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Connected Consumer 2012: A year of consolidation and integration

Fri, 30 Dec 2011 08:01:12 +0000

Call it the year of lessons learned, if not quite bubbles burst. In 2011, several trends in the connected consumer space that appeared inexorable at the start of the year seemed disorganized by the end. What does that mean for the next 12 months? From cloud-based media storage to daily deals to the fight for the digital living room, 2012 will be a year of consolidation and integration. Both entrepreneurs and investors will figure out that many once-promising standalone business models need to be grounded on more solid, integrated platforms to create real value. Companies mentioned in this report include Hulu, LivingSocial, Netflix and Zynga. For a full list of companies, and to read the full report, sign up for a free trial.

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Grooveshark to be sued by Warner and Sony

Janko Roettgers — Thu, 15 Dec 2011 15:41:47 +0000

Sony Music and Warner Music are about to sue streaming music service Grooveshark for copyright infringement, the New York Times reported on Thursday. The two major labels would be joining Universal, which sued Grooveshark’s parent company, the Escape Media Group, last month.

A joint legal front of the three majors is a bit of déjà vu for anyone who has been following the online music space over the past couple of years: Big music companies used to regularly join forces to pursue legal actions against numerous file-sharing companies like Napster, Grokster, iMesh and many others. However, the last of these lawsuits ended earlier this year with a settlement between LimeWire and the labels. LimeWire had closed shop over a year ago after being handed a permanent injunction. Now it looks like the majors may have moved on from the P2P space, targeting cloud music providers instead.

So why would Sony and Warner sue Grooveshark? The service is essentially a competitor to Spotify, something that became even more apparent when Grooveshark rolled out a major revamp that focuses on social network integration last month. However, unlike Spotify, Grooveshark doesn’t have licensing agreements with all rights holders. Instead, it offers users a chance to upload music and responds to take-down requests from rights holders, much in the same way that YouTube removes infringing videos from its site.

Grooveshark has struck deals with EMI and numerous indie labels; the company’s SVP of external affairs, Paul Geller, told me a few weeks ago that it is signing up between 10 and 20 labels per month. Universal, however, argued in its lawsuit that Grooveshark’s intent is to profit from infringement and that its employees as well as its executives personally uploaded countless songs to grow the site’s catalog.

The question is: With Grooveshark’s being sued by all three big majors and EMI’s being sold to Universal Music and Sony, will we see a return of the music industry lawsuits against online services? Back in the heyday of file sharing, the RIAA-led labels literally sued dozens of P2P operators out of existence.

These days, things are a little different, as many streaming music providers have been striking deals with the labels before launching their services. However, a possible victory over Grooveshark could embolden the labels to go after other unlicensed cloud services as well.

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Upset YouTube Users Strike Back at Music Biz

Janko Roettgers — Thu, 17 Mar 2011 17:56:29 +0000

Employees of Sony, EMI, Warner Music Group and Universal Music aren’t welcome here: That’s the message an increasing number of German bloggers and website owners are conveying online these days through a new project called Bust All Major Labels.

Geo-blocked content on YouTube...

The project is a reaction to the fact that rights holders have blocked hundreds of YouTube music videos in Germany, and it uses a kind of eye-for-an-eye approach to get its point across: Website owners add a few lines of JavaScript code to their site to actively block visitors with IP addresses owned by major labels.

Bust All Major Labels even copies the message YouTube shows its visitors when videos are blocked in a certain geolocation, albeit with a few differences. Employees of major labels are shown the middle finger, with a warning that reads: “The content of this site isn’t available for you. We’re not sorry at all about this.”

... and on German blogs. Can you spot the difference?

The two people behind the project are Christoph Maeschig and Mathias Keswani, who told German online magazine jetzt.de that they’re not doing this to fight the man. “We are not trying to say that record labels are bad,” said Keswani, adding, “We are just trying to say that we are annoyed.”

The heart of the conflict is that German rights holders haven’t been able to agree with YouTube on royalties for music videos. Germany’s performing rights organization GEMA is currently battling YouTube in court on this very issue, and more than 600 videos have been blocked on behalf of rights holders. A number of musicians have taken issue with this measure, complaining that they’re losing an important promotional opportunity, and many local Internet users have voiced their displeasure as well.

