February 7, 2011
Volume XXXIII, Issue 12
Japan's Cloud Computing Market to Quintuple by 2014
Excerpted from CloudTweaks Report by Kiril Kirilov
Japan's market for cloud computing services is developing rapidly adding 41.9% in a single year, reaching $540 million in 2010, a report by IDC Japan showed. Cloud computing services will continue to grow in Japan in the years to come, expanding to $1.8 billion in 2014, IDC analysts predicted.
Such a rapid development shows that the market for cloud computing services will grow five-fold in only five years, highlighting a trend analysts cannot ignore, and showing that regardless of cloud services market fragmentation, companies are starting to realize the full potential cloud computing offers.
Japan's vendors are looking at specialization as a way to gain competitive advantage, the report showed, for cloud computing is not a way to sell universal services anymore. Customers managed to realize that a new technology trend could be advantageous, but solutions offered are not a panacea regarding specific company needs.
Hence, Japanese providers of cloud computing services started to offer tailor-made products aimed at exacting customers who are ready to accept that existing information technology (IT) infrastructure and software deployment are insufficient to meet the requirements of a fast-developing enterprise.
One of the characteristics of cloud services is self-service, facilitating the users' access to the service and eliminating the need for complicated procedures, Satoshi Matsumoto, research manager, IT Services, IDC Japan, explained. Obviously, a growing number of cloud computing service providers are heading this way by offering custom-made solutions to cover market niches that were ignored by traditional software and hardware giants.
Bearing in mind that Japan is among the most technologically developed nations in today's world, we can see a trend here: a growing market that is eager to reward new market players provided that they have something to offer to companies, which are still unsure what technology is more advantageous.
A five-fold growth of Japan's cloud computing services market in less than five years, as IDC analysts forecast, is an alarming signal. A market of $1.8 billion a year is not a market you would ignore in terms of market potential and strength. Additionally, Japan is well known for its ability to adopt new technologies in a very beneficial manner, and it is hard to believe that Japanese entrepreneurs and home-grown companies will miss the chance to take advantage of a competitive technology.
Japanese companies have proven that they are extremely adaptable, and the growing market for cloud computing services is a sign something is changing in the way companies do business. Fundamentals are rarely misleading and Japan's cloud computing services market is showing great growth potential.
The DCIA Supports Cloud Computing Asia
The DCIA is proud to serve as the Supporting Association for Cloud Computing Asia, May 30th - June 2nd in Singapore. Cloud services are gaining popularity among information technology (IT) users, allowing them to access businesses applications and platforms, storage and even whole segments of IT infrastructure over a public or private network. New traffic patterns, new forms of content, and new applications are key drivers of the need for dynamically allocated, scalable resources.
According to IDC, within just a few years, cloud computing has reshaped the IT marketplace and the way that organizations acquire and use IT products and services, disrupting their strategies, and forcing them to reevaluate all of their alternatives to the status quo. Now the use of cloud computing is accepted as mainstream; this disruption is creating new opportunities for suppliers and catalyzing major changes in traditional IT offerings.
Cloud Computing Asia will provide an excellent platform for the regional and international computing industry to address both enterprise and telecom cloud services by showcasing cloud-computing products and services.
Learn from top industry analysts, successful cloud customers, and cloud computing experts about assessing and minimizing risk factors to take advantage of the benefits of cloud delivery without jeopardizing business functions.
NIST Publishes Draft of Cloud Security Guidelines
Excerpted from CenterBeam Industry News Report
As DCINFO forecast in November, the National Institute of Standards and Technology (NIST) has now issued two new draft documents on cloud computing.
One of the documents provides a definition of cloud computing, while the second offers a set of guidelines for managing cloud security. NIST hopes experts and members of the public will provide feedback on the draft documents.
The drafts were formulated in response to a request from US federal government CIO Vivek Kundra, who asked NIST to develop standards and guidelines to be used in the government's own adoption of cloud services.
NIST has created a website, the NIST Cloud Computing Collaboration site, to enable members of the public to comment on the draft and offer suggestions.
According to NIST, the documents were formulated with government agencies and departments in mind, but they are also relevant for private sector organizations.
