All posts tagged streaming

  • The Global Mail story: ‘Unchained Melodies: streaming music in Australia’, June 2012

    A story for The Global Mail, published in June 2012.

    Excerpt below; click the image to read the full story on The Global Mail website.

    Unchained Melodies
    by Andrew McMillen

    What are you listening to? Chances are you accessed it from a streaming music-subscription service. Who wins and loses from the surging popularity of such sites as Rdio or Spotify?

    Little-known fact: among David Bowie’s many talents — singer, guitarist, hit songwriter, actor, multi-million record-seller, one-time androgynous alien — he’s also a soothsayer. The English pop star told The New York Times a decade ago, “The absolute transformation of everything that we ever thought about music will take place within 10 years, and nothing is going to be able to stop it. I see absolutely no point in pretending that it’s not going to happen.”

    Bowie continued: ”Music itself is going to become like running water or electricity. So it’s like, just take advantage of these last few years because none of this is ever going to happen again. You’d better be prepared for doing a lot of touring because that’s really the only unique situation that’s going to be left. It’s terribly exciting. But on the other hand it doesn’t matter if you think it’s exciting or not; it’s what’s going to happen.”

    That New York Times article was published in June 2002. Ten years later, Australian music consumers find Bowie’s out-there predictions have become reality. Music sales have taken a severe dive worldwide; according to the most recent Recording Industry in Numbers report, 2011 delivered the “least negative result in global recorded music sales since 2004”; overall revenue fell by just three per cent, continuing the year-on-year decline.Today only a handful of the biggest artists can successfully earn a living from recording and releasing music alone; the vast majority of singers and players must tour regularly to top up their bank accounts, while simultaneously promoting their latest release.

    And, perhaps most significantly, technological innovation and begrudging record-label cooperation have combined to offer music fans the chance to shun the concept of traditional ownership entirely, in favour of streaming millions of songs wherever they want, as often as they want, in exchange for a regular fee. It’s Mr Bowie’s music-as-utility forecast come true. Streaming music is here, and likely here to stay. For music fans, the benefits are clear. Subscribe to an online service like Rdio or Spotify — the two most popular players in an increasingly-crowded Australian market — for $12.90 or $12.99 per month, respectively, and you’ll have access to almost any song you’ve ever loved, plus a whole galaxy of tunes you don’t yet know. You’ll also be able to hear new music on the day it’s released at the record store and on Apple’s iTunes Store. (Since April 2003 the iTunes Store has sold more than 16 billion songs.)

    Streaming offers an all-you-can-eat buffet of music, on your computer and your smartphone, and no matter how much you ‘eat’, the monthly fee remains the same. (Spotify also offers a free subscription, which automatically inserts audio advertisements into your playlist every 10 minutes or so.) Streaming is the most cost-effective and convenient means to music discovery ever mass-marketed; indeed, the initial enormity of the music library on offer — both Rdio and Spotify host 15 million-odd songs each — will overwhelm even the biggest fan.

    That record labels succumbed to streaming service providers by licencing their artists’ music was no doubt driven by a desperate need to regain some control over their ailing profit margins. Peer-to-peer file-sharing technology like Napster, Kazaa and — more recently — BitTorrent are widely acknowledged to have decimated overall music sales from 1999 onwards. The record industry learned a hard lesson: if the option is available, the tech-savvy will choose not to pay for music.

    Exactly how much this lesson cost the industry in lost sales revenue is impossible to measure, but it’s safe to say that the number in question is a whole number containing many, many zeroes. The labels’ great big hope is that the sheer convenience and relatively low cost of streaming will function as a finger in the proverbial dyke. A month’s unlimited subscription to Rdio or Spotify costs less than the average album does in-store, or on iTunes. Better that people pay a little money to hear their artists’ music, the labels figure, than nothing at all. The recording artists generally can’t choose whether or not their music is streamed, as their record labels usually hold the rights over how and where their music can be sold. Only the biggest fish can swim against the tide: bands such as The Beatles, Coldplay, Metallica and AC/DC all have opted out of including their respective catalogues on streaming services. Spotify won’t be drawn on the amount of revenue that gradually filters down to individual artists; spokespeople have only ever stated publicly that 70 per cent of the company’s revenue from subscriptions and ad sales goes to record labels, which then pass on a small percentage of the per-stream revenue to the artists.

    Perhaps it’s always been true that only the foolhardy would pursue a career in music with the primary goal of wealth in mind. But now it seems that the money-laden scales are tipping further away from the songwriters and performers in favour of those who build and maintain the tech services which enable the sale, distribution and consumption of music.(Just ask Apple’s shareholders.) So, is streaming going to kill the rock star?

    To read the full story, visit The Global Mail.

    Elsewhere: a conversation with Scott Bagby and Carter Adamson of streaming music service Rdio, February 2012.

