A Swedish/British entrepreneur in Berlin, trying to make it happen

I’m reading this artice in Five Eight (a mag from Frukt that of course is more than a little bit biased but does offer a good round up of stats and info too) where Henry Semmence, the MD of Absolute (a leading full-service label management company in Europe) talks about what’s happened since 98 and what will have happened by 2018. I’ve had to re-read it a few times to make sure I’m not missing something or that I got the numbers mixed up or so.

According to Semmence, some of the key developments by 2018 will be that the CD will have continued to decline but due to the aging population its still a force to be reckoned with. Also, we’ll see an increase in digital downloads, especially from mobile devices. Also, apparently the development of the physical distribution network is one of the most important things for 2018.

Huh? I know we won’t have teleporters, colonies on Mars and such but that’s more of a description of today than a prediction of what thing’s will be like in a decade. By then the digital download won’t even be around, even less some piece of physical media carrying it. To think that everything will be in the cloud in 3 years is optimistic but 10 years? That should be well enough to get us of having to replicate all this data across millions of devices.

[disclaimer: I know, I know, its always easy to pick on the guy trying to tell the future… But come on! Saying that 2018 will be like 2008 already is, well, that’s just wrong.]

In the last post I briefly mentioned the potential for the artist manager to become increasingly important in the new music ecosystem. Hypebot goes more into detail on why the need for good managers that understand todays situation are needed. Recommended.

Sitting on the plane back to Sónar after two days at London Calling and thinking a bit about 360° deals and the future market structure of the music industry. Unstructured thoughts go something like this.

So, we’ve all in one way or another heard about the new music industry craze for 360° deals. In case you missed it a 360 can basically be summed up by actors that traditionally only did one part in the value chain (or rather value network) trying to integrate vertically both forward and backward and thus grabbing more of the potential revenue streams around an artist. The prime example and overly quoted Madonna case where she moved all her rights to LiveNation and signing with them to handle all her bookings, recordings, merch, licenses etc. In other words the full pack. All of all, 360.

In an age where many if not most actors within the music industry are having a hard time meeting their revenue projections its naturally quite reasonable to start looking over the fence so to say at the green grass of whoever else is making some cash in the ecosystem. This could be pointing to a bit of a shakedown within the industry and a lot of actors getting pushed out. However, I’m not necessarily sure that is what is going to happen, at least not yet.

The whole hype around going after 360° deals makes me, for right or wrong reasons, think about the portal strategies of many previously successful web sites in the late 90s. Roughly, a lot of actors good in a certain field felt the need to expand and realized that, hey, you know what, if we got all the traffic for all these topics that would be great! The problem, of course, occurs when everybody is trying to set up their own walled garden catering to everybody. Basically you end up in a race where everybody’s star struck with the possibility of getting the benefits of a monopoly or oligopoly. But as we all know, if that’s to happen not many companies can survive and take that position. And, if too many actors are pursuing the same path much too fast (say by fueled on by desperation of seeing your 20 year nice revenues suddenly slipp through your hands) there’s a good chance that far too much investments will be used on attempting to build too many companies with too much overlap in a market that only allows a handful of them to survive.

Thinking of what has been happening to the web the last couple of years I’ve come to believe a lot more in partnerships and integration between services rather than walled garden approches. On most days, I tend to have a similar view on what companies should base their strategy on.

And, that’s why I think the 360° deals will eventually fail. At least in the way they are structured today where a single actor previously specializing in one area branches out and offers a complete set of services in a 360°deal to the artist. What on the other hand does make sense would be the formation of several indie networks of partners each specializing in their particular field. Granted, since everybody’s having trouble making ends meet these companies need to down-size and use online more to make their organizations more effective. But ultimately, just like online services built on an open platform idea leverage the use of the network around them to provide their customers with a more compelling experience I think this needs to happen in the music industry value network too.

Currently the artist manager is the one person (apart from the artist) that is actually involved in all the areas of the 360° deals. So, it would make sense for the artist managers to strengthen their positions as the business partner between the artist and the indie 360 network of choice.

Or, maybe I’m completely wrong. And as a quick note on the 360 term itself, I think Fred said it best when he asked if he wasn’t right in remembering that in geometry 360 actually equals zero?

Lisa Namerow, the general manager of AOL Radio, tells me:

“The royalties have gone up significantly. We had to reevaluate our business. We needed to partner in order to monetize radio better. We have grown advertising year-t0-year 100 percent, but with the increasing cost of royalties, we need to do a better job by leveraging local markets and advertisers. CBS has a string foothold in that local sales market, with over 140 sales teams.”

That statement is an eye-opener for any music service hoping to make money from advertising. If AOL Radio, with three million unique listeners per month (according to Namerow), is having a hard time, how are smaller ad-supported music startups supposed to survive? And affiliate links are not going to cut it. Every song on AOL Radio has a link to iTunes or Amazon, yet Namerow cautions that “those commerce links are a very minor revenue source.”

From Techcrunch

I’m just shooting of a little test post here since I just updated my wordpress and got myself a new theme. I’ll keep working on it and I hope and finally get back into writing down some thoughts here. Btw– why is it still so time-consuming to update wordpress and get a few widgets working? Blows my mind. Anyway, I’ve really been missing blogging/writing in general & have been reading a lot more lately so we’ll see how things goes.

Oh, and just to actually put something in the post I want to archive this insane headline from last week, especially since its real.

Meebo raising round, valued up to $250 million. Bear Stearns sold for $236 million (venturebeat)

Funny, scary, preposterous – call it what you will but that one will stick around in my mind for quite some time.

From eric.

OMG WOW.

From Yahoo news, via Slashdot:

The British government rejected a plea to extend copyright laws for sound recordings to beyond 50 years on Tuesday, prompting the music industry to accuse it of not supporting musicians and artists.

I was in London last fall for a MusicTank seminar with several attendees from the industry and at the time it sounded like the extension was practically on its way. Sometimes I like when people are wrong.

I’m in Berlin right now working like crazy with Eric’s and my start-up SoundCloud. Things are going super good and I almost feel in love with both Berlin and SoundCloud. Also, there’s quite a few interesting start-ups around here. Apart from Plazes (who gracefully have lent us a part of their office until we move in to our own) I like the Talkety concept and had a chance to talk to the guys behind it the other day at the Web2.0 Expo pre-meetup.

Anyway, I’m in Berlin, any recommendations of people, places or things to check out are greatly welcomed!

Here’s a nice little feature I’d missed, courtesy of delicious. Their playtagger allows you to add a bookmarklet to firefox that makes links to mp3 files on a website instantly playable directly in context. So, for example at the Fluokids blog, where the files are directly linked mp3s, a single click of a bookmarklet turns this:

in to this:

Instantly playable. Sweet.