iLoyal – Apple Users Tend to Be More Brand Loyal


Apple should love their iPhone users.  They should call them every once in a while to say hi, tell them that they’re appreciated.  Why is this?  Because iPhone users, typically very ardent in their love or obsession with their smartphones, drive sales and spend money.  A survey by AdMob found that while iPhone and Android users usually spend the same amount of time using apps, iPhone users are more likely to buy them.  In fact, half of all iPhone users and 35 pecent of Touch owners buy at least one app a month, far more than Palm or Android users.  But this is not the only way that Apple is capitalizing on their iPhone users.

iPhone users have the highest customer satisfaction rates and nearly all would recommend the smartphone to their friends.  Beyond this, though, they will help drive sales of Apple’s newly launched iPad.  AdMob also found that about 16 percent of iPhone users expressed strong interest in purchasing an iPad.  While 16 percent may not sound huge – what about those other 84 percent? – it can translate into sales exceeding 12 million units.

Apple has strong brand loyalty, as you can see with diehard Mac fans.  AdMob also found that about a quarter of iPhone users said they were considering an iPod Touch purchase.  This little device, while not able to make calls, has been tremendously popular as a mobile internet device and mp3 player, winning over fans with its great versatility.   They’re hoping this loyalty will extend to the new iPad, and it just may.

A survey by ChangeWave research found that 13 percent of their respondents were “somewhat” or “very likely” to purchase an iPad.  A similar study was conducted prior to the iPhone’s 2007 launch; only 9 percent of respondents wanted an iPhone.  That bit of good news was bolstered by another stat:  in 2007, more than a quarter of respondents were turned off by the iPhone’s price.  The 2010 survey finds that 8 percent found the iPad’s price to be excessive.

Analyst Mike Abramsky of RBC Capital Markets, which commissioned the survey, says, “While we do not expect feverish initial launch lines like the iPhone, the data portends well for healthy initial iPad uptae.  This data, while preliminary, suggests iPad may have greater potential than expected….”   Abramsky is predicting Apple will sell about 5 million iPads this year, taking in $2.4 billion.

And it is important to remember that it took the Touch and the iPhone a little while to catch on.  According to Morgan Stanley research, it took about two years for the Touch to “pick up steam.”  After that, they become the “fastest adapted gadget ever.”    Apple is looking to work their magic once again with the iPad.  We’ll see if it works.

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Warner Music Group and Free Streaming Services

Edgar Bronfman leaves little doubt about Warmer Music Group’s continued relationship with free music streaming sites.  He says that sites that allow people to access music for free are “clearly not positive for the industry.”  Bronfman adds, “The ‘get all your music you want for free, and then maybe with a few bells and whistles we can move you to a premium price strategy’, is not the kind of approach to business that we will be supporting in the future.”

Streaming sites like the European Spotify, for instance, clearly dislike WMG’s stance because it would keep them from offering artists represented by WMG, including Michael Buble, REM, Madonna, Red Hot Chili Peppers, Enya, and Muse, to online listeners.  The blogosphere and music reporting industry doesn’t like it much either.  According to this piece is TechDirt, entitled, “Warner Music Shoots Self In Head:  Says No More Free Streaming:”

“You don’t compete with “free” by taking your ball and going home. You don’t compete with “free” by pretending that old artificial scarcities are coming back after the wall has been broken down. You don’t compete with “free” by suing customers. You don’t compete with “free” by shunning those who have business models that work. You compete with free by offering a better product and a better business model. WMG is choosing to go in the other direction.”


WMG is also facing criticism within its own ranks.  One of their top-selling bands, Muse, is voicing their disapproval of the move to end licensing for free streaming sites.  Chris Wolstenholme, Muse’s bassist, said in an interview with BBC Newsbeat,

It’s like taking your song off the radio, isn’t it?  The corporations are setting the rules on these things because they’re clutching at straws.  They’ve lost so much money on record sales because of the internet.  As far as bands are concerned, you just want people to hear your music whichever way they can.”

It is interesting to note that 35 percent of WMG’s revenue is from digital music sales.  Digital revenue increased 8 percent to $184 million, while declining CD sales are largely to blame for their $17 million loss in the first quarter.   Is their move to end licensing for free sites, which are tremendously popular, akin to shooting themselves in the head, as DirtTech says?  If digital sales are ever more important for their bottom line, why alienate the people who are most likely to buy the music?  TechDirt writes, “Warner Music just told the one thing that was effectively competing with unauthorized downloads to shove off.  Brilliant.”