  • A Conversation with Scott Bagby and Carter Adamson of streaming music service Rdio, February 2012

    The concept of paying month-by-month to stream music from your computer and smartphone remains a relatively new idea in Australia. In the last year or two, a number of contenders have emerged. Nokia has had their ‘Comes With Music’ service for a while now. Sony launched their ‘Music Unlimited’ product in February 2011. Hulking, canary-yellow retailer JB Hi-Fi launched their own streaming platform in December 2011, dubbed ‘NOW’. BlackBerry, Samsung and Microsoft all have proprietary systems operating in some capacity. Rumours abound of Spotify’s Australian launch. A site named Guvera offers a slight twist on the idea: ‘guilt-free’ mp3 downloads. None of these services have yet gained any real traction in the Australian market.

    Clearly, it’s becoming an increasingly crowded marketplace, as app developers and record companies alike cosy up to the assumption that most people don’t give a fuck about music ownership anymore. That whatever CDs, vinyl and cassettes they own gather dust on a shelf somewhere, immobile and largely useless in the era of interconnectivity. These companies believe that most music fans – ‘consumers’ – simply want the ability to take all the world’s music with them, wherever they go. For a monthly fee, of course.

    The newest contender on the Australian market is named Rdio [pictured above]. It’s web-based and also has apps for the main phone platforms (iOS, Android, BlackBerry… Windows Phone?). It was founded by a couple of the guys behind Skype, it’s been public in the States since August 2010, and it’s pronounced exactly like it’s written (‘radio’ minus the ‘a’). For AUD$13.90 per month, you get access to unlimited PC and mobile streaming of their library, which apparently consists of over 14 million songs. Ahead of a launch party at Bondi’s Beach Road Hotel in early February 2012, a couple of the Rdio guys flew me to Sydney, bought me lunch, and answered my questions as best they could.

    Andrew: How long has Rdio’s Australian launch been in the works?

    Scott [Bagby, VP Strategic & International Partnerships; pictured left]: I first came down to Australia to start the discussions at Easter 2011. We were pretty much sewn up by the end of the year. So not quite a year.

    There’s been a few streaming services available in Australia over the last few years, but none of them have had any real success in terms of market penetration. Is that fair to say?

    Scott: Streaming services on the whole, globally, are quite nascent. I was just hanging out with a bunch of labels. I can’t verify these numbers, but this label guy told me that worldwide, there’s only about 7 million subscribers, to any streaming service. It is very much in the early days of all streaming services. But the potential is huge. They’re planning on massive growth in the area, especially this year. I think you’ll find that here in Australia, as well. There’s still an education that needs to happen for the user to understand streaming services. [They need to] just learn about ‘em, and use ‘em, and get what I refer to as the ‘a-ha’ moment, of why streaming services are so much better than buying individual tracks.

    Carter [Adamson, co-founder; pictured right]: But seven million music subscribers in a world where everyone loves music? There’s a lot of room to grow. For ten years, we’ve had various fits and starts with digital music: DRM, tethered CDs, and that kind of stuff. We have services like Rhapsody in the US, who are stuck at around 600,000 subscribers. Now within the past year, you have more than a handful of services that have well over a million subscribers apiece. That only happened within the past year. You have markets like Australia, where 40% of all music revenue is digital music revenue. Korea’s over 50%. For the first time, digital music revenue globally is growing quicker [than physical sales]. I think we’re now at an inflection point with digital music subscription services.

    Scott: The timing’s also great, because of the iPhone and other smartphones. People want to take their music with them. Back in the old days, when I was travelling around I used to have a CD case [for a discman], but that’s just too much of a hassle now. With this streaming service, we have 14 million songs at your disposal, no matter where you are in the world. You can download songs to your phone, switch ‘em out; every Tuesday, there’s new releases [on Rdio]. These sort of things – that’s the education that has to happen, and that’s the ‘a-ha’ moment when you get all of that going. The perfect alignment of the ubiquity of smartphones is what’s really helping it along.

    Carter: Well, connected devices. Any single device that can talk to the internet is a playback device now. Whereas before you had one device; a record player, CD player, 8-track player. Now there’s a wide array of devices that are effectively playback devices, so it no longer makes sense to buy one song for each device. It no longer makes sense to port all the downloads that you bought a la carte via external hard drive to every single device that you have. The only thing that makes sense is for you to access it seamlessly wherever you are, using whatever platform or device you have.

    Using the US service as an example, what percentage of users are using Rdio on their phones?

    Carter: Over 85% of our subscribers are on the higher-priced tier. [Note: PC-only access to Rdio is AUD$8.90 per month – five bucks cheaper than the PC/phone combo.] And that makes sense, because the value proposition has always been seamless mobility. People always wanted to move their music around. No-one’s ever bought a song on iTunes to just play it on their computer. They’ve been waiting for 10 years for this whole seamless mobility thing to become a reality. Now it’s finally here.

