This week’s Economist paints a picture of the worldwide music market which on the surface suggests that US music consumers are lagging behind their British and Japanese counterparts. In fact, the top three music spenders per capita are the UK, Japan, and Norway which leaves the US in fourth place, just ahead of Austria.

Digital Music Insider points out that numbers can lie. David writes, “While the Economist claims that fans “buy more music per person” in Britain, Japan, and Norway, that might not be true. They’re spending more, but based on pricing differences for CDs and digital downloads relative to the US, it seems more likely they’re just paying more for the same amount of (or even less) music.”

The real truth may be somewhere between. The Brits are voracious music buyers, so it’s no surprise to see them at the top of the list. What interests me is the void between U.S. and Canadian music buyers. Canada, with similar pricing, marketing and per capita income spends a full 8 dollars less per person on music purchases.

It’s perhaps a passé idea among the digerati but, when Alain Levy CEO and Chair of EMI declares to an audience at the London School of Business that the CD as a format is dead, people listen. Physical media sales have been in a steady decline since 2000 but the format is far from dead, representing over 70% of worldwide sales. So, what exactly does Levy mean when he says that your shiny disc shaped friend is a goner?
Unable to rely on just music to sell CDs, the industry is looking towards “value added material” to close the deal with consumers. “We have to be much more innovative in the way we sell physical content,” said Levy. He noted that, though ailing, physical formats aren’t completely dead, “You’re not going to offer your mother-in-law iTunes downloads for Christmas,” making the point that, though popular, the iPod isn’t universal just yet.

Nokia is making much of its latest sales figures that show that sales of mobile phones incorporating digital music players are far outstripping sales of dedicated digital music players. Tommi Mustonen of Nokia’s multimedia unit said in the press this week that the Finish phone giant expected to sell 80 million mobile phones with digital music capability this year. That figure far outstrips the approx 38 million iPods that will be sold this year.While mobile phones tend to lack much of the functionality and storage capability of conventional digital music players, at some stage the gap between what can be incorporated into a phone and the needs of consumers is going to narrow. It seems clear that at some stage in the near future that the amount of storage on an iPod will become irrelevant to most consumers, after all, unless there is a significant change in usage habits of iPod users it’s hard to see how most uses could use storage capacity in excess of 60-80Gb.

As flash storage prices slowly decrease and hard drives continue to get smaller the possibilities for mobile phones/digital music player hybrids is bound to increase. Mobiles also deliver an additional channel of distribution, freed from the restrictions of the PC, a plus in particular for younger users. It’s clear that a significant portion of mobile users are already making the most of the limited digital music player features on current phones, but as time goes on, this market segment can only increase in significance.

Details are few and far between but it looks like Sharman Networks, the company behind Kazaa, has reached a settlement in its court battle with the National Music Publishers’ Association (NMPA).

The NMPA released a statement saying only that a settlement had been reached, the court had been informed and that, under the terms of the deal, Kazaa has agreed to pay “a substantial sum” to end the copyright infringement lawsuit. The terms of the agreement will still have to meet with approval from the NMPA board of directors.

TOKYO, Oct. 20 (AP) — The popular video-sharing site YouTube deleted nearly 30,000 files after a Japanese entertainment group complained of copyright infringement.

An official with the group — the Japan Society for Rights of Authors, Composers and Publishers — said Friday that the organization had found 29,549 video clips like television shows, music videos and movies posted on YouTube’s site without permission.

The official, Fumiyuki Asakura, said YouTube quickly complied with the request to remove the copyright materials, made on behalf of 23 Japanese TV stations and entertainment companies.

Most videos posted on YouTube are homemade, but the site also features copyright material posted by individuals. YouTube’s policy is to remove such clips after it receives complaints, though some have suggested that the start-up could eventually be sued, especially with Google about to buy it for $1.65 billion in stock.

Mr. Asakura said the entertainment industry group might ask YouTube to introduce a preliminary screening process to prevent copyright clips from being posted.

YouTube has been negotiating with leading copyright holders and has reached agreement with several letting the Web site post copyright music videos and other content in exchange for sharing ad revenue.

The company agreed to deploy an audio-signature technology that can spot a low-quality copy of a licensed clip. YouTube would have to substitute an approved version or remove the material.

YouTube has licensing deals with the CBS Corporation and three major recording companies — the Warner Music Group, Vivendi’s Universal Music Group and Sony BMG Music Entertainment, which is a joint venture between Sony and Bertelsmann.

Since YouTube started in February 2005, the company has blossomed, now showing more than 100 million video clips a day. Its worldwide audience was 72.1 million by August, up 2.8 million from a year earlier, according to comScore Media Metrix.

NEW YORK (Reuters) - News Corp.’s MySpace.com on Monday said it had licensed a new technology to stop users from posting unauthorized copyrighted music on the social networking Web site and oust frequent violators of its policy.

The move comes amid pressure from major studios and record labels against popular online sites like MySpace and YouTube, which they accuse of infringing the copyrights of their artists’ music and videos.

MySpace, one of the most popular sites on the Internet, licensed technology from privately-held Gracenote allowing it to review music recordings uploaded by community members to their profiles.

The technology compares those filed with Gracenote’s database of copyrighted material and can block uploads without proper rights. Terms of the licensing agreement were not disclosed.

Popular sites like MySpace and YouTube are littered with copyrighted music and video posted by their legions of users, who hope to share them with friends and strangers alike.