The US government has invested considerable resources in its adoption of cloud computing. The U.S. National Security Agency recently held a groundbreaking ceremony to begin work for a new data center that is expected to cost approximately $1.5 billion and will be one of the largest in the world.
Report from CEO Marty Lafferty
 The DCIA is very pleased to announce that we will be conducting the CONTENT IN THE CLOUD Conference at NAB on Monday April 11th at the Las Vegas Convention Center (LVCC) in Las Vegas, NV as part of the NAB Show.
We invite DCINFO readers to explore this rapidly emerging technology that promises to expand the possibilities for broadcasters to realize the full potential of digital post-production and distribution.
If IPTV or online delivery is in your current or future operating plans, you won't want to miss these eight keynotes and three panel discussions focused on cloud-delivered content and its impact on consumers, television manufacturers, telecom industries, and the media.
We are delighted to share the agenda with you for the first time today.
Our Opening Keynote will be "Vision for Content in the Cloud." Cloud computing can dramatically impact many aspects of entertainment delivery - from transcoding to storage to distribution to payment collection to performance measurement. Step into the dynamic world of the cloud.
Keynote 2 will be "Cloud Vision vs. Technical Reality." Is the cloud up to the challenge of consumer demand that is stretching the bounds of today's infrastructures for content delivery? Hear a different perspective, focusing on massively scalable network capacity, content security concerns, and advanced technology capabilities - the building blocks of the digital media future.
Our first panel discussion will be "The Impact on Consumers of Implementing Cloud Computing for Media Delivery."
Discover how cloud-based distribution can affect users' ability to access broadcast station and cable programming service signal streams and to own virtual copies of television programs, music, games, and movies.
Keynote 3 will be "Benefits of Cloud-Delivered Content for Consumers: Ubiquity, Cost, Portability Improvements." Cloud-computing solutions offer consumers a number of clear advantages over older methods of online content distribution. Hear them all in this important address. As important as these benefits are the challenges this form of distribution poses to content rights-holders and technology providers to ensure the quality and the security of television channels and individual programs.
Keynote 4 will be "Drawbacks of Cloud-Delivered Content for Consumers: Privacy, Reliability, Security Issues." What have various industries experienced with inadvertent leaks, security breaches, or intentional hacking of confidential data? When users go offline, how can they mitigate inaccessibility to their applications or losing data accidentally? And what happens if a cloud provider goes out of business? What is the content owner's position?
Panel Discussion 2 will be "The Impact of Cloud Computing on the Consumer Electronics and Telecommunications Industries." Television manufacturers and broadband network operators are concerned that Internet connectivity and cloud computing could affect the way they develop and market their products and utilize network resources. Gain valuable insights on this critical issue for both industries.
Keynote 5 will be "Benefits of Cloud-Delivered Content to the Consumer Electronics and Telecommunications Industries: Advanced Capabilities, New Features, Cost Advantages." Cloud-based solutions provide a number of clear advantages and new opportunities for makers of networked end-user devices and Internet service providers (ISPs) over older methods of online content distribution. Explore these benefits in this strategic overview.
Keynote 6 will be "Drawbacks of Cloud-Delivered Content for Consumer Electronics and Telecommunications Industries: Infrastructure, Disruption, Accountability Issues." What problems do CE manufacturers face in adapting their production, distribution, and post-sale service activities to cloud-based entertainment distribution? What does the on-demand, always-accessible nature of cloud based entertainment delivery mean to broadband networks? What new kinds of liabilities does the cloud present to these entities?
Panel Discussion 3 will be "The Impact on Broadcasters of Cloud Computing Deployment." Our expert panel examines the implications of cloud computing on all aspects of content delivery starting with post-production concerns such as transcoding and metadata and then tracing each step of multicast streaming and VoD downloading through viewer authentication, distribution chain accountability, and performance analytics.
Keynote 7 will be "Benefits of Cloud-Delivered Content to Broadcasters: Efficiency, Control, Flexibility Improvements." Cloud-based solutions open up many possibilities for broadcasters. Learn more about how cloud computing is being adopted now and what additional advantages it can offer going forward.
