Music Ally NumberCrunchJuly 2010

Who / Why?• Music Ally is a digital music

business information and strategy company.

• We publish a daily news bulletin and two fortnightly insight reports.

• We also run events, and offer consulting and research services to the music industry.

• This presentation is a collection of facts’n’figures gathered from our Bulletins in July.

• www.musically.com

Want The Bad News First?

• The US single-track music downloads market dropped by 0.2% to 597.4 million units in the first half of 2010.

• However, sales of digital albums grew by 12.7% to 42.2 million units.• Digital albums now account for 27.4% of all US album sales.• Meanwhile, total Spanish music retail sales dropped 12.3% to €76.97

million in the first half of this year.• Perspective: in the first half of 2000, sales were €250 million.• In the first half of 2010, physical sales fell 21% to €57.1 million, while

digital sales rose 30% to €19.85 million.• Source: Nielsen SoundScan and Billboard

But Here’s Some Good News (For Brits)

• UK songwriters, composers and publishers earned £166.9 million from overseas income collected by PRS for Music in 2009 – up 19.4% on 2008.

• Ten years ago in 1999, overseas income was just £66 million.• Digital accounted for just £1.8 million of the 2009 figure.• Income from emerging markets saw sharp growth – 448% in Brazil and

8,689% in Romania (yes, ‘From what?’ is the key question...)• Source: PRS for Music

iPhone developer Tapulous revealed that its Tap Tap Revenge games had been downloaded more than 35 million times, as it was bought by Disney for an undisclosed price. Rumours suggested the price may be around $35m including earnouts, and that Tapulous will make $15m of revenues in 2010

Source: Tapulous and TechCrunch

NPD on Cloud Music

• 7-8 million iTunes users in the US would be interested in paying at least $10 a month for a cloud-based iTunes service to access their music libraries from multiple devices and platforms, according to an NPD survey.

• 13-15 million iTunes users in the US would be interested in such a service if it was free.

• Analyst Russ Crupnick claims that the potential market for a paid subscription-based iTunes is thus close to $1 billion in its first year – “roughly two thirds the revenue garnered by the current pay-per-download model”.

• Source: NPD Group

Forrester on ‘360 Music Experiences’

• Home computers accounted for 41.6% of digital music consumption in Q3 2009, according to a Forrester survey of US adults.

• MP3 players were second with a 32.5% share, followed by mobile phones (12.1%) and home streaming devices (11.1%).

• Only 23% of people said they listened to music on BOTH their computer and MP3 player.

• Only 9% listened on both a PC and mobile phone, and only 5% on all four platforms. Implications for cloud music services?

• 63% of people listening to music on their phones are 18-24 years old.• Source: Billboard

Controversial BitTorrent Research• Only 0.3% of files on BitTorrent are legal, according to a study from the

Internet Commerce Security Laboratory at the University of Ballarat.• It analysed torrents from 23 trackers, and found that 89% were illegally

shared, 10.7% were ambiguous but likely illegal, and 0.3% were legal.• (If you’re wondering, many of those ambiguous torrents were porn,

labelled as ‘amateur’, but probably commercial content)• Lady Gaga’s The Fame Monster was the only album to feature in the

study’s list of Top 10 most-seeded files – movies dominated the list.• BUT blog TorrentFreak has published a lengthy post claiming that the

study’s methodology was flawed and the results inaccurate.• Sources: Report PDF, Ars Technica and TorrentFreak

Justin Bieber ended July 2010 with more than 265 million views of his ‘Baby’ video on YouTube, having overhauled Lady Gaga’s ‘Bad Romance’ (253m)

Pandora and Last.fm Success• Pandora signed up its 60 millionth user in July 2010.• It took three months to add the last 10 million users, and four months to

add the 10 million before that. It’s speeding up!• Pandora now has songs from more than 90,000 artists in its catalogue, and

80% of those artists are played each month.• The company raised an undisclosed amount of new financing in June.• Last.fm has tripled its audience in the US in the last 18 months to more

than eight million people.• The service is currently processing more than 1,000 user scrobbles a

second, sucking in 40 million pieces of data a day.• Last.fm has partnerships with Hype Machine, Vevo and MOG in the US,

having ditched its on-demand streaming business to focus on data and discovery.

