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People in the News - Andy Egan

Hard to not notice Andy Egan of MaxBox. He's been invited onto the British Olympic council and will work with them to raise the £18,000 needed for each athlete to compete in Beijing.

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MaxBox’s Egan joins the British Olympic team

Thursday, 20 March 2008
Andy Egan, the chairman of digital retail kiosk firm MaxBox, has been invited onto the council of the British Olympic Association Appeal 2008.

MaxBox, which markets ‘off the shelf’ digital retail services such as mobile top-ups, games and music downloads, was recently bought out of Felix Group PLC by Egan after the firm went into administration.

It has since enjoyed a positive second lease of life and has just signed a distribution deal with TCSJOHNHUXLEY Europe to place 5000 kiosks in casinos and gaming centres worldwide.

In his new Olympic role Egan will be working with the British Olympic Association (BOA) to raise the �18,000 needed to support each athlete that is aiming to compete in Beijing.

100% of the funds raised go directly towards ensuring that UK sportsmen and women will be able to compete on equal terms with the best in the world.

To contact Egan see the MaxBox website.

www.themaxbox.com

Entertainment Multi-media Kiosks: MaxBox is Back!

Can't keep a good man down! Andy Egan liked the company so much...he bought it back. Andy and his team will be exhibiting the latest kiosk in the MaxBox stable - the US built MaxBox Americano - on the TCS John Huxley stand in ICE on stand number 3000.

MaxBox – He liked it so much….he bought back the company!!

MaxBox Digital Retail Ltd launches at ATEi/ICE 2008, 22nd to 24th Jan

Andy Egan, the ideas man behind the iconic MaxBox digital retail kiosk, gives a roaring kick start to 2008 with a newly branded company.

Andy, founder of Felix Corporation Ltd and Felix Group plc bought back the company from the administrators on 11th January and will be celebrating the rebrand to MaxBox Digital Retail Ltd at ATEi/ICE Earls Court, January 2008.

Andy and his team will be exhibiting the latest kiosk in the MaxBox stable - the US built MaxBox Americano - on the TCS John Huxley stand in ICE on stand number 3000.

Andy Egan is looking forward to taking advantage of the opportunities created in 2007 and moving ahead for a successful 2008:

“I was very frustrated and disappointed about what happened at Felix Group but I firmly believe in the MaxBox business models that my colleagues and I were rolling out. I have been delighted with the response both corporately and personally to the announcement that I am back with MaxBox Digital Retail Ltd to finish what I started, to make MaxBox the pre eminent supplier of kiosk solutions and leader in the digital retail market”

Ends

For further info about MaxBox kiosks, digital retail, bespoke kiosk design, digital content licensing, MaxBox lite and for interviews and photography contact Jill Taylor at MaxBox Digital Retail Ltd 01565 831100. Jill@themaxbox.com

Visit http://www.themaxbox.com

Music Download Kiosks at Borders

These things just won't go away but then why should Amazon have all the fun? That is a question that executives at Borders Group are asking themselves - and the answer could include an MP3-based download store. "We know that the customer is downloading music," Borders executive vice president of merchandising and marketing Rob Gruen recently told Reuters. "We're looking at how do we incorporate that into the whole process." Borders is currently testing in-store CD-burning kiosks, according to the report.

In fact, Borders may be cooking a number of etailing ideas once its relationship with Amazon ends in April. Currently, Amazon powers online purchases on Borders.com, and both parties split the revenues. An independent Borders destination is currently in beta. LINK

Another music download machine concept bites the dust?

Article in Manchester Evening News in U.K. lays out scenarios for Andy Egan and Felix now that they are re-evaluating business model and Egan has stepped down.

Has Andy's luck finally run out? - Business - News - Manchester Evening News

Has Andy's luck finally run out?

10/12/2007

HE has always lived life to the max, but his dream of creating an international phenomenon with his digital retail kiosk, has come crashing down.

Andy Egan, a former stuntman and promotions king, quit as chief executive of the Felix Group, after differences over strategy emerged between him and chairman, Richard Rose.

Now, the future of the company he founded back in the late 1990s hangs in the balance after a statement to the stock market by Mr Rose he had begun a `detailed review of the viability of the group's business model' sparked a major sell-off of the its shares.

The stock tumbled 80 per cent and shares in the Rostherne-based group were suspended last week. At the same time it was announced Mr Egan was stepping down.

Sources said there had been a `difference in view' between Mr Rose, who had recently taken on an executive role, and Mr Egan over the group's future and viability of its leading product, Max Box.

It is a retail kiosk with cashpoint, digital photo processing, gaming and shopping functions, such as ordering flowers.

Mr Egan believed Max Box was going to be an international hit because, until its launch, consumers had access to digital services such a photo processing and mobile-phone top-ups `but nobody had put it all in one box' and it offered retailers a `100,000 sq ft megastore from one square metre'. He even had his sights on cracking the North American market through licensing deals.

It was a concept the City and investors bought into - Mr Egan managed to secure private equity investment before Felix reversed into Chestn ut, a shell set up by serial AIM entrepreneur Michael Edelson. It floated in 2004 at 20p per share with a market value of £24.7m. Shares rocketed to more than 70p, but later nose-dived to around 4p. Mr Egan has said the major fall, which wiped £50m of the company in one day, came when it announced that a working partnership with Alliance & Leicester had lapsed, which he claims was misinterpreted by the institutional investors as collapsed.

Bouyed

The stock recovered slightly - buoyed by announcements that retailers were trialling the Max Box.

In June of this year, it announced Odeon Cinemas was trialling it in 19 venues, with a view to rolling out nationally.

In October, it issued an upbeat statement announcing a deal with T-Mobile to trial Max Box in 18 stores, while Mr Egan's dream of breaking into the US market seemed closer when it secured a licensing agreement with US group Kiosk Information Systems. The granted it the right to install Felix software on its own kiosks worldwide. The group also signed a licensing deal with ABK Group, which provides leased laptops to university students and staff. A PC version of the Max Box was to be incorporated into 1,600 laptops.

At the time, the group acknowledged the deployment of kiosks into shops had been slower that anticipated, 120 had been installed by October 2007, but after raising £4.15m in funding, it had started to generate more income. In the year to May 31, turnover was only £81,000 with pre-tax losses of £5.4m.

However Mr Rose seemingly does not share Mr Egan's faith in the long term viability of Max Box and said: "We have been placing trial kiosks with various high street multiples in order that both parties may evaluate the commercial returns.

"We have also been enhancing and adding applications to the portfolio of Max Boxes already established with the objective of achieving a near-term break-even position.

"The results of these initiatives have been disappointing, particularly when the cost and time of providing central support and marketing is taken into account."

Mr Rose has asked KPMG to carry out a review of the business model, and it is hoped it will be completed this week.

Mr Egan began his career as a stuntman after being persuaded by a BBC camera crew to ditch his canoe and go down a white water river on a lilo

During the 1980s, he worked on the Noel Edmonds Late Late Breakfast Show. When he lost part of his hand in a firework accident, he decided to move into promotions and set up Sky High Promotions. The business was behind a number of high-profile initiatives including the BT and BP share launches.However, in 1999 he came up with a plan to cash in on the new premium phoneline phenomenon and developed a game called Everyone's a Winner.

It was a simple concept where callers paid £4.50 for a 90-second phone call but were guaranteed to win a prize worth double the cost of the call. Andy then went to games maker Sega and asked them to design a kiosk version of Everyone's a Winner. The kiosk was launched in partnership with the Laurel Pub Company, operator of the Hogshead brand, in June 2004, and a year later the group expanded its products to include digital photo printing and mobile top-ups, and the Max Box was launched. But Max Box has so far failed to set the world alight, users says it is too slow, while others believe the concept was flawed, asking why would people want to take a trip to a cinema or into town to order flowers or download ringtones when they can do it over the web from their homes

Some now believe the Max Box itself will be scrapped and the company will focus on its selling its software through licensing deals.

However others were more scathing. Nigel Mills, director at WH Ireland, says the best outcome the group can hope for it is that someone uses it as a shell to reverse into.

He says: "However, there are plenty of shell companies knocking around that are clean as opposed to inheriting people's rubbish. Felix is the Latin word for lucky - but it looks like its luck has run finally run out."

Music kiosks - Starbucks goes wireless with iTunes iPod

Next test iteration for Starbucks is now the wireless iPods, iPhones, etc. Announcement on Wednesday was made of new agreement. Starbucks had been one of the pioneers trying music burning to CDs in the past.

Sip Starbucks, access iTunes

By Melissa Allison
Seattle Times business reporter

If you like what you hear over Starbucks' sound system, get ready to download it.

Beginning Oct. 2, the Seattle-based coffee shop chain will launch a program that allows customers to access Apple's iTunes Wi-Fi Music Store with no connection fee or hot-spot login.

A feature called "Now Playing" will show customers what's playing over the sound system and let them buy it from iTunes for the usual price — 99 cents per song.

Music can be downloaded to wireless iPods, iPhones, Macs and PCs with iTunes installed, but not to non-Apple portable digital music players.

The Starbucks-Apple service was announced the same day that Apple unveiled a new version of its popular iPod media player with wireless Internet access: the iPod Touch. The Starbucks icon will light up on the iPod Touch whenever a user nears a Starbucks coffee shop that has wireless access.

Financial terms of the partnership between Starbucks and Apple were not disclosed.

Kiosk test

The wireless music program arrives more than a year after Starbucks ended a long-running test of music-downloading kiosks at dozens of stores in Seattle and Austin, Texas. The kiosks can be used to burn songs onto personalized CDs for about $9 each.

Customers told Starbucks they preferred wireless access, said Ken Lombard, president of Starbucks Entertainment.

Read rest of story

Self-Service Technology -- DRM -- the saga continues

A program has surfaced that strips DRM off of tracks purchased from the Zune Marketplace, or traded via Wi-Fi. What makes this more significant is the optional Zune subscription which allows users to download almost all the Zune Marketplace.

From Zunescene.com

These days it's hard to keep digital media locked up in any format. Our Zune ears recently heard tell of a program that strips DRM off of tracks purchased from the Zune Marketplace, or traded via Wi-Fi. What makes this more significant is the optional Zune subscription which allows users to download almost all the Zune Marketplace.

We decided to download and test the Zune DRM stripper for ourselves to see if it actually works. In fact, it was so effective that we have decided not to publish any direct links to it.

Below is a snapshot of a Marketplace track with removed DRM.

zune hack

Music Download -- BurnLounge Changes Model

BurnLounge eliminates signup/membership and account management fee's as major revenue and shift it towards sales of actual music downloads. That's a real shift in ROI for them but it makes the FTC happy.

BurnLounge, FTC Strike Cooperative Agreement

BurnLounge has now forged a cooperative agreement with the Federal Trade Commission (FTC), one that involves an overhaul of the current business model. According to BurnLounge executives, the company will eliminate the aspects of its networked sales approach that raised FTC concerns. The BurnLounge model will still rely on a distributed sales structure, though it will not pull revenues from signup and account management fees. Instead, the group will allow sellers to open stores for free, and shift rewards more heavily towards sales of the actual music download commodity. Despite a potential market for paid downloads, the company was previously earning most of its revenue from membership-related costs.

