Digital Notes: Music Apps Gain Revenue, Vevo Grows Views, Frank & Oak Leverages SoundCloud

Music Apps Rock On -- While digital track sales may have fallen 5.7% last year, revenue generated by music apps grew 77% in 2013. This bit of good news comes from a report released Wednesday from App Annie and IHS.

Among the biggest revenue-generating music apps are Pandora, Smule's Magic Piano, Apple's GarageBand, Rdio and Ultimate Guitar Tabs. Pandora's premium subscription option tops the list with 3.3 million susbcribers who pay $3.99 a month to listen without ads. Magic Piano, a music simulation app, comes in second with its subscripton model. Rdio's on-demand music streaming app also operates on a subscription basis. Out of the top 10 grossing music apps of 2013, six offer subscription options. Two apps -- GarageBand and Ultimate Guitar Tabs -- fall into the music creation category.

The report omits two important elements, however. First, it does not capture advertising, which makes up 84% of Pandora's revenue. Secondly, it does not include subscription revenue generated outside of the Apple iTunes or Google Android payment systems. For example, none of Spotify's revenue is reflected in the study because new listeners have to sign up on Spotify's website before they can access the app's on-demand service. Other music streaming apps, including Beats Music, also do this in order to avoid having to pay 30% of the monthly fees to Apple or Google.

The report also does not reveal how much money was spent in 2013 on music apps out of the $16 billion spent worldwide in 2013 on apps. But with music download sales on the decline, every penny counts.

Fashion and Music -- Frank & Oak, a trendy online retailer aimed at young men, said it sees 4% of its new members coming from its SoundCloud playlists.

Ethan Song, Chief Executive of the Montreal apparel startup, said he was "somewhat surprised" by this, having initially decided to use SoundCloud simply as a free tool for curating and disseminating soundtracks to go with each month's collection of outfits. Song likens his content-centric approach to putting out a monthly magazine for men, complete with videos, music and photos packaged around a themed collection of clothing for men 25 years to 35 years old. Its SoundCloud playlists are designed to complement these themes.

"We just thought it was a great tool," said Song. "Then we found out later that it had this very engaged community who liked to lean forward and discover things."

Song would not say exactly how many SoundCloud listeners ended up discovering Frank & Oak, which has 1.1 million members and operates much like Fab or OneKingsLane.

VEVO Cranks Up the Volume -- The music video company on Wednesday said it garnered 55 billion views last year, up 33% from 2012. The growth was partly driven by views on smartphones, tablets and Internet connected TVs, which grew 176% last year and, by December, accounted for 60% of total views in the U.S. The company is also putting more emphasis on original programming beyond official music videos, generating 824 pieces of original videos last year and producing 30 live concerts.

Questions? Comments? Let us know: @billboardbiz

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