• Sources: TechCrunch and Music Week

Vevo’s Growth• Online music videos service Vevo attracted 48 million unique visitors in the

US in June, and 141 million internationally.• 43% of Vevo-watchers have a household income of more than $60,000.• Vevo claims to reach 27% of the US online Hispanic audience...• ... And 25% of the US online mums audience.• comScore estimates that Vevo generated more than 192 million viewing

sessions in June 2010, at 66.7 minutes per viewer.

Clear Channel Mobile Success• More than 8 million people have

downloaded Clear Channel’s iPhone, Android and BlackBerry radio apps so far.

• They listen to an average of four different stations a week, using the apps for 3.5 hours a week.

• The iPhone app has notched up more than 1 million downloads in 20 weeks, and now attracts 146,000 weekly listeners.

• These free apps plus online streaming have helped Clear Channel’s 900 stations to swell their total audience by 15%.

• Source: Music Week

Teen-focused virtual world Habbo Hotel celebrated its 10th anniversary, and said that 3 million avatars are created every month. 15 million unique users spend a total of 40 million hours in the world every month, with an average session length of 42 minutes. (Source: Guardian)

Teens and Social Networks• Online teens in the US typically spend 2hrs 20mins on the internet every

day – and 80% of that is spent on a social network.• More than a third of teens who play games on Facebook spend at least

50% of their time on Facebook playing games.• 43% of teens have spent money on or in a social network – 7% on virtual

gifts, 15% on social game currency, and 14% on avatar accessories.• 19% of 13-17 Facebook users have either left the site, or are using it less

than they did a year ago.• Of those who left, 45% lost interest, 16% left because their parents joined,

14% say there’s too many adults, and 13% are worried about privacy.• Source: Roiworld

48 Days – the time between the launch of Microsoft’s Kin ‘yoof’ handsets, and the announcement that they were being canned

Facebook Growth• Facebook now has more than 500 million active users.• Facebook attracted more than 141 million unique visitors in the US alone

in June 2010 – 11m more than its previous record in May.• Facebook is now serving three billion ‘Like’ buttons a day on other

websites, with more than 350,000 sites using its social plug-ins.• 32.5% of Facebook users are in North America, 27.5% in Europe and

17.1% in Asia. 14% of US Facebook users are now 55 or older.• Of people using online IDs to sign into websites, 46% are using Facebook

(versus 17% for Google and 14% for Twitter).• Women average 5.5 hours a month on social networks, compared to 4

hours for men.• Source: Facebook, Mashable, VentureBeat, O’Reilly Radar, Gigya and

DMW

In July, Lady Gaga became the first living artist to have more than 10 million Facebook fans. She even beat Barack Obama to the milestone.

How People Are Using Mobiles• 14.3% of US mobile users listened to music on their phones in May 2010,

up from 13.1% in February 2010.• However, that’s still behind the proportion who accessed social

networking sites (20.8%), played games (22.5%), and used apps (30%)• In May 2010, 234 million Americans aged 13 and older used a mobile

device, with 49.1 million of those using smartphones.• BlackBerry has a 41.7% share of the US smartphone market, followed by

iPhone (24.4%), Windows Mobile (13.2%), Android (13%) and Palm (4.8%). Android is the fastest growing of all.

• Source: comScore

33% of American mobile users played music on their phones in May 2010, up from 21% in April 2009. However, separate research indicates that 37% of iPhone users play games at least daily on their device.

Sources: TechCrunch and Compete

Smartphone Market• According to figures from

Strategy Analytics, Nokia remains the leading smartphone maker.

• However, all the Big Three (Nokia, RIM, Apple) showed strong year-on-year growth.

