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The music industry has changed a lot since MP3 players came around. Now we have thousands of digital stores, streaming services, blogs, and artist curated websites dishing out free music all the time. It’s easier than ever to create a massive music library without spending a dime. Here’s how to do it. More »

The internet is disrupting many content-focused industries, and the publishing landscape is beginning its own transformation in response. Tools haven’t yet been developed to properly, semantically export long-form writing. Most books are encumbered by Digital Rights Management (DRM), a piracy-encouraging practice long since abandoned by the music industry. In the second article of a two-part series in this issue, Nick Disabato discusses the ramifications of these practices for various publishers and proposes a way forward, so we can all continue sharing information openly, in a way that benefits publishers, writers, and readers alike.

Streaming music service Spotify hasn’t made too many friends in the music industry, mostly because it’s bringing fewer paid subscribers to the table than record labels had anticipated. But that’s not stopping the startup from trying to pick up more funding.

In an interview with Swedish business-focused daily newspaper Dagens Industri, Spotify CEO and founder Daniel Ek confirmed that his company had posted losses of around $96 million in its two years of existence, saying, “The question of when we’ll show a profit actually feels irrelevant.”

Nevertheless, Ek said, Spotify is still open to considering big-dollar rounds of venture capital from big-name firms.

But first, the company will be focusing on, if not turning a profit, at least beefing up revenues. Saying the company is focusing on sales and is expecting to show more than $800 million in revenue for 2012, Ek continued, “We know we are making money on each new user we get, whether it’s a free user or paying. Therefore, all user growth [is] positive for us.”

Like most businesses, Spotify has had to spend money to make money. Ek revealed one of Spotify’s biggest barriers to profitability has been coming into new markets, including the U.S., which has taken a heavy toll on the company’s coffers. “Every time we enter a new market, it is extremely capital intensive because we need to invest in local music rights,” the CEO told DI.

As for funding, Ek said, “We have no need of more capital in the current situation in order to operate the business plan we have. But I have learned to always take the money when you do not need the money. We utilize the principle that if an investor can add strategic value and the valuation is good, we are interested.”

And by a good valuation, Ek means something in the range of $4 billion.

But don’t get your hopes up for a Spotify IPO. “We want to build this company long term. Therefore, the stock exchange is not an option for us,” Ek concluded.

Image courtesy of ra2, Shutterstock

Filed under: Entrepreneur, media

The Echo Nest is possibly the hottest music data company around right now. They’ve signed deals with Nokia, EMI, Clear Channel, Spotify, and most recently, Vevo.

So chances are if you enjoy music, The Echo Nest has something to do with what songs you’re recommended.

Knowing this, I couldn’t resist sitting down with CEO Jim Lucchese to chat out what the music industry will look like in the next couple years, and how The Echo Nest may shape it.

Lucchese believes that the songs you listen to say something about your identity, and that music services have a huge problem ahead of them in the form of millions of listeners and millions of digital music titles. Being the middle man between such huge pools of information is nearly impossible without a deep understanding of the music itself.

But Lucchese believes that the real shift will come by way of understanding the listener, too. We’re getting to a point now where music can be analyzed and categorized in a number of different ways, but little is known about why someone would enjoy Nicki Minaj and Florence + The Machine at the same time. That’s what The Echo Nest is trying to figure out, and it would seem that the company is doing so ahead of the rest of the industry.

I’ve been waiting for this one. Bram Cohen is the Chief Scientist and co-founder of the P2P file sharing service BitTorrent. And he may also be one of the guys most responsible for the decline in the music industry. So I asked Bram, when we sat down together earlier this week at SFMusicTech, whether he did indeed have any responsibility for killing the music business.

His denial was categorical. Not only did Bram deny any role in shrinking the sale of recorded music, but he actually disputed that the music industry is in decline, claiming “data” showed it to be in a quite healthy state. And Bram had a clear message for music executives who might dispute his argument. “Embrace the future,” he told them, and accept that the product is the band rather than the recording.

This is the second in a series of interviews from SFMusicTech. Yesterday, I posted my conversation with Grateful Dead guitarist and singer Bob Weir, who explained to me why MP3 music is an assault on all our ears.

Yesterday, I wrote about a meeting I attended with my congressman and friend, Jim Cooper.