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Those Bad Bloggers

Someone has been waiting for years to use the word, “musicblogocide,” and that person is fulfilling his dream today.   According to, “In what is being referred to as the Musicblogocide of 2010, Google has deleted at least half a dozen popular music blogs that they claim violated copyright law which were hosted on Google’s Blogger and Blogspot services.”  A good move?  Something to keep in mind is that popular blogs sway opinion and can point consumers to an artist.

Google has targeted copyright violating bloggers who make it easy for readers to download free mp3s or who post videos without the proper licensing from the music labels.  But is that really the case?  One of the bloggers who was deleted said that he’d been encouraged to post new songs by the music labels themselves – who then filed copyright violation charges against him.  So, the cynics would say, they’ve had their free publicity, maybe a few sales, and suddenly now are opposed to the postings.

There is also a problem because of the vagueness of the charges against these bloggers.  Google says, “When we receive multiple DMCA (Digital Millennium Copyright Act) complaints about the same blog, and have no indication that the offending content is being used in an authorised manner, we will remove the blog. [If] this is the result of miscommunication by staff at the record label, or confusion over which MP3s are ‘official’ … it is imperative that you file a DMCA counter-claim so we know you have the right to the music in question.”  DMCA complaints are notoriously vague and don’t specify what the actual infringements are.

One of the blogs deleted by Google is I Rock Cleveland.  Blogger Bill Lipold told The Plain Dealer, a Cleveland newspaper, “It’s difficult to get across…that there’s a difference between someone working with the blessings of the artists and labels and someone who leaks Bruce Springsteen’s entire discography.  They don’t see the distinction between someone who’s adding value and someone who’s facilitating piracy.  That goes to the root of this whole mess.”  Lipold’s been unsuccessful in convincing Google of this.

The Twitter response has been swift, with one user writing, “I say we boycott @Google and start using Bing. Doesn’t everyone know BLOGGER sucks anyway?”

The blogs deleted also had their entire archives deleted, which was months or even years of work that had attained good search engine rankings.  Now, if they do choose to start somewhere else, they’re starting from scratch.  Music piracy is serious, but are these bloggers the problem?  Or were they helping drive sales?

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AudioMicro Partners With Flixtime – Create FREE Music Videos From Your Photos

royalty free music

AudioMicro is pleased to announce a new partnership with Flixtime, an exciting new take on creating online videos and slideshows. Flixtime users can create custom, production-quality videos and slideshows in just 3 easy steps. AudioMicro provides the sonic backbone to the project, providing sound effects and production music to cover every genre and aesthetic imaginable.

The platform is simple enough that your average computer user can have a great time while creating impressive slideshows and videos all without ever navigating away from the Flextime site or having any need to use external software. The videos can be up to 60 seconds in length and feature a dazzling array of visual effects options.

Don’t have your own pictures or video but want to create anyway?…not a problem. By including Fotolia’s stock photo library, Flixtime offers even a camera-less creative the ability to create stunning slideshows and videos from the comfort of their own desk/home. Pick your favorite pics from the Fotolia library, select the perfect royalty free music tracks and sound effects to accompany the images from AudioMicro’s award winning library and voila, you just became a video producer!

The platform is well rounded, the creation process is simple and the access is limited only by one’s ability to get in front of a computer with an internet connection. So basically, everyone wins. Check it out at

That’s True Love: Couple Says iDo

Do you love your partner more than your iPhone?  Let’s hope so.  A couple from New York said their vows at a Fifth Avenue Apple Store.  Josh and Ting Li met there, and love bloomed app style.  They married on Valentine’s Day, their rings attached to iPhones – first gens, your choice for wedding apparel.  They wrote their vows on Letterpress cards, vowing to love each other even more than their iPhones.  The final touch was the jeans and black turtleneck clad minister ala Steve Jobs who read the ceremony from a white 3Gen iPhone.

During the minister’s ceremony, he invoked the name of the almighty.  Not God, but Steve Jobs.   Quote a Jobs’ speech, he said, “said: “You have to trust that the dots will somehow connect in your future. You have to trust in something — your gut, destiny, life, karma, whatever. This approach has never let me down.”  Good for Josh and Ting.

