Magnatune – the opensource approach to music – Is there a revenue model?

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The background for this article is based on the article ‘Hear no evil’ from the special technology quarterly of the economist (www.economist.com) – Sep 17 2005.

The music industry, like many others, are feeling the full impact of new revenue models brought about by the Internet. The ipod and others have created a new distribution model. The next logical step is to reduce the power of the record labels by giving artists more power over their own work.

This is the goal of a company called magnatune(www.magnatune.com)

In a nutshell

a) Music is streamed free but to download it or to burn it on a CD, you have to pay

b) How much you pay – depends on what you decide – anything from $5 to $18

c) You can copy the music ie. There are no DRM restrictions. The overall idea being, people will not rip off artists they like

d) Artists are not contractually obligated to magnatune on an exclusive basis. They can sell their work elsewhere

e) Artists get half the revenue. In contrast other labels give 10%

All this sounds good ..

But ..

Because it’s a small company, it can’t afford to spend money on radio and TV advertising(which pushes sales). Thus, although the artist gets 50% – it’s not a lot of money because the total sales could be low

Worse .. if any of the artists get a contract from a ‘major’ they could jump ship!

So, the question is – will this model ever work? On first glance it sounds to be very interesting and disruptive but does it have within it the seeds of it’s own demise?

Finally, I think in an ironic twist, if the majors come along and pick the best artists, it would work in magnatune’s favour

Thus, the whole model may well work on holding a large number of titles each making a small number of sales

what are your thoughts?

Image source: http://www.mcpasd.k12.wi.us/~kms/Web_Clip_Art/images/MUSIC.jpg

another brick off the walled garden ..

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from Ovum my comments below.

11:45 3 UK: another brick off the walled garden

Dario Betti

Mobile operator 3 UK is to give its subscribers mobile access to the Internet outside of its own ‘walled garden’ of products for the first time this month. From the end of September, 3 users will be able to pay £2.50 per month to download up to 5Mb of data from the Internet. However, access will still be restricted to sites that 3 has deemed “optimised for viewing on compatible video mobiles”.

Comment: In 2003, at the time of launch, 3 had a very different strategy. It saw itself as a media company and wanted to be in complete control of what was on offer to its users. After its false start, 3 has re-focused its business more on voice tariffs and less on media services. Opening up the so-called walled garden is a necessary step: no single operator, even a large one, can offer the range of services that users might want. Also, it is good to offload some of the risk for new applications onto publishers. As long as the operator can charge for traffic and for billing, its business model is sound.

The service does not yet offer a complete web browsing experience. 3 only allows certain sites to be accessed on its handsets. The threat of bad user experience is very high: navigating the Internet on a mobile phone can be frustrating. We think that 3 is restricting access more to protect its users than to shield its own service line up. The operator says it will make 'hundreds' of such sites available in the coming months, and is offering users a chance to nominate those that they want to be made available.

However, 3 is not knocking down its walled garden, although it is taking one further step towards it. This is an add-on, paid-for service; only keen users will be attracted to it. The problem is how to charge for access to the worldwide web/WAP. In a prepaid dominated market, it should look at offering this in other packages and not just as a subscription. After all, other operators are already opening their portals or offering web browsing options. T-Mobile is counting on its 'web and walk' offer, O2 will launch the open garden i-Mode service, and Vodafone Live! intends to open up its off-portal access even more. This is an area to watch. Expect plenty of talk about walled gardens, open gardens and parks in 2006.

In many ways, 3 epitomises the walled gardens concept. While it seems to be getting some benefits commercially, like AOL, long term it will not work out. AOL, at least had access to exclusive content through the time Warner deal. 3 may need some such suitor. Even then, AOL was forced to open up and I predict so will 3. As the comments from Dario(ovum) below show – 3 is still way off from all the other operators and it’s just a matter of time before the walls break down completely

emailed to me by my good friend Lore Ridings of Prasada

Image courtesy : Pink floyd – the wall – a complete analysisA fascinating site – well worth a visit

nokiaone ..

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This is cool ..

Originally saw it at the mobile-weblog

A must see presentation ..