Our Closing Keynote will be: "The Years Ahead for Cloud Computing." End the day with a comprehensive overview of the benefits and drawbacks of cloud-delivered content for broadcasters: expanded opportunities to reach new audiences and to present and monetize television programming in new ways, challenges for interoperability and data security, and advantages of cloud-based solutions for popular entertainment.
We will announce the roster of speakers next week. Share wisely, and take care.
Cloud Companies to Watch This Year
Excerpted from SOA World Magazine Report by Ray Depena
2010 was certainly an exciting year in the "cloudsphere" with every major technology company positioning itself for the ultimate game of the decade - Who Will Be The Future King of The Cloud? AT&T, CA, Cisco, CSC, Dell, HP, IBM, Microsoft, Oracle, and Verizon among others will continue to vie for the title this year.
We say goodbye to a range of cloud computing companies: Boomi, DocVerse, Makara, Cast Iron, 3Tera, Nimsoft, 4Base, Heroku, LineSider, Stratavia, CloudKick, and others acquired in 2010, and look forward to a new year in cloud computing developments.
Please click here for Ray's list of ninety cloud computing companies to watch in 2011.
Amazon Prepares Video-Streaming Service
Excerpted from CNET News Report by David Carnoy
Rumors have been heating up over the last few weeks that Amazon was on the verge of offering "free" unlimited video streaming to its Prime members, who pay $79.99 a year for free two-day shipping on many items sold on Amazon.
Now a tipster has sent a few screen-shots to Engadget allegedly showing an unlimited video-streaming section to complement Amazon's video-on-demand (VoD) offerings.
Whether someone at Amazon accidentally jumped the gun on the launch is unclear, but the section has now disappeared along with the "Watch Now," free unlimited streaming button.
Back in November, one of our non-Amazon contacts mentioned the possibility of such a service in an off-the-record conversation and on December 6th, the Wall Street Journal reported that Amazon was developing a Netflix-like subscription service that would offer TV shows and movies.
According to people familiar with the matter, that service "would be included as a bundle with its Amazon Prime shipping service."
From the screen-shot, it appears the selection would be pretty similar to Netflix's Watch Instantly service and would feature "unlimited, commercial-free, instant streaming of 5,000 movies and TV shows at no additional cost."
According to Engadget's tipster, the resolution is limited to "pretty solid" 480p (standard-definition). To be clear, none of this information is confirmed, but we'll have a full review of the service if and when Amazon decides to launch it.
It's worth pointing out that Netflix's Watch Instantly service costs $95.88 a year, which comes out to a little more than $15 over an Amazon Prime subscription. However, Netflix's streaming service is currently available on more set-top boxes (STBs) and mobile devices, so Amazon would have some catch-up to do in that department.
One small bit of info a lot of people don't know about is that Amazon allows Amazon Prime subscribers to share their subscriptions with up to three "family members." (See full article here.) Whether Amazon would extend the "free" streaming service to those you share your membership with is unknown, but it would certainly be a nice perk.
Comcast, Turner Broaden TV Everywhere Pact
Excerpted from Multichannel News Report by Todd Spangler
Comcast subscribers will get access to "hundreds" of hours of Time Warner's Turner Broadcasting System (TBS) movies and TV shows, both online and on cable video-on-demand, under an expanded, multiyear TV Everywhere deal - including, later this year, live streaming over the Internet.
Specific terms of the deal were not disclosed. The TV Everywhere distribution rights are included as part of a broader agreement reached between Comcast and Turner, the companies said.
The agreement covers shows and movies from Turner networks, including TNT, TBS, CNN, HLN, truTV, Turner Classic Movies, Cartoon Network, and Adult Swim. Comcast also plans to offer live streaming of some Turner channels later this year, subject to certain rights restrictions and conditions, though details on this front are still sketchy.
"We envision that Comcast will likely begin making CNN available on an authenticated basis in the near future," Turner spokeswoman Misty Skedgell said. "You'll see others from our entertainment portfolio in the near term."
The deal builds on the agreement Comcast and Time Warner reached in mid-2009 to collaborate on the industry's first national "TV Everywhere" trial.
