Category: free
Are blue-chip companies unknowingly supporting pirate music sites?
Pirate-music sites offering free music downloads are being indirectly funded by a wide range of blue-chip companies. A survey conducted by Music & Copyright in the UK has found that all of the companies whose advertising appeared on a selection of pirate sites were unaware of the ads’ presence. Should these companies know where their ads are going? Continue reading
Has digital music failed or are the digital expectations simply too high?
An often repeated conclusion at this year’s MIDEM conference, as well as in subsequent news reports on the state of the music industry, was that digital music services have so far failed. Digital sales are still not offsetting the decline in physical sales, they have not managed to maintain the format replacement cycle and they are not competing with piracy.
It is certainly fair to say that the music industry is having a very rough time and digital is not proving to be the saviour that many thought it would be. But should we really expect any other conclusion? Have digital services failed or have we just set the bar way too high? Continue reading
Big differences in Beatles album pricing
With much of the hype surrounding the Beatles’ music being added to iTunes now starting to fade, all attention is turning to chart placings for both single tracks and the albums. Despite Apple winning the race to secure the digital exclusive on the Beatles, CD versions of the albums are likely to see a sales increase on the back of all the free advertising.
Music & Copyright has conducted a quick survey of some of the leading online CD retailers in the UK to see what, if any, pricing differences exist between the digital versions offered by iTunes and the retailers’ CD versions. The results were quite surprising. Continue reading
A global online-music pricing update
There is little correlation between the level of development of an online music market and the number and type of services available. For example, Hungary, which has a weak online music market, has only a few services, but two of them are subscription services, which are considered a newer business model. The number of services in a country also reveals little about the maturity or value of a market. Brazil has over 20 music services but is still a small online music market.
The three most developed online music markets – those in the UK, the US and Japan – all look very different regarding the availability of services. In Japan, over 90% of music services are a la carte, with few subscription services. In the US, two-thirds of services are a la carte and one-third are subscription. Many of the subscription services launched in 2009, but some, such as Rhapsody and Pandora, have been established for several years. The UK has the most diverse music market of the three, with a la carte, ad-funded streaming, bundled and subscription services available. However, the majority of all services are still a la carte.
There is no clear development path whereby as a market matures new services of one type are launched. This is probably because of the national differences in royalties and the strategies of the four major music labels, which do not have a blanket digital policy. Europe is likely to see some homogeneity in the near future as the European Union attempts to make it easier for providers to get Pan-European licenses.
A la carte services dominate
Globally, a la carte is the dominant business model for music services. For Japan and Belgium, over 90% of music services are a la carte. The countries with the lowest proportion of a la carte services are Spain, Poland and Hungary. Single tracks cost close to US$0.99 for most services. In several European countries, this is the lowest price that can be paid for a single track. In the UK, where several new entrants are large companies from other industries, some tracks cost only US$0.46.
South Korea and Russia are the countries in which single track cost the least: between US$0.11 and US$0.52 in South Korea and between US$0.28 and US$0.79 in Russia.
Album prices range between just over US$6 in Russia and more than US$30 in the Netherlands. The most common low price for albums is between US$7 and US$8. There is no single price point for which the majority of albums can be bought for globally.
No homogenous price for subscription services
Subscription services are the second-most-popular service type in many countries. France has the largest number of subscription services relative to total available services, while the US has the largest number of subscription services overall.
In contrast to Japan, where a la carte is the prevalent business model, over half of South Korean online music services are subscription-based. These services offer prices between US$2.18 for 40 songs to just under US$27 for unlimited downloading.
With the publicity that has surrounded it, it is often assumed that Spotify has set the de facto price for music-subscription services, at €9.99 (US$13.50). And although it might be true that some new entrants have copied that price, there is still a real divergence in pricing across this market segment (see fig. 4). Cost of a subscription to streaming services in the US varies from US$3 for ad-free use of Grooveshark and US$5 for unlimited streaming from Napster to US$15 for MOG’s premium service, which includes streaming to the mobile phone.
In the countries where it is available, eMusic’s premium service, US$29.79 in Europe and US$24.99 in the US, is the most expensive. In countries where both are present, eMusic’s €11.99-a-month basic package is more expensive than Spotify’s Premium service.
Bundles and ad-funded streaming yet to make an impact
With services including TDC Play and Touchdiva, Denmark has the highest percentage of bundled music services in countries tracked. With only two services, it is far from being the dominant business model, and few are likely to want to compete with the established TDC service.
