In this second guest post, MXP4‘s CEO explains why he thinks interactive music is the way forwards.

The music industry is undeniably at a crossroads, and it’s hard to tell which route will lead to increased revenue. I see the path to growing sales as one requiring three basic steps. First, engage the fans. Second, use that fan engagement to push the message virally. Lastly, leverage that viral engagement to drive purchases of music and music-related products like concert tickets, fan gear and the like. Interactive music is an essential part of this path, and it can lead to a winning place for both fans and the music industry.

As I mentioned in our previous post, we believe that many fans, particularly hardcore fans most responsible for spreading music and driving sales, are as interested in being active with music as they are interested in listening to it. They don’t just want to play it, but play with it. These fans create new mashups, are passionate out remixes and are always on the lookout for new ways to directly engage with artists and other fans online.

The question becomes, can this desire to play with music and ability to more directly engage with it have a monetizable business benefit? After releasing a number of interactive albums and singles, we took a look at some metrics and here’s what we found:

• When delivered in an interactive bundle, users spend album-like time with music as opposed to single- like time. Our data showed fans played with an average of 2.6 tracks and used the album or single for an average of 9.1 minutes at a time. This demonstrates real potential for premium pricing and services for album-like offerings.
• Fans were not only engaged with the interactive music, but they were inclined to use the built in viral tools to pass the word along. Our data showed that 75% of the traffic to the interactive singles and albums online was of a viral origin.
• And, yes, interactive music leads to sales. Our recent tests showed that as much as 3% of the traffic clicked through to purchase the music.

This is just the tip of the iceberg – the interactive approach also allows marketers more time to send a message and merchandisers the ability to sell music related products and services right through the music app.

Of course, making existing music libraries interactive means making more use of the library of stems. Our next post will cover how interactive music is creating more value in the stems themselves.

http://midemnetblog.typepad.com/midemnet_blog/2010/01/-interactivity-the-path-to-fan-engagement-and- music-sales.html

January 18, 2010

Albin Serviant, MXP4: The music technology and trends that will drive revenue growth

In this, the first of a series of guest posts, Albin Serviant, CEO of innovative French start-up MXP4 - whose format allows users to make their own versions of tracks – share his views on four key trends shaping the industry today.

With new music models now demonstrating real traction throughout the industry, this year’s MIDEM gathering should be particularly exciting. While the music industry is undeniably undergoing a period of change, consumers are continuing to show interest in buying music, propelling the industry forward. Digital track sales increased 8.3% from 2008, topping 1.1 billion tracks in 2009. Nielsen says that 89 digital tracks have exceed the 1 million sales mark. The day of the digital track blockbuster has truly arrived.

Of course, with the lower rate of growth throughout the industry, we still have major challenges to address. How can we grow sales of singles while maintaining pricing power? How can we spur digital album (bundled offering) sales? Increasing both premium single track pricing and album type sales is critical to realizing the full monetization potential of the digital world. And, in my opinion, that potential greatly exceeds anything the analog world ever had to offer.

Over my next few blog posts, I will detail four key trends I see as driving consumers to not only spend more on music, but do so in ways where they themselves can help create new revenue opportunities for the music industry.

1. Interactive music increases both fan engagement and revenue opportunities. Consumers don’t simply want to play music, they want to play with it. What we are finding is that when consumers play with music, they spend more time with it and more money on the artist. Interactive music isn’t simply a feature; it’s a marketing strategy and revenue-driving experience.

2. It’s not just about selling tracks, it’s about selling stems. The mashup movement has shown great potential but we are still thinking in terms of tracks. Once we realize that the stems themselves are as valuable as – or perhaps even more valuable than – individual tracks to many consumer, we can open up new revenue opportunities. Yes, a single song sells for 99 cents. But how much can we make off the stems of that song if we sell them to allow consumers to create, and then sell, new music or use it in other ways?

3. The music app becomes the new digital album. At the most basic level, an album is a bundled offering of songs. An app is a bundling of features that create an experience. When music apps bundle songs, interactive features and multimedia contact the result is a far more engaging album experience, yielding increased virality and sales! The album is dead, long live the album…err…music app.

4. The streaming music link becomes as important as the music file itself. As an industry, we focus on the sales of files. But how does music really spread? Links. What does the growth of streaming services tell us? That people are as happy to click on a link to a track or playlist as they are to download it. The challenge and opportunities? Making the link generate revenue the same way a file does.

http://midemnetblog.typepad.com/midemnet_blog/2010/01/digitalmusictrends.html