Music - Online with a rock ’n’ roll.

Yesterday I downloaded the new 90 minute comeback album from Oasis, Definitely Derivative Man, from the net in just ten seconds, swiped my card through the home media-centre remote, burnt the music straight onto a blank CD and had it playing in surround sound a few seconds later. The track I am the Sealion really does it for me.

Yesterday I downloaded the new 90 minute comeback album from Oasis,

Definitely Derivative Man, from the net in just ten seconds, swiped my

card through the home media-centre remote, burnt the music straight onto a

blank CD and had it playing in surround sound a few seconds later. The

track I am the Sealion really does it for me.



The above scenario may seem futuristic, but it is not that far

fetched.



It is still fetched, still future, however - more Generation Next than

Generation X. But it is coming.



The music industry, perhaps more than most sectors, will be changed

unrecognisably in the long term by the advent of new media and new

technology.



The upheaval that new technology is bringing shouldn’t come as much of a

surprise. Innovation in technology has always been closely linked to

music, whether it is the development of the compact disc, the mini disk or

digital audio tape.



Recorded music, since the advent of the CD, has existed mostly in digital

form. That means you can send it over the internet, play it on computers,

or write it to CD and play it on your hi-fi.



Right now, however, it would take most people the best part of a day to

download an entire CD. But it can be done. And the speed of many people’s

internet connections will increase with the uptake of digital TV and cable

modems.



The heart of where the internet and music meet, according to EMI director

of interactive media, Jeremy Silver, is found in the fact that they are

both global: ”Both the internet and the music industry are global. The

Spice Girls are a meaningful brand in 121 countries. That is just one

reason why we are using the internet as much as we are. If you look at the

details, it impacts on every area of our business: how we record, how we

link to studios, how we market and ultimately how we sell and distribute

our music.”



EMI is one of the six global giants that dominate the music industry and,

along with the EMI-owned Virgin record label, it has more than 30

different web sites.



Most of that activity, says Silver, is concerned with using the internet

for marketing and promotion, not for the electronic delivery of music.

While the hype focuses on companies involved in delivery - Liquid Audio,

RealNetworks and Cerebus as well as online record stores like CD Now and

the Interactive Music and Video Shop - the day-to-day activity and use of

new media for record companies is all about marketing.



Both online shopping and the fact that music exists digitally represent

huge changes for the industry. Equally, both are still tiny blips on the

multi-billion dollar global industry.



Even the largest online music retailer, US-based CD Now, ships only about

2,000 CDs a day, with as much as 40 per cent of those going overseas.



In the UK, the leading online retailer ships nothing like that figure.



Sure, it is growing, but the old relationships between retailers and

record companies have not much changed and remain close. Their

relationship is interdependent and it will not wither in a year or a

decade (see box, page 33).



On the electronic delivery front, there have been a number of digital

trials, and these have created ripples of excitement in the industry,

spilling over into hype when artists like TAFKAP or George Michael make a

public statement declaring that they see the future as a downloadable

one.



However, the music industry never fails to give each such utterance a

reality check. Nici Koepke, vice president technology and media at Sony

Music Europe, comments: ”There is a tendency to say that it is here, it is

now and it is CD quality. It is not. It is far out in the future. Think of

it this way: if you spend weeks in a recording studio, and then go back

and digitally remaster it, do you really expect people to play it on

Windows 95 machines through Liquid Audio?”



Likewise, says Silver at EMI: ”Yes, we are talking to the technology

companies. We have had them knocking at our door for some time. There has

been a lot of publicity. It is hype, but it’s not hype without foundation.

The hype is based on the distribution of the music, on its

digitisation.”



The multitude of EMI sites makes it very different from a company like

Sony that takes more of an umbrella approach. What EMI has done

illustrates the diversity of approach that exists in the music industry

and towards questions of branding.



