[Music Monday] The Darker Side Of Digital Music

Many people are not aware the complex structure that sits in what is vaguely known as "the music industry". For many people, what is seen through the media is the musician, artist or songwriter (albeit not as often), and sometimes a mild mention of the music label here, a record producer there, and sometimes the supporting musicians of  a certain album. But actually, a clockwork between songwriters, publishers, record producers, music labels, distribution channels, artists, and countless other people and bodies are involved in an intricate (and often confusing) dance. So, what happens if that clockwork breaks down?

Yet again it was somehow much simpler in the pre-digital days of music, and even that balance was struck after years of haggling, negotiation, and corporate maneuvering. The publishers represent the songwriters for anything to do with duplication (duplication of the song to any medium, of which they get 'mechanical' royalties), and synchronization (the use of a song in sync with any sort of other media, i.e. TV commercials) and make sure the songwriters get a good deal. The record labels basically invest in making albums and building artists, and take the lion's share of profits from album sales. The distributor - the CD store and any go-betweens - make money from distributing the music products, and public performance collecting societies, usually representing the songwriter also, collect royalties from any company or body that uses songs for public performance, i.e. for TV broadcast, radio, karaoke, hotels, restaurants; anything where the establishment using the music gets an indirect benefit (more viewers, more customers, etc). Things more or less stayed in balance and any issue was discussed between the industry-level associations.

Read the rest of the post on Dailysocial.

[Music Monday] Revisiting Indonesia’s Copyright Law

Indonesia is a democratic country, at least by principle. Well, at least, the word “democratic” doesn’t come with quote marks anymore, as it did during the time of the New Order. Now, a democracy will either vote or discuss on everything, or appoint representatives to do all the voting and discussing, and thus deciding on whatever is going to be enacted into law, to be followed and safeguarded by the executive branch (just to remind you, this means the President and his government). Now what does this have to do with the digital music business? The law, that’s what.

Being basically a content-based business, the music industry is highly influenced by copyright laws – how the government sees the issue regarding copyright and how it thinks it is best implemented. And of the million things that need regulation in the country, Indonesia’s most recent copyright law was signed into law in 2002, under President Megawati Soekarnoputri. Albeit according to some still lacking in some areas, the upgraded legislation added some much-needed law protection for works of cinematography to computer programs, as the earlier version of the copyright law was signed into law in 1979.

Read the rest of the post on Dailysocial.

[Music Monday] Taking OpenEMI's Torch And Taking It Further #unresolved

On April 22-24, 2012, a conference aptly named Rethink Music was organized by the Berklee College of Music in Boston. They basically brought together professionals from all over the music industry - from media, from the music labels, from artist management, and even from technology companies like Youtube, Rhapsody and Echo Nest (you can look at the whole speaker roster here). But one of the most interesting things announced and discussed at Rethink Music, in my opinion, is OpenEMI.

The basic concept of OpenEMI is to provide access to startups who want to create music applications and services based on EMI's music library - and if the app is interesting enough, EMI may partner with the startup to develop it further. You can either request for a access to a wide range of songs, or request deeper access to single artists with more audio, video and other content. This developer-friendly system is supported by Echo Nest, the company that also has a wider-range API for music applications that power services like Spotify's Radio feature.

Read the rest of the post at Dailysocial.

Why You Should Care About Ringback Tones #unresolved

For many in Indonesia, the ringback tone is somewhat of a controversial issue; drawing the ire of many, and polarizing related industries into an almost "for-and-against" situation. But not too long ago, ringbacktones were the craze of the moment and the darling of the music industry (and remains the darling of the music industry, depending on who you ask). And not only the music industry - the soaring growth of the ringbacktone market was one of the first indications that Indonesia, as a digital content market, is simply different from other countries and plays by different rules.

I have been writing about how music startups have actually been around in Indonesia for the past 6-7 years or so, and I felt if fitting to dedicate the last post in the series to discuss the ringback tone. Popularized in Korea to replace that boring connecting tone when you wait for the person on the other end to pick up your call, ringback tones (also known as 'color ringback tones', as they added 'color' to your ringback tone), the technology was imported into Indonesia in 2004 where both Indosat and Telkomsel started building their ringback tone services and offered them to the public later that year. The telecommunication companies approached the music labels to obtain attractive content for these services; negotiations took place, and business deals were agreed which were to define the business model for ringback tones across the industry.

 Read the rest of the post at Dailysocial.

[Music Monday] Actually, Music Startups In Indonesia Have Been Around For A While (Part 1)

What is a startup, actually? And in the context of DailySocial, what is a tech startup, anyway? According to Wikipedia, a startup is a “company or temporary organization designed to search for a repeatable and scalable business model”. The article goes on to describe that “Startup companies can come in all forms, but the phrase “startup company” is often associated with high growth, technology oriented companies. Investors are generally most attracted to those new companies distinguished by their risk/reward profile and scalability”. You can read the whole thing on the link provided, but I think I’ve put the key definitions here. And I think most people would add “under 3 years old” to that criteria.