Bit of science fiction and difficult to get right due to competing standards(especially Microsoft gunning in the same space) but I like the idea of the interfaces being simple and humanistic ..

the itunes phone , OpenGardens and a tale of two headlines ..

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Hello all ..

As the apple / motorola itunes phone becomes a reality, it’s interesting to compare two headlines

Sep 7 2005 : Apple motorola and cingular unveil the itunes phone

BUT

April 21 2005 US mobile carriers shun itunes

So, what happened between these two headlines?

Why the change in heart?

I have long believed that the biggest threat to the existing vested interests in the mobile data industry is from outside the industry. Apple is one example of a new, disruptive entrant.

The ‘service’ of listening to music on the go can be fulfilled through more than one means(and consequently through more than one vendor). And herein lies the threat, predictable responses, break in the ranks(in this case Cingular) and consequent u-turn.

Lets start with the April story first(US carriers shun itunes)

A synopsis of the story (as applicable to us) is as follows:

All vendors are fighting over the same set of customers. Thus, the battle shifts to marketing(branding). Who is the stronger brand?

The carriers believe that they are stronger. The numbers speak for themselves at fiscal reporting per quarter: (Cingular – $8.2bn, Verizon $15bn in Q4 2004 but apple a measly $3.2bn).

So, is apple punching above its weight in terms of its brand?

That’s the real question and the real threat!

But let’s ask the people who really matter – the customers!

Apple is FAR bigger in customer mindshare than either verizon or cingular.

So, the balance of power shifts!

It shifts in Apple’s favour ..

Thus, the carriers are forced to come to the party(and its in everyone’s interest to do so)

So, predictable arguments have to be put aside.

These include .. as per the article .. “Operators want customers to download songs over the air, directly to handsets. But with the iPod phone, customers would download songs to a PC and then copy them to the phone,”

In other words .. a walled garden!!

But how feasible is it really? Even today you can resync to PCs, use memory cards etc. In other words, over the air download is not the only path! ..

Which brings us to the second headline i.e. Apple motorola and cingular unveil the itunes phone. Clearly, its in Motorola’s interest to partner with Apple .. but note that one operator(Cingular) has broken the ranks. Note also that it was the smaller operator in terms of quarterly revenues

With better technology and richer devices(like Nokia N91 on the horizon) – the stage is set for interesting times

What’s your take on this story?

My take is – this could be a huge opportunity for the entire industry. I have always believed that the mobile device could well be a focal point for digital convergence.

Seek thoughts

Image source: carphone warehouse

Oxford university next gen mobile apps panel – details ..

As per a previous blog .. happy about this!

What is the Oxford university next generation mobile applications panel?

Launched on Sep 5, 2005 – The University of Oxford’s Next Generation Mobile Applications Panel is a joint initiative between industry and the Department of Continuing Education at the Oxford University. The Next Generation Mobile Applications Panel will bring together the best thinkers in the telecoms industry and enable the discussion of thoughts and ideas on all aspects of Mobile Applications with other like-minded members of the community.

It will also launch a quarterly journal which will enable the best articles and insightful comments to be published under the auspices of the Oxford university next generation mobile applications panel.

See the URL below

Who manages the panel? Is it free to join?

Chaired by Ajit Jaokar, Futuretext Publishing and the Forum Moderator, and co chaired by Tomi Ahonen, author and 3G Consultant, the forum is free to join and is sponsored by the university of Oxford Electronics and Telecoms Programme. Peter Holland manages the panel on behalf of the Oxford University.

What are the benefits to members?

Essentially, the panel can be viewed as a platform to become a ‘thought leader’ in the industry, build your own personal brand and thus benefit your company. It’s prestigious to have your article published in the journal – something you should be proud of mentioning in your CV! (Including any citations to your article)

What are articles?

The panel is based on the concept of ‘articles’. An article is a simple one page online document (ideally A4 printed page or a typical blog sized entry). Panel members post articles. An article should add value to members (i.e. should not be a blatant advertisement). An article should have your own insights about an issue. It should aim to create a discussion around that issue. An article could refer to your own business/experience (and thereby promote your business)

Articles start their life on the ‘discussion forum’ and they get comments from the community. If they get good feedback from the community and are approved by the chairmen – they are promoted to the ‘selected for publication’ forum and are published in the quarterly journals. Remember, you are posting articles with the goal of being selected in the ‘selected for publication’ forum

Journals and articles are an interesting concept – is it new?

