The Future of Music+Technology, and Online Music

The Future of Music+Technology, and Online Music
What does the future hold? How will this complex puzzle be solved? Emerging technologies are already having an impact on the way music is created and consumed; how will technology change the way the issues are resolved? Although we are not fortunetellers, sociologists and anthropologists (including those who study technology) could say that the greatest predictor of the future behaviour is to examine the past … or, will a whole new world of music access emerge? This section discusses:

Emerging technologies and trends that will impact the music industry:
How technology impacts new music creation; new genres emerge
Wireless, WiFi and Mobile Music
Retailers transform into "eTailers" (e.g., Starbucks)
Gadgets; portable streaming devices (e.g., Real Player and Qualcomm)
Fan Culture
The PC as home entertainment centre
Dateline 2024:
Where will music come from in 2024? How and where will we listen to it?
How will it be created? Distributed? Accessed?
Who will pay, and how much?
What will the history books say then about the music issues we faced (and perhaps began to resolve) in 2004?
Until now, this report has focused on online music models, specific relevant technologies and short-term future technologies to be aware of, what the impact of new technology has been on music, and what the current stakeholder issues are. This section of the report will now take on a more visionary tone in order to discuss some of the thought leadership around the effects of technology future on online music. There are probably more questions in this section than answers, but the discussion is meant to be thought provoking, rather than definitive. We have already touched on some of the effects of the shift in power from the large and established musical industry institutions to individual technology users; these have manifested themselves as shifts in cultural values: from a behavioural perspective, in terms of attitude, and even shifts in moral and ethical judgment. But there are other things to consider, such as actual changes to the creation of music itself. These, and other emerging trends to monitor, are discussed here:

New Artists, new creative processes

Entire generations of people are growing up today believing that the prime source of music is through downloading from the 'Net. Some of these young people will become musicians and create music of their own. Indeed, some established musicians are curious enough to experiment with new structures and processes used to create new sounds and formats of music. Can downloading actually affect how music will sound? How will music be assembled? Will the way people access music have an effect on its content?

I believe the answer to all these questions is "yes". There are many indications that the creative process is already affected. Once music becomes digitized, it becomes not only susceptible to modification but is open for manipulation and redistribution through audio software. The fact that a piece of music has become malleable — that it is no longer a discrete, single artifact — means that the door is open for an interested "user" (which could be a fan, listener, different artist or the original creator) to re-enter the cycle of musical creation at any point, as was once the case for all music in tribal societies. Custom playlists, loop sampling, re-mixing and audio editing software are now becoming tools which blur the distinction between the artist who created the music and the user who once passively consumed it. With (sample licensing) or without (ripping) the original recording artist's consent, digital music is increasingly being viewed as an open-source information resource, which invites further innovation and creative input.

The Grey Album is an early example of how new musical works might be created in the future. Originally launched as an object of protest on "Grey Tuesday" (February 24, 2004), it is known as a "mash-up": a recombinant of musical elements developed by a DJ known as "Danger Mouse" from two other recordings already in existence: the Beatles' White Album, and rapper artist Jay-Z's the Black Album. Jay-Z's record label, Roc-A-Fella, released an a capella version of his Black Album specifically to encourage remixes like the one heard on the Grey Album. Despite praise from music fans and major media commentators like Rolling Stone Magazine ("an ingenious hip-hop record that sounds oddly ahead of its time") and the Boston Globe (which called it the "most creatively captivating" album of the year), EMI sent cease-and-desist letters demanding that stores destroy their copies of the album and websites remove them immediately from their sites (EMI claims copyright control of the Beatles 1968 White Album).

Therefore, on February 24th (see www.greytuesday.org), a day of "coordinated civil disobedience" took place, organized by Downhill Battle (www.downhillbattle.org), a music activism project. Over 170 online music websites posted Danger Mouse's Grey Album on their site for 24 hours in protest of EMI's attempts to censor the work, in spite of the fact that many of the sites received cease-and-desist letters as well from EMI's lawyers. The attempt to censor the music is an example of the lack of clarity around sampling rules and a plea for common-sense changes to copyright law: good new music had been created that people want to buy, yet the major labels are so obsessed with maintaining their historic perspective of copyright that they literally turned customers away.

But back to the music itself: Danger Mouse's album is one of the most "respectful" and positive examples of sampling; it honours both the Beatles and Jay-Z. Although "mashing" two albums together would have been possible in pre-Internet days for a DJ equipped with the knowledge of, and access to, sophisticated technology, using the Internet to mix the musical elements and create a new work is a sound example of what can be achieved musically in less time with less effort, using common tools available to anyone who has access to the Internet. The concept of combining electro-acoustic and "normal" music is not new; but the "mash-up" technique could become an art form unto itself, leading to new and interesting sounds. As well, a new creative musical role has emerged as a result of advanced technology: that of the club DJ, who radically re-contextualizes existing musical source material accessed from the Internet or other sources, thus creating a new musical work which bears his or her unique imprint.

Also because of the Internet, creators have a greater source of musical material and influence to draw from. As an example, I recently composed a piece of music based on sounds heard in Eastern Africa, from an area known inhabited by the Maasai people. While traveling there last summer, I recorded bird and animal sounds as well as traditional Maasai throat singing. However, some of my recordings were not clear and once back home, I needed to locate some similar-sounding music to check that what I was transcribing was accurate. I found what I needed by searching on the Internet. While surfing, I also downloaded some highly unusual bird-song samples from the area that I had not heard, which allowed me to add some complementary and authentic "accents" to what had already been collected. Access to this sort of obscure musical material would have been impossible even a few years ago; the options for an increasing number of unusual sounds are growing, and by using the Internet, the chances of discovering not only new sounds to incorporate or influence a musical work, but also new artists, groups and musical styles, is now so much greater.

