Part 2 of a 3 part series

In what was undoutedly *ahem*, an epic novel of blog post in part 1, I argued *ahem* without a shred of a doubt the inevitability of an ad-rev supported future music industry. The great thing about postulating so far into the future is that it would take just as long to be proven wrong. In the meantime, I will profile a dozen (+ 1) companies doing their part to make me look like digital media prophet.

But before we move forward, let’s take a quick look back…

MySpace, still the largest social networking site to date, has been written off by tech and business pundits as something of a slow-footed and clumsy dinosaur. Despite their apocalyptic fate, the fact is they managed to grow into a dinosaur in the first place. Myspace’s initial rocketship rise in traffic has been subject to a million armchair theories — customization of profiles, viral marketing, the decline of Friendster, spamming, Tila Tequila, fortuitous timing, etc. Here’s mine: that MySpace hooked musicians early on by offering an free and easy personalized web presence that hosted and streamed songs. The social network of choice for musicians, MySpace suddenly had a quite considerable army of musicians plugging their Myspace pages to packed venues across the world. You reach the musicians, you reach the juicy 18-34 demographic, plain and simple. Sitting pretty on my hindsight arm chair, I must conclude that streaming music was the crucial dark-horse factor that lit the site directly on the tipping point responsible for the MySpace phenomenon we know today. And this will be their legacy when (if?) they fade to irrelevance.

In the meantime, here are the dozen (+1) visionary, envelope-shoving companies shepherding the new music industry:

Imeem.com, SNOCAP and Warner Music:

Imeem LogoWarner LogoSnocap Logo

Imeem was born as a company looking to emphasize and innovate media file sharing in a social networking environment. Their tagline is “what’s on your playlist?” and sure enough, the site’s structure, tools and interactive features revolve around personalized media playlists, especially music. It’s like crack for music lovers (I would know because my guardian angel tried to make me go to rehab, but I said no, no,,, okay, maybe). Despite their phenemenal growth and innovative features, Imeem has mostly flown under the radar of the iPod toting techarrazi.

While they don’t exactly evangelize the free-music revolution in their official press releases, Imeem’s recent development deals fully reveal their off-the-path insurgency. Back in March, Imeem announced a ad-rev share deal with SNOCAP, a digital content registry and online distributor co-founded by Original Napster Shawn Fanning. Under the deal, Imeem’s community can legally stream any song registered with SNOCAP, with the respective artists and labels receiving a cut of Imeem’s ad revenue in proportion to their plays. In other words, the exact model part 1 has been projecting.

Th Imeem-SNOCAP deal was especially revealing in its distinctive intent. Just 6 months prior to the Imeem deal, SNOCAP inked a deal with MySpace, whereby SNOCAP artists could slang their MP3’s directly through SNOCAP’s embeddable widget. So instead of directing fans to iTunes, MyStore allowed artists to close the deal directly on their own MySpace profile. A clever and practical application, SNOCAP’s MyStore application was their big, consumer-facing initiative. The one snag is that the MyStore widget only sampled songs, rather than stream them in their entirety; understandable, of course, when the goal is to move download units. Rather than tag along with a similar arrangement, Imeem shunned the MP3 slanging route, and quietly crafted the groundbreaking ad-rev share deal with SNOCAP.

More recently, Warner Music, one of the four majors, hit Imeem with a copyright infringment lawsuit last May. The techarazzi took a momentary break from their Apple and Facebook worship to forecast Imeem’s litigious demise. Two months later, Imeem emerged from the rubble clutching a signed ad-rev share deal with Warner. Imeem’s community could now legally stream Warner Music’s entire catalogue. The techarrazi was mildly impressed, but for the most part interpreted the deal as just another sign of the music industry’s desperation. They missed the key paradigm-shifting point; for the first time, a major label had just given away it’s entire catalog… for free!

