BPN 1061 Of sopranos and music companies

It looks like the online music business is changing. A soprano from Google, Douglas Merrill, has joined EMI to work on the download challenge. Sony BMG has announced its own download service. And the great labels team up with social networks like Myspace.

So far the music industry has gone through cycles of illegal music downloads and music download services by third parties. The reaction of the music industry to illegal downloads has been one of persecuting. And they were most happy to offer their collections to third parties which created download services. It is typical behaviour by publishers, be it music or print publishers: they first cry foul on copyright breakers and after that phase the offer licenses to third party download services. It is unbelievable that the music companies do not see it as their own task to set up own services; this while they see their revenues going down. Last year they lost nine per cent of their revenue stream due to illegal copying, but they picked up income from third party download services.

Now the third development after illegal downloading and third party download services is coming on stream with investment in their own download services. You wonder why the companies did not think about their own download services earlier. It is of course quite an investment and technical challenge. But the music companies use to have enough money and technical knowledge you can buy.

So what will be the difference with third party download services? There will be disadvantages and advantages: the offer will be limited to company owned music and songs, but the prices might go down or even be settled by a monthly subscription. Another benefit might be that the music companies finally will offer their backlist of music and songs; presently the big companies offer only five per cent of the music they have under contract. Of course the user will have to subscribe to more than one company service in order to get the range of music and songs, they want. So the music companies will have to find how they can work together in a meta service, offering the full assortment of their backlists.

But it is not only their portfolio and technology. They will have to market themselves to the audience at large. This they have never done before, as they only were dealing with wholesale and retail. Now the music companies will have to address the consumer and that is a different beast. Besides they have to change their image of hunters for breakers of copyright to an innovative and reliable company.

I think that EMI and Sony BMG are finally responding to the challenges and I love to see their download services as far as assortment, price and customer service. Of course you can hire Google sopranos, but you will have to see whether they can sing with the company’s orchestra.

Blog Posting Number 1061

Tags: music industry, download service, backlist

Toshiba sells movie and dvd division

The Japanese consumer electronics company Toshiba sells its movie and dvd division to the advertisement bureau Hakuhodo. No financial details have been published.

Toshiba will withdraw from the entertainment industry and focus on the manufacturing of consumer electronics, chips and nuclear technology. Last year Toshiba already ended its co-operation with the British music company EMI.

Toshiba follows the example of Philips. In 1996 this company did a strategic study into the future of the company. The company decided to withdraw from the entertainment industry as it was impossible to develop content devices which need for example DRM. As a consequence Philips sold off its music company and it’s CD-I publishing company. In 1998 the Canadian company Seagram acquired Philips music division Polygram. CEO Boonstra decided in 1996 to sell off the CD-I publishing company Philips Media to Infogrames.

The news item of Toshiba’s sale of its movie and dvd division did not get much attention in the press, but I think that it will have implications, especially for the dvd world. Toshiba has been the leader of the HD-DVD consortium, a promoter of one of the two second-generation DVD technologies.

It was not the first time that Toshiba pushed for a different DVD standard. When in the late nineties the CD-ROM technology had matured and the necessity to store movies on a DVD came up, Philips and Sony formed a consortium of technology and movie companies, while Toshiba brought also a consortium of software and movie companies together. Sony had an audio and video division just as Toshiba had. As interested party in the movie industry Toshiba had direct interests in developing an own standard, saving its subsidiaries license money. When the fight came to a head in 1998 IBM stepped in and Philips CEO Jan Timmer played the mediator role. After some head banging, the companies worked together towards one common standard.

But with the development of the second generation DVDs, the same division showed up again. Philips and Sony developed Blu-Ray on the basis of their pallet of licenses. Toshiba reeled in Microsoft for the development of HD-DVD. Now the companies let the people choose; and they do not choose yet.

But with the sale of the movie and dvd division, the immediate interest of Toshiba in the HD-DVD technology might be over, as there is no longer a world to win with HD-DVD technology and content. It could mean that Toshiba might loose its appetite to push the HD-DVD. It would not surprise me if in a few years time HD-DVD is a passed station.

Blog Posting Number : 731

Tags: CD-ROM, DVD, Blu-Ray, HD-DVDCD-ROM, DVD, Blu-Ray, HD-DVD