TotalMusic, the digital music distribution initiative created by Sony BMG and Universal Music Group, appears to be on life support – or worse. In the last few months the company has seen the two music executives who spearheaded the initiative jump ship, followed by a round of layoffs that included senior personnel. Yesterday Ruckus, a music streaming company acquired by TotalMusic last year, abruptly shut down. Repeated attempts to contact Michael Bebel, Ruckus’ CEO, have gone unanswered. It may be too soon to definitively put TotalMusic into the Deadpool, but things are not looking good for the company.
The history of TotalMusic is dramatic, filled with failed deals, major strategy changes, and an antitrust lawsuit. Since forming, the company has proposed two new revenue models for music: the first was to offer end-users a large library of music for ‘free’, by building the cost of the music service into their music devices. That plan didn’t exactly work out – in early 2008 the Department of Justice launched an anti-trust probe which derailed the idea.
Then, last summer, the company came back from the dead. The second new model was meant to serve as a departure from the way music has traditionally been licensed on the web. Historically, the major record labels have charged sites per-song fees for streaming, badgering everyone into submission with threats of lawsuits and steep penalties. Major sites like MySpace and imeem are held under this kind of agreement, as are many smaller sites which are having trouble sustaining themselves because of the high fees (even Pandora, a streaming music site that had the most popular iPhone application of 2008, has worried about having to shut down).
In contrast to these per-song fees, TotalMusic was supposed to offer free streaming to sites in return for user data and all associated advertising revenue. In particular, the initiative was built from the start with Facebook in mind, offering the social network a chance to implement a music service for free while all of its competitors were paying hefty fees. But Facebook didn’t bite. The exact reason why is hazy – UMG and Sony were able to bring EMI on board, but were unable to get Warner, the last major label, to agree. We’ve also heard that Facebook was unwilling to hand over user data and ad revenues.
Since the Facebook deal fell apart, the company has taken a turn for the worse. When we investigated the company last summer, we noted that four TotalMusic software engineers listed on LinkedIn had previously worked on MusicNow, another streaming music service that changed hands from Circuit City to AOL and ultimately had its customer base sold to the ‘legit’ Napster (presumably they had been brought in to apply their expertise to the new service). In the last month, two of the four employees have changed their profiles to indicate that they no longer work with TotalMusic.
We’ve also heard that one of the company’s lead engineers was laid off in the last few days, prompting the sudden shutdown of Ruckus. Ruckus was quietly acquired last year by TotalMusic, and was meant to act as the foundation for the service’s backend. The operation closed down so quickly that some of the service’s participating universities weren’t even notified of the upcoming change (many campuses have been actively promoting Ruckus for years to try to curb piracy).
But there has been some progress. Last month TotalMusic soft-launched a new site called TunePost, which apparently offers streaming music through widgets. The service is in a private beta, but the company’s VP of Product Management, Jason Herskowitz, has been embedding widgets into his personal blog.
This may be a sign that TotalMusic still has a pulse, but we’ve also heard that the company’s remaining employees are shopping around its technology to outside buyers – the embeds may simply be a way to show off the technology they’ve built. In any case, it’s hard to believe that in the current economy the music labels will continue to funnel money into what boils down to a music widget that has yet to launch to the public.
i can say for sure that recession has shown its effect here also
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check out EnetBaron.com
check out EnetBaron.com
check out EnetBaron.com
When will iTunes competitors learn? Hasta luego
PartialMusic
When will the music industry learn? I have a business model for all the major labels out there:
$10/month subscription fee to be able to stream, download, and listen to any song without limits on any device.
It delights me to read about another bonehead music industry scheme that is failing.
Seriousl WTF. That idea is sub par at best. The music industries real enemy is mega upload, rapid share and all those other places that are receiving traffic for something they were never built for. Not to mention bit torrents and Youtube downloading programs. The record companies need to cut i-tunes out all together and create a service mimicing a z-share or mega upload and sell ad space. All they can do to disrupt the competition is guarantee that they will have the exclusive tracks. Other than that its a lost cost. Hulu for music. Oh yeah you mean youtube.
TotalMusic, I think good…
karma
UMG & Warners agree on very little. The genesis of this story, however, is SDMI (”secure digital music initiative”) & the threat of compulsory licensing (akin to ASCAP/BMI DoJ consent decree over performance rights & to some extent mechanicals as licensed by NMPA & Harry Fox that are part of statute) …
Just look at what happened to YouTube last month with all the DMCA takedown notices which appear to chill innovation over user-generated content – time to make “fair use” – law.
http://tinyurl.com/ahzvtb
Well, I’m tired of worrying about how the “music industry” makes money. They can all go screw themselves. I can live without their “music”.
