Digital Noise: Music and Tech

A quick note from the continuing Yahoo drama: today the company agreed to sell off Launchcast, its streaming music service, to CBS. (Disclosure: CBS is the publisher of News.com.) This continues Yahoo's movement out of the music biz--it sold its subscription service to RealNetworks back in February.

More interesting than Yahoo's exit is the buyer. Launchcast now sits alongside Last.fm and AOL Radio (which is best-loved on the iPhone) in CBS's online radio arsenal. According to this report in All Things Digital, Launchcast will become more like AOL Radio, focusing primarily on pre-programmed playlists and Webcasts of terrestrial radio stations, while Last.fm will remain the company's flagship property for user-generated playlists.

It's interesting that CBS still sees a lot of opportunity in preprogrammed (top-down) online radio. By way of comparison, look at News Corp's recent launch of MySpace Music, which is focused on the idea that users will hunt down their favorite artists and songs and then assemble playlists (bottom up). CBS's approach makes sense--you might as well appeal to all segments of the listening audience, and some Internet users simply don't have the time to bother with custom playlists, or even with recommendation-driven services like Last.fm and Pandora.

When I first looked at Imeem last December, I was boggled by the site's interface--I couldn't tell if it was a social networking site, a streaming audio and video site, or a library of user-posted content for downloading. At the risk of sounding like Grandpa Simpson or Doug Morris, I dismissed the site as a symptom of widespread attention deficit disorder among the younger set.

Last week, market research firm Compete, which measures Web traffic by compiling and measuring data from various sources, reported that Imeem had surpassed Yahoo Music as the number-one streaming music site on the Web, with 58% growth in unique visitors since March 2007. I figured I must have missed something, and took another look.

I still don't understand the appeal of yet another social networking site, but I'm happy to report that Imeem's music-finding feature is 100% better than it was in December--it actually works. I conducted my usual test search for Pink Floyd, and while the results were still an array of personal homepages with widely varying themes and content, the search results listed how many songs were available on each page. Searching for the rather obscure Floyd song "Biding My Time," three results came up. The second result was obviously correct. Clicking on the "more details" tag exposed a big "play" button, so I didn't have to waste a lot of time scrolling and clicking to hear the song. Total time elapsed between search and play: about 3 seconds.

A search for Portishead's Third returned every song on the album. What about that new Scarlett Johansson album of Tom Waits covers? Any good? When I misspelled her name (with two "n"s instead of "s"s) the sponsored listings in the right column alerted me to the right spelling. Tried again, and boom, every song on the album appeared, ready for me to stream.

In other words, a little design discipline and a vastly improved search engine have turned Imeem from curiosity into a useful first stop when you want to sample new music or hear that song running through your head.

Maybe it's just coincidence, but this week two executives have left major Web companies for roles in the music industry.

Earlier this week, Google VP of Engineering Douglas Merrill left to lead EMI's digital music initiative. According to his Google bio, his core background is in finance--not music and not really technology, although apparently he has done a lot of work in information security. Apparently, singing the Sex Pistols' anti-label song "EMI" to EMI head Guy Hands helped him get the job. Too bad MCA's gone--maybe I could have gotten a job by singing Lynyrd Skynyrd.

This morning, Yahoo Music head Ian Rogers announced that he's leaving for Topspin Media, a mysterious startup that apparently hopes to "help artists earn a living through software"--based on the old Wired article that Rogers links to, I'm guessing Topspin is trying to pioneer some new form of digital distribution or rights tracking. Rogers has expressed some interesting ideas about standard labeling for downloadable music files, and while Yahoo might have been a great venue to help push these standards through, the attempted Microsoft acquisition throws everything into doubt. In fact, one of the first moves Yahoo made after the acquisition announcement was to scrap its own music subscription service and move customers to Rhapsody. I honestly can't see how a pure Web-based music service like Yahoo's could survive in a Microsoft that seems devoted to pushing its own Zune ecosystem as a competitor to Apple's iTunes.

Two pieces of news don't make a trend (although if you go back two years, I guess they're following MSN Music's Hadi Partovi, who left to help his brother start iLike). Even so, it's interesting that executives are leaving Web companies to make waves in an industry that's supposedly dying. The obvious answer: music isn't dying, but the current distribution models are, and whoever figures out the next distribution model stands to make a lot of money.

On Friday, I pondered if Microsoft would kill Yahoo Music. Now, it looks like Microsoft won't have to bother: this morning, Yahoo announced an agreement with RealNetworks to transfer all Yahoo Music subscription customers to Real's Rhapsody service. In all likelihood, this deal was well underway before the Microsoft announcement--Yahoo's been rumored to be considering a free service for several weeks now--but the timing certainly makes it look like Yahoo's accelerating its cuts. And it appears that Rhapsody's the default partner of choice for companies that want to cut their digital music ties with Microsoft--recall that MTV signed a similar deal last August after Microsoft stabbed the Urge service in the back with the Zune Marketplace.

