Napster started the music revolution 10 years ago with its file-sharing network. Today’s announcement on the roll-out of a $5 subscription for 5 downloads and unlimited streaming might not sound as epic.

But the fact of the matter is that it officially sanctions the shift from Downloads to Streaming.  From Ownership to Access.

We are not yet into the full-fledged Access Era as depicted by Caraeff and Masnick with interactive listening and your library in the cloud.

And this is yet a model from the past – the subscription- which has hardly won the music fans. But it is a step into the new era where listening comes first and then there is Upselling of additional and targeted value added services.

Spotify is leading the way – at least on paper, even though the balance sheet might not look too nice, as of yet.

BREAKING NEWS

ONE BILLION DOWNLOADS FOR THE APPLE STORE

Apple’s numbers are worth noting, because the company reported 800 million downloads just a month ago, and hit half a billion back in January. iTunes, on the other hand, took two years to reach that number of songs downloaded. The all-time top 20 apps sees Facebook and Google Earth climbing past Pandora to become the top free apps, followed by Pandora, Tap Tap Range and Shazam. [VentureBeat]

TRENDS

SPOTIFY CEO INTERVIEWED BY THE GUARDIAN: MUSIC FANS WILL BUY MUSIC

“If you truly connect and empower your fan base, people will pay for music. Perhaps that revenue won’t come primarily from selling records, but ad-supported music services, subscription music, downloads, merchandise and live shows as well as CD sales are all going to make money for labels and artists,” the head of Spotify, Daniel Ek, told the Guardian. “I think the music industry as a whole can be in a better position than it has ever been,” said Ek. “There has been a massive shift from ownership to access but people will pay for music if packaged correctly and it offers them something special.”[The Guardian]

MONETIZING SOCIAL MEDIA – FORRESTER PREDICTION

Forrester research by Mark Mulligan (free summary; $750 for full PDF) predicts that even though social music may not generate much revenue now,  monetization’s effectiveness must — and will — improve. Social music destinations will continue to build highly engaged audiences and deepen the relationship between fans and their music. But the labels will have to come to a compromise and change the licensing structure for streaming music. [Epicenter]

GOING UP, DOWN AND UNDER

DRM IS DEAD!  ITUNES VARIABLE PRICING IS BORN

As announced in January, on Tuesday, Apple made good on its promise to remove DRM from every song in the iTunes store — a long-awaited move that the labels only allowed in return for Apple letting them price songs at three different points: 69 cents, 99 cents and $1.29. [Hypebot]

Only two days after, and Billboard reports that there was evidence the increases have hurt the sales rankings of songs given the higher $1.29 price.[BillBoard]

SPOTIFY API

It’s a good week for Spotify. Commercial terms were found with PRS [MusicAlly]

And on Tuesday libspotify, the company’s API, was launched to the public, which means that any developer (for approved devices) can build apps that access Spotify’s massive music catalog and use its P2P architecture, which streams Ogg Vorbis files between users like a streaming version of BitTorrent. [Epicenter]

VEVO IS COMING SOON

It’s now official: before the end of the year the new music video hub Vevo will see the light. Google/YouTube and UMG are working together at the new Join Venture and trying to get other labels on board. The big hope is to be able to better monetize music (videos).  Will they be able to get to $25-40 CPM? [Billboard]

YAHOO MUSIC IS BACK

On Tuesday, Yahoo Music launches its redesigned artist pages incorporating music content from third parties:downloads from iTunes, albums from Amazon, streams from Pandora, music videos from YouTube, and tickets from Ticketmaster.  Yahoo hopes this strategy will cut costs, while still providing music and videos for its 20-million-plus monthly visitors. [Epicenter]

LEGAL P2P COMEBACK? QTRAX (RE)-LAUNCH

The ad supported p2p finally “officially” launched last week with all four major labels on board. The subsidiary of Brilliant Technologies originally unveiled their service at the international music tradeshow Midem last year, but it quickly closed down after it turned out the company hadn’t finalized the major label agreements it said it had. Since then, Qtrax has signed licensing deals with all four major labels, and a number of independents.[Billboard]

