The Industry Goes Purple

In the physical record business when you sell 500,000 albums you go “Gold”. Sell a million and you go “Platinum”. But in the age of the Internet less albums are earning these titles every year. What are going to go on the walls of the studios and above the mantles of the pool houses? Thankfully, Yahoo! Music has the answer:

We’re pleased to announce the Purple Award, a heavy, sexy pair of purple headphones given to superstars which manage to achieve 10 MILLION plays on Yahoo! Music. These plays could be from any of our fabulous digital music offerings, Music Videos, LAUNCHcast Radio, or Yahoo! Music Unlimited, or any of our original programs such as Live Sets, SMASH, Who’s Next?, and Get Your Freak On.

But we’re not just giving these away, we’re setting high standards and using a third party to verify the numbers. Since the onset of SoundScan (the music sales charts) and BDS (the song tracking service that makes up the Billboard charts), the music industry has become much more about the real instead of the old-school smoke and mirrors way of trying to fool/hype music fans into believing something is hot when it really isn’t. Even in this new generation of the music industry, other web sites count plays even if you only heard a couple seconds of a song/video before stopping it or navigating to another page. It’s no coincidence that many of the top artists on some social networking sites are scantily clad women as people are going to their pages to look at their pictures instead of listening to their music. We feel it’s imperative to only count a “play” as a song or video that’s been heard/watched for at least 60 seconds. That way we know for sure you’ve heard the core of the song. Anytime you skip a song or video before the one-minute mark, we don’t count it as a play and it doesn’t count towards the 10 million needed to receive a Purple Award. Also, we’re using BDS to count the plays, so all plays are validated by a third party. All on the up and up, baby.

But let’s get on to the part you’re all waiting for, the winners! We’re announcing ten winners from the last year to kick off the award, and will then be announcing winners as they hit the 10 million mark. So here’s our initial batch of Purple:

Akon f/Eminem, “Smack That”

Beyonce’, “Irreplaceable”

Ciara f/Chamillionaire, “Get Up”

Ciara, “Promise”

Evanescence, “Call Me When You’re Sober”

Fergie, “London Bridge”

Justin Timberlake, “SexyBack”

Justin Timberlake, “What Goes Around…Comes Around”

Nelly Furtado, “Say It Right”

Shakira f/Wyclef Jean, “Hips Don’t Lie” 

All the best,
John Lenac
Yahoo! Music

Yahoo! Music and Billboard’s Hot 100 Chart

A monumental shift in the music industry has been happening in the last few years. Yesterday’s announcement by Billboard to integrate the radio and video spins on Yahoo! Music into the Billboard Hot 100 chart marks the beginning of a new era. As of next week, the combined radio and video spins from Yahoo! Music and AOL will define 5% of the Hot 100 chart. For many years, only FM spins and CD sales numbers made up the chart. In 2005, Billboard started to include digital downloads as well. With next week’s changes, digital downloads will affect the Hot 100 chart more, increasing to 40% while physical CD single sales decrease to less than 1% (FM airplay makes up the remaining 55%). This means that for many songs/videos you hear/watch, your musical experience is four times more important on the biggest chart in the music industry than all of the CDs sold in the US (four times more because our spins are so much greater than AOL’s, we’ll have 4% of the chart in many cases).

This chart integration formally recognizes what’s been happening for years; people like you are discovering bands and consuming your favorite music online and through Internet-connected players. Think of the music industry as the line between a music fan and an artist. That line used to be very long and now is just two points: you and the artist. Sites like ours connect you directly to them. When an artist sends us a song or video for you to watch and experience their art without having an “in” in the music industry, you can now help get their song on the Billboard Hot 100 chart by watching their video or rating their song high so that it plays more in your customized LAUNCHcast station or more in stations you see on the station guide. This is a massive change in the business and affects how the power paradigm has been shifting, giving music fans more direct power. Now that there are thousands of radio and video outlets across the web and monsters like us music fanatics at Yahoo! Music (we play 4 BILLION music videos each year), ALL artists and ALL labels can get their music played and see the passion of their fans directly result in a spot on the most-coveted chart in the biz.

Thanks and keep watching/listening.

