JULY 13, 2009

Digital Music Update

Via PC World comes the release of a new study by The Leading Question, a UK media strategy company, showing that illegal file-sharing among British teens has decreased by close to 33%. 26% of teenagers admitted to illegal file-sharing in the last month, down from 42% in December 2007.  Not only that, for the first time in the survey’s history, the data show that purchased music downloads outpacing illegal file-sharing.

The study’s authors suggest that the decrease in illegal activity has come partially due to the increasing popularity of legal, paid options, but also the pervasiveness of music streaming sites like Spotify, Pandora and YouTube.  Streaming sites have seen enormous growth, not only because of the risks of illegal file-sharing, but also because of the increasing ubiquity of wireless data services - with devices like the iPhone, streaming is possible from anywhere, making downloaded, local copies of music more or less obsolete. Throw in the computing industry’s recent trend toward netbook computers, with their tiny hard drives, and you have a whole lot of factors creating a greater market in online streaming, making the greater prominence of these services not too surprising.

I’m encouraged by the study as a music lover. But I’d offer some words of caution to record execs who think people are finally turning away from stealing their intellectual property: the terms you’re offering to sites like Pandora are more or less killing the streaming business model. Pandora’s announcement last week that it will begin to charge heavy users of the service has, anecdotally, driven quite a few people away - even if they can afford the very small surcharge that Pandora will ask of those who listen more than 40 hours a month. I definitely listen more than 40 hours a month and can afford it, but why should I pay, when there are countless alternatives?

Pandora power users have an enormous level of interaction with the service. We generally sit and rate tracks as they play, to improve the content of our personal stations. I even have a keyboard shortcut on my laptop for doing just that,  so I don’t have to switch windows to rate songs. This should give marketers an incredibly rich data environment with which to discern our likes and dislikes. You’d think that, to simplify things a bit, if Pandora’s algorithms notice a huge number of 24 year-old guys giving good ratings to both Weezer and Mariah Carey songs, that that might be an incredibly valuable piece of data for a record executive, who could then find or create an ironic nerd-rock band with a mezzo soprano lead singer - even using the Pandora service to introduce the band directly into our headphones.

If this occurs to me, as someone well outside the music business, it has to have occurred to the pros in New York, LA and Nashville. I wonder what’s keeping it from happening. But one thing’s for sure - the costs imposed on streaming sites by the music industry will ultimately end in those sites becoming less prominent, sending people right back into piracy.

As an aside, I discovered my new favorite song, Metro by the Vincent Black Shadow, on thesixtyone, a new site that makes music streaming into a kind of video game. I don’t know how to explain it better than that, so you should probably just check it out.

(image is of the basement of Plan 9 Records in Richmond, VA - my favorite record store growing up)