Maeschig and Keswani don’t expect that Bust All Major Labels will actually help to resolve the issue, but the duo told jetzt.de that they really just wanted to make a point. Said Keswani: “Record labels and YouTube are somehow working together in the U.S., generating millions in profits. Why can’t we do the same in Germany?”

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Big Data Marketplaces Put a Price on Finding Patterns

Stacey Higginbotham — Thu, 13 May 2010 14:00:31 +0000

A decade ago, scientists would collect data over a period of years, upload that data to a supercomputer, then wait for the opportunity to run it during a scheduled time. The process took months — or even years. Now, thanks to cheap processing power and the availability of compute clouds such as Amazon’s EC2 or Microsoft’s Azure, researchers can upload their data and start processing it immediately, as long as they can pay for the CPU time.

Even the government is using the cloud to process data. The National Oceanic and Atmospheric Association is using Amazon’s Web Services for its Ocean Observatories Initiative, a study surveying ocean temperatures to detect and predict climate change. And as James Watters, senior manager of cloud solutions development with VMware, notes, the coming trend will be moving your data to the cloud, rather than keeping it stored on hard drives or DVDs that are then uploaded to a supercomputer someplace, which makes the cloud a necessary tools for supporting future economies built around information.

Analyzing huge data sets with access to seemingly unlimited compute power isn’t just a benefit for climate researchers or those seeking to decode the latest H1N1 virus. The huge amount of digital information generated by financial monitoring companies, our interactions with people and products on the web, and government data (to name a few examples) is something that analysts, app developers and average citizens can all benefit from. The challenge is making that data intelligible and accessible, and that’s what Infochimps, Microsoft, and an emerging class of data marketplaces are aiming to do.

Imeem's Recap Round Doesn't Include Sequoia

Paul Bonanos — Wed, 30 Sep 2009 17:42:32 +0000

Imeem lost a key backer when the social music site raised its last round of financing this spring: Sequoia Capital. The stalwart VC firm, which invested in Imeem’s Series A round and followed on at least one other time, has apparently lost confidence in the startup’s ability to reap profits from free ad-supported music streams, and was largely washed out in the recapitalization round. Existing shareholders Morgenthaler Ventures and Warner Music Group provided money in the round, worth about $6 million, which first came to light in May.

The new investors valued Imeem somewhere below $10 million prior to the recent capital injection. (A TechCrunch report this morning pegs the valuation at $6 million.) Warner Music, which in May wrote off a $16 million charge on a prior Imeem investment, provided some of the new money, essentially forgiving future payments for streaming royalties in exchange for more equity.

Imeem has scratched and clawed to stay alive over the past year, taking Sequoia’s advice to downsize to some 50 employees from nearly 100, renegotiating royalty rates with record labels and arranging new funding to keep from going under. And it’s the latest digital music company to be valued at a small fraction of what it used to be worth: It was valued above $200 million at the time of a DAG Ventures investment in the summer of 2008. The company was also said to have retained investment bank Montgomery & Co. in search of a sale last fall, but no deal was reached.

The reduced valuation mirrors the fate of iLike, another social music startup that sold itself to MySpace for less than $20 million in August. The sale barely paid back its investors, who had valued iLike above $50 million in a 2006 round of funding with the hope of a much stronger return.

Amid humbled expectations, though, Imeem can survive, and may even reach profitability in 2010. For one thing, Warner Music’s acceptance of an enlarged equity stake represents a vote of confidence in Imeem’s survival. However, Imeem will likely face increased competition when Spotify lands on U.S. shores in the coming months, further crowding a free streaming space that also includes joint venture MySpace Music.

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YouTube Blocks Music Vids in UK

Chris Albrecht — Tue, 10 Mar 2009 15:00:11 +0000

The appropriate soundtrack for the latest music kerfuffle for YouTube would be “The Sound of Silence,” that is, if they let you hear it. Because of stalled negotiations with the UK’s Performing Rights Society (PRS), YouTube has blocked thousands of music videos in that country.

YouTube posted the following statement on its blog yesterday:

Our previous license from PRS for Music has expired, and we’ve been unable so far to come to an agreement to renew it on terms that are economically sustainable for us. There are two obstacles in these negotiations: prohibitive licensing fees and lack of transparency.

