? Australia.

14% of surveyees would listen to music every minute of the day if they could – a proportion which rose to 49% in Brazil.

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Last year, our 200 Digital Music Startups of 2008 blog post went down a storm, so naturally we thought we’d repeat it for 2009. We’ve changed the format though: it’s in alphabetic order this time.

Some caveats to cover our backs. The list is based on startups we’ve covered for the first time in the Music Ally Daily Bulletin this year. It’s not a list of the best or most successful companies/services/sites – it’s a snapshot of what people were launching this year, or talking about launching (a few, like Rdio and Kik, won’t go live till the new year). Some are already defunct.

We think it highlights some interesting trends. Like all the sites springing up to do music stuff with Twitter. Or the huge interest in building communities around live music. Or more user-friendly torrent sites. Innovative mobile apps, legal music search engines, web games… As we said, it’s a snapshot.

What’s that? You launched a music-related startup or service this year and it isn’t on here? Please post a comment and tell us about it – this post will be updated regularly over the coming weeks with people we’ve missed. If you’re on the list but have changed tack or added major new features, please also let us know in a comment, and we’ll reflect that too.

Obligatory plug: we wrote about all these firms in our Daily Bulletin, alongside news about industry trends, digital marketing campaigns, legal/licensing developments and all things digital music. You can sign up for a free two-week trial to see how it works.

Anyway, enough preamble: read on for the startups! And for sharing purposes, we’ve turned it into a Scribd document, which is embedded at the foot of the post. And yes, we do know a more accurate title would be ‘The 9 to Z…’

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Analyst firm IBISWorld has stuck its neck out and suggested that ringtones aren’t doing too well right now. Of course, they have some figures, predicting that ringtone revenues will total $750 million in 2009, down 15% from its $880 million peak in 2007. “Music ringtones practically boomed overnight, but with two consecutive years of decline it seems the industry is exiting just as rapidly as it entered,” says analyst Toon van Beeck.”And with the ringtone market already reaching its decline stage, its life cycle is only expected to last about 15 years.” IBISWorld suggests “surging” sales of over-the-air full tracks is responsible for the decline, suggesting that “Providers like iTunes and Amazon have revolutionised the way we buy and use music, driving consumers to hang-up on ringtones.” Apart from iTunes just starting to sell them, obviously.

Music Ally’s sister research company The Leading Question has revealed that most UK music fans are still happier buying a CD than downloading, The 1,000 strong face to face survey of UK music fans showed that nearly three quarters (73%) of music fans were still happier buying CDs rather than downloading.

The dominance of the CD was still high even amongst the teens with two thirds (66%) preferring CDs to downloads. CDs are also far and away the most preferred format for listening to music with nearly twice as many fans listening to CDs every day (59%) compared with MP3 players (32%).

The research also showed that even the most digitally advanced music fans continue to buy CDs, with little evidence that digital music consumption is simply replacing physical consumption.

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Music Ally’s sister consumer research company The Leading Question has released data from its fourth annual Speakerbox survey of UK music fans showing a drop of a third in regular music filesharing amongst UK teenagers.

For the first time the survey also showed a higher percentage of fans regularly purchasing downloads (19%) compared to obtaining tracks from file sharing (17%). The volume of tracks obtained for free compared to purchased tracks had also narrowed from 4:1 in Dec 2007 to 2:1 in Jan 2009 when the face to face survey of over 1,000 music fans was carried out.

We think the positive figures represent both greater takeup of legal streaming services among teens – in particular YouTube – and other competing ways of finding music for free such as CD burning and Bluetooth. Nearly twice as many teens (31%) stream music every day compared with most music fans (18%).

However, the fact that UK teens are using YouTube as a legal source of music jars with the fact that YouTube UK has removed all premium music videos due to a dispute with PRS for Music. Perhaps this research will provide an extra incentive for the pair to resolve their licensing disagreement.

A new survey by Ipsos MORI claims that two thirds of people who illegally download music online would switch to legal models if the price was right.

Which is a pretty general thing to say – what price is the right price? The report does give some indications. Only 10% of respondents were interested in buying music tracks at iTunes’ most common £0.79 price, but at £0.45 a track, this increased to 32%. Which, judging by the two-thirds claim, means a further 34% would only pay less than 45p per track.

Interestingly, the survey – which asked more than 1,000 peopl about over 30 digital content distribution models across music, film and games – found a continued preference to download-to-own, over ad-supported streaming or subscription models.

UK tech firm Detica has launched a new tool called Price for Music, together with SoundExchange, which aims to let anyone predict the level of piracy in the future – and what impact new pricing models might have.

“One of the greatest problems facing the music industry is its inability to measure and forecast the impact of various remedies, particularly pricing models, on music consumption,” says director of media Andy Frost.

“Our ‘Price for Music’ model allows the music industry to see into the unknown and provides projections of traditional and new revenue streams based on historical performance and a variety of alternative future scenarios.”

Interested in punching in some numbers? Click here.