A recent survey of dedicated music demographics indicates access to music from services like Spotify, YouTube, Grooveshark and others significantly decreases the interest in purchasing across all groups except the least dedicated.
“Services like Spotify increase access, but also decrease spending in many situations. Which means less money from higher-returning formats like iTunes downloads, CDs, and LPs,” according to Digital Music News. “But free access also includes a range of other services, including YouTube, Grooveshark, and various freebie competitors. And all of these are sapping the juice out of higher-end impulse buying, once a music industry lifeblood.”
The recently released findings from NPD Group and NARM have already had an impact. “Following a study that claims that streaming music is damaging to record sales, a distributor representing more than 200 labels has withdrawn its entire catalogue from Spotify, Napster, Simfy and Rdio,” reports Huffington Post.
“As a distributor we have to do what is best for our labels,” STHoldings explained in a statement. “The majority of which do not want their music on such services because of the poor revenues and the detrimental affect on sales. Add to that the feeling that their music loses its specialness by its exploitation as a low value/free commodity.”
In a related All Things D story, Spotify announced it has new things on the horizon, but has yet to provide details. “In New York on November 30th, we are holding our first press conference to unveil the latest major development from Spotify — and a new direction for the company. The press event will be hosted by CEO and Founder Daniel Ek, along with special guests,” wrote the company’s PR unit.
All Things D speculates Spotify may be releasing a U.S. service to buy songs (already available in Europe) or an iPad app, but “it is courting the risk of overpromising” if these are the only developments to be announced.
Panasonic’s line of Viera TVs now ships with 12 embedded applications, including Hulu Plus and Netflix. About 120 third-party apps are also available for Viera TVs.
Just as PC users add apps to their computers, Viera owners are free to add content apps to their TVs once those apps go through quality-assurance testing by Panasonic.
The company says that more than 40 million connected TVs were sold by 2010, and 2013 projections suggest sales of connected TVs will outpace those of PCs.
“Panasonic also recently announced a new gaming app, PlayJam; a Bollywood movie/video channel, BigFlix; and the Viera Connect Market, whereby users can upload credit card information once and use it across a variety of apps, such as a demonstrated app in which users could buy 3D eyewear, among other consumer electronics devices,” reports Home Media Magazine.
Speaking at the GigaOM RoadMap conference this week, Pandora CTO Tom Conrad suggested that more than half of Americans do not pay for music each year, while 40 percent only pay about $15 annually.
“Conrad revealed that his company aims to monetize the vast majority of listeners who pay little or nothing per year for music,” reports TechCrunch.
“While there are opportunities to build businesses on the 10 percent who are willing to pay more, Pandora plans to focus on monetizing the majority via advertisements. Other music companies might be wise to target the non-paying segment as well.”
Pandora is working to expand across multiple areas, including “in the home, the television, the living room, the bedroom, even embedded above the ice maker on your refrigerator,” and in your car.
Conrad doesn’t feel threatened by Spotify’s success. “I see Spotify as largely complementary to what Pandora does,” he said. “Spotify’s CEO Daniel Ek says he thinks Spotify is the future of the record store, and that Pandora is the future of radio.”
Leichtman Research Group reports 44 percent of U.S. households with TVs have a DVR, up from 8 percent in 2005.
LRG also found that one-third of DVR households have more than one DVR, and 73 percent of digital cable subscribers have used VOD.
“On-demand TV viewing in the forms of DVR and VOD, as well as Netflix streaming, have significantly increased in terms of usage and popularity over the past few years,” said Bruce Leichtman. “Yet these on-demand TV platforms remain largely complementary to traditional TV services and viewing, with about 90 percent of all TV viewing in the U.S. still being via live TV.”
Additional LRG findings (on a scale of 1 to 10, with 10 being excellent): 80 percent of DVR owners rate the service 8 to 10, 62 percent of cable VOD users rate the service 8 to 10, 63 percent of Netflix subscribers rate the Watch Instantly feature 8 to 10, 20 percent of Netflix subscribers use Watch Instantly daily.
An increasing number of consumers are switching to digital content for movies, music and books. The approach has benefits, including convenience and cost, but may also be leading to a loss of rights and abilities we’re accustomed to as consumers.
Fortune writer J.P. Mangalindan expressed concerns that systems such as Amazon’s new lending library would change the meaning of ownership since users would be relinquishing actual ownership of content in favor of a rental model.