Another unique use of the Internet by "e-literary" types, which may also inspire and influence musical creators, is the "blog". Web logging, or "blogging" has become a new form of literature that did not exist before the Internet. It has emerged as a distinct style and format of writing for diarizing one's thoughts and feelings, using principles that are quite different than conventional literary forms. Blogging is a clear example of technology influencing the way people communicate ideas and emotions to each other. While it is too soon to tell whether the Internet will have the same impact on music, what we are seeing is that musical subject matter, whether it is a pop song, a piece of jazz music, or a chamber music work, becoming more "topical". This is not a new concept: troubadours, or trouvères, who first emerged in the Middle Ages, commented on daily events as they occurred in "real time" by traveling around and singing to whoever cared to listen — in a sort of early musical blog format. Today a creator can bypass the traditional process of producing music: renting studio space, making a recording based on what the label thinks is appropriate and will sell, and distributing the music to radio stations for air-play. As a result, there is more music available now than ever which provides instant social commentary, and ever more frequently, these songs are not sold "commercially", but are only available by downloading them from the artist's website.

With software programs like Apple's "GarageBand", it is possible for someone with little or no musical training to assemble music tracks and pre-recorded loops into a piece of music. Although traditional compositional, orchestration or performance techniques cannot be taught overnight, relatively low-cost tools are available which provide a taste of what is involved in creating, performing and producing a musical work. Perhaps this software will provide consumers with a greater understanding of music and musical styles, and if nothing else, create increased respect for composers and performers.

The existence of these low-cost products for recording and producing music undermines the 20th-century distinction between Superstar artist and music consumer. When anyone who feels a creative musical spark can easily acquire the means to express and distribute their work, a fundamental shift has occurred. Technology has empowered users and as a consequence, new communities of creators are emerging. Another related trend that is emerging is the fragmentation of musical genres as defined by both creators and consumers in the digital community. Virtual communities of downloaders can invent or encourage narrow domains of musical style. For example, take a look at iTunes list of music choices: the same categories of music that one might encounter in any CD shop:

Top 40
Alternative
Blues
Classical
Country
Easy Listening
Electronic
Hip-Hop
Jazz
Latin
Metal
Pop/Rock
Urban/Rhythm and Blues
Folk

However in a CD store, there are often category types which are overlooked or downplayed, such as "Children's Music" or "World Music". However, the Internet has the ability to easily store, sub-divide, organize and present content which has allowed online music to appeal to a much finer division of tastes. Under the "Electronic" category alone on iTunes alone, one can find music that is characterized as:

Ambient
Breakbeat/Breaks
Dance
Down Tempo
Drum 'N Bass
Electronic Cover Songs
Electronica
Experimental
Game Soundtracks
Garage
House
Industrial Electronic
Techno
Trance

The "Techno" category is further subdivided into:

Acid
Detroit
Electro
Gabby
Happy Hardcore
IDM
Intelligent Techno
Rave/Old Skool

Who knew electronic music could be so complex?

These categories exist only because they have an audience: consumers who come to the distribution sites. This subdivision of musical niches, and the formation of virtual communities organized around them, somewhat corresponds to the notion of "fan clubs", rather than physical locations where music is experienced. More will be discussed on new forms of Fan Culture later in this section, but the point is that the Internet provides an environment that fosters the creation of new categories of music that before now, never existed.

Music Packaging and other creative activity adopted by composers because of the Internet

We have already seen that downloaders can make use of the powerful tools at their disposal to pursue their own musical ends, independent of the goals and aims of the traditional music industry. Prominent among these uses is the desire to acquire music that is unavailable by any other means, particularly music which is still owned by major labels, but which is now out of print and not likely to be released again. Other people use downloading to listen to new types of music to which they had no easy or inexpensive access before; others trade files among their existing social networks of friends (this type of exchange first occurred in the cassette format, and caused some concern among the record labels in the 1970s); still others are looking for concert bootleg recordings that they might never hear otherwise.

This concept of remixing, re-packaging, and of making compilations of music customized to an individual users' taste, is also a creative process. It is possible to purchase a CD of an artist's greatest hits; or a compilation of a particular style of music. However, many users prefer to burn and download tracks in order to produce their own bespoke package of music. In fact, in an informal survey of my friends and acquaintances, this is the most frequent reason cited for taking advantage of readily-available digital forms of music. It is not unreason to see the role of the traditional record company evolve to one of helpful suggestion, or subtle influence: in future, you might encounter, "If you liked John Adams' Symphony #1, then you should also try Alexina Louie's Songs of Paradise; or George Crumb's Ancient Voices of Children" on a website.