John Lenac
Yahoo! Music

Sean Kingston’s “Beautiful Girls” was #1 on both Yahoo! Music and Billboard’s Hot 100 the first week of this updated chart:

Thanks for the Help in the Fight to Save Net Radio

A big “thank you” to all concerned music lovers and LAUNCHcast Radio fans who supported the Internet Radio Day of Silence, contacted their Congressional representatives and rallied to save internet radio.

On Friday at a House Energy and Commerce Committee roundtable hosted by Chairman Ed Markey (D-MA) and attended by seven additional Members of Congress, SoundExchange announced an offer to cap the $500 per channel minimum fee exacted on Webcasters at $50,000 annually through 2010, for the full length of the term. DiMA, the trade organization that represents Yahoo! Music and other webcasters, has accepted the offer. With the minimum fee issue off the table, we are hopeful that we can negotiate a fair royalty rate with SoundExchange that will support a sustainable business environment for Internet radio.

We hope there will be more good news to come shortly.

ian c rogers
Yahoo! Music

Yahoo! Music Goes Radio Silent

Apologies to anyone who was hoping to listen to free LAUNCHcast today. We’re shutting down the Internet’s #1 radio service for the day to draw attention to the outrageous rates recently set by the Copyright Royalty Board in Washington, D.C.. We are doing so alongside thousands of webcasters including Pandora, MTV, Real/Rhapsody, WXPN.com, KCRW.com, and many many others. For a more complete list, check Kurt Hanson’s site, RAIN. AOL and Clear Channel stand out as the only two online broadcasters too corporate to show their solidarity (sorry, Lisa ). Hopefully you’ll be seeing lots about today’s protest in the press, and most importantly I hope you’ll let your representatives in Washington know how you feel. Please visit the SaveNetRadio.org site where they make this easy for you. We need your help between now and July 15th when the first payments are due under the new royalty rates.

The situation webcasters are in is simple: the new royalty rates are more than the revenues anyone can hope to make from related advertising. In other words, we all lose money on Internet radio starting July 15th. Yahoo! has no intention of operating LAUNCHcast radio as a loss-leader. This senseless rate hike needs to be changed or our business will have to. And unfortunately the way we’d have to change our business would end up curtailing the great diversity that makes Internet radio uniquely compelling. I think we’d all be terribly sad to see Internet radio start to sound more like terrestrial radio with its limited number of stations playing a small number of songs. The irony that the new rates force webcasters to either go out of business or sound more like terrestrial radio, which pays no similar royalties, is rich.

Here are a few myths which the industry needs to get its head around:

Myth: Yahoo! (and other big Webcasters) can “afford” these rates.
Fact: LAUNCHcast loses money under these rates, Yahoo! has no appetite to run radio as a loss-leader.

Myth: All Internet radio should be for-pay subscription.
Fact: Less than 3% of our radio listeners are subscribers. Subscription is a feature for users who would prefer no interruptions, not an interesting business for anyone.

Myth: Radio drives tons of users into Yahoo! and therefore Yahoo! will operate radio at a deficit.
Fact: Not only is this a terrible way to structure an Internet business ecosystem so that it grows, it’s just not true. We’re fortunate to be a part of Yahoo!, the most visited network on the Internet, and the traffic the network drives to us is what makes us so popular. Not vice versa.

But for those who want a little more color in the story, I thought I’d share a few blips from the last three months of my life as I have come fully up to speed on this issue, visited Washington, met with artists, labels, and the RIAA, and worked with many others to find a solution. It’s been quite an education for me.

I’ve worked at Yahoo! Music for three and a half years (since they purchased my small company, Mediacode in December of 2003), but have only been the General Manager since the beginning of March. I took the reigns the same week the CRB ruling was handed down. That first week Bob Roback called me in to a meeting where I was introduced to Ken Steinthal, the lawyer who handled the case for the webcasters. Ken was shouting and cursing in disbelief on a conference call including AOL, MTV, Pandora, Live365, and others. When we hung up I stated the obvious to Bob: “I guess the decision wasn’t advantageous to us.” “It’s impossible to imagine a worse outcome,” he replied. Welcome to your new gig, kid, I thought.

