This week was an interesting one in the world of copyright infringement, takedown notices, and websites that choose to “do what they want” when it comes to record label material. Early in the week, we learned that MySpace had removed Project Playlist widgets from all MySpace profiles that contained the popular music playlist compiler. At the time, it was presumed that Facebook might not remove the Project Playlist application from and would attempt to stand up to the record labels and defend the startup. However, just a few days later, Facebook caved in under pressure of litigation from the labels, and removed the Project Playlist service as well. Of particular importance to all this is to note the just one day prior to being removed from Faceboook, Project Playlist was able to secure a deal with Sony BMG which allows music from the label giant to legally be used in the service.
Project playlist is gaining popularity and all of this bad press is undoubtedly fantastic exposure for the service. If they are unable to close deals with WMG, EMI, and UMG, will the service be able to survive with only Sony on board? The labels are clearly in control here, and the fate of this startup hangs in their hands.
The popularity of the service seems natural – it allows users to listen to music on demand, for free. Advertisements are used to support the service; however, the effectiveness of music advertisements is a huge question mark, leading advertisers to demand a greatly reduced CPM. While listening to the music, users are typically performing other activities other than starting at the ads. Web users can have different tabs and windowns open, or altogether not be using their computer monitor whatsoever.
The music industry is undergoing a major change and it’s quite clear the the model of 2008 and 2009 is free, yet ad supported music. Is this a perfect solution? Will it lead to increased revenues for the labels? Will it be enough to compensate for the decline in CD sales? Eventually, they will get it right and the musical advertisement may be a great step in the right direction. So long as you do not mind staring at Fruit of the Loom ads while you jam out to Queen, the ad supported model will be able to deliver your on demand music needs. So who will win this space? MySpace Music, Project Playlist, Pandora, LastFM, or another service?