I Eat Music

Depeche Mode’s main songwriter, Martin Gore, will be called as an expert witness should a lawsuit filed this week in California go to trial. American videogame fan Erik Estavillo is suing the makers of ‘World Of Warcraft’, Activision Blizzard, claiming that the game has alienated him from the real world, and has named Gore in court documents as a man who knows his stuff when it comes to feelings of disaffection and isolation.

In papers filed on Tuesday, Estavillo accuses the company of maintaining “a harmful virtual environment to many of its customers by forcing them to follow ['World Of Warcraft's] sneaky and deceitful practices”. These practices apparently include making characters in the game walk too slowly.

And who better to back up these claims than Martin Gore? According to Estavillo, the musician would be called because “he himself has been known to be sad, lonely and alienated, as can be seen in the songs he writes”. Gore would be joined by a second alienation expert, Winona Ryder, who would explain “the significance of alienation in ‘Catcher In The Rye’ and … how alienation in the book can tie to alienation in real life [and] videogames such as ‘World Of Warcraft’”. Obviously.

This isn’t the gamer’s first attempt to sue a technology company. Past (unsuccessful) lawsuits have included suing Microsoft, due to stress arising from a broken Xbox, and Nintendo for interfering with his right to seek happiness by blocking some software from being released on the Wii.

In this case he is seeking $1 million in damages from Activision Blizzard. That money probably wouldn’t make him happy, but at least it could fund a few more bizarre lawsuits.

High-end audio manufacturer Linn Products, based in Glasgow, has discontinued its entire line of CD players, thanks to booming sales of its Linn DS hard-disk based stereo systems (which they refer to as ’streaming players’).

Speaking to The Guardian, the company’s MD, Gilad Tiefenbrun said: “We introduced our streaming players two years ago, and thought they would be slow to take off. But sales of CD players have declined 40% year-on-year, while streaming players now make up 30% of our total business. It’s unprecedented growth”.

Another side effect of this boom in higher-end digital music devices is that people who rate high quality (or perceived high quality) audio are also willing to pay more for their downloads. Linn’s music retail division, Linn Records, has also seen a boom in sales of uncompressed audio in FLAC format, and particularly in 24bit studio master quality files (which offer much higher quality than CDs can), for which the company charge £18 an album.

With the cheapest ’streaming system’ costing £975, none of this isn’t likely to have much of an effect on the average music listener in the short term, though with audiophiles seemingly choosing high quality streaming audio now, thanks to large hard disks becoming increasingly available and more affordable, it is likely that in the coming years that demand and technology will filter down to medium range and ultimately budget systems, meaning higher quality digital audio will become a standard feature.

However, it remains to be seen how quickly uncompressed audio will take off. It’s most likely that the mainstream music industry will want to keep flogging compressed files for as long as possible before announcing that they’re rubbish and that we should all replace our music collections with FLAC and WAV files. And so the record industry can return to its strategy of reselling us the same music but in a new format yet again.

A year ago this week, Spotify was first made available to the public, and ever since it’s been a major part of any discussion about the future of the music industry. Well, it might have taken a couple of months to come to industry-wide attention, though obviously we reported on it straight away. Finger on the pulse and all that.

Writing on the company’s blog to mark the first anniversary this week, CEO Daniel Ek said: “Spotify has a long way to go but continued support from the music industry in the face of a recession and rampant piracy has made the difference and I feel that we are set up to succeed with this kind of willingness to innovate and try new things from the music industry… together we can do even better things”.

He added: “It’s been an interesting year within the music industry, with many insiders questioning whether Spotify’s model is a sustainable one. Meanwhile, it’s been amazing to see just how our users have taken Spotify to their hearts”.

Having bigged up the music industry, he then took a shot at those in the music business who have been busy speculating about Spotify’s finances, its precise business model and its prospects for future success. Now you’d never find us doing that.

Insisting it’s just far too soon to be going all doom and gloom on the Spotify model, he continued: “The notion of overnight success is very misleading and actually rather harmful to any hope for long term and sustainable growth in this industry. Yet this is unfortunately something the music industry as a whole is particularly good at, expecting business models to be proven within months of inception. The truth is that even the most successful digital business to date, iTunes, missed its revenue targets in its first year by 30%, and label executives were far from convinced that this was the future. We are in this for the longhaul. We aren’t interested in just trying to hype the company and then ‘flipping it’”.

Ek remains quite tight lipped on Spotify deals and monies, as you’d expect him to. He did reveal, however, that ad revenues had now passed “millions of Euros per month”, and said that Spotify was already 7Digital’s biggest download affiliate, even though he admitted the sell-through dimension on his player, whereby users can click through to buy tracks they like as an MP3 from 7Digital, was a bit rubbish. In fact, he estimated that 80% of users weren’t even aware of the ability to purchase tracks directly through the player.

Returning to the music industry, and despite his initial praise for their support of Spotify, he had one big criticism which, he said, was stopping the music business from properly capitalising on the potential of digital – that being their continued obsession with per-click royalties rather than profit share deals. If record labels and publishers would approach digital with a different mindset, he reckons, music could become a “$40-50 billion industry and [grow] stronger than it ever has [before]“. But that won’t happen, he mused, while labels continue to try to “squeeze as much as possible out of every single transaction”.