I quickly came up to speed with the help of many: Bob and Ken (mentioned above), Dina Hellerstein, Jeff Mickeal, and Jamie Hedlund from Yahoo!, and Jon Potter from the industry group DiMA. The basics are simple: you just need to look at the balance sheet to see the business losing more and more money each year as the rates increase faster than the radio ad market does. But coming in late and having not been involved in the litigation, it’s impossible not to continue to ask yourself, “Why? How did we get here? How does this happen?” The answer is unfortunately painfully simple: we’re still in a crossroads where old businesses and policy makers simply don’t understand or believe the realities of a new and growing business.

Here’s what happened, as simply as I can tell the story:

• Sound Exchange (the organization which represents the copyright holders and administers the payments) and Webcasters can’t agree on a royalty rate.
• The Copyright Royalty Board (CRB) is formed by Congress, a process is established, and a standard is established. The process is reasonable enough, the standard is “willing buyer / willing seller” and not liked by the Webcasters as it is a more stringent standard than terrestrial and satellite rates were determined by.
• The CRB process begins, both sides spend millions of dollars on the litigation.
• During the litigation, the CRB sees financial information from both sides, but one side never sees the other’s complete testimony as much of it is redacted so confidential information is not shared with potential partners and competitors.
• 18 months later a decision is handed down which is incredibly unfavorable to the Webcasters and includes a footnote saying the CRB couldn’t be bothered with “inefficient” businesses which aren’t able to cover the rates. In addition to tripling the per-song rate, broadcasters are no longer able to account by the “Average Tuning Hour” (ATH, the absence of which sends the costs higher), and there is a $500 “per station minimum” administrative fee that’s completely out of step with the reality of technologically-advanced stations like LAUNCHcast, Pandora, and Rhapsody where there is a literally unlimited number of potential “stations”. “Willing buyer / willing seller” proves to be the joke the Webcasters knew it to be as there is only one seller (Sound Exchange) and there aren’t any buyers at the decided rates. The only good news is that Sound Exchange won too big, so big a big spotlight would soon shine on the decision as protests like today’s call attention to the issue.
• Webcasters ask for a clarification on some of the more ridiculous parts of the decision. Clarification denied.
• Sound Exchange issues press releases which spin the truth wildly, including this one which talks about how Yahoo!, Clear Channel, and Microsoft are trying to short change artists, neglecting to mention that Microsoft got out of the Internet Radio business YEARS ago because the RATES WERE TOO HIGH. Thankfully, no one buys their story.
• Webcasters form SaveNetRadio.org, Representatives Jay Inslee (D-WA) and Donald Manzullo (R-IL) introduce the Internet Radio Equality Act, and Sens. Ron Wyden (D-OR) and Sam Brownback (R-KS) introduce the Internet Radio Equality Act. Co-sponsors sign on in numbers beyond webcasters’ expectations.
• Webcasters file an appeal, and are currently crossing their fingers hoping it’s granted in advance of the July 15th “pay up” date.

I’ve had the pleasure of meeting with Jon Simson and Michael Huppe from Sound Exchange. They’re good people, by all accounts, and I can only imagine that they believe in the position they’ve staked out in the press, that the CRB saw the details of our business and chose a rate which we could afford. If only. Unfortunately the CRB made a mistake, handed Sound Exchange a loaded gun, and gave them the option to shoot Internet radio dead. How the CRB came from the testimony presented to this outcome is a complete mystery to everyone involved. I’m guessing Sound Exchange is nearly as puzzled as we are at this point.

I’ve also had the pleasure of meeting with our representatives in Congress and understanding their position. Congress doesn’t like to set rates, and I think we’d all agree that we’d prefer they didn’t micro-muck with the economy at this level. Instead, they set up a process and a standard, we all went through the process, and they’d like to think the outcome served the needs of the people. Our continued protest just sounds like “wah! the rates are too high! wah!”, which they’re sick of hearing and I don’t blame them. So we’ve been working hard to show them that the conversation here isn’t just “hey, we aren’t making as much money as we used to” but really “um, we are losing a lot of money on Internet radio, and we’re going to have to change our offering in such a way that it’s going to lose a lot of its great diversity of programming at the very least or that it’ll go away entirely at the very worst.” But it’s a tough slog and has taken a lot of convincing.