By making video content easily available to cable TV customers across multiple non-TV platforms, operators like Comcast and programmers like Turner hope to reinforce the value of pay-TV subscriptions - and dissuade consumers from cancelling their service in favor of Netflix or other Internet-delivered video.
Comcast and Turner did not specify how much material will be available under the expanded pact. Turner shows available to the cable operator's customers this year are to include: The Closer, Men of a Certain Age, Southland, Conan, Lopez Tonight, The Venture Brothers, Ben 10: Ultimate Alien, Speeders, Glory Daze, House of Payne, Meet The Browns, and Piers Morgan Tonight.
Today Comcast's Xfinity TV online service - available to any of the operator's video subscribers, over any Internet connection in the US - provides more than 150,000 online video choices. The MSO provides up to 25,000 VOD choices on TV. Last year, Comcast customers logged about 4 billion on-demand views.
Shortly after airing on Turner networks, the content will appear on XfinityTV.com, Comcast's On Demand service, various Turner websites, and Xfinity- and Turner-branded iPad, iPhone, and Android-based tablet and phone applications.
The companies expect Turner content viewed across Comcast's Xfinity platforms to accrue to Nielsen's C3 ratings across TV and the Internet starting in mid-2011, and eventually extend to smart-phone and tablet devices.
"This multiyear agreement with Time Warner is a significant next step in our vision to deliver more content to our customers on any device, at anytime and anywhere," Comcast chairman and CEO Brian Roberts said in a statement.
Roberts praised Time Warner Chairman and CEO Jeffrey Bewkes as being "a real leader in increasing the amount of content available to consumers and we are thrilled to be able to deliver hundreds of hours of Turner shows and movies to our customers across multiple devices."
For his part, Bewkes noted that more than 50 million consumers can access "TV Everywhere" content today from various content providers and distributors.
"This landmark agreement between Turner and Comcast, along with our separate recent deal between Comcast and HBO, really solidifies our partnership in this effort and really pushes forward the concept of giving consumers more access to quality on-demand content on any device they choose," Bewkes said in a statement.
Cisco to Acquire Video Processing Firm Inlet for $95 Million
Excerpted from Digital Media Wire Report by Mark Hefflinger
Cisco Systems announced on Friday that it will acquire Inlet Technologies, a provider of video processing technology, for $95 million.
Founded in 2003, Raleigh, NC based Inlet provides video encoding and related services to customers including the BBC, MTV, Major League Baseball, NBC Sports, and Yahoo.
The company has raised over $20 million in venture capital, from backers including Capitol Broadcasting, Core Capital Partners, Technology Venture Partners, and Telecommunications Development Fund.
"Cisco's Videoscape platform will play a key role in reinventing the TV experience, and the acquisition of Inlet will enable our customers to leverage the network as a platform to deliver innovative video experiences to consumers on any device," said Enrique Rodriguez, Senior Vice President and General Manager of Cisco's Service Provider Video Technology Group.
Case against Online Video Distributor Raises Key Question
Excerpted from Daily Online Examiner Report by Wendy Davis
A coalition of digital rights groups is backing ivi TV, a start-up online video distributor, in its legal battle with television broadcasters and content providers.
Public Knowledge, Electronic Frontier Foundation (EFF), Media Access Project, and the Open Technology Initiative this week filed a proposed friend-of-the-court brief asking US District Court Judge Naomi Reice Buchwald in New York to deny the broadcasters' request for a temporary restraining order shutting down ivi. The online video distributor, which launched in September, offers $5 a month subscriptions to its service. ivi TV makes streams of TV shows that are broadcast for free in select cities (New York, Seattle, Chicago and Los Angeles) available online, while they are being broadcast.
ivi argues that it's allowed to retransmit the programs because the federal Copyright Act provides for mandatory retransmission licenses to companies such as itself. "There is no theft or piracy, but rather a mandatory license under which ivi is statutorily allowed to make secondary transmissions of content originating with the media companies," ivi asserts in its legal papers.
But the broadcasters who are suing say that ivi is interpreting the copyright law too broadly and that the provision it is relying on applies only to "cable systems."
Of course, that argument raises the question of how to define cable systems.
ivi says that the definition "was intended to be very broad and to anticipate new technologies that might be used as a means of transmission."