Unlike some corporate sites, like BT or Rover, for instance, which are

heavily about the brand identity and asking the consumer to trust and

choose BT or Rover over rivals, record companies are in a different

position.



To a certain extent, corporations like EMI, BMG or Sony are irrelevant to

the consumer. Take a trip to the one of the three UK Virgin web ’channels’

and you will not find any Virgin branding - it is the artist or band,not

the label, that is the brand on the web and in the music industry.



Consumers have no interest in whether a band is signed to EMI or BMG.



If a new record isn’t liked by the public, the fact that it is published

by a certain record company makes no difference.



Paul Sanders of The State 51 Conspiracy, a strategic consultancy which

works with EMI and Virgin on designing their web sites, says the view his

firm took was simple: ”We started with the user and worked backwards to

the providers. The user of these things wants to know about bands and hear

music. The more you tell them about bands and the more music you give them

to listen to, the happier they will be. It is not really very

complicated.”



Mark Mooradian, group director of consumer content at research firm

Jupiter Communications, comments: ”While record labels may be excellent

corporate brands, they are not consumer brands. It is the artists who are

consumer brands and it is the artists names, not the labels, that draw

consumers to the labels’ sites. As a result, labels will have to spend

more money developing a web presence for each artist. Such investments

will pay off handsomely as artist’s sites generate impulse-buy

opportunities.”



In the case of Virgin, where budgets are still relatively small, this has

led to the development of three distinct ’channels’: the Raft is its

alternative channel, home to bands like the Verve, Daft Punk, Placebo -

NME territory; Eden is the adult-oriented rock channel, slightly older,

and bigger acts, home of bands like the Rolling Stones and Genesis; and

Channel 3 is for a younger audience, very Spice Girls, 911 and Kavana -

Smash Hits country.



State 51’s Paul Sanders adds: ”The three channels thing seems to be okay

at the moment. But if you look at how music is grouping then there is a

cross-market. One person might be a close follower of say three or four

bands. We are moving to a dispersed media world where there are so many

channels that are short lived. The next wave of publishing systems will be

responsive enough for groups of users to define their own channels simply

by more than a few people being interested in something at any one

time.”



The latest figures show around 2.5 million page impressions or almost half

a million visitors across the three Virgin sites each month. That, says

Silver, is a real indication of what is happening and of how the sites are

being used.



Key to the strategy, according to Silver, is the integration of what is

being done on the internet with mainstream and off-line elements of EMI’s

marketing campaign. That includes making sure that the net forms part of

any advertising campaign and that consumers know about it.



Part of the desire for integration is because the web is ideal for meeting

a major requirement of fans - the desire for information.



When the Spice Girls site was publicised in the Daily Star, the number of

fans accessing the Channel 3 site doubled overnight. Suddenly, the idea of

having a web address tucked away somewhere almost invisibly on the

packaging seems ridiculous.



Another success has been the Verve. Back from the dead after a gap of more

than two years, the internet played a key part in the run up to the launch

of the band’s new album, Urban Hymns, at the beginning of October.



Danny Van Emden, head of marketing and creative multi media at Virgin,

said: ”To help build momentum in the run up to the launch of the Verve

album we did two things. We organised, during freshers week, that every

student going into a gig would get a publicity flyer with the Verve URL on

it. That is the heartland for us, the key demographic, and the web address

was to be on every poster and every piece of publicity we produced.



”In addition to that, we offered readers of NME exclusive access to the

web site a week before it was open to the public. It was publicised in the

paper well in advance and then we gave out a user name and password that

was printed in NME. What we were hoping was that people who didn’t read

NME would either find out from their friends or find out from NME. In that

sense it worked both for them and for us,” she adds.



The link with NME is an important one, as is a similar deal the Channel 3

site developed with Smash Hits, which focused on a live satellite

interview with teen heart-throb Kavana. Smash Hits gave two pages of

coverage to the event - and that’s what makes new media sexy to kids, says

Van Emden. It also makes it a new-media success for the record

company.



