The Web 2.0 comeback

09 November 2009

by Eamonn Forde

The heavyweights of Web 2.0 – Google, Facebook, MySpace, YouTube and Last.fm – are rethinking what music does for them and how hard it works for their brand. Hats now thrown in the ring, how does the music industry stand to benefit?

Just as with politics, a week is a long time in digital music. In quick succession of each other, several giants of the second wave of digital services announced new offerings, revised strategies and repositionings. What they all have in common is that music sits right at their heart.

What were seen, even as little as three years ago, as cutting-edge services have been superseded by thrusting new sites, platforms and services such as Spotify, Twitter, mobile apps, Guitar Hero and Rock Band. To retain relevance, these pioneers are fighting back with music being the biggest and strongest weapon in their arsenal.

Here we look at each of these services in turn, explain what they are doing, why they are doing it and what this all means for the music business.

Service: Google
Founded: 1998
Users: serves “several hundred million” searches a day

How it’s changing: The launch of Music OneBox (initially only in the US) links music-based searches on Google through to main affiliate partners MySpace and Lala. (Searches will also link to Pandora, imeem and Rhapsody, with legal offerings being at the top of all results.) Users searching for music will be able to play a track in full once from MySpace/Lala and then access 30-second clips or click through to buy the songs, all in a pop-up player. Google reports that two out of every 10 searches are for music or lyrics and these deals, along with a lyric-based partnership with Gracenote, allow Google to offer music through affiliates but without the cost risks associated with building its own music service.

What this means for music: This will drive massive volumes of traffic to its affiliate partners and will mean Google can increase its ad rates due to more targeted search results. As the biggest search engine in the world (Google is that rare thing – a noun and a verb), this is obviously positive for the music business. By delivering legal services at the top of search results, as opposed to links to P2Ps and torrent sites, this is important in the fight against online piracy. At a time when ISPs are under growing government pressure to stem piracy, this is a proactive (pre-emptive, even) move by Google to ward off similar pressure and tussles with search engines.

Service: YouTube
Founded: 2005
Users: delivers over 1bn streams a day

How it’s changing: With Vevo (the new channel backed by its parent company Google along with Universal and Sony) launching, YouTube needed to reassert its credentials. It did so by changing the deal terms (below) for labels and also struck a global first by streaming U2’s recent LA show from start to end as it happened, delivering 10m live streams through the show.

What this means for music: Warner Music recently returned its content to YouTube after negotiating new deal terms that let Warner directly sell ads around its own videos (appointing Outrigger Media as its ad sales partner). European indie label PIAS has signed a similar deal. On top of this, the success of the U2 stream could possibly see a move away from ad-supported streams to a subscription-based model for live streaming of premium events.

Service: Facebook
Founded: 2004
Users: 300m users globally

How it’s changing: The giant of social networking launched a gifting option in October with the music side being powered by Lala. Users can ‘gift’ tracks to friends to, after one full play, download for $0.89 [A$0.99] as an MP3 or stream for $0.10 [A$0.11]. Gifted tracks appear in users’ profile feeds too. On top of this, a week after the U2/YouTube stream, Facebook streamed a Foo Fighters show live from the band’s LA studio. Rather than fight MySpace head-to-head, Facebook has also struck a deal to share its rival’s video and audio content through its own Connect platform.

What this means for music: That the biggest social network in the world had no real music offerings was frustrating for the music business. Facebook’s acquisition of iLike (and its 50m+ userbase) in August, however, has helped drive a repositioning and the gifting potential for music, given the site’s sheer scale, is something that will take a few months to bed in; but, when it does, could prove to be enormously exciting and lucrative.

Service: MySpace
Founded: 2003
Users: had 124m unique monthly visitors in early 2009

How it’s changing: Alongside the Facebook and Google deals (above), MySpace has been incredibly busy recently. Its MySpace Music offering has now gone live in Australia and New Zealand and last month it rolled out a vast range of new services and features. These included a massive music video hub and a new Content Dashboard, which gives labels and acts intricate stats on user demographics, behaviour and location as well as trending data.

What this means for music: By offering artists and labels detailed analytics about users, MySpace has reinvented itself as a potentially game-changing strategic marketing platform. Certain data was available before, but the richness of the information accessible through the Content Dashboard has taken it to a whole new level. This sharing of data sets between services and content owners has been happening for a while, but MySpace (because of its size, legacy and deep involvement in music) could have just given itself the edge.

Service: Last.fm
Founded: 2002
Users: 30m users globally

How it’s changing: Faced with growing competition from the likes of we7, Spotify and MOG, music streaming and discovery service Last.fm will launch Last.TV early next year. It will be an offline and an online channel, which will focus (initially, at least) around music festivals. Parent company CBS is currently lining up sponsors and the channel will incorporate both pre- and post-roll video ads.

What this means for music: The power of the Last.fm brand means this has more chance of success than other online music channels such as the recently closed Fabchannel. Its scrobbling technology for audio could migrate well across to video recommendations. It will, however, be competing against the enormous reach of YouTube and the marketing spend of Vevo.