Whose idea was the Apple store wedding?  Isn’t that what every little girl dreams of?  Ting suggested it.  Says her hubby:  “We got to know each other because Ting was looking to buy an iPod…I used to joke that the Apple store is my church.  Ting then came up with the idea of having the wedding there.”

Josh and Ting came into the Apple store – wedding dress, wedding party, the whole deal – at midnight on February 14, much to the amazement of customers at the 24 hour store.  Perhaps the first couple ever to get married in an Apple store, the Lis aren’t the first to look to the iPhone for help when it comes to wedded bliss.

Meridian, LLC, for instance, has recently launched America’s first Tuxedo App.  This allows grooms (or their brides) to choose from a comprehensive selection of colors and brand name tuxedo styles for their big day.  The geo-locator will find the closest dealers in your area, who you can then call.  You can also email your partner with your selections for approval.

There are tons of apps to help brides and grooms get ready for the big day, including iWed.  This handy app helps you plan your wedding, track details, manage your guest list, and much more.  iBridal Gown is another favorite.  This allows brides to shop for a dress “like a pro.”  The WedLink helps you announce your impending nuptials to your friends (better than announcing on Facebook?), as well as find services that you’ll need for the big day.  You can check these all out at the App store.

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Will Free Work?

As we’ve seen with Spotify’s struggle to get itself launched in the US, imeem’s demise, and Lala’s fire sale acquisition by Apple, free music streaming sites don’t have the most successful track record.  But Free All Music and Guvera are tackling that problem – and maybe they’ll even succeed.  The Associated Press has reported that the two companies are going to rely on bigger advertising dollars to get by.

Both Free All Music and Guvera have lured advertisers that will pay more $2 for a minute of airtime on their sites.  According to the AP, this will make them about the same amount of revenue as they would get if they charged your $1.29 for a download.

Successful services like Pandora allow free usage that is sponsored by ads.  Their premium packages are ad-free for paid subscribers.  Free All Music and Guvera are asking for a moment of your time in exchange for free services.  Free All Music’s CEO Richard Nailling says, “You pay for the song by paying attention to the advertiser.  It’s a fair trade of attention for music.”  And no quiz, so you can kind of zone in and out if you want.

What has kept other free sites from working is the crippling licensing fees they must pay (sites usually pay licensing fees of about 70 percent per song downloaded, which has been unsustainable with free sites).  The advertising money doesn’t cover it.  Free All Music and Guvera have signed with Universal Music Group, EMI, and two indie labels (Sony hasn’t signed on yet).  With the bump to $2 ads, this may help keep these two services afloat.

Some advantages the sites are offering music listeners, in exchange for a moment before each free song, is that they can play their downloads on any device, they don’t have to check back in with the service to keep their songs from expiring (as was the case with SpiralFrog), and everything is much more controlled.  How so?  Right now, both companies are in testing phases.  If you want to join, you have to register.  You’ll be placed on a waiting list.  During that time, the sites determine if there is enough advertisers to pay for the projected amount of downloads, and if there is, you’re in.

Claes Loberg, Guvera’s founder and CEO, says, “Everything’s about a controlled, sort of old-school business model of: build one product, find one customer, sell it.  Then build to products, find two customers, and sell it…If we have enough to support a million people, that’s all we’ll open the door to, even if we have 5 million sitting in the background waiting to get in.”  Rather than having X amount of ad dollars and YYYYY amount of customers demanding songs, which has led the previous free streaming model to combust.

So how do these two sites manage to attract higher advertising dollars?  They help the ads target consumers.  When you go on Free All Music, for instance, you are given a choice of advertisers, from Coke to  You can select on retailer’s ad to view.  Then, you get your song. You can download it, it’s yours. You’ve paid with a minute of your life – not bad if you like the song.  You get a max of five songs per week, which is reset each Tuesday.

At Guvera, you fill out a profile, which includes info on your favorites from any number of categories (favorite foods, music, shampoo, whatever).   This allows advertisers to target you based on your interests – but you do get credits to spend on music.  Then, it works like Free All Music. You select on advertiser, watch the ad, then get your song.

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What’s Up with Pandora?