• Source: Strategy Analytics

Smartphone Data UsageAvg. Mobile data

consumption increased by 230% from 90MB a month in Q1 2009 to 298MB a month in Q1 2010

Source: Nielsen

The top 6% of US smartphone users are consuming half of all data, but a quarter of US smartphone users are consuming NO data at all – and more than a third haven’t signed up for a data plan.

Verizon Downloads Slide• Verizon Wireless customers downloaded

more than 25 million music tracks and videos in Q2 2010.

• Impressive, yes? Except in Q1 they downloaded 29 million, in Q4 last year they downloaded 38 million, and in Q4 2008 they downloaded 50 million.

• Verizon itself is doing well though: it added 1.4 million new customers during Q2 this year, and increased data revenues by 23.8%.

Mobile App Predictions• Ovum estimates that Apple accounted for 67% of all smartphone app

downloads in 2009, despite having only 14% of the smartphone market.• Other platforms’ share of app downloads in 2009: Symbian – 9%

Android – 14%, BlackBerry – 5%• In 2015, Ovum thinks the order will be Apple (22%), Android (26%),

Symbian (19%) and BlackBerry (17%).• The company estimates total app downloads of 2.69 billion in 2009, rising

to 21.3 billion by 2015.• Separately, Juniper Research predicts that mobile app store downloads

will increase from 2.6 billion downloads in 2009 to 25 billion by 2015.• Source: Ovum and Mobile Entertainment

Activision’s DJ Hero game has sold more than 1.2 million units, despite a famously slow start. “Not a flop: that’s the long tail at work...”

Source: Ars Technica

The Rise of Foursquare• Foursquare signed up its two millionth user on 10th July, just after it raised

$20 million in new funding to fuel its growth.• In early July, Foursquare was adding 12,900 new users a day on average,

and had grown to a database of 5.6 million venues.• 64% of Foursquare users are men and 33% are women, with 3% choosing

not to specify. 55% have uploaded a photo of themselves.• In July, Foursquare reported its 200 millionth check-in, up from 40 million

in April.• Beware though: a Forrester report says only 4% of US internet users have

ever used social location apps, and only 1% update them more once a week. 84% haven’t even heard of them.

• Source: TechCrunch and TechCrunch and Mashable and AdAge

Apple’s Q2 Financials• Apple generated $15.7 billion of revenues and

a net profit of $3.25 billion in Q2 this year (up from $9.73bn and $1.83bn in Q2 2009).

• The company sold 8.4 million iPhones, up 61% year-on-year.

• Apple sold 9.41 million iPods, down 8% (but iPod touches were up 48%).

• And it sold 3.27 million iPads during Q2 as well.

• iTunes Store revenues were up 25% to $1 billion for the quarter.

• The company sold $5 billion worth of iPhones and nearly $2.1 billion of iPads.

• (note, Q2 is Apple’s fiscal Q3).• Source: Apple and Seeking Alpha

Google’s Q2 Financials• Google generated revenues of $6.82 billion in the second quarter of 2010,

up 24% year-on-year.• The company’s net income was $1.84 billion for the quarter.• $4.5 billion of those revenues came from Google-owned sites, while $2.06

billion came from AdSense ads on other sites.• Google CFO Patrick Pichette revealed that the company spent $100 million

fighting the copyright infringement lawsuit from Viacom, which was recently decided in Google’s favour.

• Source: Google and Seeking Alpha

Nokia’s Q2 Financials• Nokia reported net sales of €10 billion for Q2, up

1% year-on-year. However, net income fell 40% to €227 million.

• The company sold more than 111 million mobile phones during Q2.

• 24 million of them were smartphones – Nokia says it has a 41% share of the global smartphone market.

• Nokia’s Services revenue (which includes music) rose 12.9% year-on-year to €158 million.

• Source: Mobile Entertainment and TechCrunch

Top-Earning Musicians in 20091. U2 $130m2. AC/DC $114m3. Beyonce $87m4. Bruce Springsteen $70m5. Britney Spears $64m6. Jay-Z $63m7. Lady Gaga $62m8. Madonna $58m9. Kenny Chesney $50m10. Black Eyed Peas $48m

Source: Forbes

But Check The D2C Successes...• Amanda Palmer sold $15,000 of music

and merchandise through her own site in THREE MINUTES this month.