We have already examined the ability to dismantle a track and re-mix or "mash it up" with another track, all due to the nature of digitization. It is also easy now to disassemble an entire album, or even more specifically, in the case of classical music with multi-movement works, an opportunity (or a threat) to disaggregate segments of a larger work. Composers and creators need to consider the effect that consumers, who can now take apart and recombine movements, songs or tracks, might have on the overall presentation of their work. Listening to different tracks on different albums at random is a common consumer practice today. However with digital technology, a listener can also manipulate audio variables that will affect the way specific tracks sound, not just the order that movements or tracks will be played in. This means that every time an album or a larger musical work is heard, the consumer has the ability to make it sound different than what the composer/creator or performer had originally intended. This illustrates how, through technology and creative design, music can be customized to a listener's individual tastes, in effect becoming "designer music" — i.e., music designed by the listener. The ability to personalize music in this way will cause some creators concern, and certainly re-packaging, re-compiling and re-assembling music implies respect for certain copyright principles, but generally, creators are flattered to know that their music is a living entity that can evolve into something more than what was originally intended (as long as they receive credit for the initial idea). I believe that passive listening will morph into creativity activity: this is a trend that will evolve over time in other ways and means that we haven't even imagined yet.

Another emerging trend that bears some mention is the concept of interactive creation through the Internet, whereby an artist can encourage fans to contribute their input to a new project, or collaborate with other artists to explore new and interesting musical possibilities and increase their own exposure. If you think this sounds far-fetched, take a look at the artistShare website (www.artistshare.com). artistShare has already attracted the attention of some influential artists (Maria Schneider and her Jazz Orchestra; jazz guitar legend Jim Hall) and promises to provide a major service to both artists and their fans in the future of the entertainment industry. I will discuss other aspects of artistShare's contribution to the online music world later, but the idea here is that there is an interactive experience made possible through the Internet that allows both the creator and the fans to interact in a creative process.

Here is an excerpt of one participant's online experience during Maria Schneider's newest recording:

"I love observing, and thinking about, the process of artistic creation as much as I love experiencing its products. To hear some of Maria's new compositions at the 2004 IAJE Convention was already a thrill; it's an added joy now to be a 'fly on the wall' artistShare participant while Maria puts together her latest recording. Prior to the sessions, I found the rehearsal sound bites and score clips all very fun and instructive, and I especially enjoyed reading Maria's occasional dispatches from the thick of it. I was amazed at how well she kept her cool (or at least seemed to!) while making last-minute revisions, managing her musicians, and pulling together the project logistics. (I never knew that strategic catering was such an important part of the record-making process…)

But the best part came in mid-March during the ensemble's 4 days of recording. Bits of un-mastered takes, insightful interviews with several of the musicians, photos from the studio, and frequent updates from Maria or her assistant Ryan—with all this great stuff coming my way, I found myself obsessively checking the site every few hours to see what was new and find out how things were going … I was happy to have a chance to support this recording, but I never expected to feel so proud about it, and in such an oddly intimate and immediate way.

Beyond the sheer joy of being a Composer Participant, there's a significant educational element for me. After spending my 20s and early 30s as a … journalist and… fiction writer …, I embarked on a second career as a pianist, singer, and composer/arranger in the Baltimore/Washington DC area. As a relative latecomer to the scene, I don't have the opportunity to start over and get the kind of formalized jazz education most ambitious young players seek out these days. Maria's artistShare project has become one part of my ongoing self-study effort. I very much appreciate Maria's generosity in opening this participatory 'window' to her beautiful, visceral, one-of-a-kind music."

— Sandy Asirvatham, March 14, 2004, (from www.mariaschneider.com. See "This week's featured participant"):

Undoubtedly, more technology-enabled creative roles will emerge. Once the current innovative digital audio technologies become the accepted norm, a deeper and longer-range alteration to values associated with music can be expected. Audiophiles notwithstanding, music is experienced most of the time as background to some other primary activity; it is ubiquitous in public places, in addition to homes, cars, and privately via portable tape, CD and MP3 or iPod players. What value will be assigned in the future to a resource which quickly becomes a commodity that gives near-instant and nearly costless access to more choices than one could experience in a lifetime? The only direction indicated by the trends observed today is, "less than is given now"! This is why the technology behind fan culture is taking on even greater importance than before.

Fan culture

Of course, fan culture is not an "emerging" phenomenon in the music world. As long as there has been music and performing arts, there have been fans. However, reaching these fans in unique ways has become a socio-technological trend worth examining more closely.

The use of the Internet and related technologies has become the cutting-edge way for labels, artist's managers and technology representatives to market music. By studying the relationship between labels and artists with respect to artist websites and communications with fans, which often involve e-mail and SMS text messaging, we see an evolution from what was considered a commercial exercise to one that is now promotional, participatory and even artistically collaborative. Technology has created multiple communication channels which can be costly and time-consuming to fill on a consistent basis. Consumer expectations have become much greater: a few years ago, an ad in a newspaper or an article in a music magazine would satisfy most fans' interests about a particular artist. Now, some fans demand daily information via e-mail or SMS, and they want to receive very specific, detailed facts.

Fan websites (or, the once-simpler "Bio" pages, with lists of an artist's albums, work performed, live performance schedules and fan club contact information) make up part of the overhead costs borne by the marketing departments of the big labels. For example, BMG manages 35 artist websites, which require constant co-ordinated updating between the label and artists, for example, adding new content and promoting new releases and live shows. However, new Internet Marketing companies have emerged in the past 12-18 months which support smaller, independent artists who don't have the backing of the big record labels. These site "environments" utilize the latest developments in technology at a fraction of what it would cost an individual to build and maintain their own site without having to sign over control (and profits) to a record label.

artistShare (www.artistshare.com) is one such New York-based Internet company that has taken web marketing and fan culture to a new plateau. Established in February 2003, artistShare, founded by President Brian Camelio, offers a new concept in marketing and distribution for the arts and entertainment industry: an Internet-centric solution to music file-sharing, specifically targeted for artists and creators. Artists retain all copyright and ownership of their work; they can license their work for distribution while building a direct sales network; and they can maintain a loyal fan base by providing a unique and intimate experience for fans.

