For us here at the FMC, it’s the news about the launch of new
legal distribution services that get us excited because this seems
like the most promising way for artists to be compensated for their
work in the digital future. In September, MusicMatch opened up a download
store. In October we saw the launch of iTunes for PC, and most recently
Roxio debuted the new, legal version of Napster 2.0. Here’s
some of the top news:
Apple PC iTunes hits 1 million downloads
Apple Computer Inc. said that computer users had downloaded more than
one million copies of its iTunes digital jukebox software for Windows
since its launch Thursday, and that a total of one million digital
songs had been purchased at 99 cents in that time.
Reuters,
October 21, 2003
PC User Whistles a Happy ITunes
Apple crosses over to the PC world with an iTunes music-sharing program
for Windows. Katie Dean gives the new software an audition.
Wired,
October 18, 2003
Napster Returns — Not Free but Legal
Three years ago, it was ludicrous to think that Napster would win
the backing of the record labels that were suing it for piracy.
By Jon Healey, Los
Angeles Times, October 10, 2003
MusicMatch to Sell Downloadable Music
The online store, which opens today, imposes the fewest limits on
copying and portability among legitimate outlets.
By Jon Healey, Los
Angeles Times, September 29, 2003
Music Fans Starting to Tune In to Fee-Based Sites
Ex-file sharers like the bigger, more reliable libraries. But the
labels have a long way to go.
By Jon Healey, Los
Angeles Times, September 21, 2003
For consumers, the recent explosion of options about how to listen
to, learn about and download music legally has been great, but the
FMC continues to remind folks that these new forms of distribution
should provide all artists – not just those signed to major
labels or big indies – with a better opportunity to find an
audience for their music and get compensated for their work.
Unlike terrestrial music stores with limited shelf space and can only
stock the most recent or best selling hits, digital download stores
have limitless space. Because of this, digital download stores can
stock records that have long been out-of-print, or carry releases
by artists that are unsigned or on indie labels. And now that there
are better, more secure stores out there, artists should see these
various sites as yet another way to promote and distribute their music.
But how do indie labels and unsigned artists get their tunes for sale
through these various services? It’s not as hard as you might
think. The FMC has recently interviewed three of the primary services
that can help musicians and indie labels offer their songs for sale
through various digital distribution services, asking them how they
do it, what they offer, and how artists get paid. Check them out!
The Independent Online
Distribution Alliance (IODA) is a digital distributor for
the 21st century.
Digital Rights Agency
is a company that negotiates distribution deals with digital music
services by using the collective bargaining power of its rapidly expanding
group of label clients.
CD Baby continues
to offer a fantastic opportunity for independent and unsigned musicians
to sell their CDs via their website. Now, CD Baby has added a digital
distribution component to their services, so for a reasonably small
set up fee artists can now have their songs included in up to seven
different distribution services.
11. Universal Cuts Prices at Retail
In September, Universal Music announced it would cut their retail
CD prices to $11.99. The FMC believes that this is a reasonable reaction
from the record label to consumers’ ever-increasing dissatisfaction
with the high cost of CDs. There’s a sense by some in the music
industry that the four other major labels will follow suit and drop
their retail prices to match.
The financial bottom line for UMG will probably stay the same. While
they will see less money for each CD sold, the company has also stopped
shelling out thousands per week in advertising money, which is usually
referred to as co-op money – through which they subsidize the
advertising costs of retailers.
This price cut, however, does have some negative consequences. First,
it has been reported that the lower prices offered to retailers comes
with conditions. UMG was insisting that, to get the lower price, that
stores are expected to dedicate 25 percent of their display/rack space
to Universal releases. We assume this number is based on UMG’s
27 percent global market share, but why should indie stores that have
both limited space and usually a much wider selection of music from
both major labels and independent labels be forced to dedicate that
much rack space to one label just to get records at this new price?
In addition, the bands signed to UMG will most likely also feel the
price drop. Since royalty formula in most major label contracts is
based on the “suggested retail price”, the FMC assumes
that bands will be seeing proportionately less in their royalty checks
that are based on sales. Of course, the gamble is that the lower price
will generate more retail sales, which will offset the price drops.
Only time will tell.
Universal Music Was Boxed In on CD Prices by Big Retail Chains
Discounting by Best Buy and others may have forced the cuts. More
labels may follow along.
By Jeff Leeds, Los
Angeles Times, September 5, 2003
Top Label Cuts CD Prices to Fight Net Downloads
Universal Music’s move to increase sales could benefit consumers but
squeeze retailers.
By Jeff Leeds, Los
Angeles Times, September 4, 2003
Giving price cuts a spin
No. 1 record firm Universal Music looks to get sales back in groove
By Chris Gaither, Boston
Globe, September 4, 2003
12. Other Items in the Newsstream
Hey music news junkies, for even more news about iTunes, RIAA lawsuits,
webcasting royalties, low power radio, intellectual property, music
and technology that’s updated almost daily, visit http://www.futureofmusic.org/newsstream.cfm
or FMC in the News at http://www.futureofmusic.org/fmcnews.cfm
13. What We’re Doing
Jenny Toomey
For the past few weeks Jenny has been coordinating the details of
the Tell Us the Truth tour and embarking on her first solo tour in
over a year. She recently was quoted in the New York Times coining
the expression "Lowry Burger" and she spoke at American
University on a panel that discussed the future of P2P.
Walter McDonough
Walter recently moderated at panel on the State of the Music Industry
that included Mike Dreese, president of Newbury Comix, Bill Thomas,
Chief of Staff of ASCAP, Dickie Barrett of the Mighty Mighty Bosstones
and Brian Celler, Epic Records.
Kristin Thomson
Kristin has to get a hat rack installed in her home office just to
keep her various hats organized, let alone put on the damn hat and
actually get some work done. But somehow we keep moving forward, ever
so speedily. She recently participated in a panel moderated by Carrie
McLaren of Stay Free! Magazine as part of the “Illegal Art Extravaganza”
and looks forward to more research on intellectual property issues,
digital distribution services and event organizing for 2004.
Brian Zisk
Brian’s been comparing the huge touring industry (of which musicians
get a large share) to the much smaller recorded music industry (of
which artists get a much smaller share). He’s been seeing obvious
sighs as to which
sectors of the economy are most likely to help support artists in
the future.
14. How are we doing?
If you have any feedback, questions, or suggestions please send an
email to suggestions [at] futureofmusic [dot] org,
and let us know how we’re doing.
Thanks for your support and see you next time.
Jenny Toomey
Michael Bracy
Brian Zisk
Walter McDonough
Kristin Thomson
Peter DiCola