Now, with all the attention that tech startups have been receiving the past year, a quick look at the theStartuplokal.org Showcase shows a small smattering of music startups, some defunct, some only having a beta signup page, and some not live at all. Although I agree that it the list is less than comprehensive, it shows that at least music startups have largely gone unnoticed by the recent wave of media attention towards startups in general. If you don’t believe me, try an internet search for music startups in Indonesia, and see where that gets you.

Read the rest of the article at Dailysocial.

[Music Monday] How Going Digital Can Help Music Licensing

Recently, many people have been talking about the so-called "future of music', on how the music industry and/or the musicians can make money from music. A lot of focus has gone into mobile music offerings, music download services, and the music streaming services much heralded to be the "next big thing". They're all basically consumer-facing businesses, where the services - and the music companies partnered with them - attempt to monetize their music library direct to the music-loving consumer.

The music licensing aspect, however, is not talked about much, and even less understood.

Read the rest of the post on DailySocial.

What Lies Ahead for Digital Music Industry in Indonesia

After reading Aulia's post, I felt that I needed to add to it with some more facts and insight, and throw in my own opinion about the much-discussed yet perceived-as-slow-to-develop  state of the music industry's move to the digital medium in Indonesia.

Let's get through some points in the article first:

• most of the music labels work directly with the telcos to provide music content; and some content providers either aggregate content for smaller music labels, or develop their own artist roster to further capitalize the business potential of RBT.


• The RBT service itself uses premium SMS to charge customers, because it's the simplest way to do it. But the system itself differs than standard premium SMS services, because where usually premium SMS services have servers that sit at the content providers and route through the telco charging system, RBT systems are installed on the telco side.

Read the rest of the post on Dailysocial.

What's The Next Step For The Music Industry?

This article originally appeared in Rollingstone Indonesia magazine edition 871 (October 2011) in Indonesian. This is the English translation of that article.

A few months ago there was a rumor that the popular file-sharing site, 4shared, would be blocked in Indonesia, as part of the Ministry of Communication and Informatics to stop digital music piracy through that site. Although the rumor turned out false, it brought the issue of digital music piracy back to the surface. The question is, what is the correct course of action?

At the end of July 2011, a rumor that 20 popular music blogs and websites were to be shut down by the Ministry of Communication and Informatics; when actually, the associations of music industry companies supporting the 'Heal Our Music' had sent an official letter to the Ministry regarding this, which was also spread to the press. At the time of writing, there has been no action from the Ministry towards these sites.

This is a sign of the times, something with an apparent long history.

The recorded music industry that we know today, grew from the commercialization of music products through vinyl records. The music that we enjoy could only be heard through a live performance, or the purchase of a vinyl record (and in turn, cassettes and CDs). The recorded music industry had a stranglehold over music distribution, because access to music was limited to a physical product, in the form of vinyl records, cassettes or CDs. A relatively perfect business pattern was shaped - an industry structure that sold all kinds of music, in relatively equal formats and prices, and could be maintained indefinitely; as long as market conditions did not shift.

The Wars On Intellectual Property Rights - To What End?

In one of the largest acquisitions - ever - in world history, Google buys Motorla Mobility for USD 12,5 billion. Now that's a lot of chilli sauce. I will not get into the details as there are probably already a record number of articles out since the press release until today, reporting, analyzing, cross-analyzing, and so on. You can grab a news feed here.

What Rafe Needleman of CNET says in his article, however, caught my attention:

The accumulation of patent portfolios into a smaller number of bigger players, which themselves are locked in a deadly standoff, has the real potential to slow down the pace of innovation. Which is precisely the opposite reason the patent system was created.

As I have mentioned in a previous blog post, the current pace of technological advances and the multitude of ways one can enjoy music (read: entertainment) is already calling for some sort of reform of copyright and/or copyright enforcement. Instead of limiting the consumer experience to what copyright law dictates is applicable for some sort of revenue calculation to benefit the copyright holder, shouldn't it be more flexible? Perhaps we all should sign up for Creative Commons, instead of locking our copyrighted work to companies who simply need to limit entertainment channels for better control of profits?

The escalation of patent wars in the past few weeks, currently climaxing with the H-Bomb Google decided to drop on their partners (and harried news editors), shows something else is wrong with the current state of IPR. As Mr. Needleman pointed out and going on a tangent on that, IPR was basically set up so credit is where credit is due, whoever creates or invents can benefit from their work, encouraging more innovation, and creators/inventors/innovators everywhere are encouraged to work more with the comfort of knowing that their work will be worthwhile.