That structure raised concerns that BurnLounge was running a pyramid scheme, and other aspects related to the company incentive program strengthened the case. Shortly after the FTC charges surfaced, BurnLounge quickly triggered shifts in both its leadership and broader model, and ultimately escaped a more involved punishment. "With this hearing behind us, we are aggressively moving forward and will focus on our new free model to help fuel the next evolution of business growth to better benefit our employees, artists, partners and independent retailers," said Grant D. Johnson, the newly-placed chairman and chief executive officer of the company. BurnLounge executives pointed to a formal FTC announcement over the next few days.

BurnLounge, FTC Strike Cooperative Agreement — Digital Music News

Kiosks Research - Business Model for Digital Music

Extensive article on Business Week discusses the changing business model regarding digital music and points to eventual destination we think of telcoms and mobile devices.

Digital Music: In Search of Biz Model

Digital Music: In Search of Biz Model
As the Big Four record labels embrace digital downloads they must become more user-friendly and market to the Asia mobile crowd

by John C. Tanner

Once the scourge of the music industry, digital downloads are now officially "the way forward" for the "Big Four" record labels - EMI, SonyBMG, Universal and Warner Music, which together control over 70% of the world's recorded music - now that they have numbers to justify it, anyway.

Two years ago, music labels were making virtually nothing from digital music. By the end of 2005, digital music generated $1.1 billion in revenues in 2005 - almost triple from 2004 - which accounted for 6% of revenues earned that year, according to the International Federation of Phonogram and Videogram Producers' (IFPI) 2006 Digital Music Report.

What's more interesting is that the music industry is well aware that digital music is increasingly becoming a mobile phone play, not least because ringtones - which count as digital music - accounted for 40% of digital music dollars last year. And it's only going to get bigger.

Certainly this isn't news to the mobile industry. The iPod has shown the value of porting digital music to media players, and handset makers have long since set their sights on making phones the default media player of choice for users (see "One of these is the future of digital music", p. 16).

Meanwhile, 2006 has seen a rash of new music services launched by cellcos worldwide. In Asia alone, all cellcos in China, Korea and Japan have music download services, as do most cellcos in Hong Kong, and in markets from Indonesia to Australia. SK Telecom went as far as launching a groundbreaking joint venture with Warner Music last month for a South Korean mobile download service. Others have partnered with third-party music services like Soundbuzz, which has cellco partners in Australia, Singapore, India and Hong Kong.

That's the good news.

The catch is that while demand for digital music is skyrocketing, the business case is still rickety for mobile operators, as well as other service providers that want to offer music download services. Few doubt that there's money to be made from mobile music services. What's less certain is how big everyone's slice of the pie will be, and how the music labels can balance consumer demand with copyright controls that may not always work in the consumers' interests.

BLOOD ON THE FULL-TRACKS
The monetization issue is tricky not least because at the end of the day music is just one content purchase option among many, says Marcel Fenez, Asia-Pacific leader of Entertainment & Media Practices at PriceWaterhouseCoopers.

"Music is competing for consumer entertainment dollars from other sectors, and they are all growing much faster," he says.

For example, video games will grow 13% CAGR in the next few years, driven by online and wireless sales, while pay TV content revenues will grow 10%. Sports revenues will grow 8%, and film 6%.

"In terms of content growth, you're in a competitive world, and it's all being delivered the same way - via broadband and mobile," Fenez says, though he does point out that mobile music will be a $1 billion business in Asia by 2010.

However, one chief issue for mobile music services is that mobile music is driven largely by ringtones, not full track downloads. This isn't necessarily a bad thing in the sense that ringtones, ringback tones, music video clips and even music karaoke have been successful to varying degrees.

On the other hand, the full-track model is the one most players across the value chain are chasing.

This has been the case in Korea, Asia's hottest digital music market, according to Philip Kim, managing director of investment and advisory firm IRG Ltd.

"Korean users aren't paying for full song tracks. People spend money on devices, games, avatars, but not music," Kim says, although he does add that music clips do bring in revenues.

Koreans aren't the only ones not paying for full tracks. A March survey from research company Synovate covering key North Asian markets found that while two-thirds of users under 25 had downloaded music, only 27% paid for it. Across all demographics, that figure was 17%. In China, only 15% said they'd paid for digital music.

On the bright side, the same Synovate survey reports that 42% of respondents intend to buy digital music in the next year.

LICENSING: IT AIN'T EASY
However, for cellcos hoping to offer full-track music services the biggest challenge may not be getting to users to pay so much as acquiring the rights to the content in the first place.

The music licensing regime is almost horrifically complex. Start with the basic premise that every song has at least two copyrights (one for the music and lyrics, and one for the actual sound recording), and the fact that these rights can be held by multiple licensing societies, as well the producers and musicians. Operators that want to license music from, say, Warner/Chappell (the music publishing arm of Warner Music Group) have to obtain separate licenses from at least 25 different collection societies just for the European market.

Ian Chapman-Banks, VP of Motorola Asia Pacific, as well as its North Asia GM of marketing and business development for mobile devices, can testify to the difficulty of acquiring song licenses. Motorola had to get clearances for all of the 10,000 tracks it offers on its MotoMusic.com music download Web site, which launched in China last year.

"It took us a year to get those 10,000 songs licensed," he says.

Chapman-Banks admits that one reason for this was Motorola's inexperience with the music licensing game. "This was a new business for us, so the learning curve was quite steep.

Adding further to the complexity is that the various elements in the music value chain - from labels and publishing groups to operators and even the artists themselves - are still fiercely debating the terms and percentages involved in the digital music business model.

Lachie Rutherford, president of Warner Music Asia-Pacific (and chairman of IFPI Asia Pacific), admits that the current licensing regime is "very complicated and not user-friendly. I don't know how to deal with it, but clearly we'd better think of something."

Luckily, there are initiatives underway to try and simplify the licensing process. Warner/Chappell Music has launched its Pan-European Digital Licensing (PEDL) initiative, under which it hopes to create a one-stop shop licensing service by authorizing a handful of designated collection societies to grant pan-European digital licenses.

Meanwhile, the newly formed Digital Data Exchange (DDEX) - a US-based organization founded by 11 charter members, including the Big Four, Apple, Microsoft, RealNetworks and ASCAP - plans to create voluntary standards that tackle the problem of back-office incompatibility between cellcos, collecting societies, music publishers and record labels, which is "creating a log jam and increasing costs for the transition to digital distribution."

DREAM A LITTLE DRM
Even so, licensing isn't the only element that's user-unfriendly. The use of DRM and copy-control software remains a controversial point that pits a legitimate need to protect copyright against a smooth user experience. Many users have become increasingly frustrated with the revelation that music they download from iTunes and other music services is not easily transferable to other devices and are often incompatible with other players.

The mobile music scene is likely to be no different. For example, customers of MotoMusic.com can only play their tracks on the first Motorola handset they transfer them to. Also, the songs are encrypted and unlocked using downloaded keys that the users pay for via SMS. The trouble is that if the user changes handsets (or loses the handset), they must pay for another key to listen to the track again.

Nokia's music phones have similar properties, although Jawahar Kanjilal, director of multimedia experiences at Nokia Asia Pacific, says the user doesn't have to be penalized when they change handsets. "Features can be enabled so that if you lose or change your handset, customer service can identify which songs you have already paid for and reactivate them," he says.

However, the bottom line, says Tom Jacobs, director of research for the "Voodoo Sciences" section of Sun Microsystems, is that mobile consumers aren't happy with DRM in practice. And neither, ironically, are the music labels.

"Consumers have been resistant to licensing terms and technologies, and many will be happy with digital music until they buy a new music player and discover that they can't transfer any of the music they downloaded from iTunes onto it," Jacobs says.

Ironically, he says, the problem isn't label greed or paranoia over piracy but the lack of interoperability between proprietary DRM solutions. "The music labels are looking for something better than a proprietary system that locks music onto a particular device."

The even greater irony is that DRM for mobile has been standardized for some time under the Open Mobile Alliance, whose DRM 2.0 standard was finalized last year. However, adoption of OMA DRM 2.0 has been seriously hampered by - of all things - arguments over patent royalties. The MPEG Licensing Authority - one of the two chief patent pools in the standard - has been charging royalties of $1.00 per handset, which many cellcos have rejected as too high.

"That went over like a lead balloon for the GSM operators, which started evaluating proprietary solutions from other vendors that were able to offer lower prices, but then you're back to the problem of interoperability," Jacobs says.

Sun, characteristically, is proposing a federated, network-based approach to DRM as a solution, where DRM rights are tied to a network ID rather than a device. Since digital music players connect to the network either directly or by proxy via a PC, rights can be validated and renewed every so often just by logging on. Sun has also launched Open Media Commons, an open-source, royalty-free model that works independently of any particular piece of software or OS, and is submitting the technology to various standards bodies.

BEING BORING
Whatever the solution to DRM, it has to be something that consumers will accept. Thanks to the SonyBMG rootkit incident, some consumers may find any level of DRM unacceptable. However, Jacobs says that many consumers are already coming to terms with some (if not all) of the restrictions that come with digital music.

"If you look at the Apple model, you can only burn a song so many times and people got over it," he says. "I think that as long as it's done right and is as easy and unobtrusive as possible, end-users will accept it more."

User-friendliness applies to more than just DRM - it's also necessary to keep consumers from turning to the file sharing networks and sites offering unlicensed content that make DRM necessary in the first place, says Doug Kaplan, VP of Asia-Pacific at Real Networks.

Indeed, one key finding of the Synovate survey was that 86% of respondents said the music industry could do more to help them get more digital music, such as better searchability,

Consequently, value-add is another strategy being developed by various players in the mobile music value chain to attract users.

"One of the big questions now is, how does the handset become the album experience of 30 years ago?" says Chris White, senior director of global product marketing, music, mobile devices business at Motorola. "Things like rich content, artwork, info on the songs, lyric sheets - we can bring that to the mobile device. We'd like to work with the music labels to learn how to bundle that kind of content, because the download is going to be a complete experience, not just a 99 cent song."

PCCW, which launched its full-track music download service "Moov" last month, is going for a community-based approach to value-add, says Janice Lee, executive VP for TV marketing and content management at PCCW.

"One strategy we're pursuing is to add value to the content that pirates can't, such as personalized playlists and creating communities that allow customers to share songs and playlists with each other," she says.

PCCW is also looking at a converged strategy where its music content is synced with its mobile and fixed-line offerings. Cellcos like SK Telecom, KTF and KDDI have similar strategies in play.

Warner Music's Rutherford agrees that value-add is the way to go, and says that the music labels are now recognizing that the pure digital music format is changing their product line and creating new opportunities in the process.

"The Apple model is boring," he says. "With handsets here, you can get the album if you want it, but you can also get the videos, interviews with the artists and producers, or whatever. Calling this another distribution channel is to miss the opportunities here."

However, he maintains that it's everyone's responsibility to make digital music a success, not just the labels that control it.

TRASH

* -- Tough competition from games, video and other media

* -- Licensing music is a labyrinthine process

* -- Costly DRM standards = proprietary device lock-ins

* -- Most users paying for clips, not full tracks

ONE OF THESE IS THE FUTURE OF DIGITAL MUSIC
And it may not be the iPod - at least not until it gets wireless connectivity.