    Scott: I think that’s one of the reasons that the music industry faced such a piracy problem in the past, because they didn’t offer it in a format in which people wanted to consume music. Now that it’s coming into that format, you see a lot of people moving into services like ours. They wanted to listen in several places at once, but they couldn’t, so the only way they could do it is to steal it. It was still happening up until a month ago in Hong Kong. Everyone was saying, ‘I want to buy music, but there’s no iTunes, there’s no digital services here. I can’t buy what I want; you leave me no choice but to steal it’. These people were lawyers, bankers – people that had the means [to pay], they didn’t want to steal it, they just didn’t have it.

    Carter: And also, the price has never been so low. We’re talking about 34 cents a day for access to the world’s music, across all your devices. That’s an insanely low price.

    Tell me about that education process you mentioned earlier. How do you turn seven million streaming music subscribers into seven billion?

    Scott: [laughs] Well, one of the benefits is to have your music everywhere and anywhere. Part of my job is to go around to all the different countries and get the rights sorted, so at least it’s available to everyone. Once it’s available, the education process is an ongoing one. And it’s one for the entire industry to be involved in. The best way to get there is to allow people to get that ‘a-ha’ moment. That moment comes at certain times, like when they’re at their friend’s place, they’re sitting around and they want to hear that song from their childhood that they’re all laughing about. Obviously no-one has it in their collection anymore, but then you – boom – you stream it down, you get a big laugh, and it kicks off. You can almost have Rdio and some beers, and you have a party.

    I think a lot of people would be using YouTube for that purpose at the moment.

    Scott: But YouTube, again, isn’t all that mobile. I mean, not as mobile as Rdio is.

    Which labels do you have on board for the Australian launch?

    Scott: We’ve got all the major labels, and we have some indies like Shock, MGM and Inertia. We won’t open up in any market, anywhere in the world, unless we have the domestic music, as well. At the end of the day, it’s about enjoying the content. That’s what makes a good service – the titles that you have. We have a whole team who just make sure that we have as much music as we can on the service. Funnily enough, I was just in Germany, doing a radio interview with a DJ. She is in love with Australian music, specifically Australian hip-hop. She used to fly out here, buy the CDs, then play it on her station. What she loves about this now is that she can now follow Australian influences [using the service], get the music that she wants, and find new music just through the service.

    Will Rdio have an Australian office?

    Scott: Yes.

    In Sydney, I suppose?

    Scott: We’re looking for some key players. Who’s the best person to hire? Once we find that person, they can determine where the office is going to be. Sydney, Melbourne, Brisbane, Perth… they’re all options. It all depends on who the best person is to run [Rdio] Australia.

    You talked about the ‘a-ha’ moment earlier. For me, when I was testing out the app, that moment was when I realised that Rdio had taken over the iPod player interface on the iPhone [ie the screen that appears when you’re playing music]. I thought that was pretty clever, how similar and familiar that screen was, even though I was using a web streaming service.

    Carter: Two of the most common pieces of feedback we receive: “I just deleted my iTunes collection because I no longer need it,” and “I’ve discovered more music on Rdio in the past two days than in the past two decades”. We’ve obviated a lot of what you would’ve needed iTunes for, and we’ve made it even better with the whole discovery [aspect].

    Scott: How we discovered music in our teenager years is we’d go to our mate’s house and you’d wait to hear their song. It wasn’t until you’d heard it a couple of times that you’d go out and buy it. It’s rare that you’d buy a song without hearing it first. That was one of the disadvantages that iTunes has; you couldn’t hear it without purchasing it.

    Carter: Every Tuesday, new music comes out [on Rdio]. You don’t have to pay a dollar a song, or eighteen dollars an album: you can play literally everything that’s out on Tuesday. You can save it to your mobile device, you can un-save it and throw it back into the water if you don’t like it. People are consuming more music now. I’ve never seen higher retention or engagement metrics in the 17 years I’ve been doing consumer software, or consumer services. It’s insanely high. People get on it, they love it, they use the hell out of it.

    The recommendation worked really well for me. It’s probably a simple thing, but it seemed to work better than most other services I’ve tried.

    Carter: We wanted to be the most comprehensive service out there. Unlike the other services, we offer a little of everything. We not only have the social music discovery stuff, which is always front and centre, no matter where you dial up the service; we also have the algorithmic recommendations, which you were playing around with. They’re getting better and better every day as we see more data, and learn more about you. We also have the on-demand aspect; “I know exactly what I want to listen to,” whether it’s a song or a playlist. And we have the passive listening stuff; “I like an artist, but I don’t really know which song or album to play. Just play me some of this artist’s songs, and maybe mix in related artists.” Or you can play your ‘heavy rotation’ or your entire collection as a radio station. Or your network’s ‘heavy rotation’, or collection.

    In the US… we haven’t carried it over anywhere else because no-one uses it, but we have built our own iTunes store. So you can buy [songs] a la carte in the US, but we found that no-one uses it, because once you’ve used the streaming service, there’s really no reason to buy stuff a la carte.