We’ve been hearing a lot about the downtrodden online music streaming services like imeem, the struggling MySpace Music, or the not-even-launched American Spotify.  So what’s happened to Pandora, one of the original services, whose goal is to “play only the music you’ll love”?  In the midst of all this financial and licensing trouble for streaming services, Pandora’s actually gaining ground, and has had its first profitable quarter ever last year.  How are they doing this?

First, a bit about Pandora.  Their Music Genome Project is an intensive analysis of songs: their team of musician-analysts listen to each song, study its details – each song takes about 30 minutes to fully listen and record these unique (and numerous – they’ll record up to 400 different details in one song) attributes.   You enter in the name of a song or artist, and Pandora generates a list of songs with similar attributes.  With about 100 years of music to choose from, and the ability to create 100 different stations personalized to you.  Pandora has taken its meticulous analysis and has doubled its subscription base to 40 million users, according to CNN.

They’ve made deals that have expanded their reach, including one with Apple, have sought out more higher-paying advertisers, and have brought in $50 million in revenue.   Their iPhone app allows listeners to use the service anywhere, anytime, which appeals to both those who already use and those who want to increase the options for mobile listening.  They add about 35,000 iPhone subscribers everyday.  Says Tim Westergren, Pandora’s founder, “Access is our holy grail.”

One problem that all online music streaming sites face is licensing fees.  This crippled imeem, Lala, and other sites, and has threatened to sink Pandora in the past as well.  Westergren has called royalty fees an “albatross.”   The albatross grows heavier as Pandora gets more popular.  $30 million of their $50 million in revenue went to royalty payments.  You can almost here the meter ticking every hour, can’t you?

Pandora finally got a break last year, when they reached an agreement with royalty collector, SoundExchange, to lower their fees.  Westergren says, “The silver lining of our battle over royalties is that [the music industry] came to know our business, and they’re getting to understand that we’re good for them.  Like terrestrial radio, we’re fundamentally a promotional device for music…but we’re an enormous, targeted promotional machine.”

Sonal Gandhi, Forrester Research music media analyst says, “Pandora now has a sustainable business model,” something which other streaming sites lack.  “It was quite a struggle at the beginning when royalties were very high and when they were reluctant to place ads on their site.  They realized they had to do more to make money, and now they’re getting the hang of it.”  And even with those occasional ads, Forrester finds that Pandora users aren’t leaving the site.  A good bit of news in the music streaming world.

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App Olympics

It’s been a busy month for sports: the Super Bowl, which is the most watched single-day sports event (though more than half watch for the commercials) crowned the Saints champions, and shortly after the Vancouver Olympic Games began.  iPhone was there for both big events with multiple apps.  The Super Bowl had 16 or so apps, including a countdown calendar, official game program, and the popular A+ Super Bowl Commercials.  Let’s take a look at the offerings for the Olympics.

  • NBC Olympics (free).  This was a favorite of ZDNet.  For those away from the TV or who just want to cut to the chase and see the results, the NBC Olympics app has real-time updates on every event, real-time results, schedules, video clips, highlights, news stories, and a medal count.  It links up with Facebook and Twitter so you can follow everything you want.
  • 2010Guide – Vancouver 2010 Olympic Winter Games: The Official Mobile Spectator Guide (free). Hurry.  The Olympics will be over by the time you finish reading that catchy title.  The app is great for those who are actually at the Olympics because it has a “location aware schedule.”  You can create your own itinerary, and the app will let you know what events are going on close to your current location.  Those at home can get real-time results for every sport, news, photos, and Twitter streams.
  • Olympic Games and Sports Rules and Records (free). This is handy for non-sport folk who want to follow the Olympics, or really, for sports fans who have never watched curling before.  It has a glossary of sports terms and equipment for scores of different sports, as well as records for every summer and winter Games “ever held.”  Back to the Greeks?  As you can probably tell, this app is a bit heavy on the text, but it reviews very well with iTunes users.
  • Cowbell 2010 ($0.99).  For a buck, you can rink alpine cowbells to cheer your favorite team and/or country.  The bells are covered in your choice of national flags – good way to show your national pride.  And cowbells never really go out of style.  You can also organize events schedules, create a favorite events folder, and follow your faves on Twitter.
  • NBC Olympics Cheer (free).  Last noise-making one, promise.  You can get the old cowbell, as well as an air horn, whistle, or USA! Crowd cheer.  Fun anytime of year, in fact.
  • Games.  The Olympics Games also have their share of game apps.  You can curl, ski jump, and snowboard for free with Lite Versions or from $0.99 to $2.99.