The broadcasters counter that ivi's view means that "anyone with a computer, an Internet connection and a TV antenna can become a 'cable system' entitled to compulsory licensing."
The broadcasters obviously hope that a judge views that interpretation as absurd, but the digital rights groups don't think it's absurd at all. On the contrary, they embrace it. "America's legal system favors competition, not monopoly, and the law does not grant special privileges to 1970s-era cable operators while discriminating against new entrants that offer a substantially similar service," they argue.
Public Knowledge, EFF, and the other groups also argue that as a practical matter, a host of other companies already enable consumers to stream TV programs to their computers. Those products make it hard for the broadcasters to argue that they need an injunction before the case is argued on the merits.
The digital rights groups also argue that companies like ivi serve another purpose: they help create demand for high-speed Web access, which in turn gives Internet service providers more incentives to expand broadband to those areas that still lack the service.
Buchwald will hold a hearing Wednesday in federal district court in Manhattan on the broadcasters' request for a temporary restraining order.
The Case for Rackspace as a Cloud Crown Jewel
Excerpted from GigaOM Report by Derrick Harris
Verizon announcing plans to buy Terremark for $1.4 billion is a big deal in the cloud computing world, but I don't think Terremark will be the biggest winner as a result of the acquisition. Stacey suggested Savvis as a potential beneficiary, but, as I discuss in my Weekly Update at GigaOM Pro, I think Rackspace looks great as the company straddling the line between the MSP and cloud worlds.
I wrote recently that Gartner got it wrong with its Magic Quadrant for Web Hosting and Cloud Infrastructure as a Service because the two really are two different beasts, and I stand by that position. MSPs have a variety of hosting options both dedicated and shared, enterprise-grade contracts, skin-in-the-game SLAs and general support that make them very appealing to large companies and governments that want to move workloads to the cloud, but their primary businesses are not cloud computing. Terremark is a prime example of this. Overall, Terremark is predicting cloud revenues of $30 million for its fiscal year 2010 (which ended December 31st) out of total revenues predicted to be $350-$353 million.
Cloud-first providers, on the other hand, generally don't have dedicated infrastructure and focus their operations on providing a true self-service experience far removed from the traditional IT procurement cycle. This approach is more appealing to developers, and even smaller companies without strict regulatory compliance requirements, who want real change in how they buy and procure IT. Granted, it has a larger percentage of a smaller pie, but it's estimated that Amazon Web Services revenues topped $500 million in 2010 - more than the entirety of Terremark's revenue.
Right smack in the middle of both these camps lies Rackspace, which amassed $565.8 million in revenue during the first three quarters of 2010, of which 12.2% - $69.2 million - came from cloud computing. The latter number has been growing with each quarter and should only continue to rise as Rackspace furthers the integration between its stalwart managed hosting business and its cloud business, and when its much-ballyhooed OpenStack cloud-platform software becomes production-ready.
At that point, many think Rackspace will be the largest in an ecosystem of cloud providers all running the same foundational software, which has developers very excited. One recent analysis already has Rackspace neck and neck with Amazon Web Services in terms of the number of top 500,000 web sites hosted.
If Terremark ends being just the first domino to fall, and if cloud computing is the driver, Rackspace might be the biggest.
Music in the Cloud at MIDEM 2011
Excerpted from Top40-Charts Report
Something strange happened at MIDEM 2011. Under clear blue skies, one of the main topics of conversation among the 6,850 delegates from over 70 countries was "the cloud."
More specifically, talk on the MIDEM exhibition floor was about the growth of cloud-based digital services which allow users to access music on different devices via a remote server rather than downloading it onto a computer.
The question is, "Does every cloud have a silver lining?"
Sony set the ball rolling on January 23rd by announcing that it is extending its cloud-based subscription service Music Unlimited beyond the UK and Ireland to include France, Germany, Spain, and Italy.
Music Unlimited is available across all of Sony's consumer devices and has the backing of the four major record labels. "What makes the cloud possible is technology. Having smart-phones and connected TVs creates a platform that certainly wasn't there before," noted Thomas Hesse, President of Sony Music Entertainment's Global Digital Business. Speaking at a packed MIDEMNet conference devoted to cloud music, Hesse recalled that both Apple and Google are waiting in the wings with cloud services.
