The Canary in the Digital Coal Mine What can publishing learn from a decade of digital music? Milan, February 2nd 2012
Transcript
1. The Canary in the Digital Coal MineWhat can publishing learn
from a decade of digital music? Milan, February 2nd 2012
2. Introduction Sascha LazimbatSince 2010 Managing Director A2
Electronic Publishing2007 - 2010 Managing Director Business &
Corporate Development Warner Music Group C&EE2005 2007
Co-Founder, Zebralution Digital Music Distribution2001 - 2005 Head
Of Music & Video Vodafone Germany
3. Similarities- Similar traditional value chain- Similar
copyright framework- Similar operational challenges- Same new
digital retailers
4. Differences- Music already became digital with the CD- Users
consume music in a different way- Songs can travel without
translation- Its 2012 and the world keeps spinning faster!
5. What happened to the music industry sincethe turn of the
century?- Global recorded music revenues down > 30% German music
industry turnover 2001-2010 in million , source: Bundesverband
Musikindustrie
6. What happened to the music industry sincethe turn of the
century?- Global recorded music revenues down > 30%- Out of 5
major companies, only 3 survive
7. What happened to the music industry sincethe turn of the
century?- Global recorded music revenues down > 30%- Out of 5
major companies, only 3 survivex x
8. What happened to the music industry sincethe turn of the
century?- Global recorded music revenues down > 30%- Out of 5
major companies, only 3 survive- 1/3 of jobs in the industry lost
Blue line: employees in German music industry 2001-2010, source:
Bundesverband Musikindustrie
9. What happened to the music industry sincethe turn of the
century?- Global recorded music revenues down > 30%- Out of 5
major companies, only 3 survive- 1/3 of jobs in the industry lost-
At the same time: more music released and consumed than ever
before
10. Timeline of physical / digital music units700,00 Rio and
Napster iPod 2G Musicload iTunes YouTube 100 Mill. iPhone in Rapid-
iTunes Creative closes, and Store in Launch MySpace EU share #10
DRM- MP3- Kaazaa MySpace EU, Accounts website free,600,00 Player
launches Launch Vodafone worldwide Amazon iTunes MP3 MP3 in SW +
phones EU iPod500,00400,00300,00200,00100,00 0,00 2000 2001 2002
2003 2004 2005 2006 2007 2008 2009 PHYSISCHE TONTRGER PHYSICAL
SALES DIGITALE VERKUFE DIGITAL SALES GEBRANNTE CDs/DVDs BURNED
CDs/DVDs ILLEGALE DOWNLOADS ILLEGALAll figures for Germany only in
millions of units. Sources: GfK MediaControl Download-Report,
Brenner-Studie Bundesverband Musikindustrie
11. Shift in music consumer spending Basis in Mrd. 5,10 5,13
4,48 4,49Source: Veranstaltungsstudie 2008 idkV / Musikmarkt/ GfK
MediaControl
12. The record companiesresponse:the 360 model d2c online ads
Synch Merchandising Endorsement fan clubs compass image: Smial,
used under http://creativecommons.org/
licenses/by-sa/3.0/deed.en
13. Physical products are still the musicindustrys cash-cow in
Europe Configuration- specific digital market shares for the UK in
2011: - Albums 23,5% - Singles 99,3% Sources: IFPI Digital Music
Report 2012, BPI, Trendreport Bundesverband Musikindustrie
14. AssumptionsPublishing must...- support legal alternatives
to piracy- be prepared for decreasing revenues- look for additional
revenue streams- not neglect its physical product
15. Digital Rights Management - Apple utilizes ConsumerAll
major labels Fairplay groupsinsist on DRM - other retailers critize
Apple rely on Windows DRMOpenletterFrom SteveJobs, Feb.2007 EMI
drops DRM other majors follow in 2008DRM is nowadays only used
within subscription conditional downloadservices like Napster,
Spotify etc.!
