Introduction
For 17 years now the Popkomm has been one of the most important fairs for the music industry worldwide. This year, 796 exhibitors – 130 more than last year – from 49 countries attended the event in Berlin. The future for the music industry today looks a bit brighter than in previous years. According to Gerd Gebhard, chair of the German IFPI (Federation of the Phonographic Industry), particularly online music services show a promising development and the music industry is embracing the digital age by testing new music formats and pricing models. Naturally, Gebhard could not refrain from touching the issue of music piracy as well.

No dedicated DRM sessions at this year’s Popkomm conference
Each year, the Popkomm music fair is accompanied by a rich conference program, where new developments in the music industry are discussed with top-level experts. As opposed to the Popkomm conference in 2004 (cf. Dufft 2004), no dedicated DRM session was on the agenda of the conference this year. Naturally, DRM is an important foundation for many of the discussed new business models. It therefore played a role in the discussions, but less prominent than in the previous year.

Big hope put on mobile music
One session of the conference was dedicated to mobile music. Music labels, mobile operators and device manufacturers all expect – or rather: hope – that music on mobile phones will become a soaring new source of revenue. However, incompatible file formats and DRM technologies as well as problems with providing downloads that can be used in parallel on PC and mobile phones constitute important limitations for the future success of full-track music downloads. Patent problems were also mentioned, especially concerning the OMA DRM standard (cf. on this topic Bohn 2005).

Subscriptions versus a-la-carte downloads
The future success of a la carte downloads and subscription services was discussed in a dedicated digital music session. It was conceived that subscription services should gain considerable attention also in Europe, where adoption is yet slow compared to the US. Adequate pricing models for music subscription services were discussed in detail. Low-price offerings, in particular Yahoo! Music Unlimited, which offers a subscription for only $ 5 per month to US clients, might force the involved players to accept shrinking margins. Dave Goldberg, Vice President & General Manager of Yahoo! Music provided for an interesting insight of Yahoo’s strategic goals: while in retail markets prices usually start high and decrease over time, the opposite could be true for services markets, e.g. subscription services. Spelled out this means that Yahoo will try to lock in as many customers as possible and then gradually increase prices for the service over time.

Who kills the radio star?
A session called ”New radio” focussed on new radio-like services, such as Web radio, mobile streaming services and podcasting. A first panel discussed the new business models. It was stressed that a whole range of new revenue sources and a range of different players now dominate the music business, e.g. ISPs and operators selling broadband and mobile network traffic, or technology companies selling devices and software. However, for a number of very popular music services such as Web radio or podcasting, profitable business models have not yet been developed. A second panel focussed on what the new digital services mean for traditional radio broadcasters. Music consumption has over the past years increasingly become an active process, where consumers choose what they want to hear on the device, at the place and at the time they like. Traditional radio broadcasters have to respond to this development, e.g. by offering their own podcasts or web streams and by offering high-quality programs, not only mainstream music that sounds all alike.

Is podcasting sexy?
On the last day of Popkomm a session named “Podcasting is sexy” explicitly dealt with this new form of radio-on-demand. Podcasting was a “hot” topic discussed in many other sessions as well. Open copyright and licensing issues for musical content, however, currently limit the broader adoption of podcasting (cf. on this topic Dufft 2005). Nevertheless, some market participants like the BBC see high potential in podcasts, and major labels slowly start to take the new medium seriously. Warner Music, for example, produces its own podcasts and provides samples of its music to be used in podcasts.

Bottom line
DRM by itself was less intensively discussed on this year’s Popkomm than last year. However, my impression was that the music industry is becoming more creative and innovative to develop and test new business models that serve the specific demands of consumers. In this environment DRM is “simply” a technical problem that needs to be solved properly. It is not anymore regarded as a key element that will shape the future of digital business models. Rather, the diversity of consumer tastes, not only concerning different music genres but also concerning different consumption behaviours is coming more into focus – finally.

Sources

About the author: Nicole Dufft is a senior analyst at Berlecon Research. She has been analys-ing a variety of ICT topics ranging from mobile computing and application service providing to DRM. Currently, she works in the field "digital consumer". She is a member of the INDICARE project team. Contact: nd@berlecon.de

Status: first posted 30/09/05; licensed under Creative Commons
URL: http://www.indicare.org/tiki-read_article.php?articleId=144