While new technology is driving the digital bandwagon, debate on coherent and workable pricing models continues to rage. In particular, the issue of rights management and what consumers will agree to pay at the point of purchase (PoP). US-based newcomer mSpot announced at MIDEM that it is now in talks to tie-up agreements with the major labels and commenting on Spotify's plans to enter the US market, Vivendi CEO Jean-Bernard Levy noted, "We expect Spotify to be able to find agreements with all its partners so that it could launch as early as possible in the United States." Spotify reports that it now has 10 million registered users.
"The whole digital, connected, cloud, apps, and services sector are at the heart of the evolving music market, so it is no surprise to hear so much discussion at MIDEM about how they are impacting on the industry," commented incoming MIDEM Director Bruno Crolot.
"It's also no surprise that the number of participants originating from the digital and technical sectors has risen by 30% this year and that the MIDEMNet Academy Digital Education Sessions were packed. The industry is moving so fast, particularly in the services sector and the use of social networks to reach out to fans, that we made the educational aspect of MIDEMNet an absolute priority."
MIDEM Hack Day proved a standing-room only event as a selection of top web hackers teamed up to create an on-the-spot music app combining music, social networks, and games. Enthused by the creative process, the hackers decided to produce a new app for artist Imogen Heap.
With over 155 start-up digital and tech companies attending MIDEM, the level of projects pitched at the MIDEMNet Lab reached new heights. 30 companies came to Cannes as finalists in the three competition categories - Mobile Apps, Industry Services (B2B), and Consumer Services (B2C). That left them with high-octane, five-minute pitches to make to the MIDEMNet Lab judges, who included a good number of venture capitalists.
"Start-ups need clients but they also need financial backers and that's where the venture capitalists come in and why we have made a special effort to bring the likes of Index Ventures' Saul Klein to MIDEM to discuss what encourages him to invest in the music industry," said Anne de Kerckhove, Director of Reed MIDEM's Entertainment Division.
MIDEMNet Lab judge Par-Jorgen Parson, General Partner at NZ:Northzone Ventures, was full of praise for the projects pitched in the B2B category. "There are some really innovative ideas at all parts of the value chain and it was encouraging to see young companies that have a vision of how to get the music industry working again. In fact, some of them were quite aggressive about challenging old ideas."
Par-Jorgen Parson backed Spotify four years ago and confirmed that "I am definitely interested in two of the companies that pitched in the B2B section and will be meeting them during MIDEM."
On January 25th, the MIDEMNet Lab judges finally delivered their verdict on the pitched projects. Winner in the Mobile Apps category was Australia's Jammbox, a new subscription-based, personalized music magazine.
In the B2B section, honors went to US-based Next Big Sound, a new service providing online music analytics and insights.
Finally, Shuffler.fm, an Internet radio aggregating music blog streams was named best project in the B2C category.
With MIDEM hosting "French Vibes," an eclectic line-up of hot, young Gallic talent took center stage. "I think that a live concert program that brings together Medi, AaRON, Cascadeur, The Chase, Revolver, The Bewitched Hands, Syd Matters, and BB Brunes is worthy of any music festival in France," enthused MIDEM Director Bruno Crolot. In total, MIDEM hosted 62 concerts and showcases including a MIDEM Talent set from Saul Williams in which he unveiled tracks from his latest album "Volcanic Sunlight."
In addition to performing to French Vibes audiences, the artists and their managers held back-to-back meetings with international companies. "The MIDEM experience for talent has to be about performing live and having the opportunity to talk business at an international level," said Bruno Crolot.
During his visit to MIDEM, France's Minister of Culture and Communications, Frederic Mitterrand, took time to present outgoing MIDEM Director, Dominique Leguern, with the French cultural award Officier dans l'ordre des Arts et des Lettres.
With almost 100 keynote, conference, and panel sessions taking place throughout MIDEM, thought leadership and debate abounded. Hot ticket appearances included internationally-renowned French DJ and producer David Guetta, who sold some three million albums last year and whose Facebook following is now at 17 million people and rising.
