music content management, label licensing, business models ... · realnetwork’s for their b2b...

Music content management, label licensing, business models and

where the money goes

Peter Mödlhammer

2 RealNetworks Confidential

About Peter Mödlhammer

Peter Mödlhammer studied Computer Science at FH-Salzburg and is planning to finish his MBA in General Management at the Salzburg Business School by end of the year.

Since mid 2002 Peter Mödlhammer has been working in the IT industry as developer,

software-, system architect, project- and program manager. Since 2006 Peter Mödlhammer works within RealNetworks. His role has changed

overtime, from leading a development team in Salzburg for customers like Vodafone (Global, IL, NL, TR, DE, ES), Mobilkom Austria Group, etc. focusing on Music Content Management. Furthermore running a Music focused Content Operations and Management group within an international environment that included external and/or internal teams distributed and serving content around Europa.

My current adventures are around leading and growing new business within

RealNetwork’s for their B2B products in the mobile carrier space.


Presentation outline:

Music content management, label licensing, business models and where the money goes

How digital Entertainment, special digital Music entertainment works - Licensing - Content Management - Business Models

So how to manage and run a European Music Content Management System in a B2B2C as well how all this works together? Who plays a role within the music game and why is music still such “expensive”?

The session about CMS, licensing and business models will outline the key shareholder and stakeholder within the business and the key items to setup and maintain a business with more than 8 Million Music tracks.

The session does not go into details about artist and label promotion and how to develop a music carrier but focuses on what really matters from a practical standpoint to be successful within the business.

SaaS Games RealPlayer

Digital Media for network service providers and consumers with

carrier-quality delivery

Mobile, Social and Online Casual Games; Fusion

Technology for socializing games

Delivers OTT and media management

tools directly to consumers

103 carrier

customers worldwide

>1B subscribers

to SaaS solutions worldwide

>165B inter-carrier

messages in Q4 2011

50M monthly unique

casual game players

25M monthly unique

users of our latest version

RealNetworks today

The demand for digital entertainment services and products is growing very rapidly - year by year. To support all the needs and business requirements a professional back-end system as well professional back-end processes are required. The strength of a CMS (content management system) lies - both in the range of content as well as in the structural intelligence to support the global digital music entertainment by delivering an end to end value chain, ranging from licensing, quality ensuring and distribution to customer including seamless support, billing and reporting capabilities.

Global Digital Music Entertainment


Music Player Market

Walkman

Discman

iPod (Mp3-Player)

Million Units Sold


Digital Music World 2012 – Numbers & Facts •  20 million – tracks licensed by record companies to digital music services •  500+ – licensed digital music services worldwide

http://www.pro-music.org/Content/GetMusicOnline/OnlineStores.php

•  $5.2 billion – trade value of the digital music market worldwide •  8% – growth of global digital music revenues in 2011 •  32% – the proportion of record companies global revenues from digital

channels •  1000%+ – increase in the value of the digital music market (2004-2011) •  -31% – decline in the value of global recorded music industry (2004-2011) •  -77% – estimated fall in debut album sales in global top 50 (2003-2011) •  -26% – number of peer-to-peer file-sharers fell within one 1 year in

France after “Hadopi” law •  99% - China digital piracy rate in the last recent years


Digital Music World 2012 – Numbers & Facts The global top selling digital singles of 2011 (total: 3.6 Billion)

Ar*st Title Sales (m)

Bruno Mars Just the Way You Are 12.5

Bruno Mars Grenade 10.2

LMFAO Party Rock Anthem 9.7

Jennifer Lopez On The Floor 8.4

Adele Rolling In The Deep 8.2

Lady Gaga Born This Way 8.2 Pitbull O. No-‐Yo, Afrojack & Nayer Give Me Everything 8.2

Black Eyed Peas The Time (Dirty Bit) 7.3

Maroon 5 Moves Like Jagger 7.0

Bruno Mars The Lazy Song 6.5


Shareholders and Stakeholders within the digital music business

Ar\st, Writer, Composer (e.g. U2,

Adele)

Music Record Label (e.g. Universal, Zebralu\on)

Digital Service Provider (e.g. RealNetworks)

Digital Retailer (e.g. A1music, iTunes)

Publisher, Collec\on Society (e.g. GEMA,

AKM)

Music Licensing


Music Licensing (I) •  Publishing Rights: The first is the copyright in the underlying composition and

includes the lyrics and melody of the song. These rights are controlled by music publishers.