    How does the Australian subscription price point compare to the American version?

    Carter: Scott, I’ll let you take that one…

    Scott: [laughs] Thanks. The price point is heavily influenced by the rights holders. Between different markets, we have similar… every market to us is the exact same. So the price point basically was just taking into [account] what we had to pay the artists, the labels and publishers. How does it compare? Unfortunately it’s more expensive than the US market. That was just due to market circumstances when we came here. But we personally didn’t treat Australia any different to the US.

    How do you pitch the service to fence-sitters? Those people who say they love music, but rarely pay for it. They might go to a lot of shows, but most of the music they download is via torrents and other shady methods, not via iTunes or equivalent stores.

    Scott: I think in general, most people want to do the right thing. Music lovers want the artist to get paid. I’ve never come across a music lover that says, “Screw the artist, I want to steal from them”. I think the key is making the service as easy and quick to use that it’s almost the default. So that you’re almost paying for the convenience. Instead of researching on BitTorrent, I have ‘social discovery’ [on Rdio]. I’ve built my playlists around my influencers. I like a particular DJ, and a good friend of mine knows a lot about music, so it just kinda bubbles up [in my playlist]. What used to take me a half hour of reading different music blogs and listening to their tunes, it just comes to me easily, now. As Carter says, discovering more music in two days than in two decades – that is what’s going to engage these music lovers, and make it worth them spending the money that they would otherwise gain through BitTorrent.

    Can the service be used offline, or do you have to be connected to a 3G network or equivalent for it to work?

    Carter: You can save as much music as you want to your device’s memory card. So if you have a 32gb iPhone, you can save that much. Again, for 34 cents a day – instead of spending $10,000 to fill up your iPhone or iPad…

    The mp3s are saved onto the device’s hard drive?

    Carter: They’re locally cached, yeah.

    Has that been hacked yet?

    Carter: Not yet. [laughs]

    What are the most common comments you get when people are engaging with Rdio for the first time?

    Scott: The people who’re born before 1980, their concern is: “why am I just renting my music? I want to own it; I want to have a collection.” I think that’s just a lack of understanding of the access model. It almost goes back to the heyday of having a massive CD collection, and looking at it, touching and feeling it. But more and more, as that moves on… there are a lot of 21 year-olds who’ve never owned a CD. So that question is more of a theoretical until they start using the service, and then they realise, “Hey, I can hear all my songs, and it’s actually better because I can hear my entire collection no matter where I am, not just in my house.”

    Carter: I think there’s a general lack of knowledge. Most mainstream consumers don’t understand why they need a service like this, but strangely, they’re already doing it with other types of services, like movies, videos and books.  You have a digital book reader; you pull down your books electronically, you don’t have a physical copy. Same with video. They’re getting the fact that, “Oh yeah, this is what I do with other forms of content. Now I have this wide array of connected devices, I don’t need to buy one song for every device.” But I think there’s a general lack of education on why you need the service. I don’t think it’s a resistance, per se.

    The desktop client – which is optional to download – has a matching feature, which looks at the music on your iTunes or your computer, and if we have the rights to stream it, it automatically moves it to your Rdio collection. It’s kind of like a locker service, for those people who’ve paid a ton of money – or any money at all – buying digital downloads a la carte. We do that as well. We make it an easier transition.

    Going back to what you were just saying about existing libraries; part of my job is being a record critic. It shits me to tears when labels still insist on sending me a CD – which I’ll rip to mp3 immediately anyway – rather than supplying the mp3s so that I can hear the music instantly.

    Scott: The industry itself is still in a physical mode. It’s turning around. I get CDs all the time, but I don’t have a CD player. My laptop doesn’t have a CD drive. I can’t rip the CDs. I say “thank you very much” and I usually hand ‘em over to the maid at the hotel. [laughs] It’s a transition period.

    Carter: In general, we’re leaving a hit-driven business when you move to services like this. It’s a more personalised view on music. You follow specific people because you like their taste in music. You don’t go to Rdio and look at a ‘top 50’. You go there and you look at what’s relevant, what your friends are listening to. That is a fundamental shift in the industry – along with the mobility [the app allows].

    I want to touch on what artists are being paid through Rdio. As I’m sure you’re aware, Spotify had some bad press about how little artists were being paid per-stream. What’s your model like compared to Spotify’s?

    Scott: The model’s similar, because the tariff is going to be similar.  There’s a couple ways to approach this question. First and foremost, we don’t know about the labels’ relationships with their artists. Those are confidential. I have no idea how the labels are paying the artists. I know the majority of our revenue goes to the rights holders. How that’s being distributed afterwards is a black hole as far as I’m concerned. Having said that, there’s other ways to look at this. Net present value of money and all that other stuff aside, if you buy a [music] download, you only get paid once. That person can listen to that song thousands and thousands of times and you don’t get paid for that. On Rdio, you get paid every single time that song gets played. If it’s a good song, and it goes on for a long time [in terms of popularity], you’ll get paid a lot more than you’ll ever get paid than by a [single] download.

