Note: The views expressed in this report do
not represent the official views of either the group members or the companies
for which they work. This report represents only the result of an informal
discussion group at the 5th Annual Texas Interactive Music Conference.
No other inferences or conclusions should be drawn based upon that participation
of any individual or company involved.
The Angry Frogs
No need for a riot
(unless of course you want one for entertainment value
or concession revenue..)
- THE MISSION STATEMENT
- THE PROCESS
- SOME ISSUES SURROUNDING THE NOTION OF "MUSIC AS
A SERVICE"
- PERCEIVED CONSUMER BENEFITS OF "MUSIC AS A SERVICE"
- RELEVANT BUSINESS MODELS
- CONCLUSIONS
- SUPPORTING DATA:
- TECHNOLOGY/INFRASTRUCTURE REQUIREMENTS
- CHANNEL POTENTIALS - GROWTH, IN DECLINE ETC
- BUSINESS IDEA: THE SERVICE MODEL
- BUSINESS MODELS
- APPENDIX #1: SMDI DISCUSSION
THE MISSION STATEMENT:
Examine sustainable business models enabled by new digital music technology
- that grow the market overall and enable new, expanded, extended, or
unique commerce opportunities. (i.e. we get to sell more stuff..)
The Process
In order to pursue the mission statement we asked the following questions:
How have consumers traditionally obtained their music?
What are the new digital technologies that are relevant to music?
What are the consumer issues (challenges, requirements, and impact on
experience)?
What are the content sources?
How is content created?
What are the delivery mechanisms for digital content today / 5 years from
now?
Given the specific delivery method - what are the selection mechanisms?
What are the promotional mechanisms for that channel?
What are the transaction models?
What are infrastructure requirements?
Given each distribution channel what are the trends that will effects
its growth?
Based upon an examination of the consumer value propositions that emerged
from discussing these questions, we determined that viewing music as a
service, as opposed to a product is a preferred perspective to adopt.
For example, we postulated that convenient legitimate access to what you
want, when you want it, where you want it is potentially an effective
weapon against piracy..
Some issues surrounding the notion of "music
as a service" are:
The nature and current state of secure digital content delivery and piracy
concerns.
How is the service paid for?
Non PC Centricity, musical appliances, and mobility/portability
What is the fate of CDs?.
CD collections can be personal statements or status
symbols.
Digital content delivery will compliment, not replace,
such collection.
The connection between personalization and bandwidth
Personalization, which brings convenience, requires
bandwidth which influences
cost. At least today!
Navigating the sea of content.
How do you find the content you want?
Meta data standardization
Personal profiles are required.
What are the associated privacy issues?
What is the role of the traditional "taste makers"
in the future?
How do you facilitate instant, simple commerce?
Ease of payment (the "buy it" button.)
Perceived consumer benefits of "music as a service"
are:
- What you want, When you want it, Where you want it.
- Convenience
- More variety/exposure possibilities to new music
- Well targeted advertising is indistinguishable from information.
- Perception of value
- Hardware cost can go to zero based upon subscription fees.
Relevant Business Models
- Content Sale and Rental
- Free Content and Advertising
- Music Selection Guide
- Personal Music Hosting
- Services for Artists and Labels
Content Sale and Rental ($ for content)
- Purchase
- Download and keep
- Download and expire
- Pay per listen (PPL)
- PPL Live broadcast
- Subscription
- Personal radio station (Digital Radio, Cable or Satellite delivered)
- Premium channels (Digital Radio, Cable or Satellite delivered)
- Home Broad or Narrow Band Karaoke
Free Content and Advertising ($ from advertising)
- Broadcast with general ads
- Point-to-point with targeted ads
- Music sampler
- Free Promotional Music Channels (Digital Radio, Cable or Satellite
delivered w/built in e-commerce)
Music Selection Guide ($ for referring sales & advertising)
- Find the music you want
- Based on reviews
- Based on collaborative filtering
- Based on community
Personal Music Hosting ($ for service)
- Personal storage for your music
- Accessible on any Internet device
- Download to car or portable device
Services for Artists and Labels ($ for service)
- Matchmaking artists and labels
- eBay for musicians and bands
- Community building
Conclusions:
The Sea of Content creates a free market meritocracy, (let the best music
win). Navigating this Sea of Content creates unique opportunities
for both new and established businesses in which community is essential
and services which save time and provide reliable guidance become highly
valued.