The PRS issued its own response:

Google has told us they are taking this step because they wish to pay significantly less than at present to the writers of the music on which their service relies, despite the massive increase in YouTube viewing.

The PRS also said that it did not ask YouTube to block the music videos, and that the action was done while the two were in the middle of negotiating.

If all this sounds familiar, it should. YouTube has had a rough go of it with music issues for the past few months. In December, YouTube got into a spat with Warner Music Group that resulted in music from that label being removed from the site. But not all negotiations for the video site have ended in lost content. YouTube reportedly reached an agreement with Sony earlier this year and just last week it was reported that YouTube and Universal Music Group were working together on a standalone music site to be called “Vevo.”

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Labels Looking to Hook Up With Hulu?

Chris Albrecht — Mon, 29 Dec 2008 15:53:51 +0000

A week after Warner Music and YouTube got into a public spat resulting in Warner music videos being pulled from the site, The Financial Times is reporting that major music labels might strike up a deal with premium content darling Hulu. Options being mulled by the the labels reportedly include partnering with Hulu, creating a premium service on YouTube, or creating a standalone venture (similar to Hulu). The FT doesn’t get too specific with its reporting when it comes to the Hulu news, writing only that:

Representatives of two music companies, who would not be named, said they were in discussions with Hulu, adding that no partnership announcement was imminent but that the site appeared to be the favoured partner. “If it happens at all it will be with Hulu,” one said.

Here the bump in one party’s head fits the hole in the other. YouTube has the audience (both in size and target demographic), but hasn’t monetized those eyeballs effectively yet. Hulu can monetize its audience, but isn’t nearly as big as YouTube. The music labels have all the content, but a joint venture between those control freaks would most likely wind up being a nightmare for its creators and users.

The labels’ would be smart to put their content on Hulu. With music videos responsible for so much of its traffic, losing them would be the kick in the pants YouTube needs and provide incentive for YouTube to come up with a better way to monetize that traffic. The trick for Hulu would be adding a ton of content without junking up its interface.

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YouTube, Music Labels: Stop Crying Over Spilt Milk

Om Malik — Tue, 23 Dec 2008 05:59:07 +0000

Amazing! I have been watching the spat between Google’s YouTube and Warner Music Group play out in the media — both online and in its offline variants. The bottom line of this corporate he said she said is that there are no more music videos that feature Warner artists such as Madonna. And a lot of it is two parties crying over spilt milk.

Warner complains it doesn’t make any money from Google, even though music videos are extremely popular on YouTube and are major drivers of traffic to the site. According to The New York Times, Warner made $639 million in digital revenues for fiscal year 2008, of which less than 1 percent (or less than $6.39 million) came from YouTube. Another Fellow music labels might soon follow Warner’s suit and try and renegotiate with YouTube or opt out all together.First of all, this complaining is high-grade manure. All record labels got a piece of YouTube right before the company was sold to Google in October 2006 — a stake that translated into about $50 million each. That’s $25 million a year for 2-year contracts. If the record labels were smart they would have made much more money — Google shares topped $700-a-share vs. $420 a share at the time Google snapped up YouTube.

I can totally understand why Google is asking Warner to take a walk — they feel like being held up by by local mafioso for more baksheesh and don’t want to play ball. At the same time, the record labels, too, have a legitimate gripe. Google has failed to monetize the professionally produced, highly popular music videos — a much easier sell than kitty videos to brand advertisers.

The bottom line is — Google’s YouTube has the traffic (and the eyeballs) and record labels have the content. The two need each other as much as baseball needs the Yankee dollars. So get on with it, guys — and stop crying over spilt milk.

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Amazon Now Offers Warner DRM-Free Downloads

Om Malik — Thu, 27 Dec 2007 15:05:51 +0000

Amazon.com (AMZN) has added DRM free downloads from Warner Music Group to its MP3 store, something Apple is yet to offer on its iTunes music store. With 2.9 million songs available for download, the Amazon MP3 store is a very legitimate player in the digital music business, and a true competitor to Apple, which has 5.5 million songs available but majority are protected by Apple’s own DRM.

I liked the download service when it first launched, and have often bought music from them, though it still doesn’t come close to the convenience and ease of use of the Apple’s iTunes.

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