    The second way of looking at things is, there’s been cases where artists or labels will pull their music off streaming services off Spotify. It was funny, because this label guy I was talking to – the one I mentioned earlier – was talking to a big artist of his. He turned around and said, “OK, you want me to pull it off streaming for these reasons? That sounds good. So you want me to close YouTube as well, and also the radio?” [The artist] was like, “No no no, keep those open…” The label guy was like, “Hang on a second. You make 200 times more on the streaming service than you do on YouTube, and 150 times more on the streaming service than you do on the radio. So… I don’t understand your reasoning.”

    So I think there’s another education [required] on how these [services] can help and build the labels. The actual money pool for these artists, as of 2011 – two months ago? It probably was too nascent, too small to be anything significant to walk away from. However, the way that the ‘hockey stick’ [graph] of digital music and streaming services are going? I don’t think you’ll see those same stories this time next year, because the pie is getting bigger. That is one of the biggest complaints – that dollar-for-dollar, they’re not getting as much from our service as they are from iTunes. But the iTunes pie is a hell of a lot bigger than seven million people worldwide. I understand the gripe now – again, I don’t know what [the artists] are getting from their labels – but if they look at it in a promotional way and also that this is a nascent service and it will grow, you’ll see more and more people come online and stay online.

    Carter: In a nutshell, we’re driving up music consumption. Once people are on this service, they’re listening to a lot more music. As Scott said, there’s been a model shift in terms of how they’re paid. So you’ll no longer get paid from only one transaction; you get paid each time you play a song. And we’re driving up consumption. So theoretically, that should even out very soon, as we get to scale. The other part of the equation is, we’re hitting segments of the music value chain that have never paid for music, or only pay $30 or $40 a year through iTunes gift cards. We’re reaching new segments. More people will be paying for music again, as we reach scale.

    Scott: And not only that, but the smaller independent labels in each country – because we do worldwide deals – we’ve now given them reach, very quickly and with no cost to the label or artist. In America, in Brazil, in Germany. That exposure can translate into a great opportunity that they’ve never thought of before.

    Carter: They can be big in Japan.

    Scott: Yeah – it’s not just a t-shirt! [laughs] Going back to our Skype days; when we first launched Skype, we had no idea that Brazil was going to be as big as it was [in terms of users]. It was huge. I’m sure there’s some artists sitting here going, “I don’t know if we can do stuff in Brazil.” Now they’re getting feedback from streaming services and they’re like, “OK, everyone in Brazil is streaming our music, now it makes sense for us to tour there, rather than taking a blind punt.” Or maybe they wanted to go to Rio anyway, which is an understandable blind punt. But this sort of exposure is global, at very, very little cost.

    Those are some well-rehearsed answers to a very hard question.

    Scott: [laughs] Well, we think about it. It is a concern for us. Because if all of a sudden, the artists don’t want to be on streaming services, we’re in trouble. But we’ve thought about it. It’s an industry-wide discussion.

    ++

    Andrew McMillen (@NiteShok) is a freelance journalist based in Brisbane, Australia.

    For more on Rdio, visit their website.

    Edit, June 2012: I wrote a feature story for The Global Mail named ‘Unchained Melodies’, which examines the streaming music market in Australia following the launch of Spotify. Click here to read it.

  • 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?

    Gavin Parry of Sony BMGNo, 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?

    Bandit.FM logoI 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?

    Spotify logoNo, 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?

    Queens of the Stone Age on Sony's Bandit.fmWe’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?

    'Grunged' channel on Sony's bandit.fmThe 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.

  • Rolling Stone story: ‘Sony’s Bandit.FM music subscription service’, October 2009

    In October 2009, my first story was printed in Rolling Stone Australia. It’s 600 words on a couple of music/tech issues; not exactly the most glamorous first RS article , but it’s a start no less. The story is below; click for full-sized PDF.

    Rolling Stone Australia article from the November 2009 issue on streaming music subscriptions

    This was the fourth story I’d pitched to the magazine. Here’s my original pitch:

    Bandit.FM: Under The Hood

    Sony are launching their Bandit.FM music subscription and download service in October 2009. Let’s take a closer look at the strategy and technology behind the site. Are subscription services really the future of music consumption – as everyone seems to be yelling this year – or is at all hot air and marketing?

    What will I discuss? (sample questions)

    • Who’s backing the site? (eg. venture capital beyond Sony’s involvement?)
    • How long has this been in the works?
    • Why launch now?
    • How long did it take to get all four major labels on board?
    • Each artist seems to have a unique ‘content rich’ splash page containing imagery, a bio, and artist recommendations (eg. http://bandit.fm/sixstring/karnivool) Who supplies the content behind these pages? Were these compiled specifically for Bandit, or is the content supplied by external sources?
    • How many staff are working on Bandit full-time?
    • What are the advantages of a subscription-based streaming service as opposed to an advertising-based service?
    • What opportunities will Bandit allow for Australian indie bands?

