Opinion and analysis of the day's music news.
Analysts Expect WMG Revenues To Fall
-- Citigroup analysts expect Warner Music Group revenues in its fiscal third quarter (the period ending Sept. 30) to drop by 14% to $740 million. In a note to investors, Citigroup predicted digital sales growth of just 1% and a decline in physical sales of 20%.
Citigroup sets a target price in WMG's shares of $5.91. The stock closed Monday (Nov. 15) at $5.69, its highest close since May 28. WMG announces its latest quarterly earnings on Wednesday morning (Nov. 17) and has been in the news as a possible bidder for EMI's recorded music division.
Google Sites Top Online Video Rankings
-- comScore's October 2010 video ranking shows Google sites, primarily driven by YouTube, are No. 1 in total unique views (146.3 million), viewing sessions (2.02 billion) and minutes per viewer (271.6). Vevo is No. 4 in total unique viewers with 47.6 million and fares well in viewing sessions (236.4 million) and minutes per viewer (77.9). Viacom Digital ranks just ahead of Vevo in total unique viewers (53.8 million) but lags behind it in minutes per viewer (53.7 to 77.9).
From these numbers it's possible to come up with a rough estimate of music's weight at YouTube. Start with YouTube's 2.02 billion viewing sessions per month. Vevo gets about 90% of its views from YouTube, which puts its unique viewing sessions at YouTube at 212,000. That means Vevo accounts for nearly 12% of YouTube's unique viewing sessions. If we assume Vevo represents 65% of YouTube's music views (that's based on the market shares of Universal Music Group, Sony Music and EMI), we can figure that music represents about 16% of all YouTube unique viewing sessions. Roughly.
The Value Of Streaming
-- Given these comScore figures above, it's not difficult to imagine that streaming will take over as the dominant way to experience digital media. Taken with new NPD Group figures on music streaming, the numbers point to a clear change in how people experience digital music.
According to NPD figures reported in the media, the number of people who streamed and downloaded music in the month of August was almost even - 30% for music downloaders and 29% for music streamers (from both free and paid services, although NPD does not know which services were used). Keep in mind that comScore measured 47.6 million unique U.S. Internet users at Vevo in October. And recall that Pandora has 65 million registered users (even if only half are regular users, that's still over 30 million people using the service each month). Then take a look at the millions of views that are routinely obtained by viral videos. And don't forget streaming audio on Facebook and MySpace.
So, yes, streaming music has gone mainstream. That's no surprise. People don't want to keep a file of everything they hear. Sometimes they just want to experience it and move on.
But the value of streaming versus downloading is another issue. These figures gauge the percentage of Internet users who engage in a particular activity. They don't compare the relative values of downloading versus streaming. To be sure, downloading is still a far more valuable activity in terms of direct revenues. For example, each week nearly 18 to 20 million digital tracks are sold in the U.S., according to Nielsen SoundScan, plus about 1.5 million digital albums. That's tens of millions of dollars in MP3 spending, an amount that would take an established ad-supported streaming site many years to generate. Streaming sites do provide value that can't be easily quantified, however. Many artists benefit greatly from their ability to be discovered on YouTube or MySpace, for example, even though no downloads were purchased as a result.
The upside, of course, is that some legal streaming is probably replacing what was previously illegal downloading. The caveat here is that legal streaming that is not being well monetized results in little more revenue to content owners than illegal downloading.
DRM Opponent Takes FTC Job
-- Meet Ed Felten, the Federal Trade Commission's first chief technologist. He is a computer science and public affairs professor at Princeton University.
Felton is known to many as one of the academics that defeated four watermark technologies in the Secure Digital Music Challenge Initiative Challenge of 2000. The paper was withheld from a presentation at an academic conference in 2001 because, as Felton stated at the conference, "the Recording Industry Association of America, the SDMI Foundation, and the Verance Corporation threatened to bring a lawsuit if we proceeded with our presentation or the publication of our paper." With the help of the Electronic Frontier Foundation, Felten filed suit against the RIAA and asked the court to rule the paper was not in violation of the Digital Millennium Copyright Act. The court dismissed the case after the government and RIAA both stated the researchers were not in violation of the DMCA.
Opinion and analysis of the day's music news.