Rolling Stone story outtake: A conversation with Gavin Parry, General Manager of Digital & Brand Development, Sony BMG
Here’s an outtake from my first Rolling Stone story on streaming music subscriptions. It’s an interview with Sony BMG‘s General Manager of Digital & Brand Development, Gavin Parry [pictured below right]. Sony launched the digital music outlet bandit.fm in late 2008. I spoke to Gavin on 25th August, 2009.
Andrew: As I understand it, Gavin, Bandit is currently a pay-per-download site, but in October, it’s being re-launched as a purely subscription-based site for streaming music. Is that correct?
No, that’s not correct. I think what happened with the article in The Herald and everything sort of spiraled out of control and there was misreport after misreport. Essentially what’s happening is we’re continuing the download service, and a subscription service will run along side of it. You can either choose to download on a pay-per-download model, or you can choose to be involved in a streaming model, which is basically a monthly payment plan.
So it’s up to the consumer to consume music how they want, basically.
It’s all about trying to provide as many options as possible, remembering that we also provide all our videos free to the user, free video streaming. Every featured artist on the site, which is about 1,000 featured artists at the moment and that’s increasing, they have three tracks each that are free to the users for streaming. That’s there right now.
How long has the streaming service launch been in the works? I know Bandit was launched in November as a download service.
We’ve had it in place since November, when we organized all our licenses. It’s always been in our plans.
To my knowledge, all the major labels have music for sale in the store, but Sony is the ones running the site. Is that correct?
Correct – you have to be very clear here. What happened with The Herald article is it said we were running the service on behalf of the industry. That is incorrect. At Sony, we’ve set up Bandit and we own and operate it, but we have licensed any music from any other three majors.
And Sony is the main financial backer of Bandit.
Yes.
What do you think the benefits are of a streaming-based subscription model to the previous, per-download model?
I just think it’s about options. There was a lot of feedback online about how people don’t stream music to the PC and people would never use it. If you look at The Music Network this week, they did an article in there that said 50% of kids stream music to their PC on a weekly basis. We know how popular Spotify is in the UK and Europe. There is no doubt that a streaming service, not just to the PC, but to any Wi-Fi device could be quite popular.
Conversely, what do you imagine some of the costs of a streaming-based site might be, such as high bandwidth and the necessity to allow many concurrent users?
The cost from our perspective or the cost to the consumer?
The cost from your perspective.
From our perspective, basically you have to employ someone like Akamai to cope with the volume. We currently employ Akamai. You are familiar with what Akamai is?
I haven’t heard of Akamai, no.
Rather than streaming from our servers, we basically employ a series of other computers, a network of computers that Akamai operate to take the load off of us so the streaming that occurs from a local PC – if you’re in Perth and you’re streaming from Bandit, you’ll be streaming from a computer in Perth rather than a computer from our hosting arrangement. This means the biggest cost to us is actually paying Akamai to be able to operate that high bandwidth.
There are also hosting costs, obviously to ingest and to hold – we’re up to about 70 Terabytes worth of data. The cost of hosting is pretty significant, as well.
Where do Australia’s internet service providers sit within this discussion? Are you concerned that Australia’s network might be ill prepared for this kind of streaming model, given that other territories have had faster connections and unlimited bandwidth, compared to Australia?
I think it will be fine. It just depends on what sort of plan you’re on. Obviously, cable will work fine; it depends on what plan you’re on with the ISPs. A lot of the bandwidth now should be able to cope with the streaming service.
I can imagine traveling throughout the city and falling into black spots with mobile phone coverage and having the song interrupted by buffering might be a bit annoying.
It’s the same thing you’ve got if you’re on a Wi-Fi network. You’re up to the vagaries of what the network might be. There are concerns but it will all be up to the consumer to ensure the bandwidth they’re paying for with their ISP is adequate to stream the music.
With Bandit, did you consider putting in place an advertising-based free service, as Spotify had done in the UK?
We essentially have got that in place with the video streaming, and with the ‘three free tracks’, which is a limited audio catalog. The problem you’ve got is the advertising model globally, when you actually look at Spotify and other services like iMeem and Last.fm, those services have really struggled to generate enough advertising revenue to continue to operate.
On a similar note, is Bandit’s launch time to beat Spotify to the Australian market?