In another tie-up, EMI UK and the underground dance magazine Sleaze Nation

have come together to create EMInation, a webzine for London’s clubbing

community.



Silver says: ”The site reflects some of the Sleaze magazine and the two

feed off each other. We promote the magazine and it promotes us.”





A $500 MILLION DROP IN THE OCEAN



Duran Duran, Hammer, George Michael and TAFKAP (the artist formerly known

as Prince) are among the few current artists to consider offering music

for download, working with US company Liquid Audio.



Analysts are predicting that the online music market will be worth as much

as $500m by 2002, from an estimated $40m this year, representing about one

per cent of the music market - an indication that CDs and your CD player

will be safe for a while yet.



Whether the web can be of any help in a musical comeback is difficult to

say. In the case of Duran Duran, the band who had their first hit with

Planet Earth in 1981, this did not stop them and their record company

making a copy of their latest single Electric Barbarella, the first from

new album Medazzaland, available for download.



Quite how many have taken advantage of downloading the single has not

being revealed. But here are the cold facts: the track is only available

to download if you live in the US, and even if you do, it would take you

30 minutes to download using a normal 28.8 kbps modem.



The single retails in two versions: a $1.99 internet-only mix or the radio

mix that is available for $0.99. Not exactly cheap for a

less-than-CD-quality track that can only be played back on your PC.



Tony Martin at the the Music Network, comments: ”It is left-field, not

mainstream, but artists are interested. We are talking to Portishead about

a limited Liquid Audio release remix. The band is excited by the whole

concept. The idea is exclusivity. The more left-field, the more

exclusive.”



This really gives an idea where the technology is currently at - a cool

six hours of download time for an average 12-song album.



If the album happens to be close to Oasis’s latest 75-minute-long album Be

Here Now you might as well take the day off.



Scott Campbell, managing director of MediaSpec, the UK agent for Liquid

Audio, admits that the technology has some way to go before downloading

albums, or even singles, becomes commonplace.



”These are the early adopters we are talking about here - companies like

George Michael’s Aegean . But I’m also convinced that by the year 2002,

computer bandwidth will be able to deliver a full CD in 30 seconds of

download,” says Campbell.



He adds: ”The record companies love it. They want to see the concept

realised. One of the reasons we did the Duran Duran thing is because the

record company (Columbia) wanted to see it work with a major artist.”





SOMETIMES, ITS EASIER TO COPY MUSIC THAN TO BUY IT



If there is one issue in particular that has slowed up the adoption of new

media for the delivery of music, it is piracy - or the fear of it. It

remains a major problem for the music industry and new technology only

makes it easier.



Even without the advent of new technology, the music industry already

suffers a loss from piracy estimated to be worth œ3bn each year around the

world.



Vast banks of equipment are used for traditional piracy, involving the

duplication of CDs. The net is a different matter altogether. All it needs

is a desktop computer, which is what worries the industry.



Jeremy Silver, director of new media at EMI, says: ”Anyone can do it. It

could bring huge turmoil. There is huge awareness of it in the business.

Conventional piracy requires a major operation. But Mpeg compression and

copying doesn’t require anything.”



The worst-case scenario for the record industry is the level of piracy

that exists in the software industry. However, while the software industry

can sustain such levels due to its largest sales being corporate, the

music industry as a consumer industry can not.



Others say that the problem will persist, whatever music companies do,

because digital copies of CDs are readily available to anyone who wants

one - in the form of more CDs. Based on this logic, a second digital copy

available on the web makes no difference, particularly if new technology

also brings new ways of tracking the pirates.



Tony Martin, managing director of Music Network, says: ”Piracy is a

problem, but it is something that is being looked at very closely. I don’t

think the issue will hold up the industry for as long as people

think.”





WHY IT PAYS TO BUY ONLINE



As we reach the end of 1997, sales of pre-recorded music on the internet

are worth just 0.3 per cent of total sales. According to research firm

Jupiter Communications, however, online sales are set to grow to around

7.5 per cent of total sales by 2002.