Custom information and products can be delivered directly to the artist's fans on a worldwide basis (via websites, PDA, e-mail, cell phone, etc.), including new tracks, samples, and information on current projects and activities. Streaming shows, presentations, live performances and lectures with restricted access to listening and viewing can be offered for one-time purchase or subscription series. As discussed previously, the artist can host interactive sessions where fans can contribute their input to a project; the artist can also collaborate with other artists to explore new art forms.

"artistShare is the only viable solution that I can see," says Camelio. "With the advent of the latest technology, it is becoming increasingly clear that there needs to be a fundamental shift in how artists do business. That shift involves the expansion of the product offered and a completely different payment schedule. artistShare will provide the platform."

Part of the artistShare offer includes "Artist-Track", a revolutionary way for artists to market their work. Fans that purchase an Artist-Track item (such as a musical work) through artistShare are automatically registered as the owner of that item. To ensure the authenticity and integrity of the item, ownership is tracked by a patent-pending process and is verified through the web interface. If the fan decides to sell their Artist-Track item, ownership can be transferred to the buyer for a nominal transaction fee based on the percentage of the sale price. The transaction fee is then paid back to the artist.

The artist benefits by collecting residual income on the resale of their art; the fan is guaranteed an original item; the item is much more difficult to pirate; and buyers can authenticate their merchandise before buying.

The first artistShare client to adopt the Artist-Track program for the sale of CDs was four-time Grammy nominee, jazz conductor and composer Maria Schneider (www.mariaschneider.com). Her CDs are available only via her website, and are no longer available in stores. By becoming an "Official Participant", her fans are given a personal account, and are then able to access streaming media, downloads, exclusive news and converse with her musicians, depending on the level chosen. In a way it's a modern-day version of the patronage system that was in place for hundreds of years from the Baroque through to the Romantic eras in western music — the concept of "staff musician". By sponsoring Maria, and paying the corresponding fee for a certain level of sponsorship (a "Platinum Participant"), she will give the sponsor an Executive Producer credit on her next album. This way, the fan becomes a genuinely supportive and integral part of the artist's creative process; this investment allows the creator to continue making great music.

Other artists with different types of "progressive" fan websites include the Dave Matthews Band (www.dmband.com); Jane Siberry (www.sheeba.ca); the Barenaked Ladies (www.barenaked.net); and Diana Krall (www.dianakrall.com). Incidentally, all of these musicians sell their music online, and in some cases this includes both (free!) downloads as well as CDs.

What about other technologies that will impact online music?

Wi-Fi and wireless networks and "Mobile Music"

Strong evidence emerged in 2003 that mobile networks and devices would become a key distribution platform for music over the next few years. The majority of activity in the sector so far has been partnerships between mobile operators and music companies for the purposes of selling goods and marketing their artists. This combination of technologies allow mobile subscribers to stream and sample new music as well as offering customized artist-related material via the handset. In addition, many major record companies create ring tones, "song snippets" that replace a phone's prepackaged ring. Ring tones and the mobile entertainment market first emerged in Japan and South Korea, where growth has been rapid because of a strong and ubiquitous wireless network infrastructure. Activity has spread throughout Asia and to Western Europe, and will likely reach Canada by mid-2004. As 3G (third generation) wireless technology and handset penetration develops, new services to be offered include music content, and more specifically music downloads. In the latter part of 2003, mobile operators, record labels and music-related companies such as MTV began to form partnerships that have led to the development of several new services. For example, a growing number of TV stations are beginning to sell 15- to 30-second downloadable videos streamed through wireless carriers, based on sports highlights or news broadcasts. In the UK, OD2 launched its download-to-mobile service in November 2003, allowing mobile users to download music and transfer files to a player device manufactured by Siemens. In the U.S., Warner Music is the third major record company to make material available for Sprint Music Tones, a ring tone service, following a Sony Music deal in July 2003 and a Universal deal in January 2004. AT&T Wireless is set to launch its "mMode" service in 2004 using the handset as a download channel for clips and full tracks to the PC. While it's too early to measure the revenues from watching television on a cell phone, the market for ring tones and downloadable music for cell phones was $4 billion worldwide last year (Charney, 2004).

The future of downloadable music to mobile devices will be advanced in 2004 by:

Intensive activity by manufacturers and network operators in search of new business opportunities from entertainment content, coupled with the development of innovative products by music, film and game producers.
Developments in 3G mobile technology, enabling delivery of video streaming to portable devices, and a proliferation of Wi-Fi hot-spots (discussed later) with broadband capacity.
Emergence of media-capable handsets, such as the Nokia 7700.
The development of wireless DRM-enabling distribution of content across mobile operator's networks, while protecting copyrighted content.
The concept of Mobile Music brings another dimension to content protection measures. Content owners have long been discussing the need to prevent similar scenarios occurring with content distribution over wireless networks. Although DRM has been cited as a necessary pre-condition for content owners to buy-in to wireless, issues of cost, workable business models, disparate and proprietary approaches, and the embryonic nature of mobile content distribution itself have put wireless carrier deployments onto the back-burner. Some industry watchers (Griffin, 2004) believe that wireless networks such as 3G, 4G and Wi-Fi will in fact provide the tipping point at which the entertainment industries will come to the table to cut a deal — long before other political or legislative pressures force them to make a deal. The "deal" would likely involve the previously-discussed flat-fee model (collective licensing) to collect the pot of compensation money and then divide it up, permitting a free exchange of artistic goods, and abolishing the need for DRM as strictly a policing mechanism. With mobile content revenues estimated at almost $55 Billion in 2008 (as per Forrester Research), it is encouraging to see that the Open Mobile Alliance (OMA) standard for DRM appears to be generating some traction in the market, with solutions vendors from HP, Access Inc., Mobilitec and Beepscience integrating the standard within their platforms. In the near term, the low availability of DRM-enabled devices remains the most immediate problem faced by the industry. Wireless carrier strategies must therefore remain focused on ensuring the availability and usability of DRM-capable phones, while determining which content types need to be protected and how their rights can best be managed.

