Page last updated at 09:56 GMT, Tuesday, 20 October 2009 10:56 UK

What is the future of music online?

Various ways of downloading music

By Ian Youngs
Music reporter, BBC News

For years, the music industry has, in the words of Bonnie Tyler, been holding out for a hero.

For the industry, this hero must come up with an idea that is great enough to tempt fans away from illegal file-sharing sites, while simultaneously making money for artists, songwriters and record labels.

Spotify and We7, the music streaming services funded by adverts and subscriptions, have come closest so far.

And for a while, it looked like Sky and Virgin would save the day. They planned services offering unlimited downloads for an extra fee on top of an existing broadband and TV subscription.

But both are believed to have stumbled because major labels did not think they would generate enough cash. Sky launched a watered down service on Monday.

The struggle to offer unlimited downloads on a subscription is seen as a missed opportunity by many observers.

So other than being punished, how will fans be tempted away from illegal services, and how will artists, songwriters and labels make money in the future?

A range of industry executives and commentators offered their visions of the future at the In the City music conference in Manchester.


Virgin's planned all-you-can-eat subscription download service was "the best British piece of technology I'd seen in the last 10 years", Mr Orlowski says.

"Virgin spent millions of pounds and it would have been the world's first legal P2P service, with no DRM restrictions. Virgin hasn't cancelled it but they've stood the teams down because the music business is so hard to deal with.

"It was going to be an amazing-looking social network, the first social network with music attached. And it would have completely changed the debate.

"You could stream and share files, put them in a locker in MP3 format and play them later. It used the music that's already on people's computers, and would have allowed the music business for the first time to have an offensive weapon rather than a defensive one.

"It would have made people on Facebook think, 'I don't get music on this social network - why am I on it?' It would have completely changed the dynamic in a positive way."


The first step to making money from music is ensuring the current copyright laws are enforced, Mr Smith believes.

"We've got a perfectly good strong copyright system in place. The law exists. That law needs to be enforced.

"And if that law is enforced then I think the opportunities for the future of the music business are enormous, whether that be a streaming model, a subscription model, the sale of MP3s, the sale of albums, the sale of deluxe fabulous edition specialist albums.

"I think we've got a great future as an industry, as long as government has got the strength to step up and support copyright."

No all-you-can-eat download services have yet been approved because they do not offer enough money back to the artists, he says.

"If there is a way of properly being able to remunerate the songwriters and recording artists, then there is the potential for that. But I haven't seen a business model where that looks especially strong.

"Those are being examined all the time and there are opportunities for the future but I don't think a particularly great business model has been brought together yet."


The young generation are prepared to pay subscriptions for mobile phones, broadband and pay-TV, Mr Marot says - so why not music?

"I feel the subscription model is the way forward for the music industry. The Sky and Virgin initiatives are a really promising start. But they are a little bit tame.

"The concept of every household in Britain that has a Sky subscription also paying, for argument's sake, £9.99 per month that is going into the coffers of the music industry - that's going to be a vast improvement in the music industry's health.

"I personally would like to see an all-you-can-eat for a higher price, say £19.99. The major labels have been so excruciatingly slow in coming to the inevitable conclusion that these initiatives have got to be taken.

"But anti-competition laws mean they're not really allowed to talk to each other very much, so they've had to come to their individual conclusions. Largely speaking, the record industry is getting its act together very quickly now."


A system to grant innovative new companies licenses to use music should be introduced - and the government may have to force record labels and publishing companies to take part, Mr Webster says.

"I think that has to be done on a compulsory licence basis, where everyone just puts all their music in. Licensing seems to be the issue at the moment.

"If the industry can't solve the problem, the government should step in to try and impose it if necessary. It's not a popular view but it's one of the things we've got to do to break the logjam."

Spotify is a good start at offering attractive new services, he says - but there are doubts about whether it will generate enough money to survive.

"It would be a dreadful shame if it failed because the costs of the music being supplied to it were too high. The great conundrum is - should the music industry be supporting models that compete with free and therefore drive the price of music down? Unfortunately I think that's the way we're going to go."


The future will revolve around finding innovative ways to use music, especially on the web, according to Mr Volodkin.

"One example is music games - they've created value where there was nothing like that before. People suddenly pay for Rock Star or Guitar Hero. That came from out of nowhere and is a use that people couldn't envision just a few years ago.

"More of that will happen. For that to happen on the web, though, the way people work with rights on the web needs to ease up."

Record labels and music publishers demand too much money from new services, he says. "Currently you need to spend several million dollars in advances to get some of these licences for content.

"It's all about making it easier to create services that let people interact with music online, and then I think smart people won't settle for just letting people play stuff. They'll come up with interesting ways that you can interact with music and money will start changing hands."


Licences to use music for digital services should be easier and cheaper to obtain from record label and publishers, Mr Adams believes.

Each new digital service should be given a two-year licence to sink or swim, he says.

"I think 95% of music that's downloaded illegally could be turned into music that's downloaded in legal means if things are licensed in the right way."

Drowned in Sound has stopped running a podcast because each episode would cost £20,000. "I don't have £20,000. But Laura Marling signed a record deal on the back of us playing her in a podcast. And various artists said they were selling hundreds of records on the back of us playing them."

He adds: "Instead of cutting people off the internet, I'd much rather they sent the worst offenders into studios for a week to do community service to understand exactly what goes into the process of making music.

"I don't think for a second they'd consider not paying something towards the creation of that content."

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