A report released last month by Yankee Group forecasts that the fate of MP3 players will depend on replacement cycles as markets saturate. By 2008, only 10% of MP3 player purchases in the US will be first-time purchases.

Moreover, the other 90% of sales will be driven by devices that feature voice telephony and Internet connectivity, the report says.

ABI Research has reached a similar conclusion, as mobile phones designed for playing music start hitting the market with greater memory capabilities than ever. Many new handsets support removable flash memory cards with capacities that match or exceed the lower-end MP3 players on the street today. The Nokia N91 comes with 4 GB of memory. Samsung's SGH-i310 has twice as much disk space.

"As the cellular handset becomes the one device that the world carries, the standalone MP3 player may well be left behind," says Alan Varghese, ABI Research's principal analyst of wireless semiconductor research.

Varghese adds that while high-end digital music players are packing as much as 60 GB of memory, there's "a point of diminishing returns beyond which a user doesn't care whether the device can store 2,000 songs or 7,500."

Such data echoes the message put forth by handset makers that have been enabling a range of music features in new cellphones, from Sony Ericsson's Walkman phones to Motorola's new ROKR E2, due for launch later this year. Nokia is also promoting music apps not only via handsets such as the N series of multimedia phones, but also service applications like AirAlbum and Visual Radio, which have been commercially launched in seven markets each.

Handset makers say the numbers are in their favor. Apple is expected to sell 80 million iPods this year, while the handset industry will sell well over 900 million mobile phones - over two-thirds of which will have music player functions.

"The iPod started the wave, but we will be shipping 80 million handsets with music players in them this year, and 150 million with FM radios," says Jawahar Kanjilal, director of multimedia experiences at Nokia Asia Pacific.

Music download content to be available via Amazon

Amazon Confirms Digital Music Store Plans, EMI Jumps Aboard. "Every song and album in the Amazon.com digital music store will be available exclusively in the MP3 format without digital rights management (DRM) software," the company stated.

Amazon officially confirmed its intentions to open a digital music store on Wednesday, a disclosure that largely coincides with earlier information. Several weeks ago, executives pointed Digital Music News to an MP3-based destination, one that will launch with or without major label support. That protection-free agenda was reaffirmed by the official Amazon announcement. "Every song and album in the Amazon.com digital music store will be available exclusively in the MP3 format without digital rights management (DRM) software," the company stated. "Amazon's DRM-free MP3s will free customers to play their music on virtually any of their personal devices — including PCs, Macs, iPods, Zunes, Zens — and to burn songs to CDs for personal use." The etailing giant pointed a vague launch date of "later this year," an expanded window that offers more licensing time to holdout labels.

Jumping on board immediately is EMI, which signaled its involvement alongside the broader announcement. The major will offer its entire catalog DRM-free, and tracks will carry higher fidelity levels than conventional, DRM-protected tracks. EMI did not offer details on its pricing plan, though it appears that its downloads will carry an elevated, $1.29 tag. EMI is the first major to join the Amazon play, part of a larger DRM-free initiative. Earlier, the company announced a DRM-free deal involving iTunes, though it remains unclear if the pair will launch this month as planned. EMI is one of 12,000 labels joining the Amazon push, a critical mass that will exert continued pressure on remaining majors to reconsider protection-based strategies. "Our MP3-only strategy means all the music that customers buy on Amazon is always DRM-free and plays on any device," said Jeff Bezos, founder and chief executive of Amazon. "We're excited to have EMI joining us in this effort and look forward to offering our customers MP3s from amazing artists like Coldplay, Norah Jones and Joss Stone."

research -- Music consumers buying less physical media

Rather than consumers tiring of physical CD media causing accelerated downturn for retailers, a new report proposes that the real reason is that the process of discovery is more often occurring outside the retailer and thus fewer impulse buys. Retailers need to be champions of discovery is solution. Also bigbox numbers.

Aisles have been poorly populated at physical music retailers for years, part of a pronounced shift away from CD purchases. The consumer migration, tame in previous periods, has suddenly accelerated this year, causing a fair amount of anxiety among retailers, labels and distributors. But what exactly is causing consumers to move so aggressively away from physical product? One explanation is that consumers are simply rebelling against a heavily-bundled package, one that forces playlist order and less-desirable album cuts. A highly related explanation is that digital files, and the iPods that house them, represent a far more convenient and satisfying listening experience, one that is more in-tune with music fans today.

Both are strong factors, though researcher NPD recently challenged their importance. "Consumer rejection of the CD is not the cause of the current accelerated sales decline," the group asserted during a recent presentation at the retail-focused NARM in Chicago last week. According to the researcher, deficiencies at retailers are a major source of the problem. The group noted that music consumers are usually discovering artists and songs outside of retail locations, a major missed opportunity. That means far less impulse purchasing, a significant driver of record label revenues across various platforms. According to the findings, just 13 percent of new music buyers make artist discoveries in retailers themselves, noticeably less than figures of 37 percent for traditional radio and 25 percent for personal recommendations. The solution, according to NPD, is for retailers to return to being "champions of discovery," a role that can be achieved by stronger selection, merchandising and promotion. Meanwhile, the deletion of Tower Records from the retail landscape is also playing a role in the downturn, especially for consumers that have not replaced their once-trusty outlets.

NPD Presentation

More Music news

Big-Box Retailers Edging Chains, Independents This Year

Big-box retailers are edging out chains and independents in music sales this year, according to information recently disclosed by Nielsen Soundscan. The data, shared with attendees at the annual NARM convention in Chicago last week, highlights the large and growing muscle that retailers like Wal-Mart now carry. According to the data, big-box - or mass merchant - retailers have claimed 39 percent of sales this year, compared to a 38 percent grab by chains like Trans World Entertainment. Meanwhile, non-traditional retailers retained an impressive 17 percent share, while independents pulled 7 percent. Typically, chains contribute a majority of music sales, though the absence of heavyweight Tower Records is undoubtedly causing the mix to shift.

Last year, both chains and mass merchants finished with a 41 percent share, though historical trends suggest that big-box retailers will widen their lead in the coming years. In 2001, for example, chains retained a 54 percent of total sales, while the big-box sector pulled a far-less impressive 28 percent. Of course, the shares being discussed are for a quickly-declining product, though the bleeding at mass merchants is far less severe. According to the Soundscan data, chains shed 12 percent in 2006, while mass merchants lost a less critical 4 percent. Meanwhile, the asset mix could change substantially depending on how retailers like Wal-Mart approach physical product moving forward. Recent information suggests that Wal-Mart is considering a sharp reduction in product, a response to decreased consumer demand.

KIOSKS Case Study -- Music Download Burning Kiosks

Nice writeup on latest deals and developments in the music download kiosk scene. The market still remains unclear as the writer notes but we do have to keep track of these things...

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The music-focused kiosk market has been treading water for years, and it remains unclear if a solid business play exists. Even heavyweights like Starbucks have been frustrated by the possibilities,MediaATM largely because of incompatibilities with the iPod and a consumer attraction to home-based music discovery and acquisition. But despite the setbacks, deals and developments continue to emerge. The latest comes from Mediaport Entertainment, a Salt Lake City-based provider of media delivery islands for audiobooks, music, games, ringtones, and other assets. Just recently, the company tied with Power Music, a supplier of workout-related soundtracks and compilations, to push its kiosk solution into fitness centers. The deal leverages existing Power Music relationships, and promised a blend of content from both Mediaport and Power. Gym members can download mixes, and the duo will share a piece of the revenue with the club. "This puts us closer to an anytime, anywhere solution to downloading musical favorites," commented Helen Seltzer, chief executive of Mediaport.

The initiative will run into a number of competitive threats, particularly from iTunes. A typical workout often includes pre-loaded iPod content, pulled from an iTunes synchronization prior to the start of a session. iTunes users can easily createMediaATM playlists featuring high-energy and inspirational songs, though Apple also offers a number of workout-specific mixes through its Nike+iPod initiative. Others will simply tune into any number of televisions planted around the typical gym, though adventurous types may download mixes from Mediaport-powered MediaATMs, especially given the level of customization for body-conscious customers. The group will position 30-minute workouts for $7.99, and individual downloads for 99-cents each. The initial rollout will happen in Utah before a broader expansion in the United States.

Story by news analyst Alexandra Osorio.

Technology -- DRM and Apple and iPods

It had been telegraphed in advance for several weeks and it finally happened. iTunes now offers music tracks with no DRM. It's noteworthy that the non-DRM will be offered side-by-side with the DRM version. They will charge more for delivering the song without DRM. DRM is one of the hangnails of the music industry which has crimped sales for last three years.

Announcement

EMI and Apple will now sell DRM-free catalog on the iTunes Store, according to a joint announcement issued today. The move is groundbreaking, and shatters a previously ironclad commitment to digital protections by the major labels. The decision means that well-known tracks from artists like the Rolling Stones, Norah Jones, Lily Allen, and Janet Jackson can now be downloaded in a protection-free format, an approach that eliminates usage and sharing restrictions. The company pointed to a refreshed product line that will feature "a much higher sound quality than existing downloads," and one that will be "free of digital rights management (DRM) restrictions". Specifically, the label will offer its catalog to digital music stores in a range of higher bitrates, including CD-quality fidelities. According to Steve Jobs, the DRM-free offering will be exclusively unveiled by iTunes in May. Other stores will offer the DRM-free catalog at dates thereafter.

The move represents a major shift, though several asterisks are dangling. The tracks themselves are being branded as "premium downloads," and will carry an elevated price tag above "standard," DRM-protected tracks. Instead of a standard, 99 cent, 79 pence, or 99 euro price tag, the premium tracks will be priced at $1.29, 0.99 pence, or €1.29. Both premium and standard tracks will sit alongside one another, and consumers will have the ability to upgrade their standard versions by simply paying the difference. That approach breaks an iTunes commitment to uniform pricing and format, and conflicts with earlier philosophies expressed by Jobs. But during the unveiling, Jobs noted that the offering means greater choice, and a more fine-tuned offering. "We think our customers are really going to appreciate this," Steve Jobs said. "iTunes will continue to offer its current catalog at the same price, alongside the DRM-free, higher quality versions." Jobs also disclosed that the iTunes Store has now sold more than 2.5 billion tracks.

Nice analysis by Paul Resnikoff

If you thought DRM was complicated, try DRM-free! At least, the brand of DRM-free being spun by EMI Music and Apple. Sure, you can have your freedom, but you have to pay the price! And if you don't know what DRM really is - like so many consumers out there - then you are now confronted with a more complicated iTunes Store. Newbies usually call more experienced friends for help in times like these, but doesn't that ruin the simplicity that Apple is so good at? If a mother has to dial her son at college to figure out why there are two prices for the (seemingly) same track, doesn't that make iPod+iTunes unnecessarily complicated and annoying? Can your grandma really understand what's going on now?

Jobs is famous for being consumer friendly, but the movement suddenly shifted into reverse! During the joint announcement, EMI chief executive Eric Nicoli pointed to research that showed that consumers are willing to pay extra for protection-free music. "In all of our research, consumers tell us overwhelmingly that they are willing to pay a higher price for tracks that work anywhere," he said. But just where did that focus group come from? On the digital streets, the opposite preference is being blared in the billions. Jump onto Limewire, and consumers are strongly expressing a preference for DRM-free tracks at a price tag of $0! Does that make a more expensive offering by iTunes suddenly attractive?