“Historically, the major record labels have charged sites per-song fees for streaming, badgering everyone into submission with threats of lawsuits and steep penalties.”
Why can’t a business model be worked out to turn the social networks and services like Pandora into their salesforce? Didn’t the recording industry fear radio when it first came out, but then realized it was one of their best marketing tools? As a consumer, I wouldn’t mind paying some reasonable royalties for each song listened to on the likes of Pandora (if it is ad free), or as an alternative choice – deal with the ads (like traditional radio), so they can keep their business afloat.
The value of recommendations and personalizing the musical experience goes far beyond what traditional radio could have ever done, so for me, and I assume other consumers, the value is worth paying for. And when we decide to purchase via Pandora or Facebook or other services, why can’t a little sales commission go their way from the labels? Seems like a win-win-win-win for the consumers, the labels, the musicians, and the service providers…
Let’s face it, with the cost of bandwidth and storage approaching zero (as Chris Anderson would argue), distribution costs are dropping fast, while our ability to enjoy anytime anywhere anyhow access to nearly all the worlds music is getting easier. Even the costs to produce music are dropping. Maybe the price per song and price per “borrowed listen” (in the case of streaming) should drop a little too.
Who knows what the best answers are, but at least the industry should keep experimenting with business models, and hopefully everyone in the chain from musicians to listeners will appreciate the value the new infrastructure offers, and be willing to make a few changes to enable it to thrive.
Streaming licensed music is approaching free, too. At 2141 listens per dollar, or 42 cents per user per month, soundexchange is CHEAP.
http://assetbar...ents-per-month/
I don’t see how Westergren/pandora argue it’s the “cost” of music they can’t afford. Take a quick look at their financials, and there will be much larger line items.
Israel L,
Thanks for sharing the link. Interesting analysis. If that is the case, then there is certainly room for consumers to start paying a bit more for the benefits of Internet radio and the service providers should stop complaining and start trying out new business models. At least Pandora announced they will start trying out audio ads, while giving customers an option to pay for ad-free music.
http://kevinkre...d-radio-station
I’ve listened to analog radio all my life with ads, and always wished there was an ad-free option to pay for. As your article points out, we pay a lot more for cable TV without complaining, in some cases $50 to 100/month, and we’re still bombarded with ads on top of that, and don’t have all that much choice yet when it comes to content on-demand.
As access becomes more ubiquitous and broadband improves, I can see in the near future, the need to “own” music won’t matter that much anymore. We can just pay as we go, and/or listen to ads as an option. Musicians can make more of their money from streaming (rentals) than purchases (ownership), and from concerts, t-shirt sales, and other creative methods.
Let the old artists die with the old record labels that run the old business models. NEW ARTISTS FOR TOMORROW, YOU DON’T NEED THOSE LABELS ANYMORE. ARTISTS ALL WAKE UP, MAKE THE BEST MUSIC POSSIBLE AND PROMOTE IT THE BEST YOU CAN WITHOUT THESE OLD GUYS & YOUR DREAMS WILL FALL IN LINE.
Because as long as artists are still seduced by a big major label, we will continue going through this crap.
Isn’t that already happening? How many major releases are there that aren’t aimed at 14 year olds nowadays. Most of the good stuff is coming out on indie labels or independently.
Yeah, it’s still easy to seduce a starving artist with a major label contract, but many artists are foregoing the whole “getting signed” ordeal to begin with.
They’re history. The music industry will undoubtedly try something again……but what, we don’t know.
Correction to the post: MusicNow didn’t become the “legit Napster”, PlayFirst did. PlayFirst was one of the two services launched by the major label labels (Musicnet was the other). MusicNow (originally FullAudio) was an independent startup licensed by the major labels. It was bought by Circuit City. Circuity City sold it to AOL, which eventually shut it down and made a deal to transfer its customers to Napster. This was strictly a customer acquisition deal, Napster didn’t incorporate any of MusicNow’s technology.
Wasn’t it PressPlay along with Musicnet? That seems like so long ago. The chronology of FullAudio/MusicNow is correct.
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Ummm… I see a problem. Major labels making distribution deals and setting up distribution websites won’t mean much in a future where artists DON’T NEED THOSE LABELS ANYMORE. The exodus has already started; plenty of artists are leaving their labels behind. There has to be some kind of new organizational structure–artists, producers, promoters and distributors will still need each other, but the major labels obviously won’t be a part of that equation. Too antiquated, too cumbersome.