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Music Industry Starts to (Finally) Get Digital

February 16, 2011

It’s been a long time coming, and for about a decade or more the music industry has been trying to pretend that digital is the same as physical – it’s not.  This article suggests that they are finally getting it.. but it appears to be still too little, too late:

In a keynote speech Jean-Bernard Lévy, the head of the media giant Vivendi which owns Universal Music Group, said the company was working to “reinvent the music industry”, with 30% of its revenues coming from new business models, but admitted “the music business is still only part of the way to reinventing itself”. Indeed.

Yet that reinvention is taking far too long, according to Forrester Research analyst Mark Mulligan, who gave an explosive presentation at Midem. “Unless the labels and publishers change the way they license services we are going to see the trend of dying CD sales and stalling digital downloads continue,” he said. “Labels are going to have to feel the long-term pain before they start licensing as aggressively and liberally as they need to.”

Mulligan said the music industry had to come to terms with the fact that its raison d’être – songs – was no longer the product it had to sell. “Content is no longer king. Its throne has been taken by experience. Yet how many music services really focus on experience?” he asked. Certainly the digital experience could improve. Digital startups complain that getting publishers and labels to license new services, such as streaming sites, is fiendishly complicated. Rights holders – the music majors – insist they are making the deals, but say they are being held to ransom, asked to make cut-price arrangements with hundreds of unproven services that only offer nominal revenue.

The result is that new investment money is no longer chasing startups focusing on serving up songs online. Fed up that licensing music content is such a byzantine process, many startups and investors are beginning to focus on services around the edges of music, such as Songkick, which lets fans know when bands are coming to town, or MXP4, a social music gaming service.

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