That's not to say that some consumers will pay more. But the number of consumers that will pay more for higher fidelity and flexibility represent a fraction of the current buying public. And the buying public represents a small fraction of the downloading mass. In other words, premium tracks at a higher price will appeal to a niche within a niche. And that sideshow will lessen the impact of iTunes, which gained so much traction based on its uniformity and simplicity.

Sure, Steve Jobs gets a win, and a potential domino effect involving other labels. The move will help to de-pressurize the regulatory standoff happening in Europe, and Jobs has now shifted the focus onto remaining labels Universal, Warner, and Sony BMG. Think that iTunes is non-interoperable? Just pay a little more, and you can dribble your ball on any court! Or, stay within the walls of iPod+iTunes at the existing price.

rest of story

KIOSKS - Fast casual dining restaurants go decaf on music kiosks

Nice article on Fast Casual about music download burning kiosks with a little bit of data.

by Bill Yackey * • 06 Mar 2007

Someone once said that as General Motors goes, so goes it with America. While no one is ready to compare Starbucks with the automotive giant, one should not deny the Seattle-based coffee chain its due when it comes to discerning the cultural Zeitgeist.

This may be true especially when it comes to kiosks that allow users to burn custom CDs or load a venti dose of Coldplay onto an MP3 player.

In 2004, Starbucks unveiled digital music kiosks in several of their highest-grossing stores, including numerous locations in their home city of Seattle and in Santa Monica, Calif. At the time of the launch, Starbucks had plans to expand the rollout to 2,500 stores through 2006, but after two years of testing, the company pulled the machines from 35 of the 40 stores that had them.

And while some QSRs have had success in Europe with devices that allow patrons to load up on songs and salads at the same time, attempts in the U.S. have fared no better than the Starbucks deployment.

Is it time to take music-burning kiosks off the menu?

Listening to record stores

John Timmons looks like what he is. Tall, thin, with blond hair as wild and flowing as a Jimi Hendrix riff, he fits the image of a record-store owner. His shop, ear X-tacy, on a trendy stretch of traffic jam in Louisville, Ky., is the perfect backdrop. Music dilutes the noise of CD cases being flipped by listeners scanning for titles. Mixed among the aisles are end-caps with music-themed mugs and toys, and racks with T-shirts that in some places in this conservative town would draw a scowl.

In a nod to the technology that has overtaken his passion since the days of vinyl and large, cardboard jackets, Timmons has installed a Touchsystems listening station at the front of store that lets customers sample clips of CDs. What he does not have, however, is a kiosk for those customers to download their selections for a fee to a CD or an MP3 player.

“If we put a kiosk in, we would have to sell an ungodly amount to recoup our expenses,” Timmons said. “They are very expensive, and the money we would get back for each song would not be very much. I see how money can be made with kiosks, but the financial model doesn’t work for me.”

That is the dilemma facing all potential deployers of music-download kiosks, whether their business model is fast casual or retailer. At the beginning of the decade, the kiosks promised a fun and convenient way for music fans to take advantage of the confluence of digital music, cheap burning technology and the advent of portable playing devices. Users would gain access to a vast library of songs, even those no longer being published. Deployers would have virtually unlimited, “long tail” inventory.

But the promise began to fade as fast as a Britney Spears marriage, however, when the market got a load of a new device called an iPod, and suddenly even technophobic senior citizens could take Barry Manilow MP3s with them when they went mall-walking.

Francie Mendolsohn, president of Rockville, Md.-based Summit Research Associates Inc., believes the kiosks are as out as Kevin Federline. She said that digital media kiosks have already matured to their full potential and have little room to grow.

“It doesn’t look like a terribly promising thing,” said Mendolsohn, who tests and consults on kiosks. “There was a lot of excitement for them at one point, but they won’t last all that long.”

The market for kiosks existed before iTunes began to take over the online realm, but by the time manufacturers got enough funding to ramp up deployment, Apple’s online store owned an 80 percent share in the online-retail market.

rest of article

Kiosks Case Study -- music cd mp3 burning in retail

News that Starbucks is evolving its music strategy to "walk into a Starbucks and fill up your MP3 player". Starbucks dropped the CD experiment and instead opened dedicated music section on iTunes. At a talk held jointly by Bloomberg and the Levin Institute, Starbucks' chair Howard Schultz said the beverage giant would soon begin testing and deploying a system that would let its customers add music to their jukeboxes.

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Starbucks has been spinning music offerings for years, though the larger strategy continues to evolve and unfold. The coffee giant is notoriously deliberate and slow-rolling in its initiatives, and company executives are open about an ongoing experimentation process. Several years ago, Starbucks installed a limited number of CD-burning "media bars" in various locations, though it remains unclear if that concept will expand. More recently, the company created a dedicated section with the iTunes Store, though Starbucks has yet to offer a comprehensive iPod solution. Part of the reason is that the Apple player exists within a closed system, a puzzle that has confused digital music strategies at a number of companies.

Now, it appears that Starbucks is attempting to wrestle the portability demon. Just recently, Starbucks chairman Howard Schultz pointed to a system that would allow in-store music downloading to portable MP3 players, though additional details were not offered. "Within 12 months, probably, you're going to be able to walk into a Starbucks and fill up your MP3 player with music," Schultz said. That has stirred speculation of just what the company is planning, and whether an opportunity exists for an iPod competitor like Zune. From a larger perspective, it remains unclear if consumers will want to fill their devices outside of their homes, unless the offered content represents a compelling and easy addition to an existing collection. Meanwhile, a shift towards MP3-based sales by major labels would open iPod access, and propel the Starbucks music strategy considerably.

Content Channels - eMusic Hits 100 Million Downloads

With all the talk about Zune and iTunes, the "no-DRM" solution from eMusic notes that they are nearing the 100 million download mark. Its worth noting the iTunes hit the Billion downloads-to-date mark recently and that the sharing services still see over a billion downloads every week. eMusic delivers its music in Open MP3 format (unlike the Windows WMA DRM or Apple's Fairplay).

Independent digital download store eMusic is nearing the 100 million-mark, a milestone that should arrive within "the next few weeks". eMusic started its download ticker on November 1st, 2003, the point at which the company moved away from an unlimited monthly download model. Ahead of the accomplishment, the company has tapped pop rock group Barenaked Ladies to pen a song for the winner, a unique digital commission. The lucky downloader will also receive a lifetime eMusic subscription, and inclusion within an upcoming print advertising campaign.

eMusic has long billed itself as the number two paid download provider behind iTunes, and the latest tally helps to validate that claim. eMusic is catered towards a targeted audience, one that prefers lesser-known indies over blockbuster artists and smash hits. Depending on the specific tier, the company offers its users a fixed number of downloads per month, part of a hybrid subscription and download model. And eMusic offers all of its tracks as open MP3s, enabling iPod compatibility. Meanwhile, Apple has crossed the 1.5 billion mark on its iTunes Store, a number that eclipses eMusic and other competing download providers. Others like Napster, MSN Music, and RealNetworks have not shared download figures.

Music kiosk - MOD signs a new retailer

MOD Systems signs a new retailer (identity undisclosed but not in Minneapolis) and has new method for downloading from kiosks to handhelds wirelessly (and still satisfy DRM). Secure DVD burning is now facilitated and they have a new incoming board member (Warren Lieberfarb known as father of DVD).

Retail Kiosks Dispense Custom Digital Tunes

By Laurie Sullivan, TechWeb Technology News

CDs and DVDs hogging retail shelves could go the way of free glassware at the gas station.

MOD Systems Inc. has developed software that lets consumers download and pay for digital content from kiosks directly onto portable media players--with no cables attached.

The software for kiosks will serve up music, movies and video games and more, but MOD Systems Chairman Anthony Bay said the first undisclosed retailer to deploy the system early next year will offer tunes. The news was released Tuesday at the Digital Hollywood Fall conference in Santa Monica, Calif.

"Retailers are looking for technology to help them make a move toward offering more digital content in stores," said Anthony Bay, MOD Systems chairman. The software lets consumers choose individual songs for download to digital media player or burn to a CD.

Not only does the software give consumers more choices for digital music, but it also frees up shelf space for fast-selling items without completely eliminating slow-moving content from stores. Analysts also believe the kiosks will reduce product returns.

Less inventory and more choices could help retailers improve razor-thin profit margins by reducing capital tied up in physical inventory that could sit on the shelves for months.

"Brick and mortar big-box and specialty music retailers by necessity need to grab onto a piece of digital music sales or their time on this planet is limited," said Aram Sinnreich, managing partner of Radar Research LLC, Los Angeles. One example he gave: Music retailer Tower Records, after 46 years in business, was sold to a liquidator earlier this month.

The demand for digital music is growing. U.S. sales of digital singles rose 71.3 percent, to 286.3 million between January and June 2006, while the numbers of CDs, DVDs, vinyl records, cassettes and other physical music formats shipped declined 15.7 percent to 277.6 million from the year-ago period, according to the Recording Industry Association of America (RIAA).

rest of Techweb article

Info on Digital Music News

WeblogsInc report

Digital Jukeboxes go Interactive

Jeep has recently launched a funky sales campaign, one that now includes digital jukeboxes created by San Francisco-based Ecast.

The auto manufacturer has been spinning an urban-inspired, fresh blitz across print and television, one that includes bobblehead dolls and heavy hip-hop beats. In bars and restaurants, digital jukebox users are being offered an interactive experience that places the Jeep Compass at the center of the action. After purchasing a track, the jukebox allows the buyer to customize the SUV with different colors, wheel trims and sound systems. Jeep also captures a user email address in the process.

The campaign is a rather novel experiment for both Ecast and Jeep, though early results seem positive. On Monday, Ecast reported that 8.3 percent of song purchasers are opting into the Jeep customization process, and the average stay is 53 seconds. Meanwhile, over 3,000 users are leaving their contact information every week. "This is our first foray into place-based, digital media networks ― and we are very happy with the initial results," said Jay Kuhnie, director of Jeep Communications. The campaign, which involves about 8,000 jukeboxes across the United States, is the first between Ecast and an automotive manufacturer. Advertising agency PHD helped to thread the deal for Jeep.

source

Digital Music Watermarks instead of DRM

A German company is offering MP3 files for download, unencumbered by DRM (digital rights management). Instead, Akuma discourages copying by adding a unique "watermark" to each download.

German music download store uses watermarks, not DRM | InfoWorld | News | 2006-09-15 | By John Blau, IDG News Service

German music download store uses watermarks, not DRM
Akuma hopes to break into crowded market by taking softer approach to copyright protection

By John Blau, IDG News Service

September 15, 2006

A German company is offering MP3 files for download, unencumbered by DRM (digital rights management). Instead, Akuma discourages copying by adding a unique "watermark" to each download.

Major record labels have mostly chosen DRM to protect their copyrights, limiting the number of copies buyers can make of a downloaded track, and restricting the music players they can use to listen to it.