Get going, you only have until February 28.

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The Future of Rock Band

Jimi Hendrix may join artists like The Beatles, Pearl Jam, and Green Day who have their own dedicated Rock Band games, Janie Hendrix, his stepsister, revealed to the LA Times.  The article read, “At the time the deal was completed, Sony vowed to make his music ‘available through every type of media’—including a new edition of Rock Band that Janie Hendrix says should appear before the end of this year.”

This year marks the 40th anniversary of Hendrix’s death, and in March, Sony is putting out a collection of studio recordings.  A game could be the perfect complement to this.  As this is being announced, however, Viacom president and CEO Phillippe Dauman issued a statement that throws Rock Band’s future somewhat into question.  He said,

“As we go forward, we are continuing to focus more on software than hardware, looking to reduce the cost structure associated with Rock Band, being selective in the music titles we choose for Rock Band based on their cost.  The music industry will assist with this category to make sure that it can continue on a profitable basis in the future and then finally we think we have the best games in the category, we’ll continue to rollout exciting products.”


Dauman’s comments were aimed at music labels, such as Warner Music Group.  Dauman feels that Rock Band contributed to the music industry by not only getting the license revenues from Viacom, but also increased exposure for the labels’ artists and potentially more downloads of their music.  But complicating that assertion is the fact that 66 percent of 2009’s decline in video game sales was from music games.    Viacom already relies on low license fees in order to keep their “games division alive,” according to Billboard.

WMG president Edgar Bronfman thinks that the fees are already too low – “paltry” was his choice of words.  WMG and Harmonix, creator of Rock Band, have failed to reach any new agreements this year, casting doubt on the future of WMG music in future Rock Band editions.  Viacom has indicated that if lower fees are not forthcoming, they will be forced to get their music from other sources and exclude that from Warner.

This won’t affect the Jimi Hendrix game because his music is controlled by Sony, but it could affect what we’ll see in the future.

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Apple Markups

When you buy a product like a DVD or CD, a small portion of the overall cost goes to the artists’ and writers’ royalties (though that’s by far the smallest portion of the overall take); the rest is for the retailers and the labels.  The disc itself is remarkably cheap.  It’s a bit different with consumer electronics, where the cost of the components is much higher.  Business Week has an interesting piece about the markets for the most popular gadgets, and for some, it is surprisingly small.  Let’s take a look at what Business Week found.

You’d think the iPhone would have a pretty big markup because, well, it can.  The popular G3 and G3S retail for about $200 each.  The 3G has about $175 in components while the 3GS has about $180 worth of fancy electronics.   For the iPhone 3GS, for instance, there are upgrades, such as the 32 gig memory, improved 3 mp camera, and new Samsung applications chip, that are costly for Apple.  Don’t worry about Apple being too altruistic and offering their awesome phones at almost-cost: they get a subsidy from AT&T, and their total profit for the 3G is about 55 percent.

What about iPhone rival, Nexus One?  This one retails starting at $170 and has $174 worth of electronics components.  But the “starting at” price is from T-Mobile USA, which sells the phone with a 2 year contract.  You can also get the unlocked version from Google, but that’ll cost you a much larger $529.  Verizon may be getting on the Nexus wagon soon and selling the phone with one of their plans.  In that case, the price should be comparable to T-Mobile’s.

It’s the same story with the Motorola Droid: it retails for $200, a markup of less than $20 over the cost of components with a contract from Verizon.  Contract free will cost you $600.

Bigger markups can be seen on items like the iPod Shuffle and the Amazon Kindle 2.    The Kindle costs about $186 to produce, and Amazon sells it for $359 – no wireless carrier to defray the cost there.  Likewise with the tiny Shuffle.  This whole unit costs about $22 to make, including the packaging.  It retails for a little more than twice that.  The iPad also has some big markups: the entry-level model costs $500 and has $220 worth of electronics, while the 3G 64 gig higher-end model costs $829 with $335 worth of cool iPad stuff.

It’s always nice to know what you’re getting, and not getting, for your money.

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