Billboard FutureSound Closes With Panels on Making Money in the Digital World, EMI and EchoNest's Developers' Sandbox
Billboard FutureSound Closes With Panels on Making Money in the Digital World, EMI and EchoNest's Developers' Sandbox
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SAN FRANCISCO, CA - NOVEMBER 18: SVP of Digital Strategy & New Business from Island Def Jam John Vanhala, CEO of The Echo Nest Jim Lucchese, VP of Digital Products at EMI Music Group Neil Tinegate, Founder of Muzine Jim Cannella and Founder of +Music Peter Watts pose during day 2 of the 2011 Billboard FutureSound Conference on November 18, 2011 in San Francisco, California. (Photo: Arnold Turner/A. Turner Archives)

The Billboard FutureSound Conference wrapped on Friday with the "Cost of Content" panel and an analysis of EMI and EchoNest's new "Developer's Sandbox."

"Cost of Content" featured Merlin CEO Charles Caldas, Smule CEO Jeff Smith, Tunewiki CEO Larry Goldberg, Universal Muysic Publishing's Robert Allen, MOG CEO David Hyman and was moderated by DigitalMusic.org's Antony Bruno. It took a look at the challenges of pricing, value, and creating sustainable businesses in an environment where so much is free. Robert Allen, former head of business and legal affairs at Universal, said major labels wrestled with Apple's cloud music service deal this year, which gives the majors a fee when Apple houses someone's music, even if it was obtained through piracy.

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"At least the content owners are getting to get a fee for that," Allen said. "I think it's the lesser of two evils. I think that worked out really well and I'm really excited about the service."

Such a concession probably would have been unheard of even just a few years ago, and conversion about that kind of sea change dominated the discussion.

MOG CEO David Hyman said majors need to get even more pliant, and subscription prices for on-demand mobile services need to go down. The Berkeley company pays 60-70 percent royalties on $10 per month subscriptions. Majors make more per person on average on MOG than iTunes, and they need to do more to boost their bottom line.

"Everybody would be better off if we take a smaller piece of bigger pie than a bigger piece of a smaller pie."

He lobbied for a $5 month pricepoint rather than the current $10 one, and contradicted the notion that the artist is not making money on streams. The average iTunes consumer spends $3.10 a month, he said. (Which would send around $2.06 per person per month on average to the label, versus approximately $2.60 per month per person with a $5 MOG subscription.)

MOG's has launched a free on-demand music service and is building game mechanics atop of it to reward those being viral with the service and converting subscribers. "We can give that experience forever."

Major labels bill services according to the dept and richness, Allen said.

"I feel like it's the ring on Gollum's finger. It's your precious," Hyman said. Even so, "It's easier today than it ever has been. I find that every day is easier than the day before. I think everybody's starting to ramp up. They're starting to see real money come from these things."

Smule CEO Jeff Smith still seemed exasperated by the process of licensing music for the company's line of smash hit apps lie I Am T-Pain and Ocarina.

"Our experience has been mixed. It depends on who," he said. "EMI is great."

Warner Music has suffered from staff turnover and decision-making challenges, Smith said, adding that majors still don't get new forms of monetization like virtual merchandise co-marketed with key artists. "Kids aren't going to buy music. They're not going to pay for it, so how do you monetize these kids?" he said.

"The demographics have changed, deal with it, now let's innovate," he said. "What we're seeing is a top-tier artist would never do that, but the second-tier artist will."

"Where we are now is a lot better," Tunewiki CEO Larry Goldberg said, "The pendulum has definitely swung in the direction of working together."

Merlin CEO Charles Caldas said "a culture gap still exists, and the record industry is more guilty of it than the tech side."

The Developer Sandbox discussion was also moderated by Bruno and featured Jon Vanhala (SVP Digital Strategy and New Business, Island Def Jam), Jim Lucchese (CEO, The Echo Nest), Neil Tinegate (VP Digtial Products, EMI), Jim Cannella (Founder, Muzine) and Peter Watts (Founder, +Music) It. took a look at how the service addresses the following problem: Given all the new innovations within the music and technology space just in the last year alone, there was clearly a need for an easier process for developers to license content.

Thus, EMI Music Group and the Echo Nest created the Sandbox, which provides music and other artist assets for use in new digital products. This move came largely in response to the surge in smartphone usage, as both EMI and the Echo Nest are attempting to harness the energy of the mobile revolution.

"Everything is aimed at the startup developer in order to make innovation work," EMI's Tinegate said. "We've developed a sandbox that contains media content from EMI where a developer can get a key, play with the content, and create a new app."

The end goal is to get more projects in augmented reality apps, music remixing apps, and games. "We'll help you get that app to market, clear the licensing on our side, and take the task of clearing the other side," he continued. "The result will be, hopefully, that we will get great apps, sell them, and split royalties with all parties."

Cannella pointed out that he's avoided having actual music on his platform because of all the legal complications. Instead, he relies on high-quality images and rich content, which even still he says is difficult to get his hands on.

"If content is king, I want to work directly with the content owners rather than piece it together from different sources," he said.

In looking ahead to the next step, Watts feels that there will be a demand for more artists to develop with.

"We'll be needing more artists to create fun and new experiences around," he said.

Indeed, "A lot of app developers are gravitating towards the same types of content," Echo Nest's Lucchese. "We need to make sure that we maximize and be careful not to release too many apps that offer similar content."

Jim Cannella of Muzine pointed out why there's been a push in developing engaging music content for apps beyond the high usage rate: "We would like to see fans interact more deeply with the music because that's how you create true fans of music, and not just consumers of music."