However, Akuma is taking a softer approach: The music store sells MP3 files which can be played on almost any digital music player, but adds a unique tag to each download using watermark technology from Germany's renowned Fraunhofer Institute for Integrated Circuits, which helped create the MP3 audio compression algorithm.

The watermark technology makes slight changes to the data in sound files, such as a higher volume intensity in a tiny part of a song, that are undetectable by even the best trained ears, according to Fraunhofer researchers. However, if unauthorized copies of a download turn up on, for example, peer-to-peer file sharing networks, the watermark allows Akuma to identify the purchaser of a file and take action against them.

"Around 40 percent of the labels we offer are embedded with watermarks," said Sascha Hottes, a managing director of H2 Media Factory, which launched Akuma. "This is the compromise we've reached with labels that are willing to release their titles in the MP3 format and not in Microsoft's Windows Media Audio format with its DRM technology."

As part of its service, Akuma monitors songs embedded with a watermark against illegal distribution on P-to-P services, according to Hottes. "We monitor P-to-P networks on a random basis," he said.

Around 350,000 songs, mostly from independent labels, are currently available on the Akuma portal, with 700,000 planned by the end of the year. The roster includes artists such as Katie Melua, Toni Braxton, Simply Red and Deep Purple.

A single song title costs €0.89, ($1.13) an album €4.49. Customers have various payment options: online, direct debit, telephone invoice and PayPal.

Akuma offers MP3 files in a quality similar to CDs, with bit rates (a measure of sound quality) from 192Kbps at the low end to 320Kbps at the high end.

Like eMusic.com, the German music download store hopes to break into a crowded market by making song downloading a piece of cake. The German portal requires no special download software and places no restrictions on the choice of music player, including the iPod from Apple Computer.

Customers can make as many copies of the songs as they like, burn them to CDs and transfer them onto multiple portable music players.

The akuma.de portal is now available in a beta version to registered users.

Trying to Capitalize on Music Download

One of the newer entrants in music download business is BurnLounge and they seem to have their supporters and also their critics. I think the adage "if it sounds too good to be true, it probably isn't..." is always good advice.

BurnLounge - Still Ripping Consumers Off?

Posted Jul 19th 2006 5:04AM by Gordon Finlayson

Last month, TheDigitalMusicWeblog exposed the growing concern in the digital music industry over the questionable practices of BurnLounge, a digital music sales service that appears to have more in common with a pyramid selling scheme than legitimate digital music stores. Since we posted that article we've seen a storm of controversy erupt in our forums as fans of the company go head to head with those who feel that BurnLounge is giving the digital music industry a bad name.

BurnLounge markets itself as a community based digital music download service which allows users to construct their own personal digital download stores to make profits from sales of music, but in reality it operates like a multi-level marketing scheme where the only real profits are derived from sign-up and subscription fees. Higher level users receive a share of revenue from any affiliates that they personally sign up to the BurnLounge, which includes both revenue derived from digital download sales through the affiliates stores and also the sign-up or subscription fees that the affiliate generates. With subscription fees ranging anywhere between $29.95 to a whopping $605.35 per year, there's plenty of money at stake.

Since downloads from the service are priced on a similar level to iTunes, and BurnLounge offers no significant additional functionality, I think that the the real business model is about sign-up fees, not about downloads, and a fair few of our readers appear to agree. Since posting this article, we've been inundated with feedback which has tended to fall into two opposing camps - the first from people who have been ripped off by BurnLounge, the second from BurnLounge zealots writing in to defend the service. The BurnLounge zealots were surprisingly uniform in their sunny responses, and occasionally sounded more like Kool Aid drinking cult members than legitimate business people, while the stories told by disaffected users are a very story altogether.

We here at the DigitalMusicWeblog think that people should give BurnLounge a wide berth - but you can make your own mind up with this sample of comments from our readers:

Burners

All info seems to support a finacial collision is on the way for all working retailers involved with Burnlounge. This, simply means people will become rich with this company. All power players will have critics and supporters. BURNLOUNGE, I applaud you and I'm a Huge supporter and will sign the dotted line today... - Jack Pope

It never ceases to amaze me how ignerance and lack of education paves the way for those who live in glass houses and there stone throwing antics. - Michelle

BurnLounge is CHANGING the entire distribution channel for music and entertainment. Before, companies held the key to distribution... now we do. Anyone can get involved. This is one of the most amazing things to hit the music and entertainment industries... - LT

..this company WILL change the way music is bought, sold, and distributed! Just wait and see in about 2 weeks when they will have over 1 million downloads. Can you say, move over iTunes? - Rose

We Will Succeed By Attracting To Ourself The Forces We Wish To Use, And The Cooperation Of Other People. We Will Eliminate Hatred, Envy, Jealousy, Selfishness, And Cynicism, By Developing Love For All Humanity, Because We Know That A Negative Attitude Toward Others Can NEVER Bring Us Success. We Will Cause Others To Believe In Us, Because We Will Believe In Them, And In Ourself. We Will Start Today. - Kris

This is a solid company with a great concept. Many people will benifit from this. Some of you obviously won't. Do any of you download music "legally"? Or are you part of the slimewire camp that thinks everything should be free. - Chris

Do not sweat the negative people in life. There will be plenty of people who have hangups about making money...ignore them. You all have entrepreneurial spirit. I applaud you. - Anonymous

I am so glad that I got in on the ground floor. Yes, I took a risk with my $500.00 but thats a risk that could make me live in comfort for the rest of life. - CAMERON

Burnlounge will allow you to copyright your own music and sign a deal so you can sell your own music from your own store. Not to mention they have some of the biggest names in the industry invested into this company. Do some research. - NM

Burned

The name is appropriate. A lot of people are going to get burned by BurnLounge. The chances that your average Joe will sell enough on BurnLounge to cover the annual fees are slim to none. - Eric Hamilton

This company is a major scam, and I wouldn't be surprised if there is an FTC crackdown on them soon enough. - Jerimi

Burnloungers always try to come up with some half-baked argument, but in reality, all they see is that they can scam others into joining Burnlounge to take a piece of the $600 up front payment. - Tony Zeoli

I have been on BurnLounge for a few months now and its alot of hype. I haven't made a dime from my record sales. - Christopher Valdez

Burnlounge is a scam. And all of you that are supporting it are slimy people. Let me just say this again - Burn Lounge is HUGE pyramid scheme.. ...I drank the koolaid. I was sucked by 2 of my friends into joining at the mogul level. And have made a total of 50 cents in return. - Buyerof SnakeOil

...its way hard to make money off of downloads at only 2 cents per download- youd have to sell over 500 songs a month just to make back your monthly fees. - BlueFishTShirts.com

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Recent Posts

* BurnLounge - Still Ripping Consumers Off? (7/19/2006)
* XM asks for dismissal in RIAA suit (7/18/2006)
* Virgin targets newbies to digital music (7/18/2006)
* iPods in the workplace, security threat? (7/18/2006)
* Guerrilla marketing for bands, and it doesn't involve Myspace (7/18/2006)

Reader Comments
(Page 1)

1. LMAO! I've been involved in a few forums speaking on BurnLounge's "business model". First of all the cultish followers of Burn Lounge never seem to directly answer questions on how they will actually make money besides signing up other members or have any idea about ecommerce conversion rates, promotion and the like.

But yet if you speak out against the model,
1. you're a "hater" because they're taking a chance instead of sitting on the sidelines
2. they point out that there are major corporations putting money into BurnLounge so it can't be a scam

It's totally amazing the baselss argumentents these people use in defense of BurnLounge while dodging any real sort of mathematical questions about how they're going to make money!!

Across all of the forums on many different sites, they just keep repeating the same shtick. Like an online cult or something!

Posted at 8:50AM on Jul 19th 2006 by Musica360.com 0 stars

2. LMAO! I've been involved in a few forums speaking on BurnLounge's "business model". First of all the cultish followers of Burn Lounge never seem to directly answer questions on how they will actually make money besides signing up other members or have any idea about ecommerce conversion rates, promotion and the like.

But yet if you speak out against the model,
1. you're a "hater" because they're taking a chance instead of sitting on the sidelines
2. they point out that there are major corporations putting money into BurnLounge so it can't be a scam

It's totally amazing the baselss argumentents these people use in defense of BurnLounge while dodging any real sort of mathematical questions about how they're going to make money!!

Across all of the forums on many different sites, they just keep repeating the same shtick. Like an online cult or something!

I don't see BurnLounge as a company that will be in business for the long haul. MLM's don't last forever and once they become saturated the only ones who will have truly made any money are Burn Lounge from all the "moguls" who signed up and the very first ones who jumped in it and signed up a ton of people.

Digital Music and Virgin

Virgin Digital is targeting newbies to digital music in the UK with its new Virgin Digital Music Download Starter Pack. Includes inexpensive player.

The starter pack includes a low end player, five "free" downloads and "easy-to-understand" instructions. The player isn't exactly state of the art, but it does offer 256MB of space, a USB interface and ample amounts of Virgin branding, just in case you forgot where you got it from.

It's not a bad deal at £29.99, but I wonder just how many people that wouldn't be mp3 player owners will be enticed by the offering. Enticing or not for the technophobic, the Virgin starter kit is available now at Virgin stores in the UK.

source link

Background -- New Report on Digital Music

Digital, Mobile Music Revenues Top $1.1 Billion in 2005
Global trade group IFPI has just issued a bullish report on digital music, pointing to sales of 420 million paid downloads in 2005. That is more than double the level of downloads in 2004, and twenty times the volume in starter-year 2003.

Meanwhile, the report indicated that mobile music sales hit $400 million, bolstered by the increased adoption of 3G-based services and higher-quality ringtones. Subscription services are also seeing gains, moving from 1.5 million to 2.8 million subscribers last year. According to the group, overall sales of digital music formats accounted for $1.1 billion worldwide in 2005, or 6 percent of label revenues. Digital music catalogs have recently surpassed two million tracks on many services.

The IFPI review also approached sticky subjects like illegal file-sharing and DRM protections. Citing a survey across 3,900 European internet users by Jupiter Research and Ipsos, the IFPI claimed that legal buying is now as popular as peer-to-peer file-sharing in two major European zones, the UK and Germany. In those countries, the number of recurring legal buyers exceeds regular file-sharers by one-percent, per the data. The group also pointed to successful litigation and education campaigns, which it predicts will transform file-sharing into a fading threat. But converting P2P users into paying customers will be difficult, and the group conceded the file-sharing activity remains robust. According to the organization, the efforts "may not translate directly to a corresponding reduction in file-sharing numbers," and data within the report showed that the total available number of illegal files available online remained level year-over-year. Meanwhile, the IFPI remained supportive of DRM protection strategies, even in the wake of the disastrous rootkit imbroglio at Sony BMG. "The biggest challenge with DRM technologies is to make them operate smoothly enough so that they are largely invisible to consumers � and this remains a very significant problem in the current digital music market," the group observed.

European Synopsis

FPI European Digital Music Survey - Summary

A new consumer survey by IFPI1 shows that for the large majority of people in Europe, digital music - be it legitimate or illegal - is a new concept. Only 11% of European internet users swap files on P2P networks. Fewer, around 6%, regularly (i.e. on a monthly basis) download from P2P networks.

