Something great has happened in 2011. After almost stagnating in the last half of the 2000s, digital music is once again a hotbed of ideas, investment and consumer interest. A new crop of entrepreneurs is working with new technologies - such as smartphone apps - and knowledge gained from the previous era of failures. And rights owners are proving themselves to be more flexible than ever.
The lineup of Billboard's FutureSound conference, to be held November 17 and 18 at Terra in San Francisco, shows startups can indeed work in digital music - whether or not licensing has become a perfect process.
Don't miss Billboard's FutureSound Conference, taking place November 17-18 at Terra in San Francisco. FutureSound will feature keynotes from the top minds in investment, technology and music today; presentations that will offer specific solutions structured around answering the most pressing questions; and workshops.
Take Turntable.fm, one of this year's biggest stories in digital music. In years past, a service like this might have met a different fate. The service's uninterrupted operation has constantly surprised people who remember the ill fates of numerous music services over the last decade. Even people within the industry had a familiar reaction when getting a first glance at Turntable: it just can't be legal.
But rights owners haven't rushed to shut down Turntable. Instead, the two sides have engaged in what have been described as productive talks. Like other social music services, the site is built to be DMCA-compliant. It may have a few legal issues to clear up, but labels and publishers have opted for conversation rather than conflict. Turntable co-founder Billy Chasen is a feature keynote at FutureSound, and it will be interesting to hear how these discussions have progressed and how the newcomer views the rights owner-startup dynamic.
The DMCA has actually turned out to be an important factor in the business models of many newcomers. Mixtape and Internet radio services rely on the safety and predictability of the statutory webcasting license afforded by the DMCA. Because they are not on-demand services, they do not need to negotiate licenses with rights owners. And while on-demand services like Spotify get most of the media attention, non-interactive services, ranging from Pandora to 8tracks, are proving that cool ideas can be built around a "lean back" type of listening rather than a "lean-forward" manner of accessing a large catalog of music. Appropriately, one of FutureSound's keynotes is Pandora CEO Joe Kennedy.
In spite of improvements in the rights owner-startup dynamic, running a music service still comes with potential legal problems. Just ask Grooveshark. The music subscription service can't seem to shake a legal gray cloud - it's currently being sued in a New York state court by Universal Music Group. Yet over the years Grooveshark has survived not only to license music from EMI and a growing number of indie labels but become one of the more popular services in the U.S. Paul Geller, EVP of Strategic Development, will appear at FutureSound to give a presentation titled "What Startups Can Teach the Music Biz About Monetization."
Rights owners' attitudes toward companies like Grooveshark will help shape the types of music services that crop up over the next five years. Many unique and non-traditional business models will be conceived in the coming years. They will need funding to grow and, maybe, license music catalogs. And for the wheels of entrepreneurship to work with success, there needs to be good lines of communication between startups, investors and rights owners.
FutureSound will be part of that communication process. Also in the stellar lineup is David Israelite, president of the National Music Publishers Association, who will speak about reforming licensing without sacrificing rights. Les Watkins, SVP Business Affairs & Business Development at Music Reports Inc., will discuss bypassing collecting societies through direct licensing of music. And Wolfgang's Vault CEO Bill Sagan will share his thoughts on how rights negotiations can be fair and even.