The ability to stream digital content online has led to the same kind of transformation. Services such as Spotify and Netflix have allowed users the freedom of streaming content anywhere, and have made subscribing to such a model affordable and convenient.
GigaOM raises an interesting concern: “Apart from our simple human need to own and collect physical objects, however, there’s also the way that renting changes our legal relationship to the content we are consuming. Amazon has shown the downsides of this in the past by actually deleting copies of e-books from people’s Kindles remotely after a complaint by the rightsholder — and those were copies that people had actually bought, not rented.”
If we move closer to a streaming, rental-style model for all content then perhaps consumers would eventually prefer a short-term license to use content over actually owning it. But what if Netflix or Amazon decide to change their terms of service? “What if companies decide you no longer have the right to watch certain TV shows or read certain books?”
Television’s future remains murky as content providers and cable companies get ready for battle, and streaming services continue to gain momentum.
“But change is going to come, and amid news that Google is interested in entering the cable TV business and continued rumors that Apple will be releasing its own branded television set, we also have to wonder what’s going to happen with streaming services like Hulu and Netflix,” reports Digital Trends.
The article suggests it is the cable companies that have the most to worry about (those that control the last model). “Forget applications having a say in all this: The real war is going to be fought between cable networks and the content providers that want to move on to a new format.”
“Farther off, I think [YouTube] will challenge Hulu first. Netflix is more like a library. Google is a beast and you have to keep an eye on those guys,” TalkPoint CEO Nick Balletta says. “They have the muscle and cash to weather the storm.”
Balletta believes adoption of connected TVs will take root by late 2012, and before then we’ll see significant fragmentation before we can truly cut the cord.
Media companies and well-known personalities are lined up as YouTube gets ready to produce original content for 100 online video channels.
Sources indicate Google is dedicating $100 million to the initiative, aimed at transforming YouTube into a next-gen cable-like platform for specialized video channels.
“The Internet search giant on Friday said it had signed major deals with Hollywood to bring professional, high-quality programming to YouTube that could help it increase the time viewers spend watching videos on the site and attract more advertisers,” reports the Los Angeles Times.
The company is also launching a software update to Google TV, designed to integrate with the new content.
“The partnerships that YouTube announced Friday with dozens of media companies, production companies and online-video creators will generate about 25 hours of new programming each day for YouTube.”
Michael Eisner’s digital studio Vuguru, Stan Lee’s POW Entertainment and television production company Magical Elves are a few of the early partnerships. Celebrity channels will feature personalities such as Ashton Kutcher, Amy Poehler and former NBA star Shaquille O’Neal.
Hollywood studios are starting to use Facebook as a direct-to-consumer platform for streaming films, possibly cutting out services such as Hulu, Netflix and Amazon in the process.
Universal, Lionsgate and Warner Bros. have distributed some 45 films via the Social Cinema app from Milyoni (pronounced million-eye). “What Zynga is to social gaming, Milyoni is to social entertainment,” reads the company’s website.
Miramax and Paramount have used similar apps to offer movies for Facebook credits on fan pages.
Rentals based on credits are running the equivalent of $3-$5. Facebook draws a 30 percent cut of transaction revenues.
Ad Age Digital suggests the studios’ willingness to offer rentals via social network sites “may reflect their desire to foster competition among online distribution platforms,” adding, “Miramax CEO Mike Lang said that digital monopolies were a greater threat to the film industry than piracy and that his studio had been aware of the importance of a competitive marketplace when doing deals with Netflix and Hulu.”
Google’s music download store is expected to link with Google+ within the next two weeks. However, the service may prove disappointing if the company cannot secure deals with the four major music labels.
Tentatively named Google Music, the service would follow in the footsteps of Spotify, which earlier this fall linked with Facebook to promote its music service.
The Google+ integration would allow users to recommend songs to Google+ contacts, who could then listen to those songs once for free. MP3 downloads would then be available, most likely for 99 cents each.
Music labels have shown hesitation about the service’s propensity to allow piracy, in addition to the lack of revenue for record companies, as the music locker is free.
Peter Kafka interviews Peter Chernin in this interesting 11-minute video from the AsiaD conference.
“As News Corp.’s longtime chief operating officer, Chernin was instrumental in developing Hulu,” reports All Things D. “He explained why he wanted to build the video site — in part to compete with Google and YouTube — and why he thinks its studio owners should help it thrive today — in part to compete with Netflix.” Chernin also expresses his thoughts on purchasing Yahoo.