SONGZA ACQUIRED BY AMIE STREET …SIX MONTHS AGO

TechCrunch was the first to discover that popular music store Amie Street has kept a deal it forged with Songza, a media streaming service, under wraps. The acquisition happened in October 2008 [TechCrunch]

WE7 AD-FREE SUBSCRIPTION AND REWARD SCHEME

We7 is funded by short adverts played at the beginning of each track alongside a paid-for download store. With the new rewards scheme, regular users collect points by spending time on We7 that they can exchange for ad-free days of music. The reward scheme will be followed in the summer by the launch of a paid-for subscription service for ad-free streamed music. This is likely to cost £9.99 for a month or 99p for a day. [MusicWeek]

GUNS N’ROSES AND ROCKBAND

“Chinese Democracy” will be released in its entirety into the Rock Band Music Store on April 14 and gamers will be able to download and play all 13 songs from the record, Harmonix and MTV Games announced Friday [Billboard]

SOCIAL MEDIA

TWITTER MUSIC POTENTIAL

Hip-hopper K’naan is revising his song “People Like Me” using fans’ tweets and the San Francisco sessions vets in Moonalice are planning a repeat performance of their real-time Twitter concert [UnderWire]

TWITTER PARTNERS AND GORILLAZ

No, Twitter Partners isn’t backed by Twitter, but Universal Pictures, Virgin Media and Gorillaz will use its services to launch on Twitter, soon. Supposedly virtual band Gorillaz is the first client to launch activity, promoting the documentary film Bananaz ahead of its theatrical release.[NewMediaAge]

FACEBOOK & PIRATEBAY

The Share on Facebook Pirate Bay feature didn’t last long. The Pirate Bay had recently made torrents more social by adding “Share on Facebook” buttons across its site. The social network  asked TPB to remove the buttons. After being ignored, Facebook is now blocking all links to The Pirate Bay and its torrents—legal and otherwise. [Ars]

MUST READ

Trent Reznor Interview with Wired [TheUnderwire]

MUST WATCH: TRENT REZNOR INTERVIEWED BY KEVIN ROSE

Since its launch in October 2008. Spotify has been getting lots of plaudits from users and bloggers.

From TorrentFreak to  TechCrunch, the service seems to have impressed people who have tried it with its speed, usability, and depth of songs. Spotify seems to be the new European Mecca for music.  Yes European only, since it isn’t officially available in the U.S. yet (though a Digg commenter did provide a way for people to try it out Stateside, at least temporarily). Right now it can be accessed in the UK, Germany, France, Italy, Spain, Finland, Norway, and Sweden.

What is Spotify? It  is a downloadable application that lets users stream music instantly from its library. Once downloaded, the service allows users to search its music catalog by artist, genre, or title, and stream the tracks on-demand any number of times.

As with all new social media sites, Spotify offers its users the ability to create and share playlists (a la the now-defunct Muxtape). In December 2008, it also added the ability to scrobble the songs you listen to through Spotify on Last.fm.

The Spotify catalog is huge – notwithstanding some recent troubles – and built with the blessing of EMI Music, Sony BMG, Universal Music Group, Warner Music Group, and some smaller record labels, including most recently CD Baby.

That, of course, begs the question: how does it plan to make money?

Let’s put it in a temporary timeline

-Spotify started off by offering two ways to use its service, a free service sponsored by ads, and a paid subscription service.

-How is this playing out? In an interview to Robert Andrews from PaidContent UK, Spotify CEO Daniel Ek points  at the difficulties of the advertising market and the not ready yet CRM platform as the reasons for a lukewarm start  “We launched probably at the worst possible time in 70 years for advertising”.

