Music Connected (AIM independent music conference)

Unedited notes from presentations at the AIM Music Connected event yesterday.

Paul Brindley, Music Ally

Wrote New Musical Entrepreneurs, IPPR, 1999

Pricing

Price pressure is intense. 7 Digital selling new Kylie album for £5, which became best seller for 2007, Sales do pick up at lower prices. Not going to be saviour.

End of DRM
All majors now licensing, which helps to open up Apple's dominance. EMI was first but did not see major increase in market share as a result.

A La Carte
iTunes still the biggest digital music provider. Lots of dabbling and experimenting, but this doesn't add up to much. Cherry-picking is one of the reasons that digital is not making up for drop in physical sales. Don't believe the future lies in this model. US a la carte sales are leveling off. For a la carte to survive, have to find some way to reduce price, either via ad-support or bundling.

Subscription
'Pure' rental model already on its way out. Virgin and HMV in the UK have replaced rental offerings with something more simple. Still faces the 'ownership' hurdle. But subscription is bound to grow eventually. iMeem and We7 streaming services: 'feels free'.

Mobile bundled services
Comes with Music/MusicStation feels free. CwM doesn't exist yet; but Nokia has very deep pockets. 'All you can keep' subscription service. For 12-18 months you will be given a key to unlock all the music in the Nokia store. After that, your code will no longer work, but the music you have downloaded will. It will be difficult to get your music off the Nokia handset and onto an iPod! It's going to be all about the kind of advance you get from Nokia – Merlin may be critical in this. Orange refused to stock some Nokia handset simply because Nokia had launched a music store. Radical ructions with operators may be ahead

Ad-funded
Qtrax scheduled to speak here but pulled out. We7 have changed model: away from ads embedded in downloads to streaming model. People don't like having ads on downloads, apparently

Conclusions
More 'permanent' tracks and 'free to access' models, more bundling. A la carte can only grow via 'subsidised' models. More spontaneous a la carte purchases via widgets. Operators looking at 'music' tarriffs – music as an anti-churn measure to stop people switching networks. Music discovery, recommendation and music management services. More involvement of brands with digital music/media. Less distinction between online and mobile delivery. Labels need to manage relationship between artists and fans. Find value around music, and offer broader entertainment packages.

Tom Gillet, London Connected

The digital music network for London

1. business support

2. skills development (basic and advanced training)

3. market intelligence (reports, newsletter)

Total budget £700k, with 650 from LDA and 50 privately from AIM

Organising round tables (a bit like MusicTank)

tom@musicindie.com, londonconnected.org

Ad-supported business models

Jennifer Link, Spiral Frog

Free and legal downloads, as long as you 'refresh' your membership monthly, Live since September in US. 1 million registered users. (Jennifer is responsible for rights clearance.) Universal is only major on board so far (big advance) – hoping to announce another major soon. Advertisers are most interested in targeted ads (more than invasive). There is streaming of videos on the site, but only downloads for audio. If you keep playing the same song repeatedly, the artist for that song gets more money (unlike with iTunes).

Clive Gardiner, We7

Responsible for licensing from labels of all sizes. Today is launch of streaming service, and first day with Sony BMG on board. Agree that targeted ads are what advertisers will pay for. Embedded ads can be taken off after a month. Currently have to go back to site and download new file, but future service will be integrated with iTunes and ads can be managed within that. Most of the resistance from people who haven't tried it. First million downloads took 6 months, second took 6 weeks.

Shelley Taylor, All Dig Down

Currently in alpha. Revenue-supported service, ads are one form of revenue! Streaming videos because don't think people will pay to download videos now. Editorial drives purchase. Plus some social network functions (but no UGC). Strongly against copyright infringement. Has proprietary store, with no affiliate links to other stores. Targeted as site for the culturally curious, over 25s that advertisers are interested in. Entertainment discovery site. Never going to have an open platform like Facebook. Will go live between July and September. Currently ingesting lots of editorial content. Have pre-sold all the advertising at unheard of rates for unlaunched site. 27,000 personalisation fields, like what areas of Italy do you like your wine from? Prefer to deal with aggregators. We're not paying advances and that's that.

Caroline Bottomley, Radar

Smaller in scale. Put together film makers and clients. Put video commissions to independent makers. World's first online music video agency – at lower end of market. Radar takes 15% off the video budget, and charge £10 subscription to filmmakers. Using video competition model a lot, but it's limited. There are two other agencies that do a similar function for commissioning ads.

Simon Wheeler, Beggars Group

Ad-supported business model is very young. Few companies generating enough revenue to pay for the rights. We want to support new business models, but not those that don't pay sufficiently for the rights while building up assets that could be worth billions. No Beggars music is on any of the services represented on this panel. Everyone knows what you get paid for a streaming song, and what you get paid for a download: it's clear that the streaming model makes more sense. Ad-funded will create a slice of the pie, but not sure how much. Tech companies say there is no value in recorded music any more, but they all want to use music to build their services – they can't have it both ways.

John Benedict, Collins Long

Majors want to take a stake of the company and a hefty advance. No idea where that advance goes... Some labels take the view that they can barter with the collective value of their catalogue, without being required to pass on advances to artists.

Mobile Music Mastery

Gareth Currie, Gulp!/Blackberry

Working on a music strategy for Blackberry in Europe. Blackberry are new to multimedia, moving from corporate to consumer market. Blackberry devices don't support DRM. In North America have catalogue of 1 million tracks OTA download (and to PC). Vast majority of Blackberry owners also have a digital music player.

As head of music at 3, sales rose 30% when catalogue was extended significantly.

Tom McLennan, Vodafone UK

Responsible for fulltracks and subscription services. Omnifone now been going for five months, available on 35 handsets. Musicstation service is changing to Musicstation Max, which will allow you to keep a number of tracks each month. Rental not so unattractive on mobile: compelling to have 1000s of tracks accessible directly to the device. Self-discover £1.99 per week.

Richard Wheeler, Orange

Big belief in ad-funded music,but don't know how it will work. Working with Warners on trials. Fully converged music service: online used for discovery, mobile for consumption. Don't see a la carte as a sustainable business model four or five years down the line. Working on a number of business models.

Louisa Jackson, Vidzone Digital Media

Have been around since 2000. Distribute videos for over 3,000 independent labels. All deals are minus MCPS. Moving towards being a service platform. Powering Shazam's store.

Seth Jackson, Indie Mobile

Been around since 1999. One part of the business is mobile distribution. Other part is mobile marketing, working with fans. Would provide a mobile store for a label, manage shortcodes etc.

James McGuinness, Absolute

A white label record label for independent artists. Get licensing and marketing deals for . Labels retain ownership of copyright. [As you can tell, I'm not really understanding what he's saying.]