Chernin knew IPTV would be big, but didn’t want one dominant video distributor like YouTube. Thus, the studios got together to create Hulu, which today competes with Netflix.
Chernin believes online viewers will pay $2 per month for premium content. He talks about the future of video and creating something like a digital HBO.
New platform from San Francisco-based Veokami aggregates user generated videos of concerts.
Veokami crawls YouTube and automatically puts together a playlist of videos from a single concert.
Videos are then synchronized with each other to offer Veokami users the ability to switch between the different camera views that were found on YouTube, without interrupting the flow of the music. Clips can also be arranged based on audio and video quality.
According to GigaOM, “the goal is to extend its platform so that artists, promoters and — most importantly — fans will be able to build these pages themselves. That could end up being a very powerful promotional tool for artists as they look to show listeners what it’s like to be at one of their shows.”
The company’s site also suggests the tool could be useful for organizing videos from political events and conferences.
Janus Friis, co-founder of KaZaA, Skype, Joost and Rdio (with partner Niklas Zennstrom) is working on a new online video subscription service that will be available soon in the UK.
According to GigaOM, Friis has been “assembling an A-team of media and Web technology experts to launch a site that seems destined to replicate the model behind their music subscription site Rdio in the video space.” Offices have been set up in Santa Monica and Europe.
From the follow-up Q&A: Vdio (Vee-dee-o) is in closed beta for the UK and is privately funded, while the assembled team’s experience comes from companies such as Netflix, Microsoft, TV Guide and Napster.
A spokesperson for Zennstrom’s VC company Atomico confirmed that Zennstrom is not involved in the project.
Google has announced that through the new Merch Store feature, YouTube partners “will be able to sell artist merchandise, digital downloads, concert tickets and other experiences to fans and visitors.”
The Merch Store evolved from multiple partnerships: Marketing enabler Topspin will handle merchandise sales, while concert organizer SongKick will handle ticket sales. Amazon and iTunes will power transactions for music download transactions.
“The ability to add merchandise sales, ticket sales, digital downloads and more to an artist’s YouTube site definitely gives these sites more of an engaging presence for artists with their fans,” reports TechCrunch. “These destinations will now become more than just a way to discover music videos, but also a way to transact business and actually see the artist and buy their works.”
The feature should arrive in the coming weeks. YouTube will take a percentage of sales to cover costs.
After months of bidding, Hulu’s owners — News Corp., NBCUniversal, Disney and Providence Equity Partners — have decided to stop its sale.
“Since Hulu holds a unique and compelling strategic value to each of its owners, we have terminated the sale process and look forward to working together to continue mapping out its path to even greater success,” explained the partners in a short statement. “Our focus now rests solely on ensuring that our efforts as owners contribute in a meaningful way to the exciting future that lies ahead for Hulu.”
In a related TechCrunch post, it was suggested that media companies saw more value in retaining licensing fees than selling them.
Bidders were not willing to pay more for Hulu knowing that the costs for content rights would increase dramatically after the two year period being sold. (Google reportedly bid $4 billion, but wanted streaming rights for longer than the guaranteed “couple of years.”)
Netflix returned from MIPCOM last week with several new foreign TV shows it hopes will draw interest from its 25 million subscribers.
Programs include Norwegian gangster drama “Lilyhammer” starring Steve Van Zandt, French/German co-production “Borgia,” and the British supernatural drama “Being Human.”
The slate of foreign programming will join the remake of BBC drama “House of Cards” as Netflix turns to original, first-run drama series.
“Netflix has already committed to a second season of both ‘Borgia’ and ‘Lilyhammer,’ suggesting its taste for original and foreign-made fare is no passing fancy,” according to The Hollywood Reporter. “The company is also in a bidding war with Showtime and Hulu for the rights for the relaunch of cult comedy series ‘Arrested Development.'”
Netflix chief content officer Ted Sarandos points out the strategy is in response to customer demand, since TV shows account for 50-60 percent of total viewing on Netflix.
“We’ve moved very aggressively into this space,” Sarandos said. “The growing audience for these 1 hour serialized dramas is typically on pay TV: Showtime, HBO or Starz, those ones who are least likely to want to sell their shows to me on our (second-run) season-after model. So we have to develop the muscle to create and distributing these shows ourselves.”
A recent survey of dedicated music demographics indicates access to music from services like Spotify, YouTube, Grooveshark and others significantly decreases the interest in purchasing across all groups except the least dedicated.