We have already discussed RealNetworks and QUALCOMMs' joint announcement on March 22, 2004 (i.e., the introduction of chipsets with video streaming capability for use in portable devices); as well as HP, and other cellular handset device manufacturers getting involved in the Open Mobile Alliance. All of this new disruptive technology to be introduced in the next 12-18 months, which combines entertainment content and convenience through hand-held portable devices, will need a network to run on.

That network is Wi-Fi (short for wireless-fidelity), based on a technical standard (specifically, IEEE 802.11(b), (a), (g) and (e), each offering different speeds and services) for wireless LANs, delivering broadband Internet access without the need for physical connection between a computer and a network. The same technology can be used to send or receive music over a distance — though a finite one — without having to run cables through walls, between buildings or through metropolitan neighbourhood areas. Wi-Fi networking provides unwired entertainment capability, one in which music systems can be integrated into, and accessed from a home, office or public place (e.g., airports, trains, parks, malls, restaurants, even in Starbucks coffee shops) virtually transparently, with nothing more required than a laptop computer and a Wi-Fi card in order to log in. It is also possible to use Wi-Fi networks to link to a car audio system.

The technology works in two ways, depending on the application. In the home, office or public location, where a stereo system is usually fixed and so always "in range" of the wireless network, a receiver unit offers access to a PC and the digital music files stored on its hard disk drive. It also supports access to broadcasts streamed over the Internet. The automobile system works in a slightly different way because the receiver would soon be out of range of the wireless network when the car is driven away from the home. To counteract this problem, the car unit would be equipped with a hard disk drive (min 20GB) on which data can be stored. A control panel which fits in a standard in-car audio slot in the dash-board is used to control the system. There are plans to link Wi-Fi "hotspots" to cellular and satellite networks in the future, providing seamless hand-off capability, not just for downloaded music but also for video broadcasts.

The regulatory issues and legality of downloading music via Wi-Fi remains troublesome. Internet carriers have not yet been granted all the legal permissions of being a "common carrier" like telephone companies; telcos have been immunized against prosecution for the content of phone calls, even if they're between villains planning a criminal act! To offer Wi-Fi music services, the recording industry would first have to get the courts to agree that Internet providers are not common carriers, and then would need to work out who would police content distribution activity on their networks. So far, governments considering the matter have been understandably reluctant to agree that while Internet providers should be held responsible for the data they carry, telcos and cable companies are exempt. Adding to the complexity is that some telcos own and operate Internet providers (for example, Bell Canada and its Sympatico service).

We have already seen Wi-Fi technology being used by Starbucks, where, in partnership with Hewlett-Packard Co., they have recently introduced an in-store music downloading and CD burning service called "Hear Music Café". Most major record labels and several independent labels have agreed to supply music to the service; HP is supplying the Tablet PCs, workstations, CD publishing and printing systems, printers, data storage and servers, software and user interface. Starbucks sees this customized CD service as an add-on to their current business. For several years they've sold a selection of CDs in their stores, and several years ago the company bought the small record-store chain "Hear Music". Customers frequently inquire about the music being played in Starbucks stores, so the download service now gives customers an opportunity to purchase the music they hear while enjoying their java. Many of Starbucks' customers are older consumers who do not go to record stores and who do not burn their own CDs; Starbucks wisely sees this as a unique opportunity to leverage and enhance their brand. A Starbucks store in Santa Monica, California, is the first location to offer the service, followed by ten stores in Seattle and plans to offer the service in 2,500 Starbucks stores across the U.S. by 2006, with expansion into outlets in other countries over the next four years (there are over 7,600 Starbucks locations worldwide). The company plans to develop its service so that customers can also download music to their laptops and portable players using Wi-Fi network technology, which is already installed in most Starbucks outlets in the U.S.

Video Streaming

As other online music companies scramble to match the success of Apple's iTunes, a different online-music economy is emerging around the sale of recordings of live performances, often with no restrictions on how they can be played or shared. Since starting up in 2002, Live Phish Downloads (www.livephish.com), which offers audio files for about 50 of the concerts for the rock group Phish, has generated more than $2.25 million USD in sales. Combined with companies like artistShare, and the potential instant worldwide marketing provided by online music stores, Live Phish's success has helped creators see the potential to become their own distributors online.

By the morning of January 2, 2004, Phish fans worldwide could pay $11.95 to download the prior New Year's Eve concert from Live Phish Downloads, which posts live recordings of every Phish concert for sale within 48 hours. A related company, www.Nugs.net, has posted recordings of other concerts on a site run by LiveDownloads (www.livedownloads.com). The Dave Matthews Band has also agreed to set up a downloading site with Nugs.net. While other bands following a similar model have focused on selling concert recordings, the Dave Matthews Band is now selling its albums and concert recordings through an online downloading catalogue.

