Great article written here by Greg Sandoval at cnet. 

Published in 2008, we can attest that digital promos are even more prevelant today and we are betting that it's going to become the de-facto standard some day soon.

French lawmakers passed a tough new measure to crack down on illegal downloading.

In our ever evolving mission to decrease or stop leaking, we are definitely happy to see this tougher law.

Read the full CNN article here.

Here is a well written article on the debate over watermarking and digital promos written by Mike Riggs.
http://www.washingtoncitypaper.com/display.php?id=37563

I commented underneath the article.  I'd also like to add here, that we have done everything in our power and will continue to address the journalist experience when using our digital service. We haven't forgotten about you and the reason we understand you, is because we have been in your shoes before with other ventures.

How?

- Our watermarks are undectible by the ear and the sound quality is still top notch
- Contacts that get invited through Haulix, don't have to remember login/passwords and will never have to fill out a long registration form
- We have a sophisticated way of bundling all labels' promos on one page if a contact gets invited by more than one label - yet all accounts stay separate and secure

Media contacts simply click a link in an invitation, initiate the promo download and then go back to doing what they do best, writing great reviews and articles for their publications.

Original Document: http://www.ifpi.org/content/library/DMR2009-key-statistics.pdf


IFPI DIGITAL MUSIC REPORT 2009: KEY STATISTICS
The growth of the digital business

In 2008 the digital music business internationally grew by around 25 per cent to

US$3.7 billion. Digital platforms now account for around 20 per cent of recorded

music sales, up from 15 per cent in 2007.

•

The recorded music industry generates a greater proportion of its revenues through

digital sales than the film, magazine and newspaper industries combined.

Industry Digital share of revenues

Games 35%

Recorded music 20%

Newspapers 4%

Films 4%

Magazines 1%

Source: PWC Global Entertainment and Media Report (2008), IFPI

•

Consumer demand for music is higher than ever. NPD research found that total music

consumption in the US rose by one third between 2003 and 2007. Nielsen Soundscan

reported overall sales at an all-time high in the US in 2008.

•

Single track downloads, up 24 per cent in 2008 to 1.4 billion units globally, continue

to drive the online market, but digital albums are also growing steadily (up 37%).

The top selling single of 2008 was Lil Wayne’s

Lollipop

.

Key markets

•

The US is the world leader in digital music sales, accounting for some 50 per cent of

the global digital music market value. Single track downloads crossed the one billion

mark for the first time in 2008, totalling 1.1 billion, up 27 per cent on 2007. Digital

album sales totalled 66 million, an increase of 32 per cent (Nielsen SoundScan).

•

In Japan, a predominantly mobile music market, digital sales helped overall trade

revenues to growth in the first half of 2008. 140 million mobile singles were sold in

2008, an increase of 26 per cent on the prior year (RIAJ).

•

The UK saw the biggest increase in digital sales in the first half of 2008 among the

top markets, with sales up by 45 per cent. 110 million single tracks were downloaded

in 2008, up 42 per cent on 2007. Digital album sales also rose sharply, by 65 per cent

to 10.3 million now accounting for 7.7 per cent of the albums market (OCC/BPI).

•

France saw digital music sales grow 49 per cent in 2008. 14.5 million online single

tracks were downloaded in 2008, up 20 per cent on 2007, while 1.4 million digital

albums were sold, up 27 per cent (SNEP).

•

In Germany, online single track downloads totalled 37.4 million in 2008, a 22 per cent

growth on 2007. Digital album sales increased by 57 per cent, totalling 4.4 million

(Media Control GfK International).

The challenge of unauthorised free music – key figures

•

Collating separate studies in 16 countries over a three-year period, IFPI estimates

more than 40 billion files were illegally file-shared in 2008, giving a piracy rate of

around 95 per cent.

•

Overall 16 per cent of internet users in Europe regularly swapped infringing music on

file-sharing services in 2008 according to Jupiter Research.

•

Online piracy is hitting local repertoire. The number of new albums released in France

fell by eight per cent in the first half of 2008, new artist releases tumbled by 30 per

cent and the French share of newly-released albums fell from 15 to 10 per cent 2005-

08. In Spain, a sole new local artist featured in the Top 50 album chart to November

2008, down from 10 in 2003.