Not really. In scientific and technical circles, these ideas have been around for many years. We have simply combined journals, the Internet, communities and blogs to create a variant of the concept. The best known scientific publications are ‘Nature’ and ‘Science’.

Here is some information from wikipedia about the publication ‘Nature’.

Nature is one of the oldest and most reputable general-purpose scientific journals, first published on November 4, 1869. Although most scientific journals are now highly specialized, Nature still publishes articles across a wide range of scientific fields. Research scientists are the primary audience for the journal, but article summaries in the front of the journal make many of the most important articles accessible for the general public. Also toward the front of each issue are editorials and news and feature articles on issues of general interest to scientists, including current affairs, science funding, business, scientific ethics and research breakthroughs. There are also sections on books and arts. The remainder of the journal consists mostly of research articles which are often dense and highly technical. Having an article published in Nature is very prestigious, and invariably the articles are highly cited, leading to promotions, grant funding, and attention from the mainstream media. Because of these benefits, competition among scientists to publish in high-level journals like Nature and its closest competitor, Science, can be very fierce. However all articles undergo rigorous peer review before publication, in which other scientists, chosen by the editor, will read and critique the article before publication. The author or authors of the article must then respond to the referees’ comments by changing the article or performing additional experiments, or the editor may choose to reject the article entirely.

What are forums?

The panel has three forums

1) The Introduction and News forum – for your introduction and general news and announcements

2) The discussion forum – where you initially post articles and discuss articles

3) The ‘selected for publication’ forum – where the best articles and discussions are selected to be published in the quarterly journals.

Can I promote my business on the articles/forums?

Overall we are open to promoting your business on the panel(either in the forums or in the articles). However, note that any content you add on the forums or the articles must add value to the community and must conform to the terms and conditions.

Can I link articles to my blog?

Yes, you can promote your blog. However, please don’t put a part of the article on the panel and link the rest back to your blog. We would like to see the complete posting on the panel so others can respond on the panel. You can indicate that the original is posted on to your blog and provide a link to the blog

Can I post articles from the panel on to other blogs/ sites?

Yes, the content is in public domain. However, please acknowledge the copyright of the original author and link back to the original source on the panel.

I am in PR, media, venture capital. Is this for me?

Yes, it’s open to everyone. There are no categories of memberships, restrictions on posting other than those in this FAQ and on the terms and conditions

Can I invite others and get them to comment on my article?

Yes you can!. We don’t object to people outside the community joining the panel to post comments on your article. Note that the ultimate decision to publish the article rests with the moderators.

Any more questions?Please contact me at ajit.jaokar at futuretext.com and I will see if I can help.

URL HERE

New Orleans – our thoughts are with you

neworleans.bmp

A lovely place – and wonderful, hospitable people

Our thoughts are with you

Oxford University next gen mobile applications panel ..

Hello all ..

I will be chairing the Oxford University Next Generation Mobile Applications Panel and I would like to invite you to it ..

Here is an outline..

The Next Generation Mobile Applications Panel will act as a showcase for the best thinkers in this space. It is a joint Oxford University initiative with industry under the Department of Continuing Education. Some of the companies already working with the Department of Continuing Education include Nokia,BT Group, NTT DoCoMo Inc, Vodafone, Hutchison 3G Ltd, T-Mobile, Orange, Intel, Motorola, Nortel Networks, Philips, Qinetiq and many more.

We will also seek to invite more companies.

It will be mainly online with potentially some offline meetings organised in future both at Oxford University and elsewhere in Europe/the UK . The backing of Oxford University ensures that it will be visible in the industry and has guaranteed funding for several years. Being funded by the University it is free for participants.

The concept is simple – you post a short article (similar to a blog), the members of the community will get an email about posted articles. The community comments on it. The best articles along with comments are posted on the main site(and will be published in a journal). This is a great way to build your personal brand globally under the auspices of the Oxford University and supporting companies.

At this stage, if you are interested, could you please let me know and I will send details later.

Kind regards

Ajit