Despite TDC Play’s success, bundling a music service with a broadband service is something only a few other operators have done. Part of the reason for this is music labels’ reluctance to allow operators in larger markets to provide a similar service. In the UK, Virgin announced it would offer an unlimited service, but it has failed to bring the service to market a year after the announcement. Telefonica is among the few other incumbents to offer a music service that is bundled with its broadband service, though it also offers the service to nonsubscribers.
Nokia’s Comes With Music service is the only bundled service from a mobile phone vendor. Despite the service’s mixed success, Nokia continues to introduce it in new countries. Other handset vendors are unlikely to follow, but some PC vendors, through partnerships, are launching similar services in 2010.
In the countries tracked, there are only seven pure ad-funded streaming services. Weakened ad spending and the inclusion by established providers are the two key factors. Spain and France have the highest prevalence of ad-funded-only streaming services. But one of Spain’s largest players, Yes.fm, had to close its service because it found that ad revenues could not cover royalty payments. It has since re-launched as an ad-funded service with a subscription tier available.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Evidence builds that stronger legal action against file sharing is turning round the fortunes of the music industry
The world is just emerging from one of the worst recessions in history and many countries around the world are only just starting to record economic growth. Despite this, 2009 may be the year recorded music sales started to turn a corner. The question many are asking is, what part has tougher legal played in the turnaround?
The global trade association the IFPI has published figures on the global music industry. Unsurprisingly, physical sales were down and digital sales were up. Digital is not yet compensating for the physical decline so the overall recorded music sales figure was down, by just over 7%. But this year’s report included details of quite a few countries that registered growth in 2009 compared with 2008, 13 to be precise. In six of these, growth in digital sales more than offset the fall in physical sales. In Brazil and Sweden, the sales improvement has been achieved by a rise in physical as well as digital sales.
The Swedish effect
Much has been written of the return to growth by Sweden. Earlier this year the local Swedish IFPI association said that the trade value of recorded-music sales increased 10.2% year-on-year in 2009, to SEK861.4 million, marking the first rise in the trade value of sales since 2000. Although the trade value of digital sales almost doubled, physical-album shipments rose by 7.6%. Extensive media coverage of the implementation of the IPRED law at the beginning of April, which allows rights holders to gain access to an infringing subscriber’s identity details, as well as coverage of legal action against the creators of The Pirate Bay torrent tracker site earlier in the year are thought to have been the main reasons for music sales growth. A GfK study in June last year found that 60% of file sharers had stopped using peer-to-peer networks.
Similar evidence of legal action changing file sharers’ attitudes is evident in France. The publicity surrounding the HADOPI legislation, which allows for the sending of warning letters to Internet users that infringe copyrights, was fairly intense in the second half of last year, a period that also saw a rise in the trade value of music sales. Although the trade value for the full year fell by 3.2% compared with 2008, for the final six months of the year the trade value actually increased by 9.3% compared with the same period in 2008. A similar pattern of growth continued in the first three months of this year with the local trade association SNEP reporting a rise in both physical and digital sales compared with the same period of 2009.
Some doubt over the effectiveness of HADOPI was cast by a study conducted by researchers at the University of Rennes which found that illegal downloading has grown by 3%. The study also found that of the 2,000 Internet users surveyed in Brittany, 5% had stopped file sharing, but 10% had switched from P2P to alternative methods of illegal downloading. The IFPI dismissed the study this as “nonsense” as it was conducted before any warning letters had been sent out.
The evidence grows
In the cases of France and Sweden, most would agree that it is too early to hail tougher legislation as the music industry’s panacea and 2010 results will probably present more compelling evidence. But there are several more countries that have also seen improvements in sales following a move to more rigorous intellectual property enforcement. IFPI sales figures for South Korea in 2009 and 2008 show large sales increases coinciding with the introduction of tough new laws. While South Korea still has some way to go before it reaches the peak year of 1996, when retail sales totaled Won415.6 billion, last year’s sales figure of Won364.3 billion is a significant move closer.
Some countries have experienced a slowing in the levels of falling sales with no new national legislation. For example, Germany has consistently stated that it would not impose any graduated response system to combat file sharing. But German rights holders do have some recourse to protect their intellectual property. To begin with a warning letter is sent to an Internet user identified as infringing copyright. The offender is invited to sign a cease & desist letter and to pay compensation. If there is no agreement on a settlement, the issue is then taken to court. Is it a coincidence that the decline in the trade value of recorded music sales in Germany has slowed at the same time local rights holders have been sending out warning letters? It would appear not. The German trade association the BVMI has recently presented details of a study on the level of file sharing in Germany, which shows it declined last year.