Legal downloading is clearly at an early stage in Europe. Only 6% of internet users have bought from an online music store, while 4% - less than one in twenty - does so regularly. Some 14% of internet users overall have downloaded music from either a legal service or P2P network.

LEGAL ONLINE BUYING IS CATCHING UP ON ILLEGAL FILE-SHARING

Legal buying is now as popular as P2P use in the two major European digital markets, the UK and Germany. Here the number of regular legal buyers exceeds regular illegal file-sharers (5% compared to 4% in both countries). File sharing penetration (again based on monthly activity) is highest in Sweden at 15%. Spain and France are in the next tier at 11% and 8% respectively of all internet users (France has the largest absolute number of file sharers). So in France, Spain, Sweden, more users go to P2P networks, but legal online buying is growing.

There is note on Executive Summary and also Facts and Figures.

European Synopsis pdf

Digital Music Report 2006 - Facts and Figures

Some selected Facts and Figures from the IFPI Report on Music in 2006

The Digital Music Report 2006 - Facts and Figures

19 January 2006

* Record company revenues (trade revenues) reached $US 1.1 billion in 2005 showing a threefold increase on 2004 ($US 380 million).

* Digital music (online and mobile) represents approximately 6% of overall music sales

* Mobile music sales are not far behind online, with revenues roughly split (60-40 as at H1 2005).

* 420 million single tracks were downloaded in 2005 globally - more than double the number downloaded in 2004 (156 million).

US: 353 million single tracks downloaded (up from 143 million) [Nielsen SoundScan]
UK: 26.4 million single tracks downloaded (up from 5.8 million) [OCC]
Germany: estimated 21 million single tracks downloaded (up from 6.4 million) [IFPI Germany]
France: estimated 8 million single tracks downloaded (up from 1.5 million) [SNEP]

* The number of users of subscription services, such as Rhapsody and Napster, increased from 1.5 to 2.8 million globally in 2005.

* Online song catalogues doubled to over 2 million tracks on the major services.

* Globally there are now over 335 legitimate online services, up from 230 in 2004 and 50 two years ago. In Europe alone the number of services reached 200 in 2005, up from 150 in 2004.

* Mobile sales in Japan totalled $US 211 million, or 96% of digital sales in the market, in the first nine months of 2005. Single track downloads reached 4.3 million during the period.

* Mobile phone subscriptions reached 1.5 billion in 2005 - a 50% increase on 2002.

* Globally there is an estimated 70 million subscribers to 3G. Jupiter estimates that by 2010 3G penetration will reach 60% in Europe.

* Satellite radio subscriptions reached over 9 million in the US alone - three times as many as the number of global subscription services users. Over 475 million people globally receive Digital Audio Broadcast services (DAB).

* The number of infringing music files available on the internet at any one time is estimated at 885 million. This is slightly up on January 2005 (870 million) but down compared to June 2005 (900 million). By contrast, broadband uptake rose by 26% in the past year. Total infringing music files are down 20% on the 1.1 billion peak in April 2003.

IFPI Digital Music Report - Executive Summary

Looking at the impact of music on a new wave of digital commerce. It includes a call to action to key partners to help address the key challenges confronting the digital music industry at the start of 2006.

IFPI Digital Music Report - Executive Summary

Syopsis
MUSIC - A KEY DRIVER OF THE DIGITAL ECONOMY

Introduction by John Kennedy, Chairman & CEO of IFPI looking at the impact of music on a new wave of digital commerce. It includes a call to action to key partners to help address the key challenges confronting the digital music industry at the start of 2006.

THE DIGITAL MARKET TAKES SHAPE IN 2005

2005 was a landmark year for digital music. Digital sales in 2005 accounted for approximately 6% of global music sales based on the first half of the year.

The legitimate digital music business has caught the imagination of consumers, sales have increased steadily and new service launches have accelerated to give shape to an exciting new market for recorded music.

This sections highlights the key milestones in shaping the future of the digital market and looks at developments worldwide

Key highlights:

* Digital is the fastest-growing delivery channel for music
* Single track downloads in 2005 more than doubled
* Online song catalogues doubled
* Digital music expanded rapidly across the world
* Apple iTunes extended its service to 21 countries worldwide
* Portable video was launched
* The mobile phone became a portable music device
* The world's first publicly available legal peer-to-peer (P2P) service iMesh launched in beta phase
* James Blunt topped Europe's first digital songs download chart in 2005

GETTING MUSIC TO CONSUMERS IN MORE WAYS

From a-la-carte and subscription to video and mobile, digital distribution formats have evolved and diversified in 2005, bringing music to consumers in more ways than ever before. This is set to continue in the coming year as business models continue to evolve.

Focus

* Distribution channels diversify
* Video boosts digital music services
* The record company investment
* The marketing opportunity
* Digital-only labels emerge
* The new digital intermediaries

MOBILE MUSIC SHOWS ITS POTENTIAL

Over the past decade mobile penetration has risen exponentially and, more recently, mobile handsets have evolved from a basic voice-based device to whole entertainment hubs, creating a new channel for music distribution. Mobile music is fast becoming an important revenue stream for record companies, already accounting for almost half of digital music revenues.

Focus

* Mobile music spreads globally
* From ringtones to 'real music'
* Music drives 3G
* The handset market
* The future of mobile music

IN THE PIPELINE: LEGITIMATE P2P, DIGITAL RADIO AND PODCASTING

A key focus for music industry today is to help make music available for the consumer in an array of innovative and flexible ways - just so long as it is properly licensed secure and paid for. As new technologies develop year on year, record companies have been working with entrepreneurs, technology providers and online services to help develop new opportunities, while making sure that right holders retain their right to determine the distribution of their creative works. 2005 has seen three exciting new developments progress: legitimate peer-to-peer (P2P), digital radio and podcasting.

Focus

* Legitimate P2P
* Digital radio
* Podcasting

MUSIC CONSUMPTION IS CHANGING
Consumer demand is the key to the successful evolution of the digital music market. This section looks at new IFPI research into consumer awareness and uptake of digital services in the past year across Europe. Key to the research findings is the fact that legal downloading is now on a par with illegal file-sharing in two of the largest digital markets, but attracting file-sharers to legal sites is a long-term challenge.

Focus

* New IFPI research spotlights the consumer
* Digital music versus the CD
* The power of portability

CONFRONTING THE CHALLENGES

In early 2006 a number of significant obstacles hamper the progress of the digital music market. These include the still very large problem of internet piracy and the need for more effective cooperation from Internet Service Providers (ISPs) in containing copyright infringement; the continuing lack of interoperability between formats and devices; and the emerging threat from unlicensed digital stream ripping.

Focus

* Internet piracy: the biggest obstacle
* Digital stream ripping: the next big challenge
* The call to ISPs

COURTS IMPROVE THE LANDSCAPE

For the recording industry, the business environment in which legitimate digital music has had to compete with mass-scale unauthorised free music is improving rapidly. The message sent by the courts has been clear. Operators of unauthorised P2P networks and websites searching for 'piracy havens' can be held liable for music piracy.

Focus

* Courts rule against illegal P2P
* Shutting down 'piracy havens'

CONTAINING ILLEGAL FILE-SHARING

A thriving digital music business means containing piracy. In 2005 the music industry widened its campaign of deterrence against illegal file-sharing, nearly tripling the number of legal actions to a total of some 20,000 cases in 17 countries. Targeted education campaigns also played a critical role in raising awareness and changing consumer perceptions. This section asks whether the industry's efforts are yielding results by looking at the latest file-sharing figures in the context of the rise in broadband penetration.

Focus

* Deterrence: legal actions against individual file-sharers
* Education
* Is the fight against piracy working?
* Changing attitudes

DRM & INTEROPERABILITY: THE KEYS TO FUTURE GROWTH

Digital Rights Management is an essential tool, helping to increase consumer choice while protecting the works of music creators from unauthorised distribution and unfair use. They are digital enablers, not merely locks and keys. The biggest challenge with DRM technologies is to make them operate smoothly enough so that they are largely invisible to consumers - and this remains a very significant problem in the current digital music market. Meanwhile the incompatibility of DRM systems has created a situation where digital services and devices do not inter-operate, hindering the future development of the digital music business.

Focus

* The challenge for DRM
* Interoperability: a key priority

WHAT DIGITAL MUSIC OFFERS THE CONSUMER

What online and digital music offers the consumer at a glance.

U.S. McDonald's guests no longer able to burn music on in-store kiosks

OAK BROOK, Ill. (Dec. 8) - McDonald's Corp. has halted a test of in-store kiosks where customers can burn music onto CDs, print out photos from digital cameras, or download ring tones. A spokeswoman declined to say why the test was discontinued, asserting in an e-mail that "customer feedback has been very positive." The devices continue to be tested by McDonald's in Germany, she said.

McDonald's, which operates or franchises 30,000 restaurants worldwide, commenced the domestic test in May at a unit here that was touted as the chain's new flagship.

From Restaurant News

iTunes Phone and iTunes Nano Introduced

Apple has finally unveiled its iTunes-enabled phone. "You've probably heard about this," quipped Steve Jobs at an invitation-only unveiling in San Francisco. The device, manufactured by Motorola and named ROKR, will be carried by Cingular Wireless in the US.

Additionally, various other mobile operators will carry the device outside of America, including British carriers O2, Orange, Virgin Mobile, and BT Mobile. "The Motorola ROKR represents the ultimate convergence of mobile communications and music," said Ed Zander, chairman and CEO of Motorola. "Fusing iTunes with your always-with-you mobile phone, we're revolutionizing the way the world experiences mobile self-expression and entertainment."

The device will allow consumers to port up to 100 tracks from their PCs. The phone will come with stereo speakers, headphones, and dedicated music keys, and will automatically pause the music during a call. Rollouts are expected later this month in the UK, France, Canada, Italy, and Hong Kong. Releases are then expected in the fourth quarter in Australia, Singapore, Philippines, Argentina, Brazil, Mexico, and other markets. A long list of superstars will kick off an advertising campaign this week, including Madonna, whose entire catalog is now available on iTunes.

While most of the attention remains focused on the recently-unveiled iPod phone, Apple has also introduced another addition to its iPod line. The nano, a tiny player that is thinner than a #2 pencil, will now take the prize as the smallest iPod available. But even though it is about half the size of many competing players, the device delivers an impressive 4GB storage capacity. The price tag on the device will be $249, and a 2GB version will also be available for $199. �iPod nano is a full-featured iPod in an impossibly small size, and it�s going to change the rules for the entire portable music market,� said Steve Jobs. The nano weighs about 1.5 ounces.

The nano is sleek, light, and absolutely tiny. The device comes in either white or black, offering yet another twist on the famous player design. That will help to entice more buyers, especially ahead of the holidays. Now, Apple is hoping to widen its considerable lead in the space, offering little breathing room for competitors like Samsung, Creative, and Sony. Meanwhile, the iPod lineup appears to be getting a bit crowded, with the nano flanked by both the screenless shuffle and the mini. That could cause some internal cannibalization for Apple, with the nano delivering a comparable storage capacity to the mini in a smaller size.

FYE Offers Digital Music Service, In-Store Kiosks

Music retail giant Trans World Entertainment has recently launched a subscription and download store for its FYE chain.