Now IPR has become an offensive weapon: RIAA lawsuits; Apple blocking Samsung tablets; the sordid case of Intellectual Ventures and the like. The merit-based system that IPR is based on, basically bit itself in the ass because patents (and copyright) can be bought and sold, enabling those with the most money to get whatever IPR they want. Currently IPR is at a premium, which is a boon to the IPR industry, but at what cost to the average consumer? Do these IPR weapon silos actually push innovation or inhibit it? These large companies are buying up giant stores of patents to protect themselves from litigation - but what about what comes next?

Hey, I don't even know how many patents, belonging to how many parties, are inside the whole package of hardware and software of my smartphone. I assume that all parties are paid with a royalty scheme. Which is good, and the way it should be.

But will these patent wars stop us from getting the best technology we want or need?

Video Piracy and Copyright Enforcement Reform

As part of my job, I have been scouring the Internet looking for illegal uploads of movies produced and released by my company. It seems that here in Vietnam at least, there is a dominant video streaming model done by these illegal movie sites:
- register a Vietnamese-market oriented domain on an overseas registrar and hosting;
- upload the movies to YouTube, 4shared, Dailymotion and many other similar sites, sometimes using private accounts with private links;
- make a landing page for the movie with all the links to the clips uploaded to the various video/storage services, sometimes using a proprietary Flash player based on JWPlayer;
- place a disclaimer on every page that the site does not host the content, thus the site is fully legal;
- sell ads on the page.

This is just wrong.

I'm all for the reform of copyright enforcement, but I still support the basic concept that the copyright holder should have some say on any exploitation of their content, and receive a share of any money made from it. A more flexible, liberal concept of copyright and copyright enforcement, should still benefit the creator.

How do we reform copyright law? I don't have any details yet, but perhaps more flexible controls for use, reuse and derivatives; positive enforcement i.e. making it attractive for people/businesses to support copyright... But this is something that needs a lot of thought and discussion, and perhaps needs an enormous reworking of the copyright concept. Perhaps abolishing copyright ownership altogether? Who knows. The shorter-term solution is innovating the business models and the customer experiences, but still, in my opinion, these kinds of websites need to go. File-sharing is one thing, but making money of somebody else's work - without permission and any revenue share - is downright wrong.

Anecdotal: Piracy As An Insight To Consumer Needs

A few years ago I was fulfilling my civic duty and looking at pirated DVDs, when a guy came up to the store and asked, "Hey, is the new season of [something] TV series complete yet?" (I forgot what TV series he was asking about).

The girl at the store replied, "No, we don't have any of the new season yet."

To which the guy replied, "What? WHY? Why is it taking so LONG??"

I may not remember the TV series he was talking about, but I do remember thinking, that the TV series in question was off-season hence did not have any new episodes at all,  so obviously there was no pirate DVD available.

Pirate DVDs in Asia is a fact of life and people buy it not because they want to infringe copyrights, but simply because they want to buy entertainment, and that it is just cheaper to buy a pirate DVD. But the example above shows, that most people simply don't understand the work and process that goes behind creating music, movies or TV series. They just want their entertainment NOW, and CHEAP. The quality of the entertainment (i.e. sound quality, picture quality), though, differs and is more a matter of taste or priority.

So the question is, do we attempt to educate the market about the effort needed to create entertainment products and thus increasing appreciation (and willingness to pay for the real product), or do we shift our businesses to consumer needs?

I think many have answered this question already. Example: Lady Gaga goes to Farmville.

Reflections on Sony Music vs Universal Music Business Strategy

Until up to a year ago, I worked at this little company called Universal Music Group International - not so little; it is to this date arguably the largest music company in the world. UMGI, as the official abbreviation was called, owned the largest catalog of music in the world (this would mean, UMGI owned the rights for commercialization of that music, having a de facto ownership on the recording master). UMGI also owns one of the largest music publishing companies in the world, Universal Music Publishing, and owns - get this - one of the largest merchandising companies in the world, Bravado. UMGI is owned by Vivendi, formerly a utilities company in France, which sold off their utilities business to dabble into media - now owning, among others,  SFR (telco operator in France), Canal+ (cable TV operator), and Activision (of Guitar Hero fame, which I wrote about in another blog post). They also own All The Worlds, which is an event-organizing company which manages F1 Rocks and recent Singfest events. So basically, your basic run-of-the-mill giant multinational corporation. I spent most of my professional life so far at UMGI Indonesia and loved working there, and probably would have still worked there if not for the fact they only needed me in Indonesia, when I wanted to gain some more direct experience working abroad (and thus one of the reasons I am currently working in Vietnam).

What We Should Learn From Guitar Hero's Rise And Fall

I know it's a bit late to write about this, but I thought it's a good time to reflect on it.