•  Master Recording Rights: The second copyright is the recording of the song (i.e. the actual sound that comes off of a CD, record, or MP3.) This is a separate work of creative expression, and so has its own copyright. These rights are controlled by the record labels.


Music Licensing (II) •  R1 – Reproduction: any time a copy of the musical recording is made. •  R2 – Communication to the Public: which includes:

•  R2a – Distribution: meaning any time a musical recording is distributed online, whether as a download stream or otherwise.

•  R2b – Public Performance: meaning anytime a musical recording is publicly performed. •  R3 – Adaptation: any time a musical recording or the underlying composition therein is adapted,

remixed, sampled, etc. •  R4 – Synchronisation: any time a musical recording is used in conjunction with moving images,

whether in the form of TV, films, advertisements, computer games, etc).


Music Label Licensing @ RealNetworks

RN licensed by Real Networks VF licensed by Vodafone

SFR TA licensed by SFR MAG licensed by Mobilkom Group not ac\vated

Product Live Cycle (PLC) & Content Management System (CMS)


Music Product Live Cycle (physical) The Music / Song Product Live Cycle (physically oriented MPLC) 1.  Development – Music / Song Recording 2.  Introduction – Radio 3.  Demand growth – MTV (Trend indicators) (a) Release Single 4.  Maturity – Mainstream trend establishers (b) Release Album 5.  Saturation – Mainstream trend followers 6.  Decline

Demand

Time


Music Product Live Cycle (digital) The Music / Song Product Live Cycle (digitally oriented MPLC) 1.  Development – Music / Song Recording 2.  Introduction – Radio, Twitter, Blogs, Facebook, etc. (a) Pre-Releases Single/Album 3.  Demand growth – MTV, YouTube, Facebook, Twitter, etc. (b) Exclusives / Pre-Orders 4.  Maturity – Mainstream trend establishers (c) Release Single/Album 5.  Saturation – Mainstream trend followers 6.  Decline 7.  Further grows – Concerts & Promotions

•  Give fans a reason to buy •  Freemium – fans will spread a word about you •  Offer Product packages & bundles •  Generating buzz – Turn people into fans •  Co-branding – Corporate with industry and Other Artists / Bands

Demand

Time

(a) X

(b) X

(c) X


Music Content Management System Co

nsum

er & User • Provide

featured Storefront (Web / Mob)

• Enable Mobile Client / App

• Search en\re content catalogue

• Download & Stream Music

• Recomme-‐nda\on

• Lists & Playlist Management

Labe

l / Ar*st

• Content Upload & QA

• Content Management

• Account Management

• View and download aggregated payment reports

Edito

r • Create/edit feature Lists

• Manage Content inges\on

• Write Album, Ar\st review

• Label promo\on nego\a\on

• Marke\ng

• Content promo\on

Repo

rter

• Collect 3rd party sales data

• Generate Ar\st/Label execu\ve Report

• Detailed usage reports (Ar\st, Channel)

• Generate trending reports

Live PlaEorm Service •  Label and

Technical Management

• SLA and KPI management

• Global Plagorm Management

• Product LiveCycle


CMS @ RealNetworks

Digital content provider Aggregators / Label / CD / other

Content inges*on & normalize

Metadata Clean up & categorize

Verify Assets & transcoding

Content delivery Data/Asset Storage

Commer-‐cialise & publish

Editorial & Marke*ng

Content Providers Content

6

1

3

2

4 7 5

1.  Digital Content provider (40± providers) deliver Audio Files, Album Images and Metadata XML files via (S)FTP or Web service

2.  Label Content is verified (Quality of Metadata). The Music-Metadata (e.g. Artist, Song, Title, Genre) are normalized and ingested into the CMS DB

3.  Audio and Image Assets are verified (automatic verification and manual sample checks). The required Audio/Image quality is generated

4.  Original Audio and Image Asset are stored on backup storage. Customer ready files are published to a CDN (Content Distribution Network)

Repor*ng 8 End User


CMS @ RealNetworks

Digital content provider Aggregators / Label / CD / other

Content inges*on & normalize

Metadata Clean up & categorize

Verify Assets & transcoding

Content delivery Data/Asset Storage

Commer-‐cialise & publish

Editorial & Marke*ng

Content Providers Content

6

1

3

2

4

End User

7 5

Repor*ng 8

5.  For high value and high priority Songs the Metadata is updated manually and the Songs/Albums are categorized (Genre, New Release, ...)

