Spotify's numbers – an exclusive peek

A month on, I’m still reading that Spotify’s financials and subscriber numbers are a mystery. Not here, they’re not.

Move over Fifty Quid bloke – and make way for 14p man.

Statements seen by The Register indicate that’s all the hit music service Spotify makes per user from its advertising-supported business. The difference is the middle-aged spender coveted by the movie, games and music businesses plunks down £50 per week – but Spotify earns its 14p per user per month.

The figures – which we can disclose for the first time – make for interesting reading. They confirm Spotify’s explosive growth – topping half a million registered users in the UK in May from a standing start in January.

But revenues at this stage are negligible. Advertising income was just over £82,000 last month, hence the 14p figure. We can also reveal that despite the phenomenal growth, the takeup of the tenner-a-month subscription program is small, and as a percentage of users, is falling.

Fewer than 17,000 UK users were signed up to Spotify Premium in May, an increase of 2,700 over the previous month – despite the service adding 170,000 registered members overall.

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'Thousands' sign up for legal P2P

Tens of thousands of students have signed up to pay for a legal P2P music program in US universities, set to start later this year in experimental form. It’s Choruss, the incubator hatched by Jim Griffin – a long-time advocate of licensing P2P sharing on networks.

Choruss won’t ultimately be in the retail or service business, Griffin told us in Washington DC today – but it may provide an “umbrella” for managed service companies such as Playlouder MSP, the technology partner for the suspended Virgin Unlimited music service. “We’re not in the business of distribution,” he said. Griffin was also on a panel at the biennial World Copyright Summit, organised by CISAC, the global organisation for collective rights management societies.

Griffin says this year’s phase of Choruss is designed to experiment with pricing. Different colleges will get different pricing schemes.

“The plan is to use next school year to run tests and experiments,” he said. Only after the scheme has been running will an assessment be possible – but Griffin told Summit delegates that, “We’ve had students tell us it’s worth $20 a month – to share what they want to share.”

The fact that such large numbers have volunteered to pay for a P2P service defies the conventional music industry wisdom that the only way to compete with the pirates is with free offerings. It also shows how much Choruss has evolved since it first broke the surface last April, when talk was of opting students in automatically, in return for a “coventant not to sue”.

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Elbonia: Your next (and only) music destination?

Suppose the “one stop shop” happened to be located in Elbonia – where the economy is primarily mud-based – and you could obtain a pan-European license for music (all the rights in the EU) priced in the nominal Elbonian currency of the grubnick. Suppose the Elbonian performing rights society decided to price this very low indeed…

…Read more at The Register

The Great Spotify Mystery

The music business has set up a lemonade stand outside its house and it’s giving away lemonade for free. Not surprisingly, people love the free lemonade, and the stall has drawn a large and enthusiastic crowd. The stand is called Spotify.

The business justifies this because it’s so easy for us to get their music for free elsewhere. With very little effort, you can obtain it simply by appending a magic word (‘torrent’ or ‘rapidshare’ usually do the trick) to the artist you’re looking for in Google.

Acquiring it may not be pleasant: doing so may help support a neo-Nazi with a grudge. But many people are prepared to hold their breath, because you can fill up your iPod or phone with music without paying any more than your monthly internet fee. That fee is a bit of a bummer – why can’t it all be free? – but a modest outgoing on a computer and an internet connection saves a lot of money.

The business looks down on this free and easy access to its assets quite understandably. Because if it’s all free, then investment in making sound recordings will evaporate. Only fools invest in businesses which aren’t going to make any money.

You’re following, I hope.

So to compete with businesses which don’t make any money and give away free music, they’re backing a business which doesn’t make any money, and gives away music for free. It’s genius.

But it gets better.

Read more at The Register

P2P study: crackdown is bad for business

A study of P2P music exchanges to be revealed this week suggests that the ailing music business is shunning a lucrative lifeline by refusing to license the activity for money.