It's 2008, and Guitar Hero seemingly saves the day. Activision, partly owned by Universal Music Group International, brought a seemingly niche product to the masses, increasing the amount of songs available to play, and even creating band-specific guitars and packages. In other words, a recording company's dream come true, in the days where piracy is booming and interest in physical music products (CDs, cassettes) have lost interest from many consumers. Guitar Hero brought an enjoyable platform for music for the 21st century, and all the labels needed to do was add up the music library provided in increments.

Come 2011 - Activision shuts down Guitar Hero division due to poor, poor sales. What happened?

Guitar Hero was a stroke of genius product - bringing the 'air guitar' alive for many, and enabling a much more immersive music experience with a gaming twist to be enjoyed by non-musicians, so to speak. It was a complete platform - gaming, accessories, and music, bundled into one. Sadly, this got old. Efforts to bring the Guitar Hero formula to other music, like DJ Hero, met with limited success. Why?

There are probably millions and millions of songs out there that can be 'guitar hero'ed' (formatted to be playable in Guitar Hero), only some made the cut. Some enterprising hackers in Indonesia made Guitar Hero versions of local songs, but that comes to the second problem: there is only so much you can do with 4 buttons on a small, fake guitar.

Gaming platforms make it big as it is possible to play an astoundingly large amount of games with the same interface. Guitar hero made it possible to play, well, a good amount of songs with the same interface. At some point, even the hardcore fans would get bored of the experience, because the experience essentially stayed the same - pressing buttons on a fake guitar following the rhythm and lights on the screen. The songs, as good as they were, became background music.

To prove my point, anybody here still playing Tap Tap Revenge?

On the other hand, Activision thought they had found the next great music sales and promotion platform, and proceeded to add to the music offered on the platform, and offer special packages; I.e. the Metallica edition, and so on. You know what this reminds me of? Selling standard album CDs and selling the special premium box set CDs.
So the same 'music-as-a-commodity' pattern was implemented in Guitar Hero. It spectacularly worked for a couple of years yet the whole package did not innovate. As a comparison, look at Apple - for each small upgrade and innovation they make on either the Mac, iPod, iPhone, iPad or Mac OS, people will buy it in droves. After a while, the only thing driving Guitar Hero was new song selections, but no significant upgrade to the experience.

I have nothing against Guitar Hero or Activision, but it's good if we can recognize the fact that it simply had a short shelf life. There was really nothing that could be done to maintain its mainstream success - I can't think of anything, at least. It just wasn't meant to last. When it started to use music as the standalone commodity to sell, it started to fail.

Nothing wrong with music either - but as I have said several times, music as a standalone commodity is doomed, whether or not if it stands on a relevant platform. Sure, iTunes as a platform sells millions of songs every year, but how much more music out there sitting on digital players come from P2P networks, friends or even competing, non-DRM stores? Yet, iTunes survives because it is the iTunes ecosystem that remains attractive (and perhaps addictive) for many.
Music as a standalone commodity will always have demand, but that demand will never be as strong as before. On the other hand, music as part of a service gaining ground - if recorded music businesses can work out an evolving ecosystem with technology partners, which offer up music as part of a total experience - that, I think, will work, as long as they continue to innovate.

Music will remain a strong element for business for entertainment, to drive branding awareness, to measure demographics, and many, many other things; but music sales as we know it, will wither. If the next Guitar Hero comes along, recognize that it will have a short shelf life and plan for it.

So, music business is not dead - it just needs to evolve its revenue streams and recognize its place on the media landscape.

Some Thoughts About The Music Industry

This morning I was spurned into tweeting a lot about the music industry because of the article below:

Agnes Siap Go International Lewat Perusahaan Michael Jackson... de.tk/jFnjN

I think Agnes has good potential to break international markets; I really think she can. But some details of the article piqued my attention because they seemed incorrect. So I did some digging, and eventually spent the day tweeting about the music industry in general.

The tweets are as follows:

The Case For The Almost-Extinct Music Album

In the old days which are too recent for us to say they were 'the old days', you could only get your favorite music by listening to the radio, or buying a music product, whether it was a vinyl, cassette or CD). So, either you could wait all day for your favorite song to be played on the radio (or join a song request show), or you could spend some cash to buy a music product.

This music product, in the music industry, is known as a physical music product; as it is music kept and delivered in a physical thing (as opposed to digital music product, which would be basically a computer file).

The music industry - which would be the record labels, the recording companies, the distribution companies, and the music retail companies - exerted almost total control on channels of music consumption. They would plan what would be released on the radio and when, and make sure that by the time that the song is popular, the finished physical product would be ready in music retail stores for people to buy. Needless to say, this method created a lot of wealth for the music industry.