    Clearly I was unable to answer all of those questions in the article, but the issues I raised warranted a commission.

    Hey Andrew,
    Am quite interested in the Bandit story, but only as a short thing, maybe around 600 words tops. You think you can get something meaningful in that space?

    November 2009 issue of Rolling Stone AustraliaIt would be good to get perspective on it that wasn’t just from Sony – the main thing is this can’t be a PR piece for them. A non-Sony artist who will be for sale there is good, maybe a comment from someone at one of the other majors. Nokia also do a subscription of sorts, so maybe that’s something to consider…

    After submitting the story initially, I was asked to rewrite, as the tone was “a little too “essay”, not “news” enough for one of our short pieces”.

    To give you an idea of the timelines associated with the story,  the article was finalised in late August, and it’s only appeared in print this month, for the November 2009 issue [pictured right].

    It’s been a great experience, and I look forward to writing many more stories for Rolling Stone. Many thanks to Matt Coyte, Dan Lander, Stephen Green, Nick Crocker and Neil Strauss.

  • A Conversation With Paul Hannigan, Moshcam.com Co-founder

    Paul Hannigan, Moshcam co-founder (yes, he chose this photo)Streaming concert video hub Moshcam is a super awesome resource for viewing professionally-recorded footage of bands that tour Sydney, Australia. They’ve been an intriguing player on the web music scene since 2007, yet I hadn’t seen their story told anywhere else. I was stoked when co-founder Paul Hannigan agreed to my snooping questions in early April 2009. Here ’tis: the most complete Moshcam interview, ever. Take that, internet!

    Hey Paul! I’ve researched you and your company as well as the internet allowed me. Can you describe how the idea behind Moshcam began, and how you decided to undertake the project with your two fellow founders?

    I’d returned from Los Angeles where I’d been working with a couple of successful start-ups (Citysearch, and GoTo.com, which subsequently became Overture/Yahoo Search Marketing) and had been helping manage and promote a few bands over there. Living back in Sydney at the time, around 2006, I wanted to do “something with music online”, which was about as specific as my thinking was at that point.

    As a fan, I found myself at shows at venues like The Metro and Enmore 3-4 times a week. As it happened, John Reddin, who was a friend and Head of Production at XYZ’s Lifestyle Channel, had worked on a number of television productions with Elia Eliades’ (the owner of Century Venues) production company. Elia had spoken to John about his desire to explore new territory with his venues online and John said “I know this fellow you should talk to”, and arranged an introduction. Through that meeting, the idea of Moshcam was born.

    Did you have any experience within the music industry, or were those connections gained through John and Elia?

    I’d been a drummer and a music journalist in Europe, and had some band management and production experience there and in the States. But I hadn’t been part of the industry itself in Australia, other than in a reporting capacity as Editor-in-Chief of what was initially Fairfax‘s Citysearch.

    Of course, as a tragic consumer, I’d just spent 3 months digitising some 6,000 albums in my collection, so if nothing else, it felt like I was propping up the industry! And suddenly, here was an opportunity to bring a love of music together with a background in content production and technology development?

    Moshcam doesn’t seem like the kind of business that’s built overnight. How long did it take to put concept into practice? I understand that you consulted with Melbourne web developers Hyro to build a custom CMS with sharing/playlist functionalities; had they undertaken any similar projects, or was this an all-new interface?

    moshcam_splash

    We spent 8 months developing a proprietary back-end solution for Moshcam. To a large extent, I knew what I wanted the site to be in terms of user experience and functionality, so interface design and architecture was relatively straightforward.

    The CMS was more of an iterative process in that we were really pushing into new territory around video serving and how to manage those assets.

    The Hyro project profile states that you required banner advertising intergration for revenue purposes, yet at the time of writing, I can’t see any ads on the site. When do you plan to include these, and is this the only revenue avenue down which Moshcam is treading?

    As a start-up that needed to build significant traffic from scratch, we always wanted to get the product right for music fans in terms of usability, first and foremost, before we thought about how to include things like sponsorship and advertising. Moshcam was always going to be a free offering, so naturally a free-to-air advertising model was going to be a part, but by no means all, of our model at some stage.

    However, I think it’s fair to say we are at an interesting juncture in the online world when it comes to music specifically, and there are a host of revenue models which may or may not play out in the months and years ahead.

    Moshcam’s stated aim is to make quality live recordings available to be streamed over the web for free. I can’t imagine that every artist you approach is accepting of this goal; what is Moshcam’s strike rate, and have you found that artists have become more welcoming of the idea since Moshcam started in 2007?

    Almost every artist we speak to directly loves the idea and only cares about getting their work out there.

    With record companies and managers, however, who are often the gatekeepers of approval for us, there’s still a great divide between those that embrace their artists’ music online and those who are more resistant.