No, not really. To be honest, when we launched Bandit in November, Spotify was on the radar and probably has significantly upped its profile in the last twelve months. Bandit’s plan was always to have a subscription service operating around October/November of this year.
The other thing I should mention is there is another service that we’ll operate, and again, this is all about providing options to the consumer. We’ll be operating a model very similar to eMusic as well. People can sign up and pay a monthly fee and receive a certain value of downloads.
A certain value, what do you mean?
Are you familiar with the eMusic model?
No.
You pay a monthly fee, but you are given a certain value for that fee. You’re given a value; for say $20 a month you’ll get $30 dollars worth of value that you can download. It’s not about streaming. Again, it’s a regular payment plan, but it’s all about downloads.
Will this value package be launched at the same time in October, or is it currently available?
The plan is we’ll launch it at the same time as we launch the subscription package.
Are you able to provide some figures on Bandit since it launched in November, such as how many users or what is the volume of weekly downloads?
We’ve got a monthly net browsers now of around 80,000. We’re doing about 2 million page impressions per month. We’ve got over 50,000 active users that have actually purchased something. That’s probably enough to give you an idea. We’re quite happy where we’re at after only nine months being operational. We’re pretty much on plan, as far as where we expect the service to be. We’ve done very limited marketing so far.
I was looking around your website earlier, and I noticed that a lot of artists have unique content-rich splash pages, which includes images, artist’s recommendations, and news [example below left]. Who supplies the content that is displayed on those pages? Is it managed in house or is it syndicated?
We’ve got our own editorial team that puts together news stories, and also looks after Bandit on Twitter and our Facebook page. We also have licensed in the All Music Guide. When you’re looking at all the biographies and all of the similar artists and influenced by, that all comes from the All Music Guide.
What we’re trying to do is build a very deep, rich site that is more than just a download store. You can see how it’s been built by creatives. They’re very graphical and it’s a very appealing site. That shows with our average session duration which is around 15 minutes.
How many staff are working on Bandit full-time?
We’re still in development mode, so we’ve got a team of probably four developers. We’ve also got a person in customer service, editorial, operations, and also we have a programmer who deals with the other labels.
It’s still a pretty small team of around ten, would you say?
Yeah, which we’ll scale down once we’ve finished the development phase.
What inspired the decision to make Bandit operate within the browser as opposed to an external program, such as Nokia’s Music Store?
It’s really a matter of what you can support. If you build something within a browser – it’s really a phased approach. The first thing is once you build it within a browser, you know you’ve got a higher chance of compatibility with most computers. If you build an application, it’s much more work to get compatibility with all the various operating systems. It’s really initially a cost consideration, but having said that; we’re currently working on a download manager which is built using Adobe AIR. That’s basically an application that will sit above the site, which will manage the download process, and also manage your library. We have to roll that out in October, as well.
October is going to be a big month for you, then.
Yeah, the guys are flat-stick at the moment. We’ve got them down in the dungeon, working hard!
Final question – are Sony using the Australian Bandit Store as a kind of testing ground for potential expansion to foreign territories?
I think the focus is just making the Australian site a success, and then we’ll see where it goes from there.
Fair enough. That’s all my questions. Did you want to add anything else?
The other thing that we’ll be adding in October is a level of social networking, which will be quite interesting. In that case, the core part about Bandit is the channels. You can see different channels which split music be genre, by demographic. We put up the faith channel yesterday, which is all about Christian music. Coming in October, when we launch the social network piece, each user will not only have a user profile, but also will have his own channel. The idea is that a user can go on, select their own playlists, stream music, connect to other artist, connect to other channels, connect to other users, and in that way we’re actually giving people a lot more context. Their channel will be a representation of themselves, musically, online.
This idea of ‘channels’ kind of makes me think that you’re trying to build on the concept of the radio station, so everyone has their own channel.
To some degree, that’s it, the ability to essentially create your playlist. We think the subscription service also has quite relevance to families, and it’s not just focused on teenagers and young adults. I think the subscription model going to a family where they have unlimited music online, and they can basically just turn Bandit on to their stereo, set up their playlists, and play music in stereo, I think that is a big thing. In that case, they are actually setting up their own radio station.
Okay, thanks for your time, Gavin. I appreciate it.
No problem.