-In less than 6 months, Spotify has certainly attracted an interesting crowd of  followers. It has hit the million-user mark, but that’s across its ad-supported free option, £0.99-a-day service and £9.99 unlimited offering. However, according to Mark Mulligan, analyst at Forrester Research, Spotify has found that far fewer users then expected are handing over the cash for a monthly subscription.

Plans for the future?

-Mobile apps to stream and download songs – still in the works. But this is certainly a place to be today, for branding and marketing reasons.

-A celestial juke-box (a la Lala and PlayAnywhere). This is going to be huge and who wins this market, has the chance to be the next ITunes!

-Click to buy links. And that’s happened today thanks to a partnership with 7digital.

Initially only single songs and albums will be available to purchase but eventually users will be able to buy entire playlists from the store. The buying option will go live first in the UK and Germany, France, Italy and Spain. Sweden, Norway and Finland will follow in a few weeks time. No prices have been given for the price of each 320kbps MP3.

To quote Mark Mulligan again it appears that “The deal (with 7Digital) is happening now rather than at launch because Spotify is going through the process of re-learning its business”.

We’re all here to learn and re-learn!

James Heckman, former chief strategy officer at Fox Interactive, MySpace’s parent company, is quoted today by the Financial Times in a report on the status of the online music industry, saying .“A lot of these guys are going to be wiped out, but everything that is happening right now doesn’t matter in the long run.

“This is a transformation period and I think there will be some winners.”

Late at night on March 19th after less than 3 years in operations, Spiral Frog silently pulled the plug on its site.

Just like a rockstar, hyped and controversial during its life, the frog didn’t miss to spark a heated debate with its suicide.
That its death happens not long after the demise of Ruckus-the streaming service built for college student and acquired by another now- zombie, Total Music- only contributes to the darker tone of the debate.

So what killed SpiralFrog? Was it an isolated case of bad capital structure, huge upfront fees, lack of usability, poor advertising revenues? Could another startup take over its mission?

Let’s see where other similar services rank in today.
Imeem
+4 is better than 2: has secured deals with all the four major labels - that’s already two steps ahead of the frog that Sony and Warner never liked…
+Hall of Fame: named one of the top 10 music services for 2008 by Wired.com. Kudos!
+A Mobile Pioneer: has already gained itself a reputation as a pioneer in the mobile music landscape by becoming the first and best music app on the Android
That was only…hum one month ago!
This week Imeem is all over the news but the tone is “slightly different”: Michael Arrington at TechCrunch estimates their debt at a “manageable” $30mln which, with this economy, is definitely not something you worry about…..UG
But wait, it’s not dying, it’s just renegotiating its deal with the labels. According to MediaMemo it has already been able to secure better fees per stream. The question is if this is enough to save it from going under. Ironically Imeem is partially owned by the major labels.
Ok, we’ll wait…

Last.fm

Eventually it has decided to switch from free to subscription and start charging users outside the US, UK and Germany  3euros/month.  This model is not new to Last.fm: it had been announced over a year ago, the idea being that users would be able to stream  a song only 3 times before having to pay for premium features. That model never materialized – which supposedly angered the Warner management, disappointed at the poor economic returns of the CBS poster child.
Last.fm, acquired by CBS, has deals with over 280,000 labels and artists, some of which it pays directly (except Warner Music Group…).

Playlist

2008 didn’t end well for Project Playlist. The premises were all great: former Facebook exec Owen Van Natta was appointed CEO and the company got another round of funding. But then came the label ban to Playlist widgets from MySpace and Facebook, two main drivers of traffic for Playlist.

Will 2009 be a better year for Playlist? This week EMI announced they dropped the lawsuit and signed a deal with Playlist – the terms are undisclosed though…

With Sony already on board, that’s two more to go…Unfortunately though MySpace and Facebook have not yet reinstated the Playlist widgets…

I guess it doesn’t surprise anyone if Michael Arrington ends the week with a dire vision of the future for music startups. A future with no future…