Entitled “The Long Tail of P2P”, the study by Will Page of performing rights society PRS For Music and Eric Garland of P2P research outfit Big Champagne will be aired at The Great Escape music convention tomorrow. It’s a follow-up to Page’s study last year which helped debunk the myth of the “Long Tail”. Page examined song purchases at a large online digital retail store, which showed that out of an inventory of 13 million songs, 10 million had never been downloaded, even once. It suggested that the idea proposed by WiReD magazine editor Chris Anderson, who in 2004 urged that the future of business was digital retailers carrying larger inventories of slow-selling items was a Utopian fantasy.

The P2P networks are harder to quantify, but apparently show a similar pattern, where most of the action – and profit – is in the ‘head’. Each Top 100 CD on on PirateBay averaged 58,000 downloads a week, for example. Lady GaGa’s The Fame was downloaded 388,000 times in a week from PirateBay alone. Like its predecessor, the new study also finds that downloads follow a log-normal, rather a Pareto (or “power curve”) distribution as Anderson envisaged. The WiReD man had guessed the shape of the internet – and picked the wrong shape.

Read more at The Register.

Charlie Nesson's trip

L.S.and D.

Has Charlie Nesson been at the magic mushrooms again? The hippy head of the Berkman Center, the influential New Age techno-utopian think tank that’s attached to Harvard Law School, wants to enlist Radiohead in his fight against the Recording Industry Association of America (RIAA).

Nesson, a long-time opponent of creator’s digital rights, is contesting the statutory damages in infringement cases. A Boston graduate student called Joel Tenenbaum was ordered to reach a settlement with the record companies after being sued for copyright infringement, having shared files using the Kazaa P2P network back in 2003. Nesson’s strategy in Sony BMG Music vs Tenenbaum is to put the music business on trial. That’s fine – suing freetards isn’t going to stop P2P file sharing and it isn’t going to save the music business. It only adds to the anoraks’ persecution complex. Even the RIAA has now concluded it’s the wrong strategy.

But is Nesson the man to fight The Man? Nesson’s novel argument is that unlicensed P2P file sharing is “fair use”. Even his Harvard students, who are doing the work for him, think that’s stretch. And maybe he doesn’t want to win, just preen about in front of a camera. He wants it televised, he Arse Technica, because:

“It’s like a reality show that we can all be participants in as we go along… It’s an incredibly powerful expansion of the idea of teaching.”
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Virgin puts legal P2P plans on ice

Big label pressure has forced British cable ISP Virgin Media to suspend plans to introduce a legal music sharing service for its subscribers, just weeks ahead of its launch, The Register has learned.

The radical initiative, tentatively branded as “Virgin Music Unlimited”, represented a major investment for the ISP, and would have been the first such attempt to monetise P2P file sharing in an ISP partnership in either Europe or the USA. However, 11th hour “anti-piracy” demands by major record labels including Universal Music and Sony Music meant Virgin could no longer launch the service as it had envisaged. Labels demanded that Virgin block uploads and downloads of songs from subscribers’ PCs, sources suggest. Since the system is designed to encourage file sharing, the demand removed the service’s USP.

Virgin is believed to be particularly disappointed at the collapse of the initiative. The ISP had been the first to co-operate with the music business-ISP Memorandum of Understanding (MoU) signed last July and send warning letters to file sharers. It had also made a significant investment in the Music Unlimited initiative, estimated at eight figures.

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Manx P2P for €1 a year?

The Isle of Man’s e-commerce minister says he wants to legalise P2P music file sharing – taking just one Euro a year from broadband subscribers.

Tim Craine told us today that such a scheme would be voluntary. The Manx government is hopeful that blanket P2P schemes would be rolled out in other countries – including the UK.

“If you take a Euro a year from millions, then that’s a lot of revenue,” Craine told us.

“There is an opt-out for people who don’t want a compulsory charge. We would envisage an opt-out – there would be a public reaction against it,” he explained. “But you have to compete with free.”
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