•

In the UK, Jupiter valued the lost to online piracy at £180 million annually, with a

cumulative loss of £1.1 billion by 2012 if nothing is done to address the problem.

•

Online infringement is becoming a big issue for the film industry. A total of 13.7

million films were distributed on P2P networks in France in May 2008, compared to

12.2 million cinema tickets sold (Equancy and Co and Tera Consultants).

The case for ISP cooperation

•

Unlawful file-sharing is driven more by the availability of unauthorised free music

than better choice. In the UK, EMR finds that 71 per cent of those file-sharing giving

“free music” as their main reason for doing so.

•

Research suggests the “graduated response” approach would be effective without

large numbers of disconnections. According to EMR, 72 per cent of consumers

would stop illegally file-sharing if told to do so by their ISP.

•

P2P file-sharing, the vast majority which is unauthorised copyrighted music and film,

accounts for up to 80 per cent of traffic on ISP networks (ipoque).

Addressing pre-release piracy

•

IFPI’s internet anti-piracy team has increased the number of links to infringing music

that it removed from 550,000 in 2007 to nearly three million in 2008. The team

focuses on pre-release piracy that hits albums at the most damaging time of their

release cycle.

While surfing around, I happened to find a long-winded debate on a French music website concerning the hate for VS. the acceptance of digital music promos. If you've got a good 30-45 minutes, you can read the whole thing here. We're happy to see our name mentioned in one of the posts too.

I've written quite a bit on this topic and I cannot stress enough how healthy digital promos are for the music industry. Our service really is a win-win situation for all parties involved in the pre-release to publications process. Seeing debates springing up here and there is actually a good thing though.  It's a definite sign that the industry is shifting. It's not hard to throw a Word Press website up and start playing the role of a music journalist/zine. Sure, at first, it's exciting to get CDs mailed to you. It legitimizes what you are doing and makes you feel important, that someone actually values what you have to say. But after awhile, when you hit the big time, you need a team of writers and the music coming in out-numbers your team's writing abilities. Digital promos cut down on processing time and money, resulting in a lighter load. Why wouldn't you embrace this?

That is the point of view of a media contact/journalist.

Artists, record labels and journalists are slowly accepting the industry shift. I like how one musician put it,

"I favor iPool and Haulix, because it is one of the only means to preserve the financial health of the small labels under the weight of the illegal downloading."

Seth Godin is a very smart marketing guy. In a talk he did at the Business of Software convention in 2008, one (of many) things stood out that he said,

"The model of connecting users to each other is the essence of how you are going to grow..."

I got to thinking, that's pretty much the bulk of what we do here at Haulix. We use online software to connect record labels to their media contacts in the pre-release promo process.

Let's be honest. Getting a shiny CD in the mail is much different than getting an email invitation to download an album. And with differences and change, comes hesitation. I've got 9 years of experience being on the promo-receiving end of the spectrum with another venture I'm involved with. I not only understand the process, but also the psychology behind all of this. Although record labels comprise most of our "paying customers," we consider those labels' media contacts as our customers too. The team here at Haulix put quite a bit of thought into the media contact experience. We analyzed what's "out there" now with other digital services and determined some flaws.

One process flaw we set out to cure, is getting media contacts to the secure promo as easy as possible. These great people, who invest a lot of time writing about new music releases are already hesitant to digital downloads. They are used to receiving CDs in the mail, and now they have to register for multiple accounts with a digital service, remember multiple username/password combinations and constantly login to get at the promos?! To them, that's like moving backwards in a way.

Here at Haulix, you import your media contacts. The first time you send out an email invitation to a contact, they click a custom link in the invitation that brings them here. The Haulix system is smart enough to automatically register that contact if they don't have an account. If they do have an account, we sign them in automatically. To them, the registration and login processes are transparent!

Another flaw we set out to cure, is the fact that many media contacts in a certain genre of music, get invitations from multiple labels in that same genre who use the same digital service. We came up with a way to centralize a media contact's promos from all labels that use our service. When a media contact signs in, each record label that has them as a contact, is represented up top of the page with their own tab. When a contact clicks a tab, that label's promos appear. This strategy is transparent to our record label customers and all of their account settings and promo material are separate and secure, yet the media contact gets a much better overall experience having all promos in one place.

