Digital Music Seen Becoming Business If Lawyers Don’t Intrude
HOLLYWOOD -- The music industry should focus on promoting the digital platform and stop wasting time and resources on litigation, Ted Cohen, managing partner of TAG Strategic, said at Digital Music Forum West. The past year’s main success was adoption of the ad-supported model with Imeem and MySpace, he said: “Imeem’s success over the year and a billion streams on MySpace this past week shows that is a business. It’s not about file sharing anymore. It’s about discovery and recommendation.”
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Cohen, formerly an executive at EMI, criticized labels for being litigation-happy. “We need to make deals and monetize,” he said. “We need to eliminate short-term thinking. If we've learned anything from Wall Street this week it’s that we can’t afford greed.” The biggest failure has been failure to engage with Internet service providers, he said. “The ISPs have a responsibility to give something back out of the tens or hundreds of millions of dollars being made through broadband access fees. The Verizons of the world, the Time Warner Cables, need to come to the table and share some of that revenue with the artists, the labels, the movie studios -- everyone who makes broadband interesting.”
Mobile’s capacity to be a major player near term remains in doubt, Cohen said. Except for iPhone users, consumers have no positive experience acquiring music on mobile phones, and subscription services remain a hard sell, he said. “We need more innovation, experimentation and communication. We need sustainable licensing agreements. We need funding,” he said. “Warner and Universal, the labels are investing cash because they realize a lot of these services are their future.” But legal wrangling keeps digital from reaching its potential, Cohen said. “The deal flow bottle neck is ridiculous. When negotiations drag on for a year, the money runs out.”
Labels lack the luxury of time, Napster President Brad Duea agreed. “We need fewer lawyers and consultants, more cooperation, a focus on what consumers want and to deliver it,” he said. “If we do that, we will have scale.” He sees recent economic turmoil as a potential good, he said: “Sometimes a downturn in the market will clear out the space and help us put forward models that are scalable and sustainable.” Duea also lauded Sony Erickson and Google for investing in music phones: “The open mobile Web is a new universe that will benefit us all.”
Digital Music Forum West Notebook…
In face of increasing competition, terrestrial radio must reinvent itself or face potential extinction as a music platform, said MySpace Vice President Josh Brooks at Digital Forum West. He said radio is not in imminent danger, primarily because of its convenience as a platform. “But it’s got competition because there are more and more places offering convenience.” Radio is also facing competition from CE hardware. “Now you can plug your mp3 player into your car system.” Syd Schwartz, EMI North America digital strategy senior vice president, said radio is still an essential format in promoting music. “It doesn’t matter if it’s broadcast or digital. Although its ratings have gone down, nobody is ready to write radio off. But radio is a passive experience while social networks and online is an active experience,” which is why the demos for radio are steadily aging, he said. ARTISTdirect interim CEO Dimitri Villard added: “The younger demos are focused on the Internet for music discovery. We can’t ignore the fact there is an evolutionary trend for people to be more visual and want more than just streaming audio.”