Monthly Archives: December 2008

Getty’s New Toys – Just Buy Animoto Already Will Ya Please?

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Getty Images, the photo licensing giant turned “new media” company has recently unveiled two slick new tools to show they are not going to allow Animoto own the cool photo / slideshow world (at least not until Hellman & Friedman allows the acquisition switch to be turned back on).

The first tool is called 27 Letters and is a desktop widget that allows the users to “surf” around a visual experiece of the top photos, illustrations, and other visual media on the web.  If you’re bored, 27 Letters is not a bad time suck; then again, neither is staring at your screen saver.  The application is impressive, thoughtful, and contemporary, but in a somewhat self serving way as it’s purpose seems to be to have users create links to and share Getty content. Overall, the 27 letters app portrays the creativity and excution abilitiy of a solid, experienced dev team.  Hipness aside, it would be much better served as a web application rather than a desktop app. Surely the 27 Letters iPhone app will be released soon – or will they just buy Animoto along with it’s cool new iPhone app?

Next on the Getty slick application list is one that’s also a heck of a lot like Animoto.  It’s called Punch-O-Matic and allows users to create cool slideshows put to music using photos from the PunchStock photo collection.  This one is a browser based app and the music is really killer, having been sourced from Getty’s high end stock music library Pump Audio.  The music is cool and the slideshows are even cooler.  Users can select from an array of transitions and music to create their own custom slide whows.  You can even overlay your own text, and the finished presentations can be shared and embedded.  Rhetorical question here – Why in the world would you want to create a slideshow with someone else’s stock photos and not your own photos?  It’s clear that this is just an experiment that will likely lead to the unveiling of Getty branded app that will allow users to include their own photos.

In the past, the highly acquisitive Getty would simply acquire Animoto, and they still may; however, to this day, it seems that Getty wants to show the world what their talented developers can do and just wait till Animoto has perfected it’s product before swooping in for the kill.  Either that, or their new private equity owners have placed an embargo on acquisitions for the time being.  Nevertheless, the two companies would make a perfect fit.

This Week In Copyright Infringement – Project Playlist Banned By MySpace & Facebook

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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?

Royalty Rates for Various Types of Music Licensing

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AudioMicro presently pays 50% of all cash received back to it’s artists on a monthly basis.  For comparison purposes, we will list the royalty percentages and payout patterns for various other types of music licensing:

  1. For iTunes like downloads from digital music stores – including iTunes, Amazon, eMusic, Walmart, etc. the artist typically receives a 10% royalty.  But wait a minute, this 10% comes from the net amount received by the record label.  Record labels typically receive around 70 to 60 cents from each 99 cent download, thereby leaving the artists with only 7 to 6 cents per iTunes sales.  
  2. For ring tones, artists typically receives 10% of the amount received by the record label.  For instance, if a ring tone costs $1, the record label will received around 50 cents and the artist will receive around 5 cents.  For a standard recording contract, the artist typically nets 10% of what the record label receives. 
  3. For Audio streaming services like Pandora, and Project Playlist, as well as video streaming services where advertisements are displayed along with the music streaming, the amount that gets paid to the artist is still in negotiation, and not yet set.  In short, the artist can expect to also receive 10% of the net revenues received by their record label, for their pro-rated portion of the streams.  The interesting thing to note in regards to music streaming services and satellite radio (Sirius and XM being the largest) is that the record label and the artist are paid by a government sponsored entity known as Sound Exchange.  In contrast to traditional radio, the royalties are paid not to composers and publishers but to the performers (artsts) and the copyright holders (typically the record label).