And underlining the international importance of the digital sector, European Commissioner for Internal Affairs, Michel Barnier, devoted his keynote address to his department's launch of a new public consultation concerning the future of electronic exchanges and the implementation of an electronic trade directive.
With synchronization offering new revenue streams for labels, publishers and artists, MIDEM 2011 introduced the inaugural MIDEM Sync day devoted to all aspects of the sync business. The vibrancy of the sync sector was reflected in the growing number of publishers doing business at MIDEM.
"10-to-15 years ago the synchronization business was a very ancillary part of our (music) business, now everybody wants to use this as a platform and an income stream," said keynote speaker PJ Bloom, music supervisor for 'Glee.'
"Music is a great place for brands to build engagement with their audience," says Alasdair Graham, creative partner at Ogilvy & Mather. "If nothing else we've come to MIDEM for the first time this year to let the music industry know that if they have great innovative ideas for how we can push things forward, then Ogilvy's all ears."
Getting to know about sync opportunities remains something of a challenge according to MIDEM first-timers Julia and Matthew Gurry of Belle Roscoe. "We're working on our second album and part of our goal in attending MIDEM was to look for sync opportunities and to get a better understanding of the sync market," commented Julia Gurry. "The ideal situation would be to use a sync deal as a platform to launch the album," added Matthew Gurry. "The difficulty if you are an indie and unsigned is finding out what is available in the sync sector. MIDEM has helped us get a better understanding of where to look."
The Belle Roscoe duo took the plunge to attend their first MIDEM this year. "We've been talking to companies from Japan and China which we don't have access to ordinarily. The face-to-face factor at MIDEM is invaluable. E-mail isn't the answer."
Music Industry Struggles to Make Digital Leap of Faith
Excerpted from The Guardian Report by Alexandra Topping
In the louche Martinez hotel bar in Cannes, France a sharply dressed young man launched into a tirade against the music industry convention he was attending. "All you hear is these old men whining about the past," he said. "Well you know what? The genie is out of the bottle. You try and put it back in and you will die and then we will take over."
His was an extreme view, but at this year's MIDEM, Europe's biggest music conference, where artists such as Ra Black and Andrew courted the press, there was an undeniable feeling of transition of power from music's old guard to its digital avant garde.
But the problem is that even as the industry finally recognizes that it needs to change, it is not clear that the digital future is strong enough to support the global rock n' roll machine as it used to be.
In a keynote speech, Jean-Bernard Levy, the head of the media giant Vivendi, which owns Universal Music Group, said the company was working to "reinvent the music industry", with 30% of its revenues coming from new business models, but admitted "the music business is still only part of the way to reinventing itself." Indeed.
Yet that reinvention is taking far too long, according to Forrester Research analyst Mark Mulligan, who gave an explosive presentation at MIDEM. "Unless the labels and publishers change the way they license services, we are going to see the trend of dying CD sales and stalling digital downloads continue," he said. "Labels are going to have to feel the long-term pain before they start licensing as aggressively and liberally as they need to."
Mulligan said the music industry had to come to terms with the fact that its raison d'etre - songs - was no longer the product it had to sell. "Content is no longer king. Its throne has been taken by experience. Yet how many music services really focus on experience?" he asked. Certainly the digital experience could improve. Digital start-ups complain that getting publishers and labels to license new services, such as streaming sites, is fiendishly complicated. Rights holders - the music majors - insist they are making the deals, but say they are being held to ransom, asked to make cut-price arrangements with hundreds of unproven services that only offer nominal revenue.
The result is that new investment money is no longer chasing startups focusing on serving up songs online. Fed up that licensing music content is such a byzantine process, many start-ups and investors are beginning to focus on services around the edges of music, such as Songkick, which lets fans know when bands are coming to town, or MXP4, a social music gaming service.
Of course, the labels vehemently deny dragging their substantial feet. Francis Keeling, the Vice President of Digital at Universal Music, insisted the company wanted to work with the full gamut of startups, adding: "We want to make the licensing process fast, so that they can get to the market as soon as possible."
