Digital music is here to stay, but is Itunes an old-school business model?

From the Radio and Internet Newsletter (RAIN), dated Nov. 6, 2007

"CMJ Conference recap: Digital is the future, the future is here"
BY DANIEL MCSWAIN

A college radio conference might seem like a strange place to take the pulse of digital media, but a look at the list of high-caliber names and companies present at last week's College Music Journal conference at Lincoln Center in New York City CMJ 06should convince you otherwise.

Even the panels themselves, with battle-ready names like "Invasion of New Media", "Digital Domination", and "Playlist Wars", reinforced a serious theme: the revolution is here, and today's college radio PD could have a whole lot to say about tomorrow's digital music direction.

Competition for new-tech throne
At the aptly-titled "Digital Domination" session, the first major new media report of the conference, big-name experts from Rhapsody, Napster, SnoCap, MP3.com, eMusic and Wired Magazine tried to patch together a cohesive look at what consumers Lincoln Centercan expect their digital music to look and sound like in the next five years.

Most panelists were vocal in their opposition to several of the status quo approaches to digital music throughout industries. Rhapsody GM of Programming Tim Quirk argued that the iTunes Music Store is "yesterday disguised as tomorrow", noting that "one of the reasons the music industry likes iTunes is that it fits exactly into their models."

Quirk also lamented what he sees as a misconception among many artists and labels that the promotion of music via free streams and download giveaways hurts artists' physical and digital sales. He argued instead that the discovery encouraged by services such as Rhapsody, where only 22-24% of sales are Rhapsody generated by the top 100 artists, does far more for exposing new artists than a major retail outlet like Best Buy where almost 50% of sales come from the same top group.

The panelists had a hard time agreeing on almost any topic, except for where music competition would come from in the near future. All of the panelists agreed that illegal P2P networks remain one of the biggest obstacles that legitimate alternatives like digital downloads and subscription services continue to face, but no one on seemed concerned about broadcast radio's efforts to compete in the digital space via HD Radio.

"Radio" or not?
The "Invasion of New Media" panel addressed the digital competition in a direct and blunt framework: panelists from Internet, satellite and terrestrial CMJradio outlets debated the nature of their products and made cases for which is better suited to a changing playing field.

The panel, moderated by Hot 97 PD John Dimick, opened with a question that has become more familiar at similar panels over the last few months: "Do you consider yourselves 'radio'?" The answers from the panel varied but nearly all distanced themselves from the tag, choosing to adopt titles like "interactive audio" instead of "radio", which, according to Tobi (pictured middle), PD of XM Satellite Radio's college and "indie" channel XMU, "has become something of a bad word."

The only "New Media" panelist who seemed to fully embrace the "radio" title was Adam Neiman (pictured below right), Format Lab PD for Clear Channel and one of the lead programmers for a number of Clear Channels HD Radio side channels. (Read previous RAIN coverage here) Neiman CMJ conferencesaid that the Format Lab initiative, which aims to deliver a certain amount of unpredictability and diversity to their HD Radio programming, is an attempt to take back some of the audience Clear Channel has lost to competing technologies. "We just need to experiment," Neiman said.

Ted Leibowitz, founder and operator of the Bagel Radio webcast (pictured far left above), noted that while he believes that Internet broadcasting does provide an excellent outlet for passionate Webcasters and audiences, the basic Net radio business model (which he described as increasing bandwidth costs as audience bagel radio increases) makes it difficult to pursue Webcasting as a revenue generating opportunity. All the experts agreed that this issue would change as bandwidth costs continue to drop and mobile delivery of Net radio content gives Webcasters new opportunities to reach audiences.

When asked about their companies' increasing streaming efforts, both Dimick and Neiman stressed the importance that Emmis and Clear Channel are continuing to place on webcasting. Neiman also said that Clear Channel would be unveiling a dramatically Clear Channelincreased streaming initiative in Q1 of 2007, but failed to elaborate the point with additional details.

Industry adoption of digital
The conference's sessions also showed a surprising rift within the digital music world as experts debated how they themselves XMUdiscovered and utilized the myriad digital avenues at their disposal. On a panel titled "Playlist Wars", DJ's from Internet, satellite and terrestrial radio, as well as a handful of reps from indie promotion companies, found little common ground when it came to how they handled the huge influx of music they digest on a weekly basis.

XMU PD Billy Zero said that he doesn't pay much attention to MySpace and similar online music sources, opting instead for physical delivery that lets him get more of a feel for the artists and their overall style. KCRW's Jason Bentley and CBC Radio 3's Grant Lawrence were the two most vocal supporters of online music discovery and recommendations, saying that they often found themselves more excited and engaged by MP3 files passed on to them by colleagues and surfing bands' MySpace pages than by the traditional packages they receive in abundance every week.


New opportunities
Pandora founder Tim Westergren was just one voice on the "Membership Privileges: Artist Exposure Through Web Communities" panel encouraging artists and labels to creatively take advantage of the digital music boom in its nascent stages. Westergren emphasized the opportunities artists have to promote Pandorathemselves through much more diverse avenues than before, and opportunities to monetize their efforts more effectively through online promotion.

Another panelist, Fuzz.com founder Jeff Yasuda said that the Net provides musicians and labels five major ways to increase revenues while maximizing Fuzzvisibility: creating and distributing podcasts, blogging, creating video blogs (or vlogs), "brute-force marketing", and RSS user-integration. Yasuda was also a very vocal champion of giving away music and content for free to increase exposure. "Selling music can make you money," Yasuda said. "Selling around the music can make you more."