    It’s easy to understand their concerns since they’ve seen revenues consistently eroded through free downloading but with something like Moshcam, increasingly they see it as a valuable showcase for the artist, both in terms of their existing and potential fanbase, as well as being able to show promoters who may not be familiar with their work just how well they can deliver live.

    Gary Numan hearts Moshcam. Maybe.If I had to give you a number, I’d say we’ve moved the strike rate from something like 10% to 40%, which given the number of bands that comes through Sydney is a significant figure. We just filmed our 500th show, which was Gary Numan at The Enmore Theatre.

    Moshcam is only licensed to broadcast each recording over the internet, so the shows currently aren’t available for download. In the coming years, do you think that labels will begin to request the ability to download recordings on behalf of the artists, perhaps at a per-song or per-show cost? This makes a lot of sense to me: stream the show for free, and include the option to buy a high-quality recording – via file download or on a physical DVD – for around the cost of an album.

    Absolutely. This is something we are working with the labels to put into effect. As record labels look for new revenue streams, this is one that previously did not exist. The revenue from a gig ends the minute the merch stand shuts up shop. What better way to extend the life cycle of that show than through making it available for fans to buy?

    As the aggregator of all this great footage, we are perfectly placed to offer just such a service. As you can imagine, there are a number of issues that need to be resolved in terms of licensing and technology, but we are very hopeful that this will be finalised soon.

    Do you present each artist with the same contract? Do some artists try to negotiate so that Moshcam’s recordings can be downloaded?

    We have a standard contract that varies only in the length of broadcast terms, from two years to ‘in perpetuity’.

    The download issue is not one that really comes up in the negotiations, other than the aforementioned assurances that we don’t offer it for free.

    Until we are able to put in place a site-wide download service, we link through to any band who makes their gig available for download or purchase elsewhere.. of which there are very few.

    Moshcam is now working in partnership with several Sydney venues. Are you planning to transfer the concept to other cities and venues across the country?

    The Gaelic Club. Colourful!We have built-in studios at The Metro and Annandale Hotel. We also have two mobile units and have filmed gigs at The Forum, The Gaelic Club, The Manning Bar, The Vanguard, The City Recital Hall, and the Hyde Park Barracks (for the Sydney Festival). As a result we have great relationships with those venues so whenever a band I’d like to see on Moshcam is in town, we can shoot at any venue with very smooth integration into their house operations.

    Other than being able to drill down to a very local level, there are no real economies of scale for us setting up in other Australian cities, since almost every band from another city we’d like to film tours and plays Sydney at some point.

    Internationally, I’d love to work with venues in Tokyo, London or Dublin, and New York or LA and cover the four corners of the rock and roll globe! Once we prove the model, I hope there will be opportunities to do just that.

    There was some controversy in Brisbane last year when Birds Of Tokyo‘s management kicked up a fuss over bootleg footage of new material that was recorded at The Zoo – coverage here and here. As a music fan, not a business owner, how do you feel about fans recording gig footage and uploading it to video streaming sites? I know that the quality can range from cameraphone-poor to semi-professional setups, yet I feel that there’s an inherent innocence in making an effort to record musicians’ work to share with other fans.

    It’s a dilemma isn’t it? As a music fan I want to see and hear anything and everything by the bands I love, but I respect the right of an artist to control their own output, particularly when it comes to quality – which, let’s face it, is the defining point of difference between Moshcam and 30 seconds of mobile phone footage on YouTube.

    Obviously the internet has moved the practice of taping shows into a whole new digital distribution environment. But personally, I can’t see how this does anything but increase artist exposure, and ultimately, sales. I do think there is often a lot of disingenuous talk about downloads not affecting sales, depending on who’s making what point, but when it comes to live fan recordings I really do think that is the case.

    How do you prefer to listen to music? How has this changed since you bought your first album?

    Shadow Paul jumps around to House Of PainI have a ridiculous amount of music stored digitally, both burned from my vinyl and CD collection and bought from iTunes.

    I was a bit of a vinyl junkie originally and took a while to make to change to CDs since it seemed a real degradation of the album for the sake of convenience. Tiny artwork, illegible lyrics, reduced dynamics, etc. I think that’s why I embraced the digital format so quickly, as I’d already done my grieving for the original artifact. Now, there’s just the music, and nothing else to get obsessive about.

    How do I listen to music differently now than back in the day? I’m a compulsive curator, so it’s almost always a playlist as opposed to an album.

    More people are listening to more music than ever before, yet the major labels are resistant to changes in consumer habits due to an effort to retain pre-internet revenue models. Agree or disagree?

    Well it’s a prima facie argument, isn’t it? There’s a lot of nonsense spoken on both sides about the effects of digital downloads on the industry. Most kids I know have never paid for music in their lives. That’s just the world they grew up in, it’s not a new digital frontier for them, nor is it a moral issue. They have larger music libraries at 16 than I had after years of buying music as a fan.