Yet the transition from a recorded to a digital music industry has been, at times, painfully slow. Spotify is only now edging towards a US launch, following a rumored deal with Sony, after more than one stalled attempt. Others have been lost along the way - most recently, Sky Songs, BSkyB's music-streaming subscription service, which closed in December after failing to attract enough customers.
That has not deterred Sony, which, in an event featuring big hitters from all the major labels, announced the rollout of its subscription service. Unlimited Music, which will cost from $5 a month for a basic plan to $12 a month for a premium service, with unlimited listening and the chance to make playlists. It will not, Sony said, follow in the "freemium" model footsteps of ad-supported services such as We7 or Spotify, because as Thomas Hesse, the head of digital operations and corporate strategy, succinctly put it: "Free doesn't make any money."
He has got a point. By the end of 2010 Spotify was estimated to have about 750,000 paying subscribers, up from 320,000 in March 2010, but has yet to make a profit; while its competitor last.fm made a pre-tax loss of over $3 million in 2009, an improvement on the $22 million loss in the previous year.
And although Spotify reportedly paid out about $40 million to rights holders and labels in the first eight months of last year, and in several European countries, such as Sweden, is now making more money for rights holders than Apple's iTunes Store, some artists and labels complain that their royalty checks are paltry. The UK rights collecting society PRS for Music says only 4.9% of its revenue came from digital services in 2009, compared with 2.9% in 2008.
Worryingly for the industry, the growth in the digital market - once hailed as its savior - appears to be stuttering. A report from the international music industry body, the IFPI, revealed this month that the global growth in digital music halved in 2010, with only "single digit" percentage growth in the more mature US digital music sector.
If this is to change, digital services must lead future innovation, said Mulligan. "What other failed services have shown is that if you play to the record labels' rule book you get nowhere. These startups need to make their own rules, and not let the labels lead the conversation."
Back at the Martinez, that conversation was stilled for a moment as music executives and tech geeks alike stood and listened to a performance from the Guillemots during the British music showcase.
With an irony not entirely lost on the audience, they finished their set with a song which insistently repeated the refrain "yesterday is dead". That is something that most in the music business now seem to recognize, but whether they can do what it takes to make tomorrow live remains to be seen.
Coming Events of Interest
Digital Music Conference East - February 24th in New York, NY. The 11th Annual DMCE is the only event in the United States that brings together the top music, technology and policy leaders for high-level discussions and debate, intimate meetings and unrivaled networking.
Cloud Connect Conference - March 8th-10th in Santa Clara, CA. Learn about all the latest cloud computing innovations in the Cloud Connect Conference - designed to serve the needs of cloud customers and operators - where you will see the latest cloud technologies and platforms and identify opportunities in the cloud.
Media Summit New York - March 9th-10th in New York, NY. This event is the premier international conference on media, broadband, advertising, television, publishing, cable, mobile, radio, magazines, news & print media, and marketing.
NAB Show - April 9th-14th in Las Vegas, NV. For more than 85 years, the NAB Show has been the essential destination for "broader-casting" professionals who share a passion for bringing content to life on any platform - even if they have to invent it. From creation to consumption, this is the place where possibilities become realities.
CONTENT IN THE CLOUD at NAB - April 11th in Las Vegas, NV. What are the latest cloud computing offerings that will have the greatest impact on the broadcasting industry? How is cloud computing being harnessed to benefit the digital distribution of television programs, movies, music, and games?
1st International Conference on Cloud Computing - May 7th-9th in Noordwijkerhout, Netherlands. This first-ever event focuses on the emerging area of cloud computing, inspired by some latest advances that concern the infrastructure, operations, and available services through the global network.
Cloud Computing Asia - May 30th - June 2nd in Singapore. Cloud services are gaining popularity among information IT users, allowing them to access applications, platforms, storage and whole segments of infrastructure over a public or private network.CCA showcases cloud-computing products and services. Learn from top industry analysts, successful cloud customers, and cloud computing experts.
Cloud Expo 2011 - June 6th-9th in New York, NY. Cloud Expo is returning to New York with more than 7,000 delegates and over 200 sponsors and exhibitors. "Cloud" has become synonymous with "computing" and "software" in two short years. Cloud Expo is the new PC Expo, Comdex, and InternetWorld of our decade.
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