The online music market is a small part of an industry currently

conservatively valued at œ35billion.



Few people shop online.



I have done, and did so again for this article. I bought seven CD albums

in one go, paying œ65.23 in all, inclusive of express DHL shipping. Sure,

I could have saved an extra œ4 by waiting two to five weeks, but, being

impatient, I went express. Seven top albums for less than œ70 is good in

anyone’s book.



More interesting is that the œ65.23 that appeared on my credit card bill

included shipping - and that was shipping not from Kent, but from CD Now

in Sacramento, California. I ordered the CDs on a Tuesday and received

them on a Friday.



To compare, I did the same shop with the UK’s Interactive Music and Video

Store and it came to œ98.76 or œ33.43 more. Oxfordshire Vs California

appears to be no contest.



And I am not alone in my online shopping habits. Online retailers

currently ship as much as 40 per cent of their products overseas. CD-Now

is the largest online music retailer and ships around 2,000 CDs a day with

more than a third going overseas.



Mark Mooradian, group director of consumer content at Jupiter

Communications, comments: ”You have roughly 19 per cent of households

online. Only a fraction of those make purchases and only a fraction again

buy music. The great bulk of records will continue to ship through

bricks-and-mortar outlets.”



The international market brings its own problems, however. Most bands will

be signed to one label in the home country and distributed by others in

different markets.



With online music stores selling across borders, it is the international

distributors who are losing out. Record companies are aware of this, but

the numbers are still too small to worry about.



Music retailers in the UK and the US have been slow to the net. As this

article went to press, there wasn’t a UK high-street retailer selling

records online. Our Price has nothing at all. HMV is understood to have

plans for an online shopping service in the near future.



Likewise, Tower Records is currently building an online shopping site that

will be live towards the end of the year. But in the meantime there is

always Tower’s US site, which has been up for some time.





THE TECHNOLOGY PLAYERS



RealNetworks



RealNetworks (formerly Progressive Networks) is the longest-standing

player in the audio-streaming business, and is the most established.

RealSystem 5.0, just released, was launched with the backing of more than

100 firms from the broadcast, entertainment and technology industries.



RealAudio products are heavily used by radio stations, but have been less

involved in some of the recent deals with bands and recording artists.



However, Sony Music has announced plans to use RealSystem for its

pay-per-play Jukebox, which it expects to launch later this year.





Cerebus



This much talked-about UK company has developed an internet jukebox

product which is essentially an online record shop. Cerebus is hoping that

the jukebox product will be up and running in places like internet cafes

equipped with writeable CD drives in the near future, allowing people to

choose the music they want to download, pay for it and write it there and

then.



The prototype is said to be close to CD quality. Ricky Adar, managing

director of Cerebus, says the first one should be up and running in the

new year.



Cerebus will mainly offer out-of-copyright music and independent dance

music, although it has yet to sign deals with record labels.



”I think what we are talking about is tracks priced at less than a pound.

I think the album is still a little time away as, even with compression,

technology the download time is probably not quite short enough. But with

the speed at which compression technology is moving it will not be very

long before we do it in a short enough period of time to make it worth

while,” says Adar.





Liquid Audio



This is the company that is the talk of the moment. Like RealNetworks, it

is a streaming technology company, but it is focused, at present at least,

solely on music. It has had some rave reviews - not least from the likes

of George Michael, whose record company Aegean has signed a deal with

Liquid Audio to put his music, and that of other artists on the net for

download.



Quite when it will happen is unclear, but George Michael said when the

deal was signed: ”Our partnership with Liquid Audio will be our first step

in revolutionising how we, and ultimately the music industry, deliver

music to fans.”



Liquid Audio is understood to be in negotiations with several record

companies about similar deals.



It also struck a deal with leading music business site dotmusic, which has

recently launched an audio service.



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