6.  The commercialisation engine applies all contractual requirements and business rules to the music content catalogue including setting the correct end consumer price. The customer ready data is further published out to the storefronts

7.  Editorial and Marketing Pages/Promotions are created (automatic and manual) and reviews are written

8.  All sold items are reported back to the Digital content provider


Music Metadata – why they matter (Songs)


Music Metadata – why they matter (Artist)

Business Models


Music Download vs. Music Streaming Music Purchase – “Music Download” •  Music Ownership •  Download DRM Free Music Songs •  Pay per Item (Track/Album) •  Unlimited personal use of purchased

content •  Multi device music download •  Large amount of legal and illegal services

Music Access – “Music Streaming” •  Music Rental •  Music online (cache) streaming •  Pay per moth (subscription) •  Limited personal use of entire music

content •  Single device music availability •  Rapidly growing amount of legal

services and “no” illegal services

Example: A1music Example: Spotify


Where the money goes – Music Download Single purches

Song 1,29€

Tax 20% (0,22€)

Music Label (0,5 -‐ 0,9€)

Collec\on Society (0,1€)

Digital Service Provider (0,1 -‐ 0,15€)

Retail Store (0 – 0,3€)


Where the money goes – Music Download Bundle subscription

10 Song sub. 4,99 €

Tax 20% (0.83€)

Music Label

(2,7€ * % MS)

Collec\on Society (1€)

Digital Service Provider (0,7 -‐ 1€)

Retail Store

(0 – 0,7€)


Where the money goes – Music Access Free subscription

2 weeks trial -‐ 1h/day -‐ 0 €

Tax 20% (0€)

Music Label (0,007 € per stream)

Collec\on Society

(0,006 € per stream)

Digital Service Provider (0,05/h)

Retail Store per Sub (-‐3,67€ )


Where the money goes – Music Access Payed subscription

Unlimited music access 1h/day(9,99€)

Tax 20% (1,66€)

Music Label (0,007 € per stream)

Collec\on Society

(0,006 € per stream)

Digital Service Provider (0,05/h)

Retail Store per Sub (0,9€ )


Other Devices pay to GEMA/AKM Gerät GEMA - Pauschalabgabe CD-Brenner € 8,70 DVD-Brenner € 10,68 MP3-Player € 2,56 Tonbandgeräte € 1,28 Bildaufzeichnungsgeräte € 9,21 Mobiltelefonen ohne Touchscreen € 12,00 Mobiltelefonen mit Touchscreen und weniger als 8 GB Speicherkapazität € 16,00 Mobiltelefonen mit Touchscreen und 8 GB Speicherkapazität oder mehr € 36,00 Tonträger: 0,0614 €/h z. B. bei 50 CD-Rohlingen zu 80 Minuten € 4,09 Bildträger: 0,0870 €/h z.B. bei 50 DVD-Rohlingen zu 90 Minuten € 6,53 Digitale Speichermedien (Speicherkarten, USB-Sticks u. ä.) € 0,10 Multimedia-Festplatten mit Aufzeichnungsfunktion € 34,00 Multimedia-Festplatten ohne Aufzeichnungsfunktion € 19,00 Netzwerkfestplatten mit einer Speicherkapazität < 1 TB € 5,00 Netzwerkfestplatten mit einer Speicherkapazität ≥ 1 TB € 17,00 Externe Festplatten mit einer Speicherkapazität < 1 TB € 7,00 Externe Festplatten mit einer Speicherkapazität ≥ 1 TB € 9,00 Scanner € 12,50 Thermo- und Tintenfax € 5,00 Tintendrucker € 5,00 Tintenmultifunktionsgeräte € 15,00 Laserdrucker € 12,50 Lasermultifunktionsgeräte und Kopierer bis 14 Seiten/Minute € 25,00 Lasermultifunktionsgeräte und Kopierer bis 39 Seiten/Minute € 50,00 Lasermultifunktionsgeräte und Kopierer bis 40 Seiten/Minute € 87,50 PC/Notebook € 13,65

Thank you!

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