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Social streams booming, could liven up subscription services

Posted on: 02/07/2008

From USA Today: “There’s a new music revolution brewing, and it’s social.

“Social music sites Imeem and Last.fm — which offer on-demand, ad-supported free music — have grown rapidly to 20 million monthly users each. Their success has the music industry seriously exploring the viability of ad-supported, free music as the next big business model for online music.

“‘This is driven by the reality of the way the Web is working now, and the amount of advertising dollars moving to the Internet,’ says Rio Caraeff, executive vice president of eLabs, Universal Music’s digital arm. ‘This is about going where the money is and where the fans are, and giving customers what they want, which is free music,’…

“The latest trend is ad-supported, on-demand online music streaming, most notably, Imeem and Last.fm.

“The old negative for such Web-only services — that you can listen to a song, but can’t download it — no longer appears to be an issue. In the age of always-on, high-speed connections, ‘Who cares?’ says Quincy Smith, president of CBS Interactive…

“Music industry executives and analysts believe the social sites could even help subscription services, providing the boost they need to win consumer acceptance…

“Last.fm says it will launch a subscription service later this year.

“While ad-supported on-demand online music is clearly striking a chord, the category is so new that few analysts have factored in its growth. For now, JupiterResearch projects a $3.5 billion digital music industry by 2012, from nearly $2 billion in 2008.”

Read the entire article at USA Today.

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  1. The latest attempt at new music distribution may be to give the music away free, but this is unsustainable from a cost/revenue perspective. There is not enough advertising demand available to subsidize the $30billion digital music market with ads; and if the inventory were created anyway, it would seriously deflate the display and keyword ad market.

    Digital music market is now at $30 billion and rising (including illegal downloads). While digital advertising is only at $20 billion and slowing.

    There’s an excellent analysis at Brooding Savage blog.

    Bill · Feb 9, 02:54 AM · #

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