Business Matters: Access Models Peacefully Coexisting with Purchase Models
Business Matters: Access Models Peacefully Coexisting with Purchase Models

Spotify Accounting For Growing Distribution Revenue, But Not Replacing Downloads
There is now a bit more evidence that Spotify has not lead to a reduction of music purchases. Contrary to some people's fears, it appears that many Spotify users -- and users of subscription services and other access-based services such as Internet radio -- have opted for access as well as ownership.

Spotify is accounting for a growing share of the revenues of digital distributor RouteNote, according to a post at the company's blog. Spotify accounted for 18.55% of RouteNote's overall royalties in the first quarter of 2012, up from 11.18% in the previous quarter and 5.07% one year earlier. Back in the third quarter of 2010, Spotify accounted for just 2.71% of RouteNote's royalties. Since Spotify launched in the U.S. in the third quarter of 2012, the service's percent of RouteNote's royalties is up nearly ten percentage points (from 8.84% to 18.55%).

Rob Wells, Universal Music's Global Digital Prez: 'The Idea That Spotify Cannibalizes Sales is Bogus'

These gains would be tainted if download revenue was in decline. But Spotify's gains have coincided with increases in download sales and, in some markets, gains in total music purchases. Unfortunately, RouteNote has not given any indication about the growth of its total revenues. But the distributor is showing full support for Spotify's business model. "Spotify is a great innovation for the music industry and instead of criticizing it, we should be focusing on how the service can be improved and how it can help musicians monetize/promote their music," the post reads.

The clear trends is growth in digital purchases while adoption of subscription models has increased. As I noted in May, first quarter U.K. sales data released by BPI show subscription services aren't having any obvious impact on U.K. music purchases. Total revenue grew £4.2 million. Digital revenue grew £16.5 million to £86.5 million and physical revenue declined £12.3 million to £69.3 million.

Business Matters: BPI's Q1 Numbers Suggest Subscription Services Aren't Hurting Purchases in U.K.

Music purchases have showed resilience as subscription services have grown over the last year and a half in the U.S. Album sales are down 3% through June 3 and were up 1% in 2011, according to Nielsen SoundScan. At the same time, digital track sales were up 7% through June 3 and were up 8% -- to 1.27 billion -- in 2011.

Not even easy access to online video has appeared to have much impact on purchases. YouTube is the standard place where people to go to hear something after they've discovered an artist or heard a song on the radio. Steady music purchases and growth in subscriptions have also coincided with greater access to on-demand music video at YouTube, Vevo and other outlets. Music video network Vevo has grown from 309 million streams in April 2011 to 674.2 million streams in April 2012, according to comScore (those numbers exclude mobile app activity). These Vevo numbers are just a bit more evidence that on-demand access is, for the time being, peacefully coexisting with music purchases. ( RouteNote blog)

Shout! Factory Acquires Themed Video Apps
Shout! Factory and entertainment industry veteran Fred Seibert have acquired three iOS apps from Original Victories, Inc. for an undisclosed sum. Video Time Machine, Political Time Machine and Holiday Time Machine each offers a curated collection of themed videos that go back as far as 100 years.

The apps complement Shout! Factory's existing product offerings, the new owners explained in a statement. "As we continue to expand our footprint in sharing our pop culture faves across all major entertainment platforms, this is a dynamic business opportunity and positions us well to provide unique entertainment experience at a time of exciting change in the entertainment industry."

Shout! Factory is best known in the music business for its music releases and Grammy-nominated box sets. It also releases TV shows and movies on DVD. Fred Seibert is founder and executive producer at Frederator Studios, producer of video shorts and series, and a former TV executive. ( Hollywood Reporter) Addresses Security Issues experienced a security breach three days ago that led to millions of compromised passwords. The London-based company detailed the steps it took in a blog post on Friday:

"We immediately implemented a number of key security changes around user data and we chose to be cautious and alert users. We recommend that users change their password on and on any other sites that use a similar password. All the updated passwords since yesterday afternoon have been secured with a more rigorous method for user data storage." Users Latest Victims of Password Hacks

Judging from some of the comments to this blog post, however, not all users received an email alert from the company. Others had problems with the instructions gave on how to reset passwords. "Looks like will be losing users and they do not care," one commenter complained.

The security breach at followed similar breaches at LinkedIn and eHarmony. It's the first notable music service to have security problems since Sony's Music Unlimited was hacked last year. ( blog)