    But the point is, they would never have bought that music anyway. So it’s simplistic and misleading for the labels to say that this is somehow lost revenue.

    What’s more, these kids are incredibly indiscriminate about what they download, which exposes them to artists they would never have heard if they were buying one album a month with their pocket money. This gets them out to live shows; gets them buying merch, and gets them involved in online fan communities, often interacting with the artists themselves. All of which creates lifelong fans who will buy music in some form or other when a pricing model becomes both standardised and sensible.

    Likewise, a lot of people who buy music continue to do so, while downloading a lot of free stuff they wouldn’t normally buy to check it out – again, no lost revenue and wider artist exposure boosting live music attendance. Can it really be coincidence that we’ve seen an explosion in live music attendance since since the advent of peer-to-peer download networks?

    And then there is the percentage of people who are downloading for free the music that they would have historically paid for. That’s something you can’t refute. Human nature being what it is, and music costing what it does, means that a lot of people are saving themselves money at the expense of the label and the artist. And that’s a problem, especially for the artist. If a musician can’t make a living from their output, how can they survive to make more music?

    Moshcam Logo. "The gig is up!"

    That’s why the tour has become an income staple. It’s like a return to the strolling minstrel – bands as bards, singing for their supper!

    Let’s hope we see some innovation from the labels around pricing to get fans paying for music at a price that’s realistic, in the new digital economy. Whether that’s a tiered licensing model – which would save fans like me who still buy their music a small fortune – remains to be seen, but if you look at media sectors where this has been operational, such as subscription TV, you can see how it could be work for the online music industry.

    None of this is being held back by mechanics or technology. It’s all about pricing. However, I think there will always be a demand for a fan to buy an album or a song directly to own it, either as a digital file, or as something you can hold and look at.

    What excites you about the music and web industries?

    The immediacy. It’s like the fourth wall has been demolished. Although with that comes a loss of some of the mystique for fans and means there will probably never be any more rock gods, I think it’s really healthy.

    The internet is basically punk technology for music distribution. Now not only can anyone pick up a guitar, form a band and record some songs, they can get it out there on a scale that has never been possible before.

    And in the area of live music, I’m obviously thrilled that we can now capture a gig and share it with fans without having to get into the business of DVD production and distribution. As a fan, this is all part of what I love about being able to experience music outside of the established release schedule of a band’s label.

    Before the web, all you heard from a band was what the label released. Perhaps an album every couple of years; maybe a live album or a DVD. Now there are all these great auxiliary moments where you get to see and hear an artist outside the studio, being captured and shared in all sorts of environments.

    Moshcam was nominated for a Webby Award last month in the ‘Best Music Site’ category, although you were beaten in the end by NPR. Congrats! Was this a goal of yours, or a total surprise? 

    The Webby that Moshcam didn't win. No crying over spilt springs!Thanks! It was great to be acknowledged by our peers as doing something worthwhile.

    To be honest it was a total surprise. Obviously, we’d entered but we haven’t been doing this for too long and we figured we were probably still off the radar of the Stateside luminaries who decide these things.

    What are your plans to navigate the ‘interesting juncture’ in online advertising models, and what can we expect from Moshcam throughout 2009?

    One thing to understand is that we didn’t start this as a marketing model upon which to hang a product. It was a genuine project by three fans to build something compelling for other fans. That said, it’s far from inexpensive to maintain and obviously we have to find a way to pay for it.

    How will we do that? Well, one thing Moshcam enjoys is a startling level of engagement with it’s users. Fans are watching for an average of 31 minutes per show, which is almost 10 times the average for a website visit. And when you realise that video advertising is the fastest growing sector, it’s not hard to see a model there that could work well for us as the market matures.

    As discussed, we’re also very keen to work with bands and labels to facilitate a download service, should they wish to sell their shows. We’re also working on some neat licensing and distribution partnerships, and we have a 13-part TV show featuring signed and unsigned Australian bands running on cable at the moment called “Moshcam: Live and Kicking”. We’re not in the business of re-inventing the internet’s business models; we just want to be in a position to offer a valuable service to bands, valuable content to fans and be able to work with whichever models shake out as viable for us.

    As for the rest of 2009, you can expect hundreds more great gigs filmed, as well as a lot of new types of content, from backstage interviews to artist-curated playlists. You’ll also see Moshcam on the road around Australia capturing the best local bands in each capital city, and a couple of other cool initiatives we’re developing that will focus on getting some unsigned bands we love much wider exposure!

    As you can see, Moshcam is kind of a big deal. Unless I’m mistaken, their streaming concert concept is sailing uncharted waters on the national level, so to speak, and they’re probably a trend-setter on the international front, too. Remember, you read it here first! All 2,900 words! Congrats. To reward yourself, head to Moshcam and watch a show. They’ve got over 500 available, so if you can’t find one that you like, you’re not a music fan. Get the hell off my blog!

    Thanks Paul! He can be contacted via email.