Dollars From Heaven: CMJ Panel Ponders How Industry Can Monetize The Cloud
Dollars From Heaven: CMJ Panel Ponders How Industry Can Monetize The Cloud

A discussion of new cloud-based models of music consumption kicked off Day Three of CMJ. Patrick Sullivan, president and CEO of licensing company Rightsflow, moderated a Thursday planed titled "That Cloud is Shaped Like a $." Sitting with him were Lisa Tiver, VP of Business Development at RightsFlow; Elizabeth Moody, Head of Music Partnerships at YouTube; Jason Pascal, VP and Associate General Counsel at The Orchard; and Charles Caldas, President of Merlin B.V. Also involved in the discussion, from the crowd, were Duncan Hutchison, Managing Director of Blackheart Records, and Ray Farrell, U.S. representative for finetunes.

As the music industry shifts more from relying on selling records toward subscription-based streaming frameworks, Apple's iTunes cloud model is being promoted and discussed as one of the primary potential avenues forward. As the panel put it, the industry is now transitioning from preventing people from doing what they want to do, in terms of guarding downloads and prosecuting those who pirate music, and toward a model of enabling music fans and finding ways to monetize that.

With iTunes Match, which analyzes users' music collections and weds them to corresponding official tracks available in the cloud, Apple is creating a model that, among other things, attempts to monetize songs that were previously pirated. Along with subscription-based services such as Spotify, Apple's cloud creates a system where "you're not paying for content, you're paying for how you access that content," explained Caldas. "You're paying for the convenience." Apple is offering its cloud-based music service at $25/year, and offering 70 percent of the profits to the music industry. "iTunes has 70 percent of the market share; you can't afford to not be on iTunes," said Tiver. "It makes it hard for publishers to say no to their terms."

But Apple's cloud isn't the only way forward; YouTube's recent changes have introduced a number of new potential revenue streams for artists. Earlier this week, the company announced its new Artist Merch Store, allowing bands to sell music, merchandise and tickets directly from their YouTube pages. Additionally, artists can sign up to become a YouTube partner, generating revenue from page clicks and advertising and gaining access to analytical and geographic data to discover where their clicks are coming from. "Hundreds of YouTube partners are making thousands of dollars already," said Moody. "We're only now discovering its value for independent artists."

"Nobody ever thought that YouTube would pay off financially," said Pascal. "Now, by the end of 2012, we think it might rise to as high as our number two revenue stream for our artists, behind iTunes."

With a plethora of new ideas about how the future of the industry will look, there is no clear idea where cloud-based and streaming-based music consumption will end up. As ad targeting becomes increasingly more sophisticated and valuable and the potential tools available on the cloud become a reality, the landscape over the next five years seems open to debate. "The concept of cloud-based storage is not new," said Pascal. "There is just no other solution when thinking about the volume of data we all have to manage."