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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.
3 RealNetworks Confidential
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
6 RealNetworks Confidential
Music Player Market
Walkman
Discman
iPod (Mp3-Player)
Million Units Sold
7 RealNetworks Confidential
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
8 RealNetworks Confidential
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
9 RealNetworks Confidential
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
11 RealNetworks Confidential
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.
12 RealNetworks Confidential
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).
13 RealNetworks Confidential
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)
15 RealNetworks Confidential
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
16 RealNetworks Confidential
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
17 RealNetworks Confidential
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
18 RealNetworks Confidential
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
19 RealNetworks Confidential
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
20 RealNetworks Confidential
Music Metadata – why they matter (Songs)
21 RealNetworks Confidential
Music Metadata – why they matter (Artist)
Business Models
23 RealNetworks Confidential
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
24 RealNetworks Confidential
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€)
25 RealNetworks Confidential
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€)
26 RealNetworks Confidential
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€ )
27 RealNetworks Confidential
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€ )
28 RealNetworks Confidential
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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