As discussed, the concept behind fan culture is to let performing artists become more involved with their fans. Video streaming of concerts through fan sites is one more way of achieving that. It gives fans access to officially sanctioned recordings and also conditions them to not expect to get something for free (many "fans" are, of course, also downloaders). These video services help bring revenue to the creators by selling valuable content and at the same time, nurturing the relationship with their fans in a positive way.

Most of the budding concert download sites (including Live Phish Downloads) sell unrestricted files, meaning there are no limitations on where or how many times the file can be copied. The idea is to make downloading music products easy, convenient and flexible to use on a variety of devices. The fan site hosting companies realize that there will always be people who are intent on accessing the content for free; all they are trying to do is make it easier for the vast majority of users who want to "do the right thing". Some artists do want copy-protection or restricted use; others don't care. For example, Phish recently gave would-be pirates a new incentive to do the right thing, announcing that it was donating its profits from Live Phish Downloads to a non-profit group supporting music education for children (Schiesel, 2004).

Other similar services are entering the live-concert download store market: two are BackOfficeMusic and DigitalSoundboard (www.digitalsoundboard.net). "Nugs.net" is also a successful fan site in addition to offering high-quality online shows. In addition to the pay sites, Nugs.net offers dozens of free concerts, in both streaming and downloadable formats. They have recently formed a partnership with "Musictoday", a company that provides Internet services to over 250 bands including Metallica and the Rolling Stones. Musictoday already offers services like Web music stores, ticketing and fan club support to its artist clients and now also offer musicians a downloading service powered by the Nugs.net operation.

Until now, bands that sell concert recordings are best known for their improvisational live performances, so it is these groups that the technology is well-suited for. However it could also be extremely useful for the classical music industry, which has not yet embraced video streaming like their pop music relatives have done. Opera, symphony and jazz performances are all excellent candidates that would benefit from the increased exposure and marketing to remote but appreciative audiences, though the distribution model might not appeal to these musical art forms until there is more evidence of potential profits.

Emerging Home Entertainment and Portable Devices

It is because of these new and interesting ways of accessing and enjoying content (like video streaming) that consumers are embracing both the new portable and fixed entertainment platforms. What we are beginning to see is an increased complexity of listening behaviours on multiple platforms in the home and "on the person". Seamless networking and content management will be key features for compelling audio and video products and services. Consider today that to listen to music while "untethered", we have a choice of car CD players, personal CD players, portable MP3 players and iPods; and once in the home, we use our PCs as "jukeboxes", as CD players, as portable CD players (in the case of laptops), and or course we also have our traditional fixed stereo systems — in some cases, several — in the home. Not to mention the fact that we use cell phones to speak on and PDAs and laptops to keep ourselves organized and do our work on. It's no wonder that all of this "gadgetry" can seem intimidating to us, as users.

Device manufacturers are also intimidated: not only are entertainment dynamics changing, but because today's consumers can choose from a multitude of distribution, device and content options — and because all of these are somewhat inter-related — content providers (i.e. the record labels), device manufacturers (i.e. the MP3 vendors) and service providers (i.e. ISPs, wireless carriers), are all challenged too, as they ponder varying consumer consideration and purchase cycles because of these options. The key drivers are undeniably interoperability and ease of transition from one device to another. Consumers want the ability to listen to their music anywhere, and they want it now.

The next two areas of emerging technology discuss both portable and "fixed" systems.

From iPods and other portable gadgets to streaming hand-held devices, and beyond

Digital audio technology has initiated an increase in device competition and also a requirement for device integration. Gadgets have moved from being a cheap piece of consumer electronics to a combination of technology and sociology, just as the cell phone has become. Wearable devices make it easy and convenient to enjoy background music, making iPods and other MP3 players disruptive, or "transformative", technology.

The iPod is not a fad — it has liberated the digital music discussion. Consumers armed with this technology have been able to enjoy the benefits of online music in interesting ways. The iPod has set new standards, brought about new attitudes and behaviours and these changes help to show other users the possibilities of what can be done with digital music and portable storage.

Consumers are now aware of the legitimate alternatives to free downloading because of the iPod and iTunes. This awareness has become part of popular culture and has brought a renewed interest in music. In fact, at no other time in the history of the music industry have so many people indicated that they cared enough about music to pursue it in the way that they do. Although we're finding it rather difficult to monetize the concept, I believe that by analyzing the models and studying user behaviour, the solution to calming all the turmoil will emerge — and it's certainly been given a kick-start with the iPod.

Realistically, no user is going to fill an iPod with $20,000 worth of music. To date there are only about one million iPod users, and the amount of money that the iPod has made for the music industry is still very small. However, the device is a concept gadget for a "digital lifestyle choice", becoming a symbol of freedom, fun, mobility and individual expression. Users are now expecting a combination of features: content, software and hardware … and soon, networking.

The iPod and other MP3 players are not the only gadget-centric businesses round. We have already mentioned the plans that HP has announced earlier this year, and Sony has plans to launch technology that goes beyond their original MiniDisc device this year. Perhaps more than any other high-tech company discussed in this report, Sony understands the power that integrating technologies like Wi-Fi, inexpensive storage and personal gadgets gives to consumers in order to access and manage their digital entertainment requirements. Sony has already established itself in the consumer electronics, computing and mobile device markets; and Sony Music is a major player in the music content business. Although it claims to have been negatively impacted by online music file sharing, Sony has also decided to enter the competitive online music business, planning to introduce a service in mid- 2004, first in Japan and then in North America and Europe, to deliver digital files to the variety of electronics and mobile devices that it manufactures.