Unpopular in some circles as this may be, there is growing evidence that legislation is having an effect on the attitudes of file sharers. New examples are emerging that illustrate an improvement in music sales following the introduction of tougher measures to control copyright infringement. Although some countries are closing in on the point where sales can’t fall anymore and growing investment in new digital services is leading to increased user interest, it would appear that legislation is the answer, in the short term at least. Do you agree?
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Sony Music makes gains on dominant Universal in 2009
SME was the only music company to record an increase in market share for all sectors tracked by Music & Copyright in 2009. SME’s recorded music division narrowed the gap with the global leader UMG and although Sony/ATV remained the smallest for the four major publishers, it has closed in on third placed Warner Chappell.
UMG maintained its position as the largest recorded music company and music publisher for the fourth consecutive year in 2009, despite losing market share to its rivals. UMG’s share in terms of revenues generated from the sales of both physical and digital recorded music decreased to 27.7% from 28.6% in 2008. In contrast, SME saw its share increase to 23.1%, narrowing the gap with UMG to 4.6 percentage points.
For music publishing, Music & Copyright has calculated that Universal Music Publishing’s (UMPG) share of global publishing revenues decreased to 22.9% in 2009 from 23.2% in 2008. UMPG became the largest music publisher in the world following Vivendi’s purchase of BMG Music Publishing in 2007. Prior to UMPG taking the lead, EMI Music Publishing was the largest publisher in the world. It remained in second place in 2009 with an increased share of 19.3%.
According to Simon Dyson, editor of Music & Copyright, “2009 was a good year for SME with the company increasing its market share for both physical and digital sales, the only one of the four majors to do so. EMI’s publishing division also performed well last year, closing the gap with Universal.”
Totaling all the revenues received by the major music groups (recorded music sales, music publishing and general licensing including neighboring rights etc), Music & Copyright has calculated the figure for 2009 stood at US$22.15 billion, down 6.8% on US$23.77 billion in 2008. UMG was the leader in 2009 with a reduced market share of 27.2%. The overall successful year for SME saw it close the gap on UMG with an increased share of 20.9%.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Are existing laws, existing education and existing understanding of consumer behaviour insufficient to deal with ‘piracy’?
Recently a UK Government advisory body – the Strategic Advisory Board for Intellectual Property (SABIP) – has bucked the trend by calling for an urgent investigation into consumers’ attitudes and behaviour in relation to offline copyright infringement. It says that too much focus has been placed on looking into online peer-to-peer file-sharing. SABIP is concerned that physical copying by swapping hard drives and memory sticks has been overlooked and may pose a greater threat of piracy than online copying. Although SABIP believes that there is a lot of offline copying taking place in this way, it says that further research is needed to establish the extent of it. Initial SABIP research (conducted by BOP Consulting) shows that consumers are more interested in price, quality and availability of material than whether it is legal or illegal. The natural implication seems to be that if legal material happens to be better quality than unlawful copies, that will influence consumers to buy legally. That is food for thought, particularly in light of the following survey of legal purchasers – who break the law.
73% of 2000 people surveyed by Consumer Focus in the UK admitted to being confused by what they were legally permitted to copy or record. Most of the consumers did not know that it was illegal to copy something that they have legitimately paid for (such as a CD) over onto another medium (such as a computer) for their own personal use. Consumer Focus accused the current copyright laws of being outdated and not reflecting what consumers reasonably believe to be the case when using music just for themselves to listen to. Indeed, it seems clear that many people who are not illegal peer-to-peer file-sharers are still clearly breaking the UK’s copyright laws, despite not realising it. The congruence between the law and what people believe to be the law seems to be in a bit of a mess.
Turning to online protection, in the UK, initial steps to enforce the law seem to have failed. The first prosecution in the UK of a person charged with illegal peer-to-peer file-sharing ended with a not guilty verdict. A man ran an unauthorised music-sharing web site called Oink from his home in the North East. The site allowed members to share files. From its launch in 2004 until police closed it down in 2007, over 20 million music files were shared. Users had to make a donation to the site so that they could invite friends to become members too. The site operator made a considerable amount of money – some £10,000 a month, in donations. However, the site operator was found not guilty of the offence of conspiracy to defraud by Teesside Crown Court.