I shared in that post my opinion of the legislation known popularly (and unpopularly) as SOPA. In short, I oppose the legislation and view it as nothing more than an attempt by the entertainment industry to out-regulate what they can’t out-innovate. I also believe that by fighting battles on the field of copyright and intellectual property law and by using the term “piracy” to label activities that may not only  be legal, but be beneficial to the copyright holder, we are in a place where a lot of bandwidth is being directed at trying to convince the other side(s) (no matter what side you’re on) rather than finding ways to evolve our understanding of what the internet is and what its potential can be.

Yesterday, I wrote that Jim Cooper is a very smart and intellectually curious individual. I appreciate, also, that he believes big problems can be broken down into parts so that they can be better understood. I agree with that approach, as well.

He suggested that those of us around the table probably agree on 95% of what’s in the legislation. I have no reason to believe his statistic is correct or in-correct, but I agree there’s probably a lot of fluff included in the legislation, most of which is designed to bury the contentious parts. (I also believe what I just said was a snide way to say, I agree with him.)

I also agree with the most important take-away and challenge Jim Cooper provided the group. In essence (I wasn’t taking notes), he said, “This is Nashville. We have the music industry here. We have a lot of talented technology people here. We should try to work together to address the issues we don’t agree on here. If there’s a way to solve the issues by working together, then Nashville should be where that happens.”

While I’m not quite sure we have the tech chops in Nashville equivalent to the music chops here, I do know that inside and outside those Nashville music companies that are endorsing SOPA are lots of extremely smart tech people who understand what their executives don’t. I know there are lots of creative, entrepreneurial and tech-savvy students and recent graduates from schools like Belmont’s music business program and Vanderbilt’s engineering and business schools who completely comprehend all the facets and nuances of the issues, musically and technically and business(ly?). And I know that if there are good alternatives to crappy technology (say, the MP3), then people who care about music (say, customers and fans) are willing to pay for it if they understand the value.

So, what Jim Cooper said perhaps should be listened to by those in Nashville who want to embrace the reality of the internet today and look for ways to innovate rather than legislate wherever possible.

Perhaps someone should write a song about this.

(Illustration: Polar bears having a snowball fight. It’s a Nashville thing.)

Related articles:

• What I told my congressman, a sponsor of SOPA (RexBlog.com)

Every year Forbes magazine singles out 30 entrepreneurs under 30 years old who are out changing the world before they’re even old enough to run for president.  Topping the list this year is Swedish entrepreneur Daniel Ek, whose digital music service Spotify has won the hearts of music lovers worldwide while working toward a more sustainable business model for the music industry.

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New Career Opportunities Daily: The best jobs in media.

As if his involvement with Napster and Spotify wasn’t enough to shake up the music industry, Sean Parker has invested into music startup StageIt, according to a BusinessInsider report.

StageIt is basically an online platform for live concerts. The company aims to help music artists monetize their live shows by focusing on a truly live experience — meaning the concerts aren’t recorded and/or archived for later viewing. Founder Evan Lowenstein launched the company with the idea that people will pay for a unique experience.

The amount of Parker’s investment is currently unknown. Neither Parker or StageIt has confirmed the news, but it does make sense.

While this is his first attempt to shake up the live music space, Parker has a long history of disrupting the music industry’s business model. in the ’90s by co-creating the peer-to-peer file sharing network Napster. More recently, he’s been a prominent investor in streaming music startup Spotify.

Filed under: deals, media, VentureBeat

A third-party iOS application that streamed music from Amazon’s Cloud Drive service has been removed from the App Store due to legal complications with the music industry.

An update to the Facebook’s Open Graph platform will allow people to express themselves in new ways and will let developers create a new class of app, chief executive Mark Zuckerberg announced this morning. Friends can use these apps to do things like listen to a song at the same time and help each other discover new music.

“We are making it possible to build a new class of apps and rethink a number of industries at the same time,” Zuckerberg said in a talk before thousands of developers at Facebook’s f8 developer conference today in San Francisco..

Zuckerberg said people will be able to share all sorts of things that they couldn’t before, but without completely annoying their friends. You can publish your activities directly to your news stream, but your friends can also watch your activity on a ticker on the side of the screen.

These apps allow for a “frictionless experience,” real-time serendipity, and finding patterns in what you and your friends do. The platform changes are good for apps related to communications, games, media and lifestyle, he said. The company has redesigned its permissions process to allow users to post things related to material they have posted before, without having to grant express permission every time.

“Developers are using open graph not only to rethink music, but to rethink the music industry,” Zuckerberg said. “Being able to click on someone’s music and play it is a great experience, but knowing that you helped a friend discover something new…is awesome.”

Filed under: social