One of the first things Microsoft did when launching the new Zune was kill the 2-year-old MSN Music download service.

The business reasons were plain: MSN Music was a PlaysForSure service, but the Zune wasn't PlaysForSure-compatible, and it came with its own music download service, integrated into the Zune software.

Sure, there's still something with the brand name MSN Music, but it's basically a shell--a few music videos, some promotional tie-ins with Zune (through a program called Ignition), and a radio station powered by Pandora.

So what might that mean for Yahoo Music, if Microsoft's proposed acquisition of Yahoo clears? Probably not much, at first.

Microsoft's Kevin Johnson, who leads the group responsible for online services and Windows, mentioned in a conference call that the company would get the quickest benefits from combining their advertising platforms, particularly paid search: "scale economics can kick in fairly rapidly when you just look at the simple step of just combining the search-related ad inventory on a single ad platform."

Translation: as soon as the acquisition closes, Yahoo Search would be folded into Microsoft's Live Search, and Panama would be folded into AdCenter.

Eventually, though, Microsoft would go through all the other Yahoo divisions, looking for overlap or strategic misfits. Here's where Yahoo Music could feel the heat. Selling PlaysForSure-protected files does nothing for the Zune, and even if Yahoo goes with DRM-free MP3 files, it would seem to be redundant with the Zune Marketplace.

Now, if Microsoft were smart, it would recognize the popularity of the combined Yahoo Music and LaunchCast (see Aribtron's online-radio ratings). But often, decisions in acquisitions are driven by politics and emotion rather than actual business logic.

Editors' note: Yahoo on Monday announced that it is discontinuing its Yahoo Music Unlimited subscription service, transferring its customers to RealNetworks' Rhapsody service.

Yahoo Music's going to join Amazon.com in offering DRM-free MP3s, either for free as part of an advertising-supported service, or for sale on a per-download basis, according to anonymous record company executives cited in this AP story.

Ian Rogers, the exec in charge of Yahoo's music service, has certainly thought long and hard about the future of the music industry, and Yahoo's got tons of traffic (which it hasn't done a very good job of monetizing, but that's another story). I like the site's search interface--it's a lot better than Amazon's, which mixes MP3 downloads and physical CDs with no rhyme or reason--and it's the only major commercial music download site that offers lyrics.

They've got a fighting chance, in other words, but will need something extra to differentiate themselves from the rapidly growing pack. Some ideas: offer a range of bitrates, all the way up to lossless. Do more with the lyrics, like integrating them into music streams, then scrolling them across the Yahoo Media Player when users play or link to a song that's hosted on the Yahoo streaming service. Make it as easy as possible for independent artists to post their files on the site, like CDBaby and (recently) Last.fm--depth of catalog is key.

What not to do: stay wedded to Windows Media Audio, require a subscription fee or online registration, or (worst of all) try and create yet another desktop application for playing music--we've got plenty of those already, and most iPod users will stick with iTunes.

I'll wait on the details before speculating further as to whether a revamped Yahoo Music will hit or miss.

Ian Rogers, Yahoo's VP of Video and Media Applications, didn't get much chance to speak on the five-person panel I saw at Billboard Live. However, he gave a very interesting presentation at Aspen Live, a conference for music industry types sponsored by talent agency Creative Artists Agency (CAA), and he's paraphrased the talk in its entirety--complete with slides--on his blog.

Most of his arguments ring true to me: scarcity has been replaced by abundance, and spending incremental dollars on improving quality (while difficult and highly subjective) will provide much better returns in the long tail era than spending incremental dollars on marketing. In English: people are going to download the stuff their peers say is great, not the stuff that marketers push. He also namechecks Yngwie Malmsteen and quotes Neil Peart by way of Geddy Lee, suggesting he's a fellow refugee from the suburban 80s hard rock universe.

But I'm not sure I agree with his final point, in which argues for a new set of standards for labeling media files (the hAudio microformat), playlists (XSPF), and sharing user information and other data among social-networking and user-generated-content services (he offers no specific suggestions here). In essence, he's saying there need to be the types of open standards that enabled the Web, like HTTP and HTML, only for digital media.

The trouble with this argument is that the Web has been the exception, not the rule. Most "standards" are not predetermined by a committee or industry consortium and then miraculously adopted by all participants. Rather, most "standards" are proprietary technologies that become ubiquitous through end-user behavior.

Look at music. MP3 is considered the standard for compressed digital audio. But it's a patented technology, developed by private corporations (Fraunhofer, mostly), and licensed through the Motion Picture Experts' Group (MPEG). The Red Book standard for audio CDs was developed by Sony and Philips and must be licensed.