The beauty of the deal for me as a music lover is that now, Warner’s catalog has become an organic part of Imeem’s social infrastructure. Users are constantly listening, repackaging and sharing Warner’s content. So, say I want to listen to any and all recordings of one of my favorite rappers, Lupe Fiasco, who happpens to be a Warner Music artist. The most obvious first step would be to purchase his album from iTunes. But Lupe’s major label debut, Food and Liquor, was leaked early and often, prompting several revisions and re-recordings before it’s final incarnation. I can hunt down all those leaked versions and parse out the unique songs that didn’t make the album. Once that’s done, I can go online hunting for his numerous mixtapes and concept collaborations. Repeat for all his guest appearances. Repeat again for any and all other miscellaneous recordings that might be floating around in a dusty Westside Chicago record store. And again and again and so on and so forth until I lose all patience and rationality and veg out on Hilary Duff’s latest…

Or instead, I can go here: http://ilivformewzikc.imeem.com/playlist/zdPH3bQ5/

And now that his previously unheard discography has only worsened my Lupe Fiasco man-groupie affliction, do you think I’ll let anything stand in the way of checking out his next show in my neck of the woods?

Skreemr, Hype Machine and Project Playlist:

Skreemr LogoProject Playlist LogoHypeM Logo

The premise behind Skreemr, Hype Machine and Project Playlist is simple: mp3 search. These engines troll the web for sites that host a stream or download of the respective music you search. The coolest thing about these sites is that you can stream the music directly off the search results page. Skreemr and Project Playlist integrates a flash player with each search result. Hype Machine plays all the results in a pop-out flash player. There’s a world of music blogs out on the World Wide Dub, a big unruly haystiack of text, commentary, html, videos, comment, php, tags, javascript, mp3s, directories, etc. These three sites excavate that needle of an mp3 you’re looking for.

In theory, Skreemr, Hype Machine and Project Playlist push along the ad-rev model along several axises. One, they make downloading specific songs super easy, publishing a link to the hosting site alongside the flash streamer. Two, while it doesn’t exactly centralize streamable music files on the network side, the search function effectively centralizes the music on the end user side. Go to any one of these sites and you’re a click away from that song you need. Third, it’s browser based. Fourth, it lubricates real-time sharing of music. Instead of waiting for downloads, you and your friend can stream it from one of these sites and discuss immediately. In a web. 2.0 world, every second counts.

In practice, Skreemr, Hype Machine and Project Playlist are just plain cool. If you want to download an album, go with Bit Torrent. But if you’re online chatting about a song or reading about a song, and you just absolutely need to listen to a song RIGHT NOW, then one these three sites might be your best bet. Also, it’s a great, low-commitment way to preview an artist or an album before *ahem* “spending” your broadband and hard drive space on a full download. Of course, an mp3 search engine can is only as deep as the web it searches — if your song isn’t hosted anywhere, especially on a searchable blog, then the triumvirate isn’t going to work for you. But again, blog buzz tends to engender public curiosity, and vice-versa — if you’ve heard about it, there’s a good chance someone is sharing it.

Subscription services: Real Networks, Napster, Yahoo

Real Networks Logo Napster Logo Yahoo Music Logo

All-you-can-hear subscription services reportedly have millions and millions of subscribers…. none of whom I know personally. Subscription obviously has a number of drawbacks. For one, all these services are heavily armored in DRM. Second, you don’t “own” downloads “for keeps” — once you stop subscribing, so goes your immaculately conceived playlists, tags and ratings. Third, inconsistent licensing and copyrights translate into inconsistent usage permissions, effectively making the playability of every new song a mystery. Fourth, it costs money.

That isn’t to say these subscription services aren’t without its charms. All-you-can-hear subscription is a great idea — in theory. Any song, anytime, anywhere, for the relatively dirt cheap $5-10 a month — that’s half a CD a month. Even with all their setbacks, subscribers have their evangelists, including Anthony Volodkin, founder of (above-mentioned) Hype Machine.

Regardless of of the finer points of user-interface designs, functionality and other such relatively trifling details, it is these type of all-you-can-hear streaming services that have, perhaps, the shortest leap from a universal ad-rev share model. They already implement revenue-sharing agreements with major and indie labels. They already stream more than a lifetimes’ worth of content. Really, it’s just a matter of time before the pricing points intersect — the rising point of a hypothetical future ad-serving program against the lowering point of declining labels.