Finally, the elephant in the room is that while they’re asking Internet radio to pay more than 100% of revenue in royalty fees, satellite radio pays about 7% of revenue and terrestrial radio pays 0%. Killing the newest, most diverse, with the most growth potential, is asinine for all involved.

I’d like to think we’re making progress, though. Please do your part and write or call your representatives in Washington and let them know what you think of the above process and outcome. With your help, we can put Humpty back together.

Tune in to KCRW.org anytime on Tuesday, June 26th, they will be looping an hour long radio program where Webcasters discuss the specifics of their situation.

Thanks for reading and your support.

ian c rogers
Yahoo! Music

Save Net Radio

By now you’ve likely heard the news about the Copyright Board’s ruling regarding net radio. Simply put, it approximately triples the amount paid to record labels via SoundExchange for streaming Internet radio over the next three years, changes the way the payments are computed (from what is called an “Aggregate Tuning Hour” basis to a straight “per play”), adds a confusing and onerous “per station minimum” fee with no maximum, and extends the new rates back to the beginning of 2006. Many small Webcasters won’t be able to afford this, and you can bet large Webcasters like us are all taking a hard look at the Internet radio business and our products to decide if it’s really worth the cost. Big companies might have more money, but they can’t stay in businesses where they don’t make any profit, a pretty simple business fact.

Compare the implications of this decision to terrestrial radio which pays NOTHING to SoundExchange, or even satellite radio which pays only 3-7% of their revenue to SoundExchange, and it’s hard not to be left scratching your head. The irony of all this, of course, is that this ruling will keep LAUNCHcast, Pandora, and the like out of your living room and push you toward FM, where the labels are paid zero. This decision cuts off a genuine future revenue stream before it has had a chance to grow.

It’s not just the Webcasters that will suffer. Higher costs, fewer Internet broadcasters and stations means less diversity overall, and less opportunity for the unlimited spectrum of Internet radio to become a discovery tool for curious listeners and a launching platform for smaller artists. Internet radio features thousands of channels in the narrowest of genres as well as personalized services (LAUNCHcast) and recommendation systems (Pandora), while FM radio (where it still plays music) plays the same songs over and over and the total number of satellite channels is less than five hundred. I am a satellite radio subscriber and can honestly say it doesn’t even come close to representing the diversity I get from my personal LAUNCHcast station. Listeners and artists ultimately lose if this infinite spectrum of music choice evaporates or even shrinks to just a few players. The implications for innovation in the space are catastrophic.

Which is why we are asking you to take action RIGHT NOW. We are supporting DIMA (a trade organization representing Yahoo!, AOL, MTV, Pandora, Real, Live365, and many others) and the SAVE NET RADIO campaign on this issue. Please take five minutes right now to visit SaveNetRadio.org, let your representatives know how you feel about this issue, send this post and these links to a friend, and put a link to SaveNetRadio.org on your blog, MySpace page, or site. We are on a very tight timetable to get our voices heard in Washington and legislation introduced before May 15th when the first payment is due under this new ruling. We need your help in making sure Congress is paying attention to this issue.

Thanks for your understanding and support,
ian c rogers
Yahoo! Music

Wifi-Enabled SanDisk Sansa Connect Features Yahoo! Music Unlimited, LAUNCHcast, Messenger, and Flickr

It’s with great pride I announce the release of the SanDisk Sansa Connect, the new Wifi-enabled portable MP3 player set to free you from the USB cable chaining you to your PC, allowing you to listen to personalized radio, download music, share music with friends over Yahoo! Messenger, and view photos from Flickr, all direct over any Wifi network. Here are a few of the features not shared by either iPod or Zune:

• Personalized streaming LAUNCHcast radio
• Unlimited music downloads for $12/month direct over Wifi from Yahoo! Music Unlimited
• Dynamically updated “mix lists”
• Share music recommendations with friends via Yahoo! Messenger (your friend doesn’t even need the Sansa Connect)
• Photos from Flickr

It’s pretty fresh if I do say so myself, but why trust me? Here’s what Engadget had to say after spending a day with the device:

The Connect is tied to Yahoo! Music Unlimited for its subscription download model and streaming radio, and we’ve gotta say, a WiFi DAP really brings the model into its own.

