From Adagio to Fortissimo
The giants of the music industry and the major web portals sense a huge business opportunity in online music services
The giants of the music industry and the portal giants smell the big business with sound offers on the InternetBy Clemens HörlerLate in the day, the big music companies are also tinkering with web presences and looking for allies among the portal operators. Such coalitions could make life even more difficult for independent smaller providers such as music pioneer Launch.com.
After the battle against Napster, which has been successfully fought so far, the music indus-
The music industry is now rather late in launching its own Internet offerings. Accordingly, the two heavyweights Sony Music Entertainment and Universal Music Group, which together dominate almost half of the market, announced a joint project called Duet. Other giants such as Warner Music, EMI and Bertelsmann Music Group (BMG) responded in kind, unveiling plans for a music platform called Music Net.
The problem for the music giants is that they are certainly not among the top brands among Internet users, and launching such platforms on their own would probably devour vast sums of marketing money. That's why the two competing groups are looking for allies in the Internet industry who are already well-known and popular. The big portals are ideal for this. Yahoo has already joined Duet. And Microsoft has already announced its own music portal with partners BMG and Sony. MSN Music is currently in the beta phase.
The rulers of the music industry are also welcome partners for portal operators, especially since music is considered premium content in the Internet industry. Because of insufficient revenues from the online advertising industry, other sources of money are increasingly having to be tapped. Paid music offers could be a most welcome contribution to filling the coffers again.
Too many free offers reduce competitiveness
The planned cooperations between the music and Internet giants probably do not pose much of a threat to independent music file sharing networks like Gnutella. However, they could put the existing music portals in serious trouble. These have impressively demonstrated what can be achieved even with the bandwidths available today. However, despite large user numbers, many of these providers are in a position of weakness in the face of the impending competition because they too have relied too heavily on financing through advertising and offer practically everything for free.
A representative example is the American company Launch Media Inc. Its music portal Launch.com counted 5.6 million registered users and 9.7 million visitors in the month of December at the end of last year. Launch.com is a mixture of MTV and music magazine and offers soundsurfers a total of 50,000 video clips, interviews and features with musicians, concert notes and general news from the world of stars and starlets.
Users choose their own music program
Unlike MTV, where viewers are presented with a ready-made menu, visitors to Launch.com can put together their own music station according to their preferences. Music fans on Launch. com choose what they like best from 18 styles and a variety of subcategories, and list their favorite groups. Once registered, they only receive music played to their liking in the program window. If they still don't like a video clip that is played, they can wish it into pepperland with one click and never have to get upset about it again.
The disadvantage compared to MTV & Co. is obvious: The section on the screen is even smaller than on TV, and Launch.com rarely plays the latest music clips, which is probably due to licensing or cost reasons.
Sluggish online advertising market is responsible for losses
As interesting as Launch.com's free offering is to users, the operators' business model hasn't quite panned out. In 2000, Nasdaq-listed Launch Media Inc. made a loss of $34 million on revenues of $36.9 million. In the last quarter of the fiscal year, three-quarters of revenues came from advertising revenue, and 22 percent came from reselling content to other Web platforms. Sales of CD-ROMs containing excerpts from the Web program brought in only a little revenue. And the sale of concert tickets did not bring the hoped-for financial success either.
The company primarily blames the flat online advertising market for the unsatisfactory business performance. Nevertheless, Launch Media wants to continue to focus primarily on advertising in the future and, in addition to banner ads and sponsorship opportunities, also offers the opportunity for flash spots between the individual video clips. Charging premiums for the use of the personalized offer apparently still seems too risky for many providers - and would actually probably be the wrong way to go given the current reception quality.
Online music to break up the office routine
Primarily because of the sound and picture quality, websites are not too much competition for the TV music channels. At least now, they are still more of a supplement to them: At home, where Internet connections are not yet as good, Internet music services such as Launch .com probably still have a rather difficult time. In the office, on the other hand, where greater bandwidths are available but there is no TV, the service will certainly do. The big portal operators and their allies from the music industry can also hope for this. After all, it's no longer a secret that the Internet is also used in offices for non-work purposes.
