NYT has an article on the fears of the book industry about e-book piracy. There are numerous parallels to the music industry, including that the business model is under pressure even without piracy. The music industry remains dismal.
Since music sales peaked in 1999, the value of the industry’s inflation-adjusted sales in the United States, even including sales from Apple’s highly successful iTunes Music Store, has dropped by more than half, according to the Recording Industry Association of America.
NYT has a short note that a deal between Google/YouTube and Warner Brothers has been reached. Terms are not disclosed, but it ends the row that had forced Youtube to remove all WB contents from its site last December. According to Business Week:
"Google says the new deal allows Warner to sell ads against its own music videos, as well as user-generated videos that contain clips of its songs."
Yet another indication that the majors can force good deals for themselves, while all others, the indies, will see no money from Google. The media industry turns into a content oligopoly.
NYT has an interesting article on the multi-year competition to come up with better recommendation algorithm, where the winner won one million $. Two things are worth mentioning. Netflix CEO summed it up as this: "You look at the cumulative hours and you’re getting Ph.D.’s for a dollar an hour." Not only that, they are also motivated, because self-selected.
But, for companies taking part in the challenge may be worth it, even without winning.
Arnab Gupta, chief executive of Opera Solutions, a data analytics company based in New York [which came in second], took a small group of his leading researchers off other work for two years. “We’ve already had a $10 million payoff internally from what we’ve learned,” Mr. Gupta said.
Working on the contest helped the researchers come up with improved statistical analysis and predictive modeling techniques that his firm has used with clients in fields like marketing, retailing and finance, he said. “So for us, the $1 million prize was secondary, almost trivial.”
CNet has this story, highlighting the two way processes of digitization and materlialization
On Demand Books, makers of the Espresso Book Machine, are expected to announce Thursday that they have been granted access to Google's library of public domain digital books for use with their product. The Espresso Book Machine can print a 300-page book in four minutes, complete with a cover and a bound edge. It ranges in price from $75,000 to $97,000, depending on the configuration, and is found mostly at universities, libraries, and institutions around the globe.
The books thus produced are probably so cheap that it's more economical for libraries to simply give them away that to loan, track, process the return, and re-shelve them (which costs quite a bit, I think Brewster Kahle, archive.org, once put a figure of $4 on it, though obviously that depends on a lot of variables.) See also this article with details on pricing (sales price at about $8 per book).
An attempt to implement a street-performer protocol type platform for music.
http://sellyourrights.com/. Still in closed beta, but I'm not overly optimististic that this will work.
See also futurezone article.
The register has a story on an analyst's estimate (whatever that's worth these days) that youtube will be losing close to half a billion $ this year. They take this as an indication that the ad model is not working. After discussing two reasons why this might be the case -- either Google doesn't know how to do it (unlikely) or the model is fundamentally broken (more likely) -- they come up with an option for Google to make money out of youtube.
Of course, there's a third option for YouTube. Its parent company - whoever that may be - may want to cross-subsidize the operation in the hope that will drive traffic elsewhere on the site. Don't laugh - that's exactly what Google's new music service in China does. Google China pays rightsholders much more than 0.22p per song - about ten times as much, according to industry estimates. As Baidu has shown, music drives enormous traffic to the rest of the operation.
Update (14.04.): On the other hand, artists are demanding that Youtube increases it's payment to them.
Update II (15.04). A detailed breakdown of revenue and costs. The most interesting figure is the amount given to independent creators through it's revenue sharing program.
Revenue share: If you provide videos to Google and join its revenue sharing program, then you get a commission if ads are shown alongside your content. Credit Suisse estimates that YouTube will "share" away $24 million this year -- $66,000 per day.
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A new article over at TorrentFreak indicates, once again, that free downloads and 'for-sale' distribution model might well co-exist, even if it's much too early to tell if this model is doing to be stable. They write:
Mininova, one of the largest BitTorrent sites on the Internet, will launch a new feature today that will help artists, labels and other content producers to generate revenue. The Dutch record label ‘Beep! Beep!’ is one of the first to try the new feature, which allows content producers to add ’shopping links’ to their free torrents.
On Februry 18, a report commissioned by the ministry of Economic Affairs, the Justice Department and the ministry of Education Culture and Science called "Ups and downs Economic and cultural effects of file sharing on music, film and games" was released. A few days ago, the official English translation was released as well.
The research shows that the economic implications of file sharing for welfare in the Netherlands are strongly positive in the short and long terms. File sharing provides consumers with access to a broad range of cultural products, which typically raises welfare. Conversely, the practice is believed to result in a decline in sales of CDs, DVDs and games.
Determining the impact of unlicensed downloading on the purchase of paid content is a tricky exercise. In the music industry, one track downloaded does not imply one less track sold. Many music sharers would not buy as many CDs at today’s prices if downloading were no longer possible, either because they cannot afford it or because they have other budgetary priorities: they lack purchasing power. At the same time, we see that many people download tracks to get to know new music (sampling) and eventually buy the CD if they like it. To the extent that file sharing does result in a decline in sales (substitution), it usually entails a transfer of welfare from producers to consumers. With estimated welfare gains accruing to consumers totalling around €200 million a year in the Netherlands, music producers and publishers suffer turnover losses of at most €100 million a year. These calculations are necessarily based on several assumptions and contain uncertainties as many of the underlying data are not precisely known. Whereas comparable figures cannot be provided for the film and games industries, they follow a similar logic.
Commissioned by the Dutch government, a recently published report concludes that file-sharing has a positive effect on the economy, both on the long and short term. A massive 30% of the Dutch population uses file-sharing software to download music, games, movies and other forms of entertainment, which is now considered to be a ‘good thing’.
File-sharing gives people access to a wide range of cultural goods and is often used to sample content that is bought later, the report concluded. Most file-sharers would have never bought the content they downloaded, but having access to such a large media library increases the welfare of Dutch citizens, the researchers note.
Frankly, the findings of this study do not surprise me and they point to the power of the long tail for cultural economy. Wider range of access to cultural product is a good thing, in and off itself. People will be able to find what they really care for (rather than stick to what is just not objectionable enough to switch off -- the basic mode of operation of TV and other broadcast media) and form that engagement, many things can flow.
Things get really interesting on page 116 as the report starts to dissect the societal effects of file sharing. The study concludes that the effects are strongly positive because consumers get to enjoy desirable content and also get to keep their cash to buy other things. Because the consumers save much more money than the producers lose, the net economic effects are positive. The report also reinforces the truth that unpaid downloads do not translate into lost sales in anything close to a one-to-one ratio.