Record labels like Sony are slowly beginning to understand that they must create new media services through channels that consumers will pay for, so although they are already well behind both Microsoft, HP and Apple in their announcement, when they do make one, it will undoubtedly be some type of consolidated entertainment package, bringing an integrated Mobile device + content service to market for the first time by a single vendor. My suggestion: buy shares now.

The PC as Home Entertainment Centre

In most businesses, the PC forms part of an Information Technology system. In the back office of a business, there is a massive data centre that oversees the storage, management and distribution of content, and delivers it to PCs, printers, and many other devices; all of that technology is connected over a local and/or wide area network (LAN or WAN).

In a home, the evolution of the PC in coming years will involve building a "data centre" for the consumer, similar in concept to what has been assembled for businesses. This technology will allow users to customize their entertainment by enabling them to access, manage, distribute, edit and store any content from anywhere at an affordable price, in a simple and enjoyable way. This is not a far-fetched concept: many high-tech companies (IBM, Dell, and the two thought-leaders in this area, Apple and HP), are building prototypes of this technology now.

The concept starts with a "Media Centre" PC, which allows the user to manage and enjoy all their personal digital content from one place. As it evolves (HP claims their version will be ready to ship in 18 months), the PC will emerge as the hub of a "Digital Entertainment System". It is already possible to purchase competitively-priced entertainment displays from several vendors, including both large LCD and plasma screens; these digital displays are used as high-end TVs, offering superior audio and visual capabilities, with an imaging engine that displays high definition resolution. In time, these displays will become more than TVs, but rather digital displays, allowing a user to view any content from any source of any kind, which TVs and PCs on their own don't do very well today. Next-generation digital projectors would also be integrated into these Digital Entertainment Systems for a home theatre component.

HP's version of these entertainment centre products also support Microsoft's Media Center technology, announced in March 2004. This combination of hardware and software will provide high-end processing devices that allow consumers to access digital entertainment residing on any Media Center PC in the home, even if it is being used at the same time in another room. Starting in Fall 2004, the first generation of HP's entertainment centre product will be available. With it, a user can not only watch and pause live TV and record TV shows from any source (cable, satellite or HDTV), but the centre will also become a repository and distribution storage point for a user's entire digital entertainment collection, including music, photos, games, videos and movies throughout the home. It will have the processing power to access entertainment content including new releases of music and video on demand. It will also allow users to access online services with telephone, broadband, cable and satellite connections via the newest communications technologies such as VoIP and other soft-switch technologies.

Although HP is the first technology vendor to make announcements around these "Super Entertainment Centres", others are on the way. The emergence of these integrated, interoperable systems, coupled with digital TV recording services like TiVO, Internet radio, video streaming of live concerts and an abundance of online music services, serve as a signal for what we can expect to look forward to in terms of consumer musical entertainment over the next several years.

The concept of "Bundled Entertainment"

One other emerging trend that ties together much of what we have just discussed involves "bundled entertainment". The companies that are most likely to offer service bundles are ISPs. Downloaded music, movies and games, online photo services, Internet radio, security applications (with incorporated DRM), web storage, online banking, even pop-up blockers and Spam filters will drive solid interest in consumers over the next few years. Consumers' willingness to pay for packages of applications from a single Service Provider will drive ISPs to combine all elements for offer under "one roof". From here, it doesn't seem unreasonable to suggest that ISPs might also then add a small monthly royalty fee that they could collect and then distribute to creators and content owners.

Voilà! A logical online music model will naturally emerge, not through complex legal contortions and wrangling, but because the availability of content packaging delivered via new technologies becomes highly desirable to consumers, thus requiring a workable business model to emerge that makes simple economic sense: collective licensing.

Follow the Emerging Trends

The pressures created by the technological developments discussed in this report have created an environment in which the economic and societal norms that once governed the roles of music in society are being challenged, and in some cases, dramatically altered. Figure 5 summarizes the resulting dichotomy of practices in conflict. The left column represents the status quo prior to the availability of music downloading, while the right column represents the impact of digital and networking technologies on music, and a glimpse of what is to come in the future.

Figure 5: Transformations in Music Culture

Yesterday and Today Yesterday and Today
Centralized Markets — five major record labels seek millions of buyers for relatively homogeneous products; media market concentration; economies of scale Niche Markets — thousands of music producers cater to highly specific tastes of smaller groups of users; market fragmentation; economies of specialization
Planned, Rational Marketing - decisions are based on competitive strategies Self-organizing, emergent Marketing — based on the collaborative and collective actions of millions of network users (digital community networks)
Discrete objects — CDs, Super Audio CDs, Audio DVDs Music embodied in information-based format: MP3, WAV, RealAudio
Economics of scarcity — supply regulated by record labels, physical production and distribution Economics of abundance — P2P networks use demand to create self-reproducing supply: the more popular a file is, the more available it becomes
Mass Distribution — traditional retail distribution channels, B2C (online shopping already exists) P2P Distribution — direct user-to-user distribution via file-sharing networks (virtual marketing)
Centralized content control — product content based on the judgment of industry experts (A&R divisions of record labels) Distributed content availability — determined by collective judgment of users; any content can be made available
Scarce, expensive production resources — use of traditional recording studios, CD presses Ubiquitous, low-cost production resources — Digital audio workstations, MP3 storage media, other IT storage media allows "anyone" to create
Product-based revenues — Economic success measured by retail sales of packaged CDs Service-based revenues — subscription services; creation of secondary markets in underlying IT production and playback via hardware and software
Proprietary music — fixed, static, copyrighted musical product Open-source musical information — musical information as resource for further manipulation (remixing, sampling, mash-ups)
Creator/consumer dichotomy — The "industry" (Stars, Labels) creates music; buyer is a passive consumer of finished product Creator/consumer convergence — user has power to participate in musical process via Digital Audio Workstations and networks

