The Truth About Saving the Music Industry

On October 23, 2011, in Uncategorized, by racsimedia

There is no single solution to make sure the music industry is thriving with multiple alternate ways to make money, and we need to make sure that these are in place to encourage future musicians to make music and take it out of the home computer or bedroom practice session. Multiple methods of music experience must be available for multiple types of music fans to interact – and we must be courageous enough to let the music evolve with the consumer (and the technology) as well. So at that point, the labels must evolve as well and rethink more consumer-friendly music interaction points.

Part of an article written by Ario Tamat

 
 

Global Music Industry Turnover (1973-2009)

On February 21, 2011, in Uncategorized, by racsimedia

Digital is actually INCREASING. But industry sales as a whole is decreasing

 
 

There is no second chance for Vinyl Records

On December 30, 2010, in Uncategorized, by racsimedia

The music industry is struggling to provide more value to their existing product line.  This is all too critical an issue to ignore as music sale profits are projected over a period of years in various formats.  Yet every year, the consumer finds fewer and fewer reasons to be a true customer.

We already know the story on a-la-carte song downloads are flat and declining in the US. The sales of digital album result for the past 3 quarters looks problematic. In 2010, digital album sales have, for the first time, gone through three consecutive quarters of negative growth. Unit sales were down 5% in the first quarter, down 7% in the second quarter and down 3% in the third quarter. Billboard analyst Glenn Peoples recently shared his opinion on digital album’s data, stating there were serious warning signs based on previous growth rates.

The previous attempt to revive the “postalgic wunderkind vinyl” just doesn’t have enough steam to give that new shot in the arm and make it any more than a niche product.  Granted, the movie industry is very successful in adding new effects and actors to revive old movies such as Disney’s Tron from 1982.  But this is hardly the case of vinyl.

Music devotees still believe vinyl’s aural authenticity, and coupled with bands trying to cash in on this retro technology, short lived excitement can be understood.  However, the data does not show long term viability.

After years of breakneck growth, vinyl’s comeback is dying – Consider these recent US-based totals, as counted by Nielsen Soundscan:

·       2008: 1.88 million units of vinyl sold, up 89.9%

·       2009: 2.5 million units of vinyl sold, up 33.0%

·       mid-2010: 1.3 million units of vinyl sold, up only 9.1% from the comparable half in 2009.

From 90% growth to just 9% in two years?  It is very clear that vinyl’s growth is topping off, and likely a shrinking market in coming years. This drop is not a surprise and not a reason to write off the format. Digital tracks even with a slight aide in rise of prices, had already lost momentum at this time last year. Digital albums were destined to fade as well, although with a lag time of a year or two behind tracks. These trends show the download market has become mature. Growth is now harder to come by.

This trend definitely should put extra pressure on record labels and publishers to speed the arrival of next-generation products and services.

Although reviving vinyl is fun, but to be profitable, the industry should just move on.  New technology today means bringing in new creative guards, and dismantling that idea that no one knows better than the old guards.

All forward looking industry experts should consider RACSiMedia to be the next big thing.  With innovative presentation of music, RACSiMedia makes music more interactive than ever.  Smart-phone users clearly understand that information and interaction is what they demand, and you can meet that demand by working hand in hand with RACSiMedia.

 

There are now 823 million paid users of digital music worldwide and that number is expected to almost double to 1.55 billion in 2014

While there has been much debate about the impacts of the global recession on consumer discretionary spending, IEMR is forecasting a significant increase in the number of users who will be accessing their music through various digital channels, including online downloads, mobile downloads, and subscription downloads of online portals. We are estimating that the total number of paid users of digital music worldwide will reach 823 million in 2010, and this number is going to increase to 1.55 billion by the end of 2014, for a Compound Annual Growth Rate (CAGR) of 17.0%.

This forecast is higher than our previous 3Q.2009 Digital Music Forecast and represents relatively robust survey data we have seen in our Global Consumer Telecommunications Survey Panel.