Both say they remove unauthorized copyrighted material when notified.

But MySpace, increasingly seen as a destination to see and hear music and video, will soon begin selling songs from nearly 3 million unsigned bands. It aims to eventually offer copyright-protected songs from major record companies.

Once Gracenote’s technology is integrated into its service, users who repeatedly try to upload unauthorized music will have their accounts deleted, MySpace said.

YouTube, which recently agreed to be acquired by Google Inc., has similar aspirations to cash in on Web video use and protect itself from legal challenges.

EMI, Vivendi’s Universal Music Group, Warner Music Group and Sony BMG own around 75 percent of mainstream popular music. Most of this music is only available on MySpace for live streaming as a promotional tool.

MySpace was acquired by Rupert Murdoch’s News Corp. for $580 million less than a year ago. It now boasts more than 90 million active users.

The new Sony Reader is an eBook reader introduced by Sony that is about the size of a paperback, but weighing just 9 ounces. The Sony Reader works with the Connect service, which is like iTunes for books.

With 64mb of memory on board, and an expandable memory card slot, the Sony Reader is capable of carrying dozens of ebooks at once, and providing 7500 “page turns” on a single 4-hour battery charge.

The companion Connect service boasts more than 10,000 ebooks from publishers like Simon & Schuster, Random House, Penguin, HarperCollins and Harlequin.

In fact, the top 10 downloads at Connect this month include The Devil Wears Prada, the Da Vinci Code, and 1776.

Many may be surprised that so many ebooks are available, but according to Nick Bogaty, executive director of the International Digital Publishers Forum, “All major publishers have e-books, and that includes front catalogue as well as back catalog. Around 60 to 70 percent of the New York Times bestseller list is available in e-book form.”

Bogaty also points out that “I’ve always said that four factors need to be in place for the market to take off. You need a device that makes reading pleasurable, content at the right price, a great selection of content and e-books that are easy to use. We’re definitely getting closer to these goals.”

Of course, there are already places one can download ebooks which are not in any particular proprietary format, such as Project Gutenberg, whose ebooks can be readily read on a laptop or PDA, and also converted to iPod format using Phil Hord’s iPod Notes free service.

Two months ago, in noting that Tower Records had filed for bankruptcy for the second time in about two years, we wondered if it was the final word on the pure play music retailer. After all, selling music is almost universally recognized as being a good loss leader, not as a pure business. It looks like the folks at Tower were too late to figure this out. While there had been some hope of keeping the company going, in an auction late last week, the winner has decided to liquidate the business, selling off the inventory, shutting down the stores and laying off the people. The company’s hometown paper, the Sacramento Bee has a sentimental obituary for the company, noting that the executives at Tower (and plenty of other retailers) never really believed the internet would impact their business. In the end, as sad as it is for those of us who used to spend plenty of extra time (and money) at various Tower Records’ stores, it should be a case study for those who don’t understand when the market is shifting around them. While other record stores began to recognize that that they needed to completely revamp their business — from becoming combination music/dance clubs and stores to starting their own record labels or becoming “destinations” rather than just stores — Tower Records leadership insisted that the web “is certainly never going to take the place of stores.”

A “hit” song in a commercial, movie trailer or even buried in a film can be just as much a sales home run as being a hit on radio. And in some cases, if a potential new fan has to “track you down” via the internet, they’re likely to become super-fans.. who then spread you to their friends as well.

“Today, an iPod spot is better exposure for a band than radio play, and a good movie trailer can be seen by more people than a music video. TV commercials have become a viable platform to distribute music.”, writes Coyle of Associated Press. It’s not a huge surprise, but it is worth noting what Coyle missed, more than what he hit; Being a hit in a socially viral video can get you noticed too.

My friend Lisa DeBenedictis hit just such a home run. When the YouTube videos of lonelygirl15 were catapulted into the global news meme, Lisa’s singing voice was a part of several webisodes. “Everyone is talking to me and e-mailing me about it.” she blogged recently, “A NY writer called me for an interview last weekend.”

For the emerging artist, this kind of guerrilla exposure can be crucial. The major labels and their hipster imprints (mostly) have the lock on major market commercials and big budget films, so how does an artist without representation get anywhere by themselves? In Lisa’s case, the chances her voice would be in an Internet video were actually quite high; She was featured in a remix competition hosted by CCmixter last year, in which hundreds of remixes of two of her songs were made by fans and aspiring producers using source material she made freely available under the Creative Commons. She gave away the license to fileshare a few of her songs, and those tracks fileshared their way around until they found a company who licensed them for a commercial purpose.

During the same time, she still sold albums through Magnatune (in unrestricted formats) which has its own meme friendly policy in place; You can podcast any Magnatune song without paying anyone anything, unless you’re making money yourself. Magnatune’s policy helps build exposure for its artists.

I think about this every time I come across an unsigned band on MySpace who isn’t ticking the box to allow visitors to download at least one or two of the songs they’re featuring. What any band thinks it’s gaining by “protecting” its intellectual property is a false economy. You’re creating your future obscurity, not future prosperity. By limiting your fans ability to become your greatest promoters, you are squandering your biggest asset; The free ‘street team‘ you get from having devoted fans in the first place.

If you’re unsigned, you’re positively blowing it if you aren’t licensing a song or two under the Creative Commons and then leveraging that for any exposure you can.

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