70% Of Cloud-Based Music Users No Longer Use P2P Music Services

In a survey recently conducted by Thumbplay, 70% of respondents reported that they have stopped using Peer-to-Peer P2P services since engaging Thumbplay Music. Thumbplay Music, which works on numerous devices across all major smartphone platforms in the U.S., is one of the most widely-available cloud-based streaming music services in the U.S. More than 500,000 people have downloaded Thumbplay Music to date; nearly 70% are male and the largest user group for the service is 25 – 34-years-old, followed closely by 35 – 44-year-olds. Thumbplays popular, feature-rich app with more than 10 million songs has been publicly available on Android, Apple and BlackBerry smartphone platforms since June 2010. It is also available for PCs/Macs.

- 70% Of Cloud-Based Music Users No Longer Use P2P Music Services

Spotify Bleeding From Licensing Costs

_{Photo courtesy of madstreetz}

- Spotify Bleeding From Licensing Costs

Warner Music Group Reports Results

Total revenue of $752 million declined 13% from the prior-year quarter, and was down 12% on a constant-currency basis. Full-year 2010 revenue declined 7% to $2,984 million, and declined 9% on a constant-currency basis. Digital revenue was $197 million, or 26% of total revenue, up 7% from $184 million in the prior-year quarter on both an as-reported and constant-currency basis. Digital revenue grew 10% sequentially from the third quarter of fiscal 2010, or 9% on a constant-currency basis. Full-year 2010 digital revenue rose 8% to $759 million, or 25% of total revenue, and grew 6% on a constant-currency basis.

- Warner Music Group Corp. Reports Results For The Fiscal Fourth Quarter And Full Year

Digital Music: Spotify, Google and Grandfathering Label Deals

Last year, around the time that Apple acquired music service Lala, Google and Spotify were deep in acquisition discussions, says a source with knowledge of the negotiations. Ultimately no deal happened, and the two companies tried to negotiate a deal to have Spotify pre-installed on all Android phones instead. But the deal almost happened, says our source, and Google was going to pay nearly $1 billion for the service. Ultimately the deal went sideways because Google was demanding that all label deals be grandfathered in. And Spotify wanted a $800 million+ walk away fee if the deal faltered (Google had a similar provision in their Admob acquisition).

Here’s what “grandfathering” label deals means: The deals that music labels do with online music companies contain a provision that if the company is acquired, the deals terminate. That’s exactly what tripped up Facebook when they were looking to acquire or partner with a music startup a few years ago.

- How Spotify Almost Sold To Google For $1 Billion, Plus New Apple Rumors

On Money, Music Startups and Failure: Imeem Tells All

Dalton Caldwell, one of the co-founders of Imeem, spoke recently at a Y Combinator event about lessons learned from Imeem’s depreciation and subsequent firesale. The lecture was a revealing discussion of a number of topics, including music business models, tools for independent musicians, download stores, subscriptions, and revenue models.

Of course, the issues that Caldwell dealt with during his time with Imeem still very much impact entrepreneurs today. We are frequently approached by startups that have built amazing products premised on the ability to stream, download or otherwise include music. The inability to effectively and affordably secure those rights can lead to a failure to launch or a failure to create a viable business. VentureBeat has a great article summarizing the pifalls discussed by Caldwell:

For one thing, each licensing deal with the music labels tends to include a minimum quarterly payment that startups have to pay, even if their revenue doesn’t meet expectations. Also, in most models, Caldwell pointed out, the costs are high enough and the margins are low enough that you’d have to sell an unrealistically high amount of music to break even. Plus, most of these offering types are already saturated with competition. Finally, even if you want to sell your startup to another company, there’s a big problem: In every licensing deal Caldwell said he has seen, the record label has the right to renegotiate or pull out of the deal if you get acquired.

All of this reminds of a recent infographic outlining the operating costs of Pandora, created by former MP3.com CEO Michael Robertson.

ASCAP Loses Major Music Download Appeal Case; Blanket License Fee Calculation Remanded to District Court

Is a song download a public performance?

In a strongly worded opinion coming out of the US Second District Court of Appeals last week, the court ruled against ASCAP and remanded the case, which involved Real Networks and Yahoo.

The court (decision available here in full text via Film Music Magazine) analyzed existing copyright law and precedent extensively. The meaning of the word “perform”, defined in Section 101 of the US Copyright Act as “to recite, render, play, dance or act it, either directly or by means of any device or process,” had a significant impact on the decision.

As Film Music Magazine noted, the decision “in large part hinged on the fact that a download does not include a ‘contemporaneously perceptible event’ – that during a download, the musical work could not be heard or listened to.”

We’re looking forward to seeing how this decision will impact our new media and technology clients, for whom the difference between a download and public performance can sometimes mean thousands in royalties.

Apple in talks for iTunes music subscriptions, blocks Spotify in the process

“Just as we’ve heard many times over the past few years, Apple is apparently in talks with music labels for a subscription-based iTunes plan that would give customers unlimited access to songs for a fee, the New York Post reports.

Sources tell the paper that Apple’s VP of internet services Eddy Cue, who heads the iTunes and App Store teams, has been in talks with music executives as recently as a few weeks ago. Apple has in mind tiered pricing for the service between $10 and $15 — but it still needs to work out issues with the labels like how much music to include in every tier, and how long consumers have access to content.”

- Apple in talks for iTunes music subscriptions, blocks Spotify in the process

German Rights Society GEMA Squeezes YouTube

The fight between YouTube and the German collection society GEMA is heading into the next round. GEMA announced today (Sept. 30) that they will file a case for principal proceedings in the next few weeks against YouTube. GEMA’s legal challenge aims to prevent YouTube from making 75 compositions available online. The video site’s license with GEMA expired March 2009. Negotiations for a new agreement have stalled.

- GEMA and YouTube to return to court

It’s interesting to note that YouTube was able, on the other hand, to reach a deal with French collection society SACEM. That deal applies retroactively to all works since YouTube’s launch in France in 2007.