Companies dream about having a patented technology become a standard. That's why Microsoft, and Apple, and Sony, and everybody else on the technology side of digital music have fought so hard for so long to make their digital audio technologies ubiquitous. (It's also why companies play games with standards...like sitting on standards committees while quietly trying to achieve market ubiquity with their own proprietary alternatives...or trying to get their own patented technologies approved as a standard...or enthusiastically supporting open standards when the alternative is a de facto but proprietary standard owned by a competitor.)

It's hard to be the grump who argues against open standards, but in this case I'm not sure who would create these standards for digital media, or who would listen once they were created. Unfortunately, that means a harder landscape for content owners: they might have to pay attention as competing formats emerge for these needs, and bet on a winner based on actual user behavior.

Whether you agree with his point about standards or not, the rest of the speech is great and well worth a read.

If you often link to music files from your personal Web page or blog, and have some control over the code on that page, Yahoo's got an interesting tool for you. With a few lines of very simple Javascript code, you can add small "play" buttons that link to specific songs. When users click those buttons, the Yahoo Media Player launches, letting visitors play the song without leaving your page. There was a previous iteration of the Player, but it worked only on Yahoo Music and linked only to music files from Yahoo's own site.

How does it work? Judge for yourself--these are two songs from old bands on which I played bass (so I have at least a plausible claim to partial copyright). I simply followed the instructions here and here (to insert album covers). Click on the small arrows (after the page break) and they'll play right within the Yahoo Media Player at the bottom left of the page. (Worked for me on Firefox on Windows XP, your mileage may vary!)

Click the 'Read More' button below to listen to the tracks.

... Read more

Correction 5:35 p.m. PST: This blog gave an incorrect last name for the head of EMI Music's digital business. He is Barney Wragg.

Because I had to leave Las Vegas on Wednesday, I was only able to catch the first two sessions of the one-day Digital Music Live conference, a conference about technology and the music industry co-sponsored by Billboard and the Consumer Electronics Association (who's behind CES). Nonetheless, the morning speakers had some interesting thoughts.

First up was Gregg Latterman, president of Aware Records, whose company manages multimillion-selling artists The Fray (which had already been signed to Epic by the time Latterman began managing them) and John Mayer.

Despite the rejection of traditional promotion and distribution by everybody from the youngest MySpace bands to the most-established rockers, Latterman argued that the old ways--terrestrial radio and major label marketing and distribution--are still necessary for artists to sell more than a million records. He acknowledged that it's harder to create million-sellers from scratch--a few years ago, he claimed, a label could put $1 million into promotion and radio and almost guarantee a million album sales--but he noted that many critically acclaimed independent acts just aren't selling in big numbers, citing Bright Eyes (whose last album sold 189,000 copies, according to Latterman) as an example.

He also pointed out something I noted when Radiohead first revealed its tip-jar pre-release download plan for In Rainbows: without EMI, the band might never have built the huge global audience that allowed it to perform this experiment and sign distribution-only deals for the actual full CD.

My favorite insight, however, came in a discussion of how digital downloads are becoming a larger proportion of sales:"it's not fun to buy a record anymore." He didn't expand, but I imagine he was thinking of big-box stores and $18 retail prices.

The next session was a five-person panel on the current state of the industry. EMI Music's head of digital business, Barney Wragg, claimed that moving to DRM-free downloads revitalized the label's sales of digital full albums, as opposed to singles, contradicting the industry's fear that users would cherry-pick fewer tracks in the iTunes age, leading to less revenue per sale. (He didn't reveal exact numbers, but hinted they were significant enough to change top executives' thinking on the subject.)

He also acknowledged that many executives at the majors have had their heads in the sand regarding digital downloads and combating file trading, but pleaded for some tolerance, noting that a lot of artists and publishers refuse to participate in newer forms of distribution for fear it'll hurt their own bottom lines. I'd be crying crocodile tears if I pretended to be too sympathetic, but it was a good reminder that the majors aren't monolithic corporations, but actually must represent lots of parties with conflicting interests and levels of comfort with digital distribution.

There were a few other interesting points in the panel discussion, although 45 minutes seemed hurried.

Ian Rogers, VP of Video and Media Applications for Yahoo, praised the impending end of DRM, claiming that Yahoo Music had been unable to sign many deals--such as one with home automation company Control 4--because of the expense of supporting DRM-protected audio files.

Matthew DeFilippis of publishing rights clearinghouse ASCAP talked about how the organization was never interested in DRM, but cares much more about tracking usage--watermarking could be a useful technology here--and mentioned a system ASCAP is using to monitor songs playing in public places.

Finally, well-known music lawyer Fred Goldring summed up the problem nicely: empowered consumers with an unlimited supply of music directly contradicts the old industry basis of enforced scarcity. The trick is figuring out how to monetize what consumers are already doing. Unfortunately, there are no jaw-droppingly obvious or brilliant solutions at hand, although he and Nettwerk Music Group CEO Terry McBride seemed to lean toward some sort of blanket license applied on ISP fees.