• How? She released a digital EP of ukulele-fuelled Radiohead covers on a pay-what-you-want model.

• 4,000 were sold on the first day at an average price of $5.

• Separately, Bandcamp announced that artists have sold $1 million of music and merchandise through its platform in the last six months.

• Meanwhile, rival D2C platform Bandzoogle says artists have done $2.5 million of sales through its service since 2004.

Source: Bandcamp, Bandcamp and Bandzoogle

Online karaoke site PureSolo attracts 70,000 unique visits a month, and is generating more than one million streams of its members’ recordings. It’s currently running a contest with Mark Knopfler.

Other Facts + Figs from July 2010• €680,000 – Fines levied on the seven admins of Finnish BitTorrent site

Finreactor by the Supreme Court (source)• 550,000 – Unique visitors in May to Russian legal content store Omlet,

which belongs to telco MTS (source)• 1m – Downloads in a fortnight of sci-fi TV show Pioneer One’s debut

episode. It’s being distributed exclusively through BitTorrent (source)• 44% - Percentage of downloads on Nokia’s Ovi service from Indian users of

Shakira’s World Cup anthem – despite not being in the World Cup (source)• 5bn – Number of mobile subscribers in the world, according to research

firm The Mobile World – up from 4.82bn at the end of Q1 (source)• 109m – Unique visitors to MySpace in May this year according to

comScore. That’s down 13% year-on-year (source)• 300,000 – Members of free Virtual Private Network (VPN) ItsHidden,

which lets BitTorrent users evade detection (source)

Other Facts + Figs from July 2010• $1,372.20 – Revenues made in a single day from Apple’s iAd network by

iPhone app developer Jason Ting (source)• 90% - Reduction to the damages bill facing US file-sharer Joel Tenenbaum,

as his fine was cut from $675,000 to $67,500 on appeal (source)• $5m – Amount being invested by YouTube in a new ‘Partner Grants’

program to help creatives make videos for the site (source)• 180 – Number of tracks given away by UK grime star Wiley via his Twitter

feed, following a fallout with his manager and/or label (source)• £375 – Amount being demanded by Ministry of Sound’s lawyers in a letter

to people who it alleges illegally downloaded a compilation (source)• 500,000 – Registered users of music locker service MP3tunes (source)• 500,000 – Number of Premium subscribers to Spotify (source)• 0% - Proportion of people who would pay to use Twitter, according to a

survey conducted in the US (source)

Other Facts + Figs from July 2010• 422 – Number of ‘illegal websites’ shut down as a result of action from

Dutch anti-piracy group BREIN in the first half of 2010 (source)• $100bn – Value of the mobile ticketing market in 2012, according to

analyst firm Juniper Research. That’s not just for music though (source)• €50,000 – Daily fine faced by The Pirate Bay’s three co-founders if Dutch

users aren’t blocked from accessing the site (source)• SEK 500,000 – Separate fine faced by TPB co-founder Peter Sunde if he

ignores a court order to stop running the site (source)• 143 – Number of e-books that Amazon US sells for every 100 hardback

books (source)• 1m – Number of e-books sold by the late Stieg Larsson on Amazon’s Kindle

Store – the first author to reach the milestone (source)

Music Ally Cloud Models Debate• This month we held a Cloud

Models debate in London, with participation from Omnifone, Imagination Technologies, Gracenote, Greenberg Traurig, PRS for Music and Deloitte.

• Michael Robertson from MP3tunes beamed in via Ustream too.

• You can read the liveblog of the event, or watch the full 90-minute video.

Cheers!• For a free two-week trial of our Bulletin and Report service, click here• For information on our consulting and strategy services, click here• To contact our editorial team, or give feedback on this monthly

NumberCrunch report, email stuart@musically.com