Meanwhile, you can treat these subscription services as the private betas of that future universal ad-rev supported music platform. Think of any shortcomings and inconveniences as digital kinks inherent in a private beta. Sampling the future of music consumption for the cost of half-a-CD a month? That’s not such a bad deal. Hell, even I’m almost tempted. Almost.

If you’re reading this and you subscribe to any of these services, leave a comment with your thoughts. I am genuinely curious.

Revver / Metacafe

Revver logo Metacafe Logo

There are a million (+1) YouTube clones serving ads, many of which share revenue. I highlight Revver and Metacafe because these two video hosting sites have particularly visible rev-share programs. Revver’s entire catalogue is built on the submitted, proprietary content of legitimate producers, with whom they split video-roll revenues 50/50. Metacafe follows the “post-now, ask-questions-later” approach of YouTube, integrating registered “Producer’s Rewards” content within the fold of their catalogue. Once qualified and registered, Metacafe’s “Producer’s Rewards” cha-chings at the rate of $5 for every 2,000 views.

Modest incentive, no doubt. But the point is, they’re trying, all the while spreading the “ad-rev share” paradigm. Everytime someone watches the infamous “Extreme Diet Coke and Mentos Experiments” video — a virally successful Revver video that’s logged more than 10 million views — we’re that much closer to a world of online ad-supported content distribution. For whatever reason, the video medium has been quicker to experiment with online ad-rev share experiments. Perhaps because it’s easier to create a watchable piece of video content rather than a listenable piece of music. Perhaps it’s because the prolific king of professionally created video entertainment, the television industry, is already used to the idea of having their checks cut from Madison Avenue. Perhaps video/television professionals and executives have heeded the lessons of their fallen music industry counterparts. Whatever the reason might be, they’re trying, and they’re trying hard.

On a practical level, video content is integral to the success of the music business. Since the launch of MTV, music videos have become essential visual content, although they’ve always used as more of a marketing afterthought rather than as a legitimate source of revenue. Appropriately so, artists’ video content, including live performances, interviews and show appearances, have traditionally taken a backseat to the the king money-maker: CD audio. In the future, video becomes an integral piece of content from which artists can reap a share of ad-rev.

Google / Zoho

Google Logo zoho logo

As mentioned in part 1 , both Google and Zoho are on the cutting edge of creating online applications that best mimic software we’re used to operating out our desktops. Yeah, I know there are a million and one startups and apps that are doing really cool things (Read/Write Web, one of the more thoughtful and less star-struck WebTech blogs out there, dedicated a week to covering the nascent Web OS scene/products). Anyhow, the link is tenuous, but these two better known companies represent the general trend towards pushing the Web OS paradigm unto users. Referencing back to part 1, it is this paradigm that will make and business model based on moving download units an obsolete and irrelevant.
Google Documents, Zoho and their Web OS buddies are not neccesarily making a direct, flashy contribution to the coming ad-supported streaming revolution. But consider this: my father is a civil engineer by training, a home inspector by trade, and he’s taught me this — never overlook the foundation when you’re building something big.

So there it is, folks. Feel free to let me know about any other companies pouring concrete. I know there are a lot out there.


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Comments ( 2 )

[...] didn’t put Imeem on the top of my last entry on accident. I really do believe Imeem pulled the proverbial (obese) rabbit out the (miniature) hat [...]

Imeem and Google: Contrasting Approaches to Content Partnerships | fresh breakfast added these pithy words on Sep 12 07 at 10:56 pm

An interesting summation of some of the innovative companies in the space - I would disagree however with your comment on Warner. They aren’t giving the music away for free, but are simply being compensated by advertisers instead. We7.com are operating on the same basis.

First Tuesday held an seminar on music in London last night which I wrote about here (http://greatapps.blogspot.com/2007/09/first-tuesday-is-back-with-band.html). It through up a few interesting companies and comments. My favourite was from the CEO of Jamendo who said “”Biggest music distribution platform - Bit Torrent; Biggest online donation platform - iTunes, on the basis that no one needs to pay for the music when it is freely found on torrent sites!”

John Wilson added these pithy words on Sep 05 07 at 12:13 am

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