In Australia, a court ruled that an Internet Service Provider (ISP) was not liable for the unauthorised peer-to-peer file-sharing habits of users to whom that ISP merely provided access. Roadshow Films claimed that iiNet (an ISP) had authorised copyright infringement by its users, but the Australian Federal Court disagreed. The judge said that the fact that copyright infringement was occurring on a wide scale across the ISP’s network did not mean that the ISP had authorised the wrong-doing as it was not compelled to stop the infringements. Mere knowledge that infringement was taking place was not enough. As with English law, Australian copyright law forbids the doing or authorisation of the doing of anything which infringes someone else’s copyright. The two legal systems have common roots, and the decision may therefore be persuasive (although not binding) on similar English court cases.
Over the past few months, the UK government has turned to a different approach with its Digital Economy Bill. When passed, the Digital Economy Bill will see file-sharers being identified, warned and ultimately stopped from having full Internet access. There is some recent uncertainty whether the Government has shifted its position in the Digital Economy Bill and adopted a more lenient line in respect of illegal peer-to-peer file-sharers. Instead of cutting off persistent file-sharers from the Internet, the Government now says that their accounts will be temporarily suspended – although it is unclear what this means. It is not clear if this is a change or not. According to Jim Killock, of the Open Rights Group – a body against the proposed legislation – nothing has really changed. He says that temporary account suspension still means that families will be stopped from using the Internet.
As to cost – the Government has announced that rights-holders will have to pay 75% of the cost of dealing with Internet pirates under the proposed Digital Economy Bill and ISPs will be required to foot the balance of 25% of the cost – although the entertainment industry had hoped for a 50/50 split.
However, the law may say (or be about to say) one thing but the technical ability to identify file-sharers is far from fool-proof. Indeed it would seem to be a pre-requisite to any enforcement under the Digital Economy Bill that file-sharers are identifiable. Recently, Virgin Media announced that it is planning to trial new software called CView which will analyse file-sharing by its customers. However, Privacy International – a privacy rights watchdog – has taken issue with the ISP’s actions and has asked the European Commission to report on the legality of the proposed software use. Privacy International claims that the trial would breach the Regulation of Investigatory Powers Act, under which it is a criminal offence to intercept communications without consent unless certain exemptions apply. However, Virgin Media counters that it is not actually identifying individual users. Instead, it is conducting the trial to see how much of the traffic through its service is illegal file-sharing. It wants to find out what it can do to reduce illegal file-sharing and the trial will give it useful information to help to achieve that. Virgin Media has admitted that it would be possible technically to use the deep packet inspection software to identify Internet protocol addresses (from which individual users could be identified) but has announced that this is not currently its plan.
Importantly, Virgin Media claims that CView will not help with the proposed Digital Economy Bill precisely because it says that CView does not actually identify anyone.
It seems that the ability to identify file-sharers as file-sharers beyond a reasonable doubt (the criminal standard of proof) or even on a balance of probabilities (the civil standard of proof) remains in doubt at present. That must surely put the utility of the proposed Digital Economy Bill in doubt too.
Ways to deal with file-sharing seem to be in state of flux. It is not just files that are being shared – the problem is being shared as well – between those responsible for the legal aspects, the technical aspects and the educational aspects of this modern problem. And, of course, by those losing money as a result.
This blog entry was written by Mark Weston, who is a partner at Matthew Arnold and Baldwin LLP. There he heads the Commercial/IP/IT team. He joined in 2004 after many years in the Magic Circle law firms. Although Mark’s team deals with non-contentious and contentious matters, Mark’s own practice has primarily evolved focus on non-contentious matters in all areas of commercial law, information technology law, intellectual property law and Internet and on-line commerce law.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Could blanket licensing for ISPs be the solution to file sharing?
In most developed music markets around the world, associations representing rights holders, music companies and performers are engaged in negotiations and discussions with governments to develop guidelines, and in some cases legislation, to control the level of file sharing across P2P networks. Almost without exception, ISPs have come out against such measures. Whether ISPs have benefitted from illegal file sharing through higher subscription numbers is perhaps an argument for another day. But are ISPs missing an opportunity to cash in on file sharing and at the same time be the solution to a problem they have helped exacerbate?
