"What to Expect in the Future of Digital Music"

I went to an MIT Enterprise Forum talk a couple of nights ago about “What to Expect in the Future of Digital Music.”

Here are the highlights:

  • Music is second only to sex in quantity of web pages served.
  • The oft-quoted “2%” online sales of music has grown to 3% which is actually a very significant amount of growth (50%).
  • The music companies are recognizing how music can drive advertising, which is why they started charging the online sites (AOL, MSN, Yahoo) for the use of their music videos. It reverses the relationship whereas in the past those online sites were seen as an avenue for music promotion – now they are an avenue for income.
  • Everyone agreed the phone will be the next huge thing in digital music – and pretty much everything else. Phones will just keep getting cooler and cooler.
  • The Universal Music Group is selling 3 million tunes a week online – up from 100’s a week just a few years ago.
  • Rhapsody serves up 400,000 unique music cuts a month; compare this to the fact that there are at most 40,000 different CD titles available in retail; that’s the equivalent of Rhapsody selling one of each tune available at retail every month (except, from a larger catalog). (I hope that makes sense and I hope I understood those numbers correctly.)
  • Rhapsody’s future will be built on (1) incredible ease of use; and (2) music playlist sharing across the entire universe. Or something like that. The vision was “I hear a tune, I press a button to remember it, and I can listen to it anywhere – home, work, car, jogging.”
  • Music producers earn 1%-3% of all retail revenue from music they produce forever!
  • On the radio (terrestrial radio), writers get compensated for music that is played, but the artist and publisher/distributor do not! So Paul McCartney gets something for every single version of Yesterday (Muzak, whatever), but only as the composer – he gets nothing extra (from radio) for being one of the Beatles. (I guess Yoko Ono is raking it in too.)
  • Video ring tones for your phone are coming – never mind that as soon as you might see it you’ll be answering the phone. Someone thinks this is a good idea. (Presumably you would show your video ring tone to your friends more often than you would actually watch it before answering the phone.)
  • Who makes all that money on iTunes? Apparently it goes 1/3 to iTunes, 1/3 to the publisher, and 1/3 to the artist. Not sure how that last 1/3 is carved up between the writer and/or performer.

    © 2005 Stephen Clarke-Willson - All Rights Reserved.