Fascination in the specifics of Spotify’s business model remains, more than ever really given that Ek’s blog comments on the need for further change in the music sector suggests that he recognises the deals his company is currently tied to won’t add up long term.

Trying to guess what’s at play, The Guardian’s Technology Editor Charles Arthur yesterday pawed over the available information on Spotify stats and costs, with help from the founder of Spotify rival We7, Steve Purdham.

It turned into quite a major exercise, not least because Arthur’s original calculations missed off record label royalty payments (focusing on PRS payments). As the journalist’s article changed as the afternoon developed it became clear it was almost impossible to work out what sums of money Spotify is currently spending and, possibly, losing. Not least because chances are the digital service has done special deals with the labels and PRS and isn’t paying industry standard rates.

However, Purdham’s input providing some interesting extra insights. He pointed out that while some – us on occasion – say that Spotify etc can only ultimately work on a subscription model, PRS costs go up when music is provided to paying subscribers rather than those using the ad-funded free service. So much so his conclusion is this: “The fact is that if you can’t make it work with ads, then subscriptions won’t cover the costs. Subscriptions aren’t a silver bullet”.

He added: “By going for scale, Spotify creates the problem that the cost base for the music is so high. The costs make the freemium model, pushing people to subscriptions, hard to handle. The model that Spotify’s shown in the public domain will need significant investment. If they’ve just raised $50m then before they go to the US, that $50m has been spoken for across six or seven months”.

Interesting stuff. All of which possibly proves us doom and gloom cynics right – and adds credence to Ek’s blog comments. The record companies are starting to see their digital revenues grow significantly, thanks in part to the large upfront payments new digital services pay, and to the success of things like iTunes and, albeit to a lesser extent, YouTube and MySpace. But the fact is quite a bit of that money is coming from the venture capital funds of start-up services, rather than sustainable income like ad revenues and subscription fees.

Venture capital money is going to run out, so, unless they genuinely believe that they can make millions in ad sales by setting up their own ad-funded content platforms, those record companies, and where relevant collecting societies, should probably be both listening and responding to Ek et al. Digital music services – especially those which are streaming based – are never going to be able to pay per-stream royalties long term, in much the same way many commercial radio stations don’t pay per-play royalties either.

I suspect deep down most labels and collecting societies know this, and are just adopting a ‘get as much as we can in the short term’ approach at the moment, in a bid to improve this year’s bottom line. But that might be a dangerously short-termist approach. If per-play royalty systems are never going to work, and are just proving to be a restrictive barrier to innovation, perhaps the time has come to scrap em and get on with the future.

U2 bassist Adam Clayton has said that the band would like to follow in the footsteps of bands like The Beatles and Metallica and have their own videogame.

Clayton told USA Today: “We definitely would like to be in there, but we felt some of the compromises weren’t what we wanted. That could change. I love the idea that that’s where people are getting music, and we’d love to be in that world. We’ll figure something out. What The Beatles have done, where the animation is much more representative of them, is what we’re interested in, rather than the one-size-fits-all animation. We didn’t want to be caricatured”.

I look forward to the release of ‘Bono Kong’ and ‘Sonic The Edge Hog’.

There has been, as I’m sure you’ve noticed, a lot of talk about the future of music of late. Not least in these editorials.

I like to think that I have a fairly open and optimistic view of all and any new developments in the music industry, and I definitely reckon there is nothing wrong with as many new products and services, and re-works on the way music is presented and delivered, being tried out as possible. Doing so will hopefully help us all find something genuinely good.

There is, however, one word that often crops up when people discuss the future of music which strikes fear into my heart: interactivity. It all stems from something someone said to me a couple of months ago: “The last album I bought was an iPhone app. You had to play a game and you were given access to each track by completing various tasks. I think that really is the future of music”.

Oh God. Please no. This is the last thing I want. Seriously. All I want from music is music. I like the fact that music isn’t interactive. I don’t want to have to jump through a hoop to be able to listen to it, I don’t want to be given the opportunity to remix tracks, I don’t want behind-the-scenes footage from the studio. I just want to press play and listen. That’s what music does. It’s what it’s good at.

OK, there might be mileage in marketing campaigns or promotional gimmicks that involve some sort of fan interaction, but interactivity at the heart of the music product? Surely that ruins one of music’s greatest assets over, say, TV, films or games – the fact it is something that can be enjoyed entirely passively. And surely if you want to interact with music you play it loud and jump around your bedroom, and you don’t need any new fangled technology to help with that.

Basically, what I’m saying here is I just don’t believe interactivity is going to be at the heart of future music. And look, I managed to say so without requiring any interactivity on your part bar basic comprehension. See, I practice what I preach.

This is my editorial from the 2 Oct 2009 edition of CMU Weekly (which you can read in full here). It would be wrong of me not to note that Chris Cooke added some bits to it.