Several ISPs already offer bundled music services as an extra option on top of their regular subscription price and have reported significant interest. There is also evidence to suggest that bundled services could become popular with consumers. Last year, research from Entertainment Media Research/Wiggin for the 2009 Digital Entertainment Survey revealed that regular downloaders of unauthorized music said they would be willing to pay for legal content if it were bundled with the price of their ISP connection. The problem is, all of these bundled services have concentrated on trying to entice P2P users away from file sharing. Advocates of monetizing file sharing point to the fact that the system has been largely created by consumers, which in the process have formed the largest-ever repository of music. Since music is already a shared medium, why would so much effort be concentrated on changing consumer behavior, particularly since consumers have already given a clear indication of what they want?
Providing a blanket license to an ISP that legitimizes the behavior of file sharers comes with an almost innumerable list of considerations. How payments to rights holders and music companies would be determined and the fairness of imposing a fee for all ISP subscribers regardless of music use are just two of the most obvious. But these are not insurmountable. Applying a fee for a service brings with it issues of quality and service guarantees. If a file shared is substandard – a not-uncommon occurrence in the world of P2P – then whose responsibility is it to rectify the problem? On this issue, perhaps, file sharers would most likely accept this in the knowledge that their actions were not deemed illegal and that rights holders were now receiving a payment for their services, in the same way authors and performers do for use of their content through public performance.
One of the central issues and perhaps the most crucial to the adoption of such a system is price. Establishing a level that is acceptable to Internet subscribers and rights holders is problematic but not impossible. Music & Copyright has crunched several numbers and come up with some simple guidance where the debate surrounding the possible fee level could begin.
Taking France as an example, the trade value of online music sales (excluding streaming) totaled €38.3 million in 2009. That is the equivalent of an average of just over €2 per internet subscriber. To use this figure as a pricing guide is obviously much too simplistic, because it does not take into account physical music purchases or purchases via mobile. It also assumes no shift in music-buying patterns, which would inevitably occur if an ISP fee were added to a broadband subscription. Let’s take the per capita guide to the other extreme, if the total 2009 music-sales figure (online, mobile and physical) were used and all music sales in the year were made via broadband, the per capita trade-value figure for 2009 would be slightly over €31, or €2.60 a month. It’s equally fair to suggest that this guide figure is only slightly less flawed than the previous one, because it does not address the monetization of the considerable amount of music shared via P2P – the whole reason to add a fee in the first place.
Estimating the number of tracks illegally shared online is speculative. At the press launch of the IFPI’s Digital Music Report 2010, published last month, the global trade body estimated that 95% of all downloads are unauthorized. If that figure were accurate for France and the published trade value of online sales were just 5% of possible value, then factoring the 95% into an online-sales-only calculation would put the annual ISP fee at around €40 (€3.40 a month), or €70 (€5.84 a month) if the figure for mobile and physical were included. It should also be noted that these figures are based on trade revenues and do not include author’s/artist royalties or ISP management fees. However, the inclusion of these figures would still result in a surprisingly low figure and one that is comparable with many of the “unlimited” DRM-protected subscription service fees charged by ISPs.
ISPs have resisted any price increases to compensate for file sharing and would most likely see the above as anti-competitive. But if a “P2P monetizing fee” resulted in a reduction in churn, the benefits to an ISP would extend far beyond solving their perceived aiding of file sharing and include the generation of more revenues and lower expenses through greater subscriber retention. Music companies may also have an incentive to pursue such an approach, particularly if the problem of file sharing can be solved without alienating their customers.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Is anyone making any money from streaming?
There seems to be a considerable debate at the moment about whether or not artists and rights holders are earning significant revenues from streaming. The debate was started by an analysis by Billboard magazine on the worth of online streaming to artists. It described the earnings by the top artists from on-demand and non-interactive streams as being “shockingly low”. One notable finding was that only 10 out of the 100 artists analyzed earned above US$2,000 from non-interactive streams last year. Beyonce was top with just US$5,000. Billboard concluded by saying that it was understandable that artists and music companies were nervous when it comes to supporting streaming as the future of the music industry.
Earlier this week the Billboard findings were picked apart by the Radio and Internet Newsletter (RAIN). It contacted US digital-recording-rights-collection body SoundExchange to try and verify the Billboard analysis. SoundExchange gave a very different view to Billboard, with its spokesperson describing some of the findings as being “wildly off the mark”. SoundExchange was also quoted as saying that “more than a thousand artists received more than US$2,000 from SoundExchange for non-interactive webcasting only”. In addition to this revenue source, SoundExchange also collects royalties from other non-interactive streaming services via satellite and cable. One other interesting statistic provided to RAIN by SoundExchange was that the top earner from Internet radio made a six figure sum.