As the music industry evolves, we all have to adapt to the changes. We know this can be very difficult at times. At Haulix, we strive to make the entire pre-release promo distribution process as painless as possible for our customers and their associated contacts.

This question was posted in the Independent Record Labels Association (IRLA) LinkedIn group by a record label President about a month ago and I've received quite a few positive responses via private email from people who were interested in what I had to say. Being that the group is private, I'll share my response here.

When the Compact Disc Disappears from the Marketplace, What are You Going To Do?

I think just the fact that you and many other labels are accepting the fact that there is a major shift in the industry, moving towards "digital everything," is a good thing, in that you want to, and plan on, being prepared for it. Sprinkle the bad economy on top of all of this and it's obvious that there has to be a major strategy change.

I would imagine with iTunes, Amazon.com and the million other digital music stores, that the standards will continue to tighten up and all stakeholders will be happy as they continue to get their cut from the sale of each song. Profits from a digital song purchase aren't as high as selling a compact disc, but if you go all digital, you don't have the overhead of manufacturing the discs.

One area of expertise that I have, is in the marketing/digital promo part of the strategy. Labels, who are used to mailing out mass numbers of discs to various media outlets (radio, webzines, newspapers, magazines, etc.) could cut costs and save quite a bit of money, if they adopted using a digital promo service. (You pay a subscription, upload one copy of your promo into the system and then invite contacts to download and listen, so they can write their reviews and articles.) This service is less expensive than hiring an in house programmer or consultant to build your own. Plus, with watermarking technologies, you can decrease leaking. And then there is tracking. There's nothing fun about mailing discs out and then wondering if the recipient got them and when/if they will write about the album. Digital service has fine grained tracking so you can be more efficient.

Let's embrace the fact that music is going digital. Compact discs aren't gone yet, but you can certainly get a head start by serving your promos in digital format.

We use quite a few HttpHandlers in the Haulix codebase. If you are running in IIS 7 Integrated Pipeline Mode, then registering your handler is trivial. In the web.config file, find the system.webServer node and add a line to the handlers section.

<handlers>
      <add name="SampleHandler" verb="*"
        path="SampleHandler.new"
        type="SampleHandler, SampleHandlerAssembly"
        resourceType="Unspecified" />
    </handlers>

I had a situation in a different website where I was running in IIS 7 Classic Mode. Registering a handler requires a few more steps. Most of the HttpHandler articles I found online referenced using the .ashx extension and the WebHandler directive, which can be called directly without having to setup the web.config or IIS file extension mappings. So, I hope this will help others who have had a hard time finding the solution. For this to work, you have to define both an httpHandlers element AND a handlers element in the web.config.  The lines in red are important and are what threw me off the first time.

<configuration>
  <system.web>
    <httpHandlers>
      <add verb="*" path="SampleHandler.new"
        type="SampleHandler, SampleHandlerAssembly" />
    </httpHandlers>
  </system.web>
  <system.webServer>
      <add name=SampleHandler" verb="*" path="SampleHandler.new"
      Modules="IsapiModule"
      scriptProcessor="C:Windows\Microsoft.NET\Framework\v2.0.50727\aspnet_isapi.dll"
      resourceType="File" />
  </system.webServer>
</configuration>

Here is a great article written by Carolyn Pritchard.

Even though our service is targeted at pre-release promos, this article talks about CD's in general.

She says, "CDs and DVDs are made from materials including polycarbonate plastic, petroleum-based lacquer and paints, aluminum and other metals. These materials release chemicals that contribute to environmental and health problems as well as global warming, both when they are produced and when they are destroyed."

and later continues, "Eliminating the physical distribution of digital goods is an excellent way for companies in many industries to reduce their impact on the environment. The impact is twofold; locally (smog, landfill, etc.) and globally (green house gas emissions)."

Read more here: http://earth2tech.com/2007/08/16/how-the-physical-distribution-of-digital-goods-impacts-the-environment/