An Enormous Band of Pirates
-- The five millionth user account was created at The Pirate Bay  on Monday, according to TorrentFreak. For the world's most notorious BitTorrent site, a constant thorn in the side of music companies, five million may seem like a low number. After all, there are around two million paying customers to various music services in the U.S. alone, and Spotify has another one million paying customers in Europe.
But that's not the whole story. The Pirate Bay actually has far more than five million users because you don't have to register to download files at The Pirate Bay. So in addition to the five million people who have registered, there are many millions more who simply visit and download without registering.
According to Alexa.com , The Pirate Bay has a traffic rank of 88 (87 in the U.S.) and reaches about 1% of global Internet users on a daily basis. Its traffic rank is highest in Sweden (#18), Finland (#25), Serbia (#26) and Norway (#27).
( TorrentFreak )
Hulu's Rosy Outlook
-- More good news for subscription models: Hulu Plus should have one million subscribers by the end of the year, CEO Jason Kilar wrote in a blog post on Monday. Revenue is expected to grow to $500 million in 2011, up from $263 million in 2010, and the company served 50% more advertisers in the first quarter of 2011 than in the same period last year (289 versus 194).
Advertising is clearly the driving force at Hulu. At $8 per month and $96 per year, Hulu will bring in slightly less than $100 million from one million subscribers. Since it will average under one million during 2010, subscription revenue will actually take in well under $100 million. Let's say Hulu averages 500,000 subscribers during 2011. That's just under $50 million from subscribers, which would mean subscription revenue will account for less than 10% of Hulu's 2011 revenue, according to Kilar's estimates. And none of this has anything to do with Hulu's bottom line. Kilar gave only top-line revenue estimates. Hulu's expenses and net profit/loss are another matter.
While it's certainly growing, Hulu is well behind the leading video subscription service (which also includes a DVD rental business). Netflix had over 20 million subscribers at the end of 2010 and added over three million subscribers in the fourth quarter of 2010.
(Hulu Blog )
The Great Royalties Smackdown Match: Streaming Vs Downloading
-- Are streaming royalties the future of death of the music industry? That's the question posed in a post at the blog of digital distributor TuneCore. "In an era of constant connectivity and universally available content, there is no distinction from a user's perspective between streaming and downloading," wrote George Howard. "There is however a distinction from an artist/content owner's perspective. "That distinction is the amount of the royalties paid to rights holders."
The difference in the size of royalty payments goes hand-in-hand with a fundamental difference between streaming and download royalties: timing. Think of a download royalty as a single, lump-sum royalty payment that allows the buyer to listen to that song royalty-free in perpetuity (or at least until the file is lost and must be purchased again). Streaming royalties are like an annuity, or a recurring stream of fixed payments. With streaming, the rights holder gets paid every time the song is played.
Digital royalty math is a lot like financial planning. The trick is to figure out if an annuity is better than a lump sum payment. You have to calculate the present value of all future annuity payments and compare them to the lump sum payment. Those calculations will tell you if it's better to receive one payment of 70 cents for a purchase of a track at iTunes or a fraction of a penny every time the song is streamed at a music service.
Judging from the comments in the TuneCore blog post, many artists can see that a lump sum payment from an iTunes sale appears to be far better than a series of streaming royalties. For one, the streaming royalty is puny compared to an iTunes royalty. That difference in size wouldn't matter if the volume of streams resulted in an equal amount of revenue. But a song would have to be streamed well over 100 times for the digital annuity to come close to the digital lump sum payment, assuming 0.5 cents per stream (it's actually likely to be far lower). It's hard to imagine a scenario in which there are enough hours in a day for people to stream so much music that streaming pays more than downloading.
But the really difficult part of comparing revenue from streams and downloads is the uncertainty surrounding streaming. Financial planners know how many payments an annuity will have over a particular number of years. However, artists and labels don't know how many times a person will stream a particular song. If a fan buys a song, the resulting revenue is fixed and certain. But encourage that fan to stream a song rather than purchase it and future revenues become far less certain.
( TuneCore blog )
Universal Launches Ye Olde Vinyl & FLAC Shoppe
-- Universal music group today launched Groovetown Vinyl, an online store featuring "high-quality audio products for the discerning fan." What that means in real terms is the site is offering both vinyl and lossless audio FLAC downloads by Universal artists.
There are a number of different price points for albums dowlnloaded in FLAC format from the site. Amongst the six albums featured on the site's home page, for example, La Roux's 2009 self-titled debut is listed at $9.99, Jimmy Eat World's brand new "Invented" cost $11.99, and Eminem's multi-platinum "Recovery" is selling for $14.99. All of which suggests the prices for FLAC files may vary greatly depending on the online retailer and the album's popularity -- both of which may be somewhat arbitrary.
The vinyl price of the aforementioned albums is $15.98 except for La Roux, which inexplicably sells for $17.98.
The page also lists an option to purchase both vinyl and FLAC together in one click, but the option offered no discount.
( Press Release )
(Additional reporting by Andy Genlser)