While the number of music users downloading their music through their mobile handsets will increase from 483.8 million in 2009 to over 1 billion in 2014, the greatest growth in the global digital music industry will happen through subscriptions to both online and mobile music channels

While the mobile channel will continue to account for a large share of music downloads (its current market share is 70% of all users), we think that both the online single download users and online subscription users will see a higher growth rate over our forecast period. For online single download users, we are forecasting a subscriber CAGR of 21% (previously 25.4%), while for subscription users, our expectations are that these subscribers will grow at a CAGR of 57.5% over the next five years. Their base, however, will continue to be small, reaching about 28.8 million users by the end of 2014.

Digital Music Retail Revenues to reach $32.5 billion at the end of 2014

IEMR is forecasting that global digital music revenues will increase from their current level of $7.8 billion in 2009 to $32.1 billion in 2014, for a CAGR of 36.0%.

Online digital retail spending (which includes digital downloads of full tracks, albums, music video and streams over the fixed network) was $3.5 billion in 2009. This particular market segment will see retail revenues grow by a CAGR of 32.7% to $13.4 billion in 2014.

Digital Music Revenues at Record Companies to reach $21.1 billion at the end of 2014

IEMR is forecasting Record company revenues from downloads of full tracks, albums, music video and streams over the fixed and wireless network will reach $21.1 billion in 2014, from our current estimated $4.8 billion in 2009.

We think that over the next five years, record companies will do a better job of increasing their subscription customers (subscription revenues will increase to $1.8 billion for record companies) and they have also seen the writing on the wall in terms of online access and will begin exploiting this channel more thoroughly over the forecast period. This will result in increased online revenues from digital music downloads of $8.1 billion in 2014 (for a CAGR of 30.6%).

North America

There are now 105 million paid users of digital music in North America and that number is expected to grow to 227.4 million in 2014

Despite the global economic slowdown, the North American digital music market remains strong. We expect that digital music paid download users in the United States and Canada will increase from 105 million to 227.4 million over the forecast period, 2010 – 2014 (Compound Annual Growth Rate is 17.0%. This is higher than our previous forecast of a CAGR of 12.9%).

Online music download users in North America will increase dramatically from 50.4 million in 2009 to 135.0 million in 2014

We expect that music users downloading their music through their mobile handsets in North America will increase significantly from 52.9 million in 2009 to 83.3 million in 2014 (CAGR of 8.6%, previously 4.5%). However, the greatest growth will happen through online and mobile subscription users. We forecast that digital music download subscription users will increase from 1.9 million in 2009 to 9.1 million in 2014 (CAGR of 44.6%).

Digital music retail revenues in North America to reach $11.87 billion in 2014

We forecast that digital music retail revenues in the United States and Canada will increase from $4 billion in 2009 to $11.87 billion in 2014, for a CAGR of 26.8% (previously 33.4%).

In particular, revenues from online single download users of digital music will increase from $2.4 billion in 2009 to $8.3 billion in 2014, for a CAGR of 30.9% (previously 44.0%). The strong growth in the use of the online channel is caused by high broadband penetration in North America. Revenue will continue to grow as illegal file sharing becomes more difficult with various legislation and enforcement.

Digital music revenues at Record Companies in North America to reach $7.3 billion in 2014

We expect that record company revenues from downloads of full tracks, albums, music video and streams over the fixed and mobile networks in North America will reach $7.3 billion in 2014, from $2.53 billion in 2009.

Record companies will be gaining more subscription customers over the next five years. We expect that subscription wholesale revenues (received by record companies) will increase from $108 million in 2009 to $528 million in 2014, for a CAGR of 45.8%.

Asia-Pacific

Paid download users of digital music in the Asia-Pacific region will increase from 367.3 million in 2009 to 885.1 million in 2014

Although consumers are willing to pay less for entertainment due to the economic downturn, we expect that the digital music market in Asia Pacific will continue to grow rapidly. IEMR estimates that the number of paid users will increase from 367.3 million in 2009 to 885.1 million in 2014, for a Compound Annual Growth Rate (CAGR) of 17.3% (previously 18.7%).