The company will offer a catalog of 1.2 million tracks, and deliver downloads for 99-cents each. On the subscription end, a tethered service is available for $8.99 a month, while a portable subscription option is offered for a $14.99 monthly fee.

The company will also be experimenting with in-store download kiosks, allowing customers to sample tracks and download them on the spot. The kiosk rollout is slated to begin next month.

Music and Entertainment Week in Review

The most interesting digital music news items for the week.

The biggest news this week came from Japan, with the iTunes Music Store crossing one million downloads after just four days. The intensified a stalemate with Sony, which refuses to license its tracks to Apple.

Meanwhile, the US Patent and Trademark Office (USPTO) issued a non-final rejection to Apple on a submission detailing the iPod user interface. The USPTO pointed to an similar patent submitted earlier by a current Microsoft researcher.

Following a substantial payola settlement involving Sony BMG and New York attorney general Eliot Spitzer, the FCC has now opened its own investigation into the matter.

Clear Channel continued to advance its plans to spin off both its outdoor and live business units, eventually creating three, separately-traded business groups.

Online media monitoring firm BigChampagne finalized a data-sharing deal with AOL Music. And at Music 2.0 in the Bay Area, Sony BMG Executive Thomas Hesse pointed to new digital music concepts like release windowing and varied pricing, while also placing a greater emphasis on new formats like ringtones.

In the financial world, Loudeye posted strong revenues while also suffering deeper quarterly losses. And Creative also suffered a disappointing quarter, with heavy pricing pressures and a write-down in inventories causing net losses, despite increased unit sales.

Music Label Market Share Numbers

Global recording industry trade group IFPI has released its latest annual report, with Universal Music showing a dominant market share. According to the report, Universal grabbed a 25.5 percent share of the market last year, a percentage that has increased in 2005.

Meanwhile, Sony BMG grabbed a 21.5 percent share, followed by EMI at 13.4 percent and Warner at 11.3 percent. Meanwhile, the independent sector continued to show remarkable strength with a 28.4 percent piece of the global pie. The figures are contained in the IFPI's 12th annual Recording Industry in Numbers report.

Other trends were notable. The group recently started tracking revenue from performance royalties, a rapidly growing sector. Royalties topped $493 million in 2004, a 4.5 percent increase over 2003 and a 19 percent jump over figures from five years ago. While those totals include revenues from restaurants, hotels, and traditional television and radio outlets, new technologies like webcasting are also increasing total earnings.

Elsewhere, the IFPI continued to trumpet a recent increase in global paid downloads, which reached 180 million units for the first half of this year. And overall, CD buyers appear to be getting older, with 55 percent of discs purchased by those over the age of 30, a steady increase over figures from 5 years ago.

Source: DigitalMusicNews

Burning CDs at Concerts

This is ground zero of one of the newest markets for rock and pop music: instant concert CDs, mixed on the fly by the engineer, copied, and then distributed just 15 minutes after a show as an instant souvenir that has more substance than a T-shirt or commemorative program.

Source - toledoblade.com -

The ultimate concert souvenir
Before the last notes have faded, instant CDs are made and sold
Photo
Many in the audience at the Allman Brothers Band concert earlier this month at Toledo's Stranahan Theater ordered CDs of the concert and picked them up after the show.
( THE BLADE/ANDY MORRISON )
Zoom

By ROD LOCKWOOD
BLADE STAFF WRITER

Backstage at the Allman Brothers Band�s concert a few weeks ago at the Stranahan Theater, there was the usual hubbub and focused preparations a half hour before show time.

Gregg Allman, clad in sweat pants and a T-shirt, walked in a back door with a woman carrying his stage clothes. Guitarist Warren Haynes, smaller and less husky than he appears on stage or in pictures, strode through quickly, brow furrowed with a sense of purpose etched across his face as he ducked into a side room. Roadies scurried around in a business-like hustle to make sure everything was ready to go.

And in a control room just off stage left, a nervous engineer sat behind a sound board, fretting over the fact that just a few dozen feet away several hundred people among the 3,000 or so at the show had paid $25 on faith that he would do his job properly with brand new digital equipment.

This is ground zero of one of the newest markets for rock and pop music: instant concert CDs, mixed on the fly by the engineer, copied, and then distributed just 15 minutes after a show as an instant souvenir that has more substance than a T-shirt or commemorative program.

With technology owned by entertainment giant Clear Channel Communications, the process is popping up in concert venues across the country as acts as diverse as Jewel, Hall and Oates, the Charlie Daniels Band, Black Crowes, and the Allmans feature it at shows this summer.

�It�s a piece of merchandise that is unique to that show,� said Stephen Hall, project manager with Instant Live, the Clear Channel-owned firm set up at the Allmans concert. �What we are doing is saying, �You were at this show, and now you can listen to it on this CD.��

For Scott Smelcer of Monroe, the CD was a chance to fill in the first hour of the Stranahan show, which he missed, and hear a better quality performance than the actual concert. While the band played with their typical combination of bluesy, jam-band fire, the mix in the hall was too loud, making Allman�s vocals indecipherable.

�The concert was kind of muffled and drowned out, but the CD and recording itself was unbelievable,� said Smelcer, who popped the disc in his car stereo before he left the parking lot.

Jeremy McCoy of Perrysburg also listened to his copy of the three-disc set immediately after the 2�-hour show, and was more critical of the CD�s sound.

�The quality of the recording isn�t real crisp, but it sounds OK,� he said. �You can tell the different instruments more distinctly, but you�ve really got to turn it up if you want some volume.�

Still, he�s �literally dissected� the overall sound and performance, comparing it to his memory of the actual show and what he hears on the discs later. �I�ve listened to them in their entirety three times and I always find something different in them. I�m glad I�ve got them,� he said.

Trend setters

While there�s nothing new about live albums � seminal works like James Brown�s �Live at the Apollo� or The Who�s �Live at Leeds� are considered classics � very few concert-goers ever get to hear the show they attended. Bootleg recordings made without the artists� consent have been around forever, generally recorded by audience members with a sound quality that can be mediocre at best.

Other variations on the live recording have popped up over the years. Pearl Jam recorded its entire 2000 tour, releasing the discs months after the show. And jam bands like the Grateful Dead have always encouraged fans � known as �tapers� � to record their concerts.

Photo
Crew members burn CDs of the group's performance and place finished copies into cases for sale to concert-goers.
( THE BLADE/ANDY MORRISON )
Zoom

Hall said Instant Live�s approach is an extension of those concepts while giving the bands an �alternative stream of money� that amounts to about $10 per sale. Multiply that times the 250 CDs sold at the Allmans show and you have $2,500 in the band�s pocket in addition to ticket sales.

�In this day and age with downloads and free music on the Internet, artists get less and less control of the quality of the product out there,� Hall said.

His perspective was echoed by Ray Waddell, senior editor/touring with Billboard magazine, who noted that Instant Live and another firm, DiscLive, are producing high quality products that legitimately boost bands bottom lines.

�It�s another form of merchandise, another revenue stream for the artist and something for a fan to take home with him other than just a memory,� said Waddell, who tracks rock and pop tours for the influential music magazine.

The bands that contract with Instant Live control the process, Hall said, and if they want to allow tapers at their shows � something many of the jam bands encourage � then the company leaves them alone. �The band is our client and we only go as far as they want us to. We never reach our arms over them,� he said.

How it works

The recording process is deceptively simple. The Instant Live team travels in separate vehicles with the band, bringing along an engineer, sales manager, and someone to duplicate the CDs, and hiring local people to help do the legwork at the venue.

A high-tech mixing board is set up and the sound from the show is fed directly to the engineer, who mixes it literally as the show is taking place. After about an hour he burns a CD that is then hustled out to a team that duplicates it.

In the bowels of the Stranahan, that job fell to Joshua Boine, an Instant Live duplicating production manager who stood before a series of CD burners that could record 105 discs at a time. He supervised a couple of locals who fed the discs into the burners, which would spit them out in a few minutes to be loaded in no-frills packaging.

The timing is set up so that the first couple of hours are done as the concert is taking place. As soon as the last notes of the show fade and the band walks off, the final disc is burned in about 15 minutes and everything is ready to be sold.

Clear Channel bought the patent to the process two years ago, and some people in the music industry have expressed fear that the firm would wipe out any competition.

The manager of the band String Cheese Incident, Mike Luba, fought with Clear Channel in 2003 when promoters prevented the band from using its own CD-burning equipment, according to Rolling Stone.

�It�s one more step toward massive control and consolidation of Clear Channel�s corporate agenda,� Luba told the magazine.

Hall insisted that Instant Live works directly with the bands, and said if a group is playing a Clear Channel venue and wants to use other technology it can, as long as it doesn�t violate the company�s patent.

He also said the firm, which makes the discs from the show it records available for sale on its Web site (www.instantlive.com), won�t stop bands like The Who or Pearl Jam from making available live discs just days after a show.

Started in February, 2003, Instant Live hasn�t been around long, and Hall said the company is �retooling� to reach more venues and sign more artists, which means concert-goers could see the kiosks hustling the CDs at a lot more shows in the future.

�It�s been around for a few years but it�s still a relatively new concept,� he said. People are still opening their eyes to it.�

Music Video Catching Up To MP3s

Universal Music Group has inked another video licensing deal, this time with the reincarnated MP3.com. The re-treaded music destination, now part of CNet Networks, Inc., will soon deliver hundreds of Universal videos on-demand and free of charge.

As part of the deal, MP3.com also scored an exclusive remix video from 50 Cent. Meanwhile, MP3.com sister site GameSpot will feature an
exclusive interview with the rapper, who will discuss his new game, 50 Cent: Bulletproof. That content is already being heavily promoted throughout the CNet destination, which reports a reach of 25.5 million.

For MP3.com, the new videos offer a nice content addition, with 50 Cent sure to deliver a spike. For Universal Music, the move is part of a growing string of deals with internet video outlets, and follows larger negotiations involving AOL, Yahoo, and MSN. While those outlets could once rely on free video content, a surge in broadband penetration and multimedia interest have caused majors to now charge for their videos. That is a major shift from previous thinking, with top executives uninterested in replicating their promotional-only MTV relationship online. Now, smaller destinations are coming to the table, with UMG recently finalizing a deal with online video outlet Singingfool.com.

Source: Digital Music News

Smallest iPod Yet Shown on NY Times?

TGIF News:
Video satire of fictional new iPod Flea product release (smallest iPod yet) on NY Times. The "extra accessories" bag with power source is a nice touch.

Entertaining.
See video here

Apple Reports Results - iPod Shines

The music business and Apple seem to agree given their latest financial results. Earnings over last year increased 425% (not bad...) and Sales surged 75%. The iPod device proved to be the highlight.

Apple said it shipped 6.16 million iPods during the quarter ended June 25, a 616% increase from a year ago. Sales of the device totaled $1.1 billion -- up more than fourfold -- and thus accounted for almost a third of the company's total revenue. "The iPod numbers came through yet again,"

Interview with Music Kiosk Pioneer

Interview with Shervin Rashti of Touch n Surf on the Burn A Song self-service music download burning kiosk. Major distribution agreement hinted at in next few weeks.

