Music Industry Growing eMarketer's report today talks about growth in the music industry (yes, believe it or not, GROWTH). Revenues last year (2006) were $60.7 billion and by 2011 will be $67.6 billion (about a 2% annual growth rate). The report states the obvious that CD sales will continue to plummet and digital continue to grow, however, digital sales will never make up for the loss from CD's. Thus, the growth will come from other innovative ways to exploit the music such as online and mobile, concerts, licensing deals with TV, films, video games, and tie in with various products (the report states U2 and iPod and Bob Dylan and Victoria's Secret). I think that the record labels have definitely enjoyed a monopoly on this business for a while, however, in order for good music to continue to be put out, there needs to be a way to monetize this business. Apple recently put announced that 100 million iPods were sold and about 2.5 billion songs sold via iTunes, which puts each iPod on average with 25 legally downloaded songs, a far cry from the thousands of songs that you can put on it. So where is the other music coming from? I wonder....Regardless, some very interesting models have come out, one of them I talked about before called AmieStreet which is a true supply and demand model. However, with sites like MySpace offering streaming music how would a band make money from them? The answer: Poptopus. Poptopus (reviewed by Mashable), is a widget (we talked about these yesterday) that you can embed on your site and revenue is shared by the artist and the publisher. Advertisements play in the video portion of the player and are paid on a per listen basis. It's actually a radio type model but uses the visual portion of the Internet to play the commercial while you are enjoying the music. I think its a great way to utilize the single servingness of the Web with a business model that could be sustainable. And since everyone makes money, or gets eyeballs, everyone should be happy....the one downside I see is that if a popular band doesn't want to be associated with a certain advertiser (but I think those are few and far between).
Regardless, its a good time for the music business as they've finally embraced the Internet as opposed to fighting it and it turns out that artists as a whole will be making more money than ever and some artists will actually be able to call themselves full time musicians because of this long tail phenomenon. We'll keep track of the music space as it continues to innovate....perhaps Sirius XM can take a lesson here? (i.e. Give away your units and advertise on your proprietary hardware?)
Widgets Everywhere!
Widgets are the hot new thing of Web 2.0 - everything from YouTube embeds to mashups to music players and so on. Widgets are basically Flash or javascript code that authors can simply place on their site and users can interact with them in some way (whether its answering a poll, e-commerce, watching a video, listening to music, etc.)
The e-commerce aspect is hot topic now on widgets since the interactivity of them and the portability of them allow for some really interesting applications. WidgetSense (coined by Steve Rubel) allows for Flash or javascript enabled Google Adsense to be embedded into widgets. Two new companies, Tumri and Mpire, (via Techcrunch) have announced e-commerce widgets. Coupled with eBay's widgets and the plethora of other widgets out there, it appears as if we have a widget revolution.
Marketing wise, what does this mean? Well, I think that we can now have those interactive, flashy (not Flashy if you get the difference), and interesting ad campaigns that we've always wanted to. Targeted and completely relevant to the content of the page, these new widgets are more catchy than Adsense and hopefully will provide more value to the advertiser. Time to rethink your SEM strategy!