Mobile music download users in Asia Pacific will increase from 315.5 million in 2009 to 734.3 million in 2014

The majority of music downloads happen through the mobile channel in the Asia Pacific region. We expect that mobile music download users in Asia Pacific will increase from 315.5 million in 2009 to 734.3 million in 2014 (CAGR of 17.3%, previously 15.6%).

We think that both the online single download users and online subscription users will see a higher growth rate over our forecast period. Online single download users will increase from 50.4 million in 2009 to 141.8 million in 2014 at CAGR of 22.0%.

Digital music retail revenues in Asia Pacific will reach $13.5 billion in 2014, making the Asia-Pacific region the largest market for digital music retail revenues in the world

We expect that digital music download retail revenues will increase from $2.5 billion in 2009 to $13.5 billion in 2014, for a CAGR of 45.8%.

In the Asia Pacific region, most of the retail revenues come from mobile music downloads. Digital music retail revenues from the mobile channel will increase from $1.4 billion in 2009 to $9.3 billion in 2014, for a CAGR of 53.1%. On the other hand, retails revenues from online downloads (over the fixed network) will increase from $0.23 billion to $1.1 billion over the forecast period, 2010 – 2014.

by IE Market Research Corp.,  2010, Pages: 60

More on Middle East, Africa, Eastern Europe and Western Europe on this report not included in this summary.

 

Mobile Operators Transform Music Distribution

On December 26, 2010, in Uncategorized, by racsimedia

This year, mobile operators in the USA should take a hard look at becoming the main music supplier to everyone.  With CDs quickly disappearing, and illegal downloads exploding, new music distribution models are springing up to fill the gaps.

Countries in Asia, especially in Korea, lead the world in online music sales with the majority of music sales transacting online. Industry expert predict that mobile music sales in Korea should hit USD$500 million by 2015.  Similar trends are forecasted in Japan.

Mobile operators in Korea and Japan have been the fastest to innovate and capture the mobile music market. Korean mobile carriers, especially SK Telecom view music streaming and downloading as the next cash cow for data services. As Apple iTunes has done in the US,  Korean mobile operators have transformed music distribution in Asia.

A great example is SK Telecom’s mobile music portal service called ‘MelOn’. The  first integrated, wired and wireless, music service that allows users to enjoy music virtually anytime, anywhere using a portable MP3 player, a PC, or a mobile phone.  This end-user friendly platform has completely changed the music landscape and is now being reproduced in Australia, Hong Kong, Singapore, Thailand by local mobile operators.

By innovating a consumer friendly mobile platform, music piracy in Korea has also dramatically dropped to negligible levels.   This resulted in the revival of the music industry, which previously experienced years of stalled growth due.

Content providers are either being acquired, merged or forced out of business by the mobile operators which are now becoming music integrators more than just distributors. With higher than average margins, the Korean mobile operators command the highest distribution margin in the Korean music value chain. With the artists themselves, mobile operators have become by far the main drivers and key success factors of music in Korea.

 

Reality in Developing IOS Apps

On December 25, 2010, in Uncategorized, by racsimedia
If you’re looking to develop a mobile app, iPhone application development classes are cropping up everywhere.   Yet the demand outstrips supply 3 to 1, meaning more than half of all interested are turned away.

This current boom stems from the income potential seen surrounding the iPhone and iTunes App Store.   As it stands now, there are more ideas than competent developers, so transforming your idea into an actual quality product is harder than ever.

Every day, headlines sing about Apple new $60 billion cash hoard.  Not surprisingly, everybody wants in on the party.

However, it’s not that easy.  If you don’t have the skills to develop the application, the cost could be prohibitive.  But the lure of becoming financially independent overnight continues to draw interest.

Entrepreneurs with sufficient money to burn shell out money by the hundreds of thousands to get their idea off the ground, and then submit it into a pile, along with hundreds of thousands of other apps.  If you’re looking for an overnight hit, it could happen.  However, even if your idea doesn’t explode onto the scene, it could very well generate considerable income over time.