Supporting Data:
How have consumers traditionally obtained their music?
Are the record companies really the bad guys?
Is piracy a real issue?
Are record companies irrelevant?
Are we advocates for the artists or for the record companies?
The record companies create artists - and artists create record companies.
It may cost MORE to "BRAND" a product (artist) via the Internet! The
record companies promote the brand - can an individual artist actually
build that brand name recognition without the record label?
The record companies have dictated "taste" we have relied on them to
tell us - what we want to listen to.
If we don't have the record companies - how will we decide what we want
to listen to?
How do you find it?
How do the small bands get rid of the record company and still promote
their goods?
Is it the night club taking the place of the A&R
Where does Radio fall into the equation? The house party, "Raves" -
Over the air radio is built upon the advertising model -
You have to hear the music first before they decide to buy it. They here
it for free first - then buy the bits. Now - night club -> radio
-> national radio -> tour -> big record sales.
High quality music production "at home" is possible - the distribution
problem is "solved" (Internet) - but marketing is the big problem.
HB: The mechanisms may change - but the expectations of the artists need
to change also.
A new business idea for music is making it easier for the consumers to
find AND buy the product without inter-mediation from the record companies.
What are the new digital technologies that are relevant
to music?
- Standard digital compression formats that enable convenient distribution.
- Symbolic compression (MIDI)
- MPEG4
- Inexpensive digital audio production equipment
- Digital Broadcasting technologies (Over the air, cable, Telco, and
satellite
- Data-casting
- Side band transmissions
- Subscriber based music services
- With or without a back channel
· Can you make choices, can you send information
back and forth.
- Live broadcast
- On demand broadcast
- Multi-casting
- Streaming (point to point)
- Encryption / Watermarking
- Pre-view technologies i.e. try before you buy
- Wireless
- Networking
- Storage in what ever format
- Contextual filtering
- Collaborative filtering
- Interactive playback technologies
- Personalization of the music your listening to
- Enhanced data
- Data which you may or may not be able to use, but it is included within
the file. I.e. liner notes, pictures etc..
- Meta-data
- Data about data
- Surround Technologies
What do these technologies enable?
What are the consumer issues?
- Is more choice better?
- How does this make me fit into a community?
- Usability of the hardware
- Battery Life
- Storage Capacity
- Usability of the transaction system
- Usability of the acquisition system
- Life cycle of the content
- How does it save me time?
- What makes it better than CD's?
- Audio Quality
- Cost of the transaction
- Transaction model
- Environmental Impact
- The fashion / social status aspects.
- Perception of value
- The Moral Dilemma
- Piracy & Ethics
· Can you defeat unorganized piracy with convenience?
· The perception of digital content copying NOT being considered
stealing. The original is still
"there" - so what is so wrong?
What are the content sources?
- Individual artists
- Funded Corporate
- Funded Independent
- Hobbyists
- Collaborative Development
- Back catalogue
- Live Performance
- Re-Mix
How is the content created?
- Recording
- Live
- Home
- Studio
· PC
· Hardware
· Digital / Analogue
- Solo / collaborative
- Local / remote
- Pro / pro-sumer / hobbyist / non-musician
- Hobby / Pro
What are the delivery mechanisms for digital content
today / 5 years from now.
- Internet
- Broadcast
- NAPTSTER.COM
· Decentralized, distributed servers for MP3s
- Buying Media
· Streaming, download, on-demand
- Cable
- Satellite Broadcast
- To home
- To car
· Streaming, download, on-demand
- Record-able media
- CD, DVD, Minidisk, ROM
- Kiosk - POP
- Streaming, download, on-demand
- 3G wireless data delivery
- Streaming, download, on-demand
- Terrestrial broadcasting
- Streaming, download, on-demand
Given the delivery methods - what are the selection
mechanisms.
- Chat
- Email
- Smart Agent
- Collaborative filtering (amazon.com, - people who bought this book
also purchased this book)
- The dumb agent Programmer (person)
- Booking agent
- The traditional promotional model
- Word of mouth
- Search Engines
- Content Guides
- Traditional media, rags etc..