After the battle against Napster, which has been successfully fought so far, the music indus-
The music industry is now rather late in launching its own Internet offerings. Accordingly, the two heavyweights Sony Music Entertainment and Universal Music Group, which together dominate almost half of the market, announced a joint project called Duet. Other giants such as Warner Music, EMI and Bertelsmann Music Group (BMG) responded in kind, unveiling plans for a music platform called Music Net.
The problem for the music giants is that they are certainly not among the top brands among Internet users, and launching such platforms on their own would probably devour vast sums of marketing money. That's why the two competing groups are looking for allies in the Internet industry who are already well-known and popular. The big portals are ideal for this. Yahoo has already joined Duet. And Microsoft has already announced its own music portal with partners BMG and Sony. MSN Music is currently in the beta phase.
The rulers of the music industry are also welcome partners for portal operators, especially since music is considered premium content in the Internet industry. Because of insufficient revenues from the online advertising industry, other sources of money are increasingly having to be tapped. Paid music offers could be a most welcome contribution to filling the coffers again.
Too many free offers reduce competitiveness
The planned cooperations between the music and Internet giants probably do not pose much of a threat to independent music file sharing networks like Gnutella. However, they could put the existing music portals in serious trouble. These have impressively demonstrated what can be achieved even with the bandwidths available today. However, despite large user numbers, many of these providers are in a position of weakness in the face of the impending competition because they too have relied too heavily on financing through advertising and offer practically everything for free.
A representative example is the American company Launch Media Inc. Its music portal Launch.com counted 5.6 million registered users and 9.7 million visitors in the month of December at the end of last year. Launch.com is a mixture of MTV and music magazine and offers soundsurfers a total of 50,000 video clips, interviews and features with musicians, concert notes and general news from the world of stars and starlets.
Users choose their own music program
Unlike MTV, where viewers are presented with a ready-made menu, visitors to Launch.com can put together their own music station according to their preferences. Music fans on Launch. com choose what they like best from 18 styles and a variety of subcategories, and list their favorite groups. Once registered, they only receive music played to their liking in the program window. If they still don't like a video clip that is played, they can wish it into pepperland with one click and never have to get upset about it again.
The disadvantage compared to MTV & Co. is obvious: The section on the screen is even smaller than on TV, and Launch.com rarely plays the latest music clips, which is probably due to licensing or cost reasons.
Sluggish online advertising market is responsible for losses
As interesting as Launch.com's free offering is to users, the operators' business model hasn't quite panned out. In 2000, Nasdaq-listed Launch Media Inc. made a loss of $34 million on revenues of $36.9 million. In the last quarter of the fiscal year, three-quarters of revenues came from advertising revenue, and 22 percent came from reselling content to other Web platforms. Sales of CD-ROMs containing excerpts from the Web program brought in only a little revenue. And the sale of concert tickets did not bring the hoped-for financial success either.
The company primarily blames the flat online advertising market for the unsatisfactory business performance. Nevertheless, Launch Media wants to continue to focus primarily on advertising in the future and, in addition to banner ads and sponsorship opportunities, also offers the opportunity for flash spots between the individual video clips. Charging premiums for the use of the personalized offer apparently still seems too risky for many providers - and would actually probably be the wrong way to go given the current reception quality.
Online music to break up the office routine
Primarily because of the sound and picture quality, websites are not too much competition for the TV music channels. At least now, they are still more of a supplement to them: At home, where Internet connections are not yet as good, Internet music services such as Launch .com probably still have a rather difficult time. In the office, on the other hand, where greater bandwidths are available but there is no TV, the service will certainly do. The big portal operators and their allies from the music industry can also hope for this. After all, it's no longer a secret that the Internet is also used in offices for non-work purposes.
