Some major players of the digital music world congregated in the Blue Lounge at MIDEM today, for a panel hosted by Sony Network Entertainment about its new Music Unlimited cloud service, and its wider implications.
The panel: Mark Pibe, global head of digital music at EMI; Michael Nash, EVP of digital strategy and business development at Warner Music Group; Rob Wells, president of the global digital business at Universal Music Group; Thomas Hesse, president of global digital business at Sony Music Entertainment; Tim Schaaff, president of Sony Network Entertainment; and Shawn Layden, EVP and COO of Sony Network Entertainment.
Sony started the Music Unlimited project around a year ago, and it launched in the UK and Ireland last month, with four more European markets going live this weekend.
“We are trying to do something at Sony that hasn’t happened in the past very well: to take a look at the full range of assets of the company and try to create a really exciting set of propositions that address an extreme need of consumers,” said Schaaff.
What need? The internet, and delivery of content over it to multiple devices. Onto the panelists, starting with UMG’s Rob Wells.
“You’ve probably seen a number of these services go live over the last few years,” he admitted. “The single biggest problem that exists in the global music business still exists – we have a huge piracy problem… And services like Music Unlimited has to be seen against the backdrop of global rampant piracy. Services like this do not compete with the existing services in my mind, and research that we’ve carried out bears that out too.”
Wells added that Music Unlimited “has an absolute, genuine, categorical shot at success on a global basis”.
Sony’s Hesse took up the baton. “This conference is a lot about cloud-based music, and in many ways Sony here is leapfrogging into exactly that space. It’s a very visionary and bold thing to do, and we’re very supportive of that. Ultimately cloud-based music is about consumer convenience… Access to all the music through all the devices that you have.”
Hesse also welcomed Sony’s openness with its service, with plans to launch apps for Android and iPhone, rather than just focus on its own devices.
On to Nash from WMG, who hailed the distribution scale that Sony brings to Music Unlimited. “The thing for me though that really makes that formulation exciting is the service is really perfectly targeted for those devices,” he said. “When you see the service demonstrated… you realise how exciting the service is going to be, particularly in the digital living room.”
He also described Music Unlimited’s potential as being “significantly additive” – the same point made by Wells, that it won’t cannibalise existing digital music sales. “We’re talking about tens of millions of consumers who are largely not digitally migrated at this point.”
The panel then took questions from the audience of journalists. First up: does the service legitimise piracy, since it scan-matches a user’s digital collection on their computer so they can play it through other devices – and varying proportions of those songs may have been illegally downloaded?
Schaaff said that getting these people to now pay for a service like Music Unlimited is the key point. “We’re not increasing the surface area of the problem, because once you’re a subscriber, you’ve got access to all these tracks… We aren’t bringing songs into the cloud that we don’t actually have licences for.”
Nash from WMG said he sees this as the service’s key feature: migrating people’s collections to the cloud. “You’re not asking them to choose something new versus what they already have.” Wells agreed, saying that cloud-based services will “live and die on a functionality like this“.
He went on to talk about elements that make services appealing to consumers: user experience, billing integration, a good marketing message and an existing base of consumers. “With Sony, all of those boxes have been ticked.”
Do startups have a shot at launching this kind of service? Nash pointed to Omnifone and Gracenote’s involvement, but admitted that scale is absolutely critical. “You’re talking about tens of millions of devices that can be powered by this service. That creates a massmarket environment.”
Hesse added that “Sony is taking a very nimble approach here – it’s not saying it’s all got to be entirely Sony, in the way they’re rolling out apps to these other platforms.”
Wells thought the fact that there is a new entrant into the digital music space – and one with Sony’s global marketing budget – “a great opportunity for us as a music industry to potentially break some new artists”.
Schaaff was asked about the strategy for non-Sony devices in more detail. “When you provide these services, you’ve got to provide customers the ability to access the content wherever they are,” he said.
“We don’t see that supporting devices from other manufacturers is a problem to the business model – in fact, it probably strengthens the proposition… It’s very natural for us to support Android and iOS over time. That’s an incredibly fundamental part of this.”
Schaaff mentioned the automotive market as a big opportunity for Music Unlimited, building on Omnifone’s existing partnerships in that market.
Will the music ever be playable offline? Schaaff said that Sony recognises that many mobile products are “mostly connected, often connected, usually connected, but sometimes they’re not connected” – and Sony is keen to provide features that deal with this challenge. He didn’t specify how, hinting at necessary discussions with labels and publishers on the licensing for this kind of feature.
He also alluded to social features. “It’s hard to imagine an entertainment service succeeding over time without a social component built in… It’s a really important part of the featureset, and that’s a high priority for us for sure.”
How do new artists join Music Unlimited, aside from signing with a major label? Schaaff says Sony is working with hundreds of independent labels, through its Omnifone partnership. The service is launching with six million songs in its catalogue, but that’s just the start according to Schaaff. “We want all the music in the world on the service.”
He also came back to Wells’ point about promoting new artists on the service, while Hesse agreed that discovering new music should be a key benefit for people signing up to Music Unlimited. Nash talked about labels needing to “transform our marketing practices” to take advantage of new services like this.
The panel were asked about the MIDEM Hack Day event, and their stance on opening some of the data-sets of the service up, or providing an API for integration with other services. “There’s a lot of opportunities in supporting other developers,” said Schaaff, while warning that Sony wants to make sure the service is stable and has a few more features in place first.” But APIs for developers are certainly on the agenda in the longer term.
How will services like this change people’s behaviour? Wells talked about learnings from similar services: “We’re seeing a lot more time spent listening to music, a lot more consumption of the album format, obviously transition from pirate services into legitimate services,” he said. “It’s all incremental incidental business from what I hope.”
Pibe chimed in: “It’s about execution. The better the services are, the more people use them. And the more they’ll consume music… We think that if anything, people who get interested by this service are going to consume more music.”
Schaaff said Sony has grand ambitions for expanding the service, both geographically and across devices, while adding more and more features. “It’s just the beginning… Your ability to iterate and evolve the product, you need the focus and attention to come from the consumers actually using it.”
Why isn’t the service live in the US yet? “We’re ready to go,” said Schaaff, promising a launch this quarter. “I felt there was a great opportunity of starting in Europe. Omnifone is a UK-based company, and it’s good to start close to home to make sure that things are working… It was a very pragmatic decision, it wasn’t driven by licensing issues.”
Is there any free component to Music Unlimited? Schaaff said Sony thought hard about this when putting the service together. Users can get free previews of all the songs on the service, and can sign up for a 30-day trial to the service. “We’re not going down the path today of an ad-supported free service,” he said.
Hesse added: “Free doesn’t really make any money. We definitely feel that when something’s free it’s promotional. And anything that’s free has to ultimately lead to an upsell that ultimately generates real revenues.”
How about bundling Music Unlimited’s subscription into the initial price of devices like TVs and PlayStation 3 consoles, Comes With Music-style? “We’re not going to talk about some of the other promotional opportunities we are likely to go for in the future,” said Schaaff – a hint that it could happen, but not for a while.