Conclusion

Besides the esoteric artistic and realistic technology trends, there is a commanding counterforce at work in the online music world. This is, of course, the powerful record label industry, which has been increasingly successful in concentrating power and wealth within a few conglomerates that simultaneously compete and collaborate. Using their extraordinary lobbying power, they have been able to influence institutional decisions and public opinion. The industry's relentless attempts to protect content through a combination of legal and technical measures is based on the position that the concept of copyright as it applied in the industrial age should be extended into the digital age, with no significant changes. While the war on piracy cannot be won by its annihilation, the music industry is striving to force compliancy from the majority of consumers, and in doing so, this would allow the industry to maintain market control (or so it might think). In that case, a limited, if vibrant, underground market of file swappers and non-paying customers could be tolerated (Biddle et al, 2002). Certainly the record labels have both enormous technological resources and superior expertise at their disposal, which they are attempting to use to justify the prices they wish to charge for access to intellectual property. But there is no agreement, even among the decision-makers of the major industry players themselves, about how to deploy such resources in defense of their markets. And, despite all the legal "might" they have mustered to enforce their "rights", their efforts are seen as derisory by most of the other stakeholder groups.

My belief, and that of many others who are attempting to take a more esoteric and holistic view of the online music situation, is that it will be Culture, that is, the collective construction of values and beliefs that shape behavior, that ultimately shapes the outcome of the debate on what should be allowed or disallowed in the context of distributing digital content, and leads us to the "best" (most workable) business model. If cultural values concerning the exchange of information and intellectual property really change at a deep level (and this might be simply a generational question), and as people develop new patterns of social interaction in digital space, then no effort, whether legal, technical, or economic, will prevent people from freely trading content in digital space.

I believe this is the real purpose of the Internet, if we apply media theorist Marshall McLuhan's famous and provocative statement that "the medium is the message" (McLuhan, 1962). Peer-to-peer file-sharing is, in a sense, the natural descendant of the design of the Internet, in that it must be accepted — precisely because it takes full advantage of the inherent power of the network. Digital community networks have emerged from P2P networks as the new forms of social and economic organization, and are capable of creating tremendous value to societies and economies. How to monetize, and then to operationalize the "winning" model remains, for now, a Holy Grail of sorts.

Back to the Future: Dateline 2024

If you think of Moore's Law which states that the processing power of a computer doubles every 18 months … then, twenty years from now is a looooong way ahead in terms of technological advancement. Cultural practices tend to change at a slower pace, although no one could have predicted the profound and rapid changes in music creation and consumption that have taken place over the past three to five years; although they are easily explained as changes "caused" by the Internet and other technologies. Here are a few of my predictions for the year 2024 that pertain to the online music situation:

ISPs/telcos will be collecting a flat-fee royalty through a communication subscription services. However, telcos and ISPs will be government-run utilities which also include providing services like power and other municipal infrastructure elements, to consumers.
Government-run ISPs will become aggregators of content, and all entertainment services will be offered by ISPs, and offered as bundled packages. The more content a consumer signs up for, the greater the savings. Music will be one element to choose from in the entertainment bundle. All-you-can-eat music, 24 hours a day!
Everyone (who wants one) will have their own personal music consultant. It may be an avatar, but it will be a very hip and knowledgeable avatar, just for you.
Many consumers will actually own creators' works because a system of music patronage (first pioneered by Canada's Department of Canadian Heritage) will be operating in full force. Some musicians' entire body of musical works, and their incredible website environments, will be publicly traded companies.
We will finish work for the day and then watch our favorite artist's live concerts on our huge wall-sized HDTV entertainment centre screen—or screens, which are now installed in every room in the home.
All homes will use wireless connections to link all entertainment, communications and computing requirements. Besides screens mounted in every room in every home, there will also be small, high-grade wireless speakers and small wireless entertainment console panels available so that any type of content anywhere in the home can be accessed.
Virtual concerts will take place frequently, where artists from all over the world will take part in multi-media performances even though they are in physically dispersed locations. Concert-goers have the choice of watching from home or going to their favorite pub, concert hall or arena to take in the show.
All radio, TV and live or time-shift performance programming will be based on the TiVO system, which was bought by Microsoft in 2010.
Our personalized, virtual digital media content "bubble network access" will move with us from the home, to the car, to the office, on the plane, to the restaurant, golf course or country retreat. All voice communications, digital entertainment content, and personal communications will be accessible through the bubble, which will also act as a personal security device.
There will only be one recording "label" still in existence in 2024. It will be strictly a clearing house for all royalty distribution payments, and will house virtual copies of all music ever recorded. It will be run by a co-operative of artists, former music industry execs, former copyright lawyers and the son of Bill Gates.


http://www.pch.gc.ca/progs/ac-ca/progs/pda-cpb/pubs/online_music/9_e.cfm