- Chart reports
- Connivance
- Pre-views
- Ease of access
What are the promotional mechanisms for that channel:
- Traditional advertising
- Print, TV, Radio
- A&R
- Artist Incentives
- Banner advertising
- Internet style advertising buys
- Affiliate Internet alliances
- Product placement / usage
- Live
- Appearances
- Performance
- Chat rooms
- Show cases
- Direct Mail (spam)
- "Samplers"
- Internet Hype creation / buzz
- Cross promotion
- Controversy
- Coupons
What are the transaction models for that channel?
- Retail - CD Purchase
- Buying Clubs (Columbia house)
- On-Line Retail
- Digital Download
- Pay per listen
- Juke Box
- Subscription
- Rental
- Library (borrow)
- Steal (Piracy)
- Swap / Trade
- Auction o Resale
- Advertising supported
- Permission based marketing
- Incentive based
- Audience aggregation
- You give people music while they stay on your site.
Technology/Infrastructure Requirements:
(70% of transactions on the Internet STOP before
completion.)
- Back channel
- Does it need to be real time - or deferred
· Dependent upon bandwidth requirements
- Ubiquity of coverage
- Should not require internet connectivity
- Bandwidth
- Access to sufficient bandwidth at reasonable cost
- Local Storage
- Meta-data
- Needs to be standardized
- Should be regulated
- Carried within the song - encapsulated into the content
- Need methodologies for associating the metadata to the song
- Better filtering, sorting, cataloguing
- Ubiquitous access to your existing music collection
- In addition to broadcast and point to point - you have the access
to your "personal
server" from any where.
· You can play your music collection which is stored
off site - at your friends house.
- "Hot mail" Model
- Application ubiquity
· UI standardization
- Infrastructure ubiquity
- One touch convenience
- Purchasing
- Feedback
- Conditional Access
- Parental Controls
- Commerce restrictions
- Etc.
- Export guides, human navigation
- Universal identification per song
- GUID
- World wide homogenous database index
- Secured transactions
- How do they pay?
How do you "return" the bits?
Channel Potentials - growth, in decline etc..
- CD / DVD-A / Minidisk (ROM)
- Value added?
· Including compressed files with the "normal" data etc.
o Will real consumers rip their own - or would
they prefer to simply transfer the files?
· How about non-PC centric transfer functions?
o Transferring files from their CD player to
their PD!
· Maybe a situation which adds convenience for the consumer!
And therefore may help
prevent piracy!
o Higher quality mix, and integrity of materials
for the compressed format.
· No back channel for profile aggregation, personalization
and targeted advertising in
place.
· The large CD collection is a status symbol
Prediction: This channel will not shrink in the near future, but may
grow more slowly that in the past.
- Wireless distribution (data services)
- 3G @ 56kbytes now - should go to 384 then "a couple of megabytes"
in the
foreseeable future.
(This section was only completed up until this point by the group. The
remained was added
by the editor, Mark Miller of GroupProcess consulting.)
- Battery powered devices with sufficient memory storage still aways
off.
- Best hope for ubiquitous what you want, when you want it where you
want it.
- Secure billing infrastructure in place
- Back channel for profile aggregation, personalization and targeted
advertising in
place
Prediction: This channel is the least developed but could have the best
chances for long term growth
- Internet distribution (broadband and narrow band)
- The MP3 cat is out of the bag.
- SDMI looks cumbersome at best, ridiculous at worst.
- Commerce is in place, but piracy is rampant, but maybe our ideas about
Intellectual
Property are simply outdated.
- Billing system is in place but can be cumbersome
- The record companies are acting as a "delay" agent
- Back channel for profile aggregation, personalization and targeted
advertising in place
- Well developed content "search" and navigational systems
in place.
Prediction: This is the fastest growing channel right now, but is also
quite controversial. Growth looks insured but could be side tracked politics
or supplanted by alternative broadband delivery systems.
- Push (Digital "over the air" Broadcast, one way Satellite,
one way cable)
- Subscription music services are quite successful
- Local storage is extremely limited
- Billing structure is in place
- E-commerce is cumbersome
- Piracy is minimal
- "Free" or advertising supported business model is in question
- No back channel for profile aggregation, personalization and targeted
advertising in place
- Broadcasting methodology limits personalization in delivery
- US infrastructure for OTA digital broadcasting is in shambles.