One figure Music & Copyright can add to the pot is that the online radio service Pandora made a payment to SoundExchange last year of around US$30 million. We have calculated that Pandora accounts for about 1% of all US Internet radio, so although the total sum paid is still small, it would be wrong to dismiss it altogether.
RAIN was quite right to conclude that Internet radio “benefits artists in many ways beyond simply the royalties it pays”. It also suggested that it should not be judged simply by its worth “on the royalty revenue it generates for artists”. There seems to be a clamor at the moment for digital music services to make large sums of money for artists and music companies quickly. Such demands are, on one hand, understandable, with music companies having lost so much through online file sharing. But to decry a new service as not worth supporting just as it is becoming established, and at a time when large numbers of consumers are still downloading music through P2P with artists and music companies receiving no returns, is surely a mistake.
Comparing the Billboard/RAIN findings with other countries around the world is difficult. Most European collection societies publish online revenues as one figure. In the UK, for example, total online revenues increased by 81% between 2007 and 2008. However, it should be noted that this was from a low base (£9.7 million to £17.6 million). No details are available for the different online revenue streams. But, although it is safe to conclude that no one is going to become super rich on streaming alone, the important thing at this stage is that services are being licensed and are contributing to the legal mix.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Nokia stands by Comes With Music despite lack of convincing figures; Vodafone champions DRM-free bundle
A little over 12 months after its Comes With Music service launched in the UK, Nokia is mute when it comes to just how many people actively use the bundled music offering. Comes With Music effectively requires a customer – be it a mobile user or network provider – to pay for over a year’s worth of unlimited music downloads at the point of purchase.
While much of the Comes With Music business model remains shrouded in mystery to market observers such as myself, it has clearly met with the approval of the major record labels, which have given Nokia access to almost the entirety of their music catalogs. Music-industry insiders suggest that the labels’ willingness to work with Nokia – and accept its undisclosed revenue-share deal – is motivated by a desire to break Apple’s stranglehold on the global digital market, since Apple is reputed to account for over 90% of global paid-for digital music downloads. But few mobile carrier groups have been convinced enough by the Comes With Music model to launch it.
Nokia made much of its rollouts in Australia, Brazil, Singapore and elsewhere in 2009 but has yet to offer quantitative evidence that Comes With Music has been a success, suggesting that its original marketing has been something of a botched job. One speaker at the MIDEM trade fair earlier this year even suggested that the “hidden music charge” – which is how money is made in the Comes With Music model – was the way forward for the music industry and that Nokia was sadly guilty of “cocking up” what is on paper a really good idea.
Nokia accepts that there had been some initial problems in getting operators to communicate the idea of Comes With Music effectively to subscribers and that there can be resistance from operators when Nokia attempts to intervene by showing them how best to sell the service to a customer. This is a little reminiscent of the “who owns the customer” debate, a frequent topic of discussion in analyst circles when Nokia first attempted to launch Ovi two-and-a-half years ago.
In contrast, Vodafone used the MIDEM conference to trumpet the success of its “all-you-can-eat subscription music service,” which enables users to download and keep 10 DRM-free MP3 tracks from the Vodafone music store for about €3 (US$4.19) a month. The carrier publicly announced that the service was now the biggest repeat paid-for music service in Europe, with 450,000 monthly subscribers in eight countries. This seems to have validated Vodafone Group’s decision to take Kevin Houghton from his far-flung New Zealand post to helm its global music offering. Houghton made such a success of Vodafone’s New Zealand music offering that it regularly featured on the list of the group’s 10 highest-grossing music stores. And now he appears to be producing similar results in Europe.
Vodafone’s announcement of such lofty figures only months after getting all of the major record labels on board will inspire the rest of Europe’s major carrier groups to follow its lead and adopt a similar model at a similar price point, dealing another blow to Comes With Music.
Will Comes With Music go the way of Nokia’s doomed premium N-Gage gaming platform? It’s hard to tell. In the meantime, Nokia has been touting its services strategy in emerging markets – Nokia’s CEO used his keynote speech at last month’s CES event to talk up the firm’s effort in that area – leading some to speculate that Ovi could become the iTunes of the developing world. Right now it seems unlikely, but 10 years ago who’d have thought that Apple would be in the position it’s in today?
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