Source: KioskCom.com Website

Burning a Revolution in Music

By Rick Redding

You say you want a revolution? That�s what Shervin Rashti believes his Burn A Song kiosk is bringing to the music business. That�s why he and his associates at Los Angeles-based Touch N Surf set out on a path two years ago to build a kiosk for burning CDs, and eventually distributing all sorts of media.

The Burn A Song kiosk finished second at the 2005 KioskCom.com Awards in the category of Best New Deployment, Small Deployment. Rashti, who co-founded Touch N Surf with his father Jacob, believes his patience in dealing with the requirements of record label executives is about to be rewarded.

He said Burn A Song won�t qualify as a small deployment long, as he expects to have 100 of the kiosks in place this year, and more than 1,000 in locations such as electronic retailers, grocery stores, universities, malls and convenience stores by the end of 2006.

In a July 5 interview, Rashti said he expects to have a major distribution announcement later this month.

Without doubt, Rashti said the biggest hurdle has been getting agreements from the four major record labels to license musical content. Burn A Song is the first to obtain such an agreement, and he expects to have all of the labels on boards very soon.

�It has taken 14 months,� he said of his quest to obtain agreements from the four major record labels. �It�s taken a lot of meetings and stringent requirements. They�re big on security, and they have to OK your whole business model.�

Rashti says that in the near future customers will be able to find and download music from the four major labels � Universal Music Group, SONY/BMG Music Entertainment, EMI Group and Warner Music Group � on Burn A Song kiosks. They�ll be able to use the kiosks to compile their own CDs. But more importantly, customers will be able to find and purchase out-of-stock recordings through the kiosk.

�We saw this vision two years ago,� Rashti said. �We saw the need and the pain involved in the distribution of music. Retailers can�t offer the shelf space, and consumers can�t get the solution.

�We�ve put a major store into a 2 by 2 box. That�s revolutionary,� he said.

An industry-leading publication, Billboard, discussed the kiosk�s role in helping music stores reduce physical inventory. A May 21 story about CD-burning kiosks included this quote from record industry executive Gene Fein. �A lot of labels are eliminating low-turning albums from their catalog, and retailers are taking them out of their inventory anyway. We don't think this is going to replace traditional manufacturing, it will complement it.�

The Burn A Song kiosk is manufactured by Kiosk Information Systems, which has several clients pushing to be included in an increasingly crowded market.

�They�re the first group to secure major label content,� said Tom Weaver, vice president of sales and marketing for the Colorado-based firm. �This application is still in its infant stages. The biggest issue is content. Indy labels are available, but the question is would anybody buy it?�

In fact, Business Week reported on June 20 that a CD burning station, Hear Media, with a catalog of 150,000 songs available, has been a disappointment for Starbucks. Tested in 45 stores in Austin, Texas and Seattle, the early results show customers aren't buying CDs. Still, the chain told Business Week it would roll out the machines eventually to 30,000 stores.

Weaver said very few similar CD burning deployments have reached the marketplace, though there are many competitors. KIS, in fact, believes digital media downloads, including CD burning, will become a major channel/sector for the kiosk industry.

And while the Burn A Song kiosk is poised to stir a music revolution, Rashti says it�s only the beginning in terms of product that can be offered on the kiosk. Ring tones, photos, even movies, are part of his vision of the future.

�Other things are definitely coming,� Rashti said.

Strong Lattes, Sour Notes at Starbucks Music Download Stations

Doubts come to surface again on whether or not the Starbucks equation is working and/or will work for music download stations and kiosks.

BW 50: Strong Lattes, Sour Notes at Starbucks
Starbucks' adventures in media bars aren't playing out as planned

For Starbucks Corp. (SBUX ), the success of upstart folk rock band Antigone Rising couldn't be more delicious. The girl group's debut album, From the Ground Up, was promoted by Starbucks and for now is only on sale at the coffee shops. It's doing well: 35,000 CDs in its first three weeks. The New York City band has been deluged with requests to appear on late-night TV and music cable shows.

But Antigone Rising is one of the few sweet notes in the company's effort to blend coffee with music. Its new Hear Music media bars, which let customers burn CDs at Starbucks shops from a digital library of more than 150,000 songs, have been as disappointing as a tepid latte. And its broader goal of, as Starbucks Entertainment CEO Ken Lombard puts it, "transforming the way music is discovered and delivered" seems like marketing froth so far. This is Starbucks' most ambitious attempt yet to become known for something more than java, and a stumble could ding one of the world's best-known brand names.

That said, for all of its talk, Starbucks isn't necessarily looking to make big money in the music business. CIBC World Markets' (BCM ) restaurant analyst John Glass estimates that Starbucks' annual revenues from the music bars could add up to $120 million at most, or just 3% of the company's $4.5 billion in U.S. retail sales. Glass figures Starbucks breaks even if customers create 1,600 CDs annually at each store. That would add between 4 cents and 7 cents to earnings per share. Even the success last year of Starbucks' multiplatinum Ray Charles album, Genius Loves Company, earned the company more buzz than anything else. Same goes for the Starbucks music channel it launched on XM (XMSR ) satellite radio last year.

OFFICIALLY UPBEAT
Starbucks is investing cautiously enough that any impact would be minimal should this prove to be another ill-fated attempt to sell something else, anything else, with the Starbucks name on it. Indeed the company is in a position to take some risks: It enjoys a 10.6% operating margin, and its shares are up 34% since the beginning of the year.

So what's really at stake here? Chairman Howard Schultz's deep conviction that Starbucks can be different from other retail chains: that it can offer people a place to do the things we spend much of our time on these days, such as connecting to the Internet and downloading music.

Despite evidence that the CD-burning service isn't doing well at the 45 test shops in Seattle and Austin, Tex., set up last fall, Starbucks is officially upbeat. It plans to roll out more media bars this year and expects eventually to have them in up to two-thirds of its 4,500 U.S. stores. "Our excitement is as high, if not higher, than when we initially launched our strategy," says Lombard.

The reality isn't so exciting. Hear Music insiders say the response at the stores in Austin -- a college and live-music town -- has been disappointing. Even in Starbucks' home city of Seattle, few customers were listening to the music during recent visits to four stores with media bars. During several hours at each of the four spots, only one CD was burned.

The Austin experiment could be a sign that Starbucks is misreading its customers. The city is full of tech-savvy music downloaders who carry iPods, not portable CD players. Digital music these days means MP3 file mixing and sharing, and that's not in the business model yet, says digital music analyst Josh Bernoff of Forrester Research Inc. (FORR )"Starbucks is not going to be a significant contributor to the music economy."

Besides the unproven premise that customers want to download music at a coffee shop, Starbucks' fees are high. It costs $2 to use the media bar, $8.99 for the first seven songs, and then 99 cents per song. Apple Computer Inc.'s (AAPL ) iTunes Music Store charges just 99 cents a song, and Wal-Mart Stores Inc. (WMT ), just 88 cents.

rest of story

McDonalds Blaze Net in Chicago with Music Kiosks

A chicago writer makes the trip to the local test McDonalds and writes up the latest kiosk techonology test by McDonalds. This is the US test with the previous one done in Germany rumors have it.

The best guess as far as effectiveness is that the music download kiosks result in close to 15% revenue increase for the restaurant in normal terms. That's a significant revenue increase.

Read more on MTV

Followup to Ed Christman Billboard article

Last week we posted nice article by Ed Christman on music kiosk business. Within the billboard article were two sidebars which did not show up in the electronic logs.

By Ed Christman of Billboard
Burning Question: Full Albums or Compilations?

A key debate is shaping up over whether the machines should be used for creating song compilations�as many label executives believe�or for manufacturing out-of-stock albums.

Do you burn a deep catalog album and make a lot of money, or do you do the customized compilation as most expect.

The kiosk model can't be dependent on "five to 10 customers a day making their own compilations," MICS president Gene Fein says. "That is not a business."

Supply chain issues enter into the equation and the article goes on to present two different point of views, both of which are valid.

Copy Protection: Not An Issue Yet

Copy protection at the CD level (and with GE media) is still not an issue at the kiosk level but copy protection to a mobile device is definitely on the radar (and mandatory).

One of the problems is that the labels would like to use Janus DRM from Microsoft however most of the portable devices do not support it. That's a dilemma.

Plus Microsoft still requires a personal computer to unlock the mobile device (less than optimum).

We get to wait...

Acquisitions in Music

InternetRetailer.com - Daily News for Friday, May 20, 2005 Muze was bought today by Enterprise Partners Venture Capital. Muze has one of the largest repositories of music metadata of anyone. Enterprise plans to aggresively expand Muze's market in retail websites, stores and kiosks. Terms not disclosed.

Reuters Feature on CD Burning Kiosks

Feature on how red tape and the music labels are making it hard for CD burning kiosks to succeed. The labels all have their different requirements. The growing trend for independent music and more relaxed requirements from smaller labels is not covered. Good story.

Red tape could kill stores' CD-burning kiosks
Sun May 15, 2005 07:53 PM ET

By Ed Christman

NEW YORK (Billboard) - The concept seems great: Place CD-burning kiosks that can manufacture out-of-stock albums in retail stores and offer customized compilations, too.

But after numerous false starts, retailers, hardware suppliers and the major labels say a quagmire of issues still threatens to overwhelm the initiative.

Even with the momentum of Starbucks leading the way with Hewlett-Packard kiosks, and despite numerous other hardware suppliers flocking to stake a claim in the market, retailers say that in-store CD manufacturing still has one big problem: an unprofitable business model.

Key to the equation are significant hardware costs and stringent content-usage requirements from the majors.

Installing a CD-burning kiosk in a store can run $18,000-$35,000, hardware suppliers and retailers say. The actual cost depends on which hardware supplier is chosen and how many viewing screens or tablets are placed with each machine.

The machines also require software systems to manage in-store CD burning and provide accounting. These systems add thousands of dollars in costs.

Still, at least a dozen hardware suppliers have licensed music for kiosks or are in talks to do so, and more are popping up every day.

While all parties agree costs could decline if CD-burning kiosks are mass produced, other expenses still have to be dealt with to achieve a profitable model.

As it turns out, each major label is licensing music for kiosks with its own set of strings attached.

For example, Universal Music Group wants kiosks to use only special blank CDs sold by General Electric that, depending on who you ask, cost two to five times as much as normal blank CDs.

And EMI Music wants the cover art printed on paper to be installed as the front sleeve of the jewelbox. Another major is said to have limitations on when and how much music can be made available for in-store burning.

"Each content company has its own set of rules, which when explained makes sense. But when you put them all together, it's a mess" -- and an expensive one, Mike Dreese says. The CEO of Brighton, Mass.-based Newbury Comics is a member of the CD-burning task force of the National Assn. of Recording Merchandisers.

A Feb. 24 meeting in New Orleans that brought together merchants, hardware suppliers and labels to discuss CD-burning kiosks was an eye-opener for all, as each camp aired its issues.

Following that meeting, NARM's task force created a 52-item punch list that could facilitate the CD-burning initiative. It was delivered to the majors April 1 for review. NARM spokeswoman Susan L'Ecuyer declines to comment on the list, which she describes as "preliminary."

Nevertheless, task force member Ish Cuebas, director of merchandising operations at Trans World Entertainment, says, "I see signs that retail can make this a business, but we need cooperation from the hardware, software and content people."