Prediction: In this channel, subscription services will continue to grow
slowly and steadily but 'free' over the air broadcasting could be on it's
way out
(End of editor's addition)
Business idea: The Service model
- Consumers purchasing a license instead of the bits. Can play
them back, anywhere or anytime. Their "collection" - exists on
some monster database somewhere and they can create play lists etc.
- What you want, where you want, when you want it.
- Piggy backing compressed files onto "normal" media
- Fighting piracy through convenience
- Not a PC centric model for feeding PD devices
- Re-purposing the catalogues for surround reproduction
- DVD-ROM is emerging
- Multi-channel
- Hi-resolution
- Back catalogue conversion
- CD's may be phased out in favor of DVD
- Cars are preparing for multi-channel sound
Facilitating the access to new kinds of music - can expand the music
industry.
Facilitates instant commerce possibilities
Question: Do you buy and own the bits and cart them around with you -
or - do you access them whenever you want?
Business models:
- Subscription services: Bandwidth vs. Storage vs. Convenience
o Much less cost per song - because it is shared
bandwidth
o Personalization required bandwidth - added
value
- Pay channels (premium content)
- Free channels
- Content aggregation channel
· One that goes out and gathers all the data that
the consumer "owns" and puts it in one place for access.
- TiVio model
· Recommends music for you to listen to etc.
- Per transactions
· Micro-transactions made on a monthly basis, billed
monthly - i.e. cell phone model.
- Personal Music remote site hosting.
· Music ISP (Hotmail for music) - HOTMUSIC!!!!!!
o You just buy the "keys"
o They store and convert the data for
you
- Pay per play
- Buy & Download
- Promotional Models
- Always free - but driven by the "channel" owner
- Profiling models
- As long as you provide feedback - you can get free service
- Locale storage provides information on both what you buy, like etc.
but what you had
to "throw away" to get the new data.
- Community profiled
- Based on the play preferences of the group.
- Record companies are going to become their own radio stations.
- The advertising (commercial break) model maybe on the way out.
- Advertising Model
- Expert guide to music
· Search engines
· Content providers pay for posting
- Helping new bands navigate up the meritocracy
- "Real world" agent model
- % of the bands take
- Soundsbig.com
- An Internet Record company
· Promotions, productions, producer, booking agent,
etc.
- Garageband.com
· An incubator for new bands.
- Match making
- Musician stock exchanges
- Auctioning musicians services
· Lounge acts § Lead singers
· The EBAY for musicians
· Electronic Booking services
o Homeimprovement.com
- Internet DMX
- Subscription channels for music
- Internet Broadcasts
- Pay-per-view of live events
· I can listen to a live concert happening anywhere
in the world
- Pay per view of pre-recording events
- Subscription Karaoke
- In the home
- In the car
- Bar
- Local Content Aggregator
- Remote broadcast
- Studio & remote recording
- Community portal
- News & Information
- Feeding the "central" database
- Selling side band - bandwidth along with popular content
This is a very questionable end of a business.
Appendix #1: SMDI Discussion:
- Generation 1 specification - really to "wrap" the portable digital
devices.
- The PC is a "safe" haven for digital recording
- How to stop the proliferation of illegal MP3 files, and then to supplant
that format with a "safe" format.
- Entice the consumer to purchase the new devices for music from the
internet.
- The MP3 world basically has to be written off - yes the cat is out
of the bag, but "so
what."
- Internet -> application ->LCM - Licensed compliant module -> PD
- A SDMI licensed device cannot play "clear text" MP3 files - the files
must go through the software "system" - to get to the Portable Playing
device.
- The labels must get together and insist that they will not distribute
data in any other manner than via SDMI authorized avenues.
- The apps & LCM does some screening to prevent the proliferation of
copies of CDs. Defaults to allowing up to 4 copies. However, data
from the net - carry their own specific rules - i.e. 2 copies, 1 million
copies etc. all apps / LCM must honor the rule with the data.
- PD can't transfer music back to the system - only the check in/check
out license.
What will be the price of a individual song? $1.00, $2.95 - the market
will decide
JR: If it's too expensive - you'll steal it.
* Must Reject content in a state that is reflective of DVD audio
The state of the SDMI v1 spec - is pretty close to being closed except
for the patents on the watermark. Aris is the technology company
behind the watermarking.
Would the consumer prefer to have an incidental transaction model vs.
some other model
section 5
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