For developers in the USA, it’s not unusual for an iPhone developer to charge well over $150/hour to do contract  iOS development.  On the street, the hourly range is anywhere from $75/hour to $250/hour, with experience and name recognition usually setting the price. Given the limited pool of developer talent, it’s no surprise that it’s a developers market.

RACSiMedia is taking a different approach to create predictable results, minimizing risks.  We wish to partner with Entrepreneurs, artists and publishers to creating innovative and interactive musical experiences, audiobooks and language learning tools.

Contact RACSiMedia today to partner with us as you venture into the mobile world.

 

A Changing Vision of the Music Industry

On December 18, 2010, in Uncategorized, by racsimedia
In the era of Digital Entertainment, the music industry is slowly waking up and trying not to follow Kodak’s debilitating decisions in the photographic industry.  Smart companies are learning to diversify their revenue streams to ensure a viable forward business model.

As the CEO of EMI Music Elio Leoni-Sceti puts it, “Our aim is not simply to be digitally savvy – our aim is to be consumer savvy. We know that people want to consume music digitally, so we need to be digitally aware, have digital capabilities and marketing ability.”

ITunes’s à la carte download model with over 100 million accounts across more than 25 countries will remain the goliath of digital music sales for years to come.  A recent innovation in the iTunes store introduced variable pricing, which was highly successful for converting single track sales into album sales.  iTunes launch of an additional format called iTunes LP coupled with DRM-free music hit a home run with all audiences alike. Technology savvy smart phone users also access their music from multiple sources including Amazon and CD Baby.  And lets not overlook subscription services which are becoming more mainstream in the mobile ecosystem.

Record labels are definitely making music available in an unprecedented number of new ways. Beyonce’s “I am . . .  Sasha Fierce” album is sold in 260 different products in the US including music videos, mastertones, ringback tones, and audio tracks. Rob Wells, Sr. VP, Digital, at Universal Music Group International states “We’re much closer to the utopia, where we’re extracting $1 out of a million consumers as opposed to $10 out of a thousand.”

All forward looking labels looking to grow in 2011 should consider RACSiMedia to fuel their power-punch into digital marketing.  With innovative presentation of music, music offerings are now more interactive than ever.  If you’ve ever seen a smart-phone user, you understand clearly that information and interaction is what the forward market demands, and you can meet that demand by working hand in hand with RACSiMedia.

 

Music’s Industry Biggest Mistakes

On December 16, 2010, in Uncategorized, by racsimedia

“Why do we play this game?” – he wonders. “It seems that in times of digital disruption, the music industry has had this strange tendency to cling to potential saviors, almost all of which disappoint. The major labels are masters at this, though this goes far beyond the Big Four. And, it makes you wonder whether the same blue-sky, save-the-industry mentalities are currently driving areas like cloud-based models, DIY distribution, and ‘middle-class artist’ concepts.”

Could it be they keep it up with the Joseph Goebbels ‘dripping tap’ principle in mind? If you say something often enough and loudly enough, eventually, it’ll be taken as fact? Like ‘we’re being devastated by file sharers’?

So, “what are the biggest blunts this industry has smoked so far?” – asks Resnikoff.

Here are his Top list:

(1) The a-la-carte download

Remember when Steve Jobs was praised for ’saving the music industry’ by simplifying music purchasing? These days, he’s mostly praised for making billions for Apple and tripling Wall Street investments, not for enriching musicians or labels. And the a-la-carte, variably-priced download is hitting its plateau. [Um, what "a-la-carte, variably-priced download" was that? The labels killed indie attempts to establish anything like it, leaving the phony 99 cents and up as the 'standard'.]

(2) The ringtone

In hindsight, this was a billion-dollar hulu hoop, but labels, mobile startups, rappers, and everyone in-between were pegging serious fortunes on the ringer. These days, there’s still some scratch, but mobile entertainment is a totally different – and tough-to-monetize – space.

Read More: p2pnet view P2PMusic:- Paul Resnikoff pretty much nails it on Digital Music News.


 

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