16. Assumptions- DRM frustrates consumers when it does not work
seamlessly and incompatibilities arise- DRM benefits closed
eco-systems and hurts independent retailers and device makers- DRM
has not saved any media industry, neither will its abolishment
destroy any industry
17. Digital music retail landscape- iTunes clear market leader-
Amazon second where the company operates local stores- Few serious
la carte competitors- Subscription services strong in some
markets
18. Ebook digital retail landscapeWho else?
19. Assumptions- Amazon will be here to stay, making it
difficult even for Apple and Google- Bricknmortar booksellers will
struggle to compete with the Internet champions- There may be
niches for specialized retailers and different business models
20. Turning physical dollars into digital cents
21. Turning physical dollars into digital cents,Part II
22. E-Book end consumer prices - a spot check No. Title Source
Price 1 Stealing Phoenix For. Publisher 6,45/0,99 2 Entfhrt
Self-Publisher 0,89 3 Grimms Mrchen For. Publisher 0,99 4 Sonne,
Wind und Mond Self-Publisher 0,99 5 Kindle - das inoffizielle
Self-Publisher 2,99 Handbuch 6 Der Junge, der Trume Trad. Publisher
8,49 schenkte 7 Holunderksschen Self-Publisher 2,99 8 Der
Beobachter Trad. Publisher 8,99 9 Verblendung Trad. Publisher 8,99
10 Der Hundertjhrige, ... Trad. Publisher 11,99German Kindle store
charts on randomly picked day in January 2012
23. E-Book end consumer prices - a spot check No. Title Source
Price 1 Stealing Phoenix For. Publisher 6,45/0,99 2 Entfhrt
Self-Publisher 0,89 3 Grimms Mrchen For. publisher 0,99 4 Sonne,
Wind und Mond Self-Publisher 0,99 5 Kindle - das inoffizielle
Self-Publisher 2,99 Handbuch 6 Der Junge, der Trume Trad. Publisher
8,49 schenkte 7 Holunderksschen Self-Publisher 2,99 8 Der
Beobachter Trad. Publisher 8,99 9 Verblendung Trad. Publisher 8,99
10 Der Hundertjhrige, ... Trad. Publisher 11,99German Kindle store
charts on randomly picked day in January 2012
24. DIY in the music industry: Long Tail or Long Fail?- 76,685
albums released in the U.S. in 2011- 88,5% of sales from just 1,500
titles- Only 1,215 albums sold more than 10,000 copies- 80% of
titles sold less than 100 copies- DIY service providers like CD
baby pay out an average $100 per artist / annum
25. DIY: in the future, everybody will be famous for fifteen
minutes- Tila Tequila: most famous person on MySpace in 2006- 32
million views of her song- Releases failed to enter Billboard
charts- Became the star of a now cancelled reality show Photo:
Philip Nelson, used under
http://creativecommons.org/licenses/by-sa/2.0/deed.de
26. DIY: which music artists can do it on theirown?established
artists newcomers withformerly on majors strong fan base
27. Self-Publishing: the eBook revolution- John Locke and
Amanda Hocking enter Kindle million club- KDP generating
substantial Kindle sales- Apple launches iBooks Author-
Self-publishing platforms
28. Our own experience with self-published titles- Short
stories by one of Germanys most popular bloggers- Social media
marketing buzz via Twitter- #1 iBookstore, top 5 Kindle store
29. eriginals berlin e-book imprint- No traditional marketing
or PR- Social media marketing- Digital retail marketing- #1 &
#2 iBookstore releases and seven further top 50 ebooks
30. Why does self-publishing work better for ebooks than for
music? An assumption...- Music purchases are triggered by a
combination of stimuli - radio, MTV, billboards, reviews,
interviews, live shows etc.- Readers seem to rely much more on
trusted recommendations - social media/social
reading/recommendations will be king! BUT: PRICE MAY BE ANOTHER KEY
TO SELF-PUBLISHINGS BIG SUCCESS STORY!
31. Digital music pricing: superstar vs.newcomer
32. What readers say about 99 cent self- published books For 99
cent its The book is definitely worth well-written and buying!
perfect for its Big reading fun price tag at xxs-price A great book
Total crap! save for the Would be OK for dialogues! free but at
0,99 it s too expensiveSource: all quotes from German
iBookstorecustomer reviews
33. What did Steve Jobs say?I can tell you asone of the
largestsellers of contenton the internet todate - price
itaggressively andgo for volume. Photo: Matt Yohe, used under
http://creativecommons.org/licenses/by-sa/2.0/deed.de
34. Outlook- More books will be read, but readers will spend
less- Everybody in the business will have to do more to keep
afloat- Only lean organizations will survive- Self-publishing might
be a game-changer