Hells yeah. But they aren’t the only ones. Gadgetaholic liked it, too:

Sandisk has another winner here; I have no doubt. I am thoroughly impressed with the features available on this little device. Once you hooked this player up to your wifi network, it is almost impossible to put it down. This is what the Zune should have been.

You said it, homey. I also wanted to give a special shout out to my man Chris Leckness from Mobility Site for his very informative (and complimentary) unboxing and initial walk-through videos. Thanks, yo.

For me personally, the SanDisk Connect has put me in a completely different mode of portable music listening and discovery. I didn’t even connect mine to a computer for a week. I fired it up, started listening to personalized LAUNCHcast, and as songs I loved would play I’d grab the whole album. Then it was time to leave the house so I walked out the door and into the car, connected it to the line-in, and backed out of the driveway. The device elegantly said, “um, lost the connection to Wifi, dude”, so I flipped over into “My Library” and hit “Shuffle All” to start listening to the many songs I’d downloaded. Then when I got home the device was smart enough to wake up, realize there was Wifi available again, and restart my downloads. Simple and genius management of limited connectivity.

But there’s so much more. The Sansa Connect really underscores Yahoo! Music’s strengths and future direction, showing that we’re not just a way to get your music, but a set of services you use to manage your music experience across multiple endpoints. When you add songs to your library on the Sansa Connect, you’re also adding to your library on our servers and in Yahoo! Music Jukebox. The playlists you create in Yahoo! Music Jukebox show up on the Sansa Connect. When you rate songs on the Sansa Connect, the ratings will impact your LAUNCHcast station when you’re listening in the Web. The Sansa Connect is not an island, it’s part of your holistic Yahoo! Music experience. Yahoo! Music knows your music preferences, and helps you take them anywhere. Invest now, much more to come.

And of course you get other great Yahoo! features such as music sharing via Messenger and photos via Flickr. Can Rhapsody or Napster give you that? Thought not. How about Zune or iPod? Neither can give you unlimited music for one low price and neither are connected to the Internet for music discovery, playlists, and library management. My sixteen year-old daughter has a Zune, goes to a high school with 3700 kids, and has never once encountered another person with a Zune, shared music, or even used the Wifi functionality on the device. Welcome to the social? It’s 2007. How about welcome to the Internet. Duh.

[unfortunately controversial paragraph removed, explanation here]

So what are you waiting for? Buy one (or more!) now from Circuit City and subscribe to Yahoo! Music Unlimited if you haven’t already.

Word up,
ian c rogers
Yahoo! Music

LAUNCHcast in Firefox? Virtually!

I converted to the Firefox browser a while ago, but I still need to keep an IE icon handy for some sites - including listening to Yahoo! Music LAUNCHcast. We all know a version of LC that works with Firefox will be an important evolution of the service… but I’ve always been a little impatient when it comes to evolution.

Along comes IE Tab - an extension for Firefox that allows a user (that’s you!) to actually load an instance of Internet Explorer right in a Firefox tab. The extension is a mere 163K, though it requires that IE be installed on your machine, of course. The cool part here is that you can specify certain URLs that always use IE - and for things like the LAUNCHcast web player, it can open just the pop-up player in IE. So I visit music.yahoo.com in Firefox, click a LAUNCHcast station, and the pop-up player that opens is automatically an instance of IE - and LC plays beautifully.

When configuring IE Tab, I added http://radio.launch.yahoo.com/ to the list of URLs that automatically use IE Tab.

We still need to come up with a Firefox version - but for those who have IE installed, but still prefer to use Firefox, this is a nice solution. And, if you want to use it to listen to Chill Out — the station I program for Yahoo! Music — then that’s even cooler.

IE Tab: https://addons.mozilla.org/firefox/1419/

Cheers!,

Mick O
http://360.yahoo.com/emayoh

Yahoo! Music Shows LGBT Pride With Gay Club Mix Radio

Earlier this year, Yahoo! Music released an instant hit: Gay Club Mix Radio. In it’s first week it was one of our top 25 stations with tens of thousands of listeners.

This past week, Yahoo! Music was proud to have Gay Club Mix Radio a key anchor of Yahoo!’s Pride ‘06 site.

Just a reminder that at Yahoo! Music we’re open, not scared of the closed-minded, and the goal is to supply music for one and all.

Many colors,
ian c rogers
Yahoo! Music