@ Digital Music Forum West: State Of The Digital Union Not Strong Or Sound; Changes Afoot

New services like Nokia’s Comes With Music, which was announced today, are pushing (or is it pulling?) music labels to experiment with new business models they’ve been hesitant to embrace for years. All-you-can-eat music services, time to market, the economy and the seemingly never-ending pipeline of litigation that’s killing innovation by entrepreneurs were all addressed by a group of music industry executives Thursday afternoon at Digital Music Forum West. Still, there was plenty of enthusiasm about the slate of new services and opportunities coming to market that might spell changes for an industry long hesitant to disrupt the status quo. The past couple weeks have highlighted those changes through Myspace’s just launched music service and Sony Ericsson’s forthcoming Play Now Plus. For a panel titled “state of the digital union,” few would conclude that it’s strong and sound, but positive changes are afoot. – Ted Cohen, managing partner at TAG Strategic: “The jury’s still out” on mobile music. “With the exception of the iPhone, it really isn’t a fun experience getting music on your phone.” Cohen on Comes With Music: “It’s interesting that some of the labels came to the table an hour before the party started, but at least they’re at the table so that’s good.” These changes are further proof that “it’s not about file sharing anymore. It’s about discovery and recommendations… I think the failures are in all this litigation around MP3 search engines.” On the economy: “I think we’ve learned from Wall Street over the last few weeks: we have to eliminate greed… We’ve got to look at how this future is going to play out.” Brad Duea, president of Napster (being acquired by Best Buy): “I think we jump in the weeds really quickly sometimes and talk about the problems.” The last six months have been “such an eventful and exciting time.” DRM-free music is now a reality and bundled music models are coming for starters. “That’s an incredible embracement of these models.” – David Pakman, outgoing CEO of eMusic: “My general view is that the way to grow the industry is to power the entrepreneurs because they come up with the ideas.” If there was a industry-wide repository of rights with fixed business models and APIs associated with it, there would be 2,000 new websites in a few weeks. “There are technological ways to streamline access to music.” But more pressing is the industry’s “battle for consumer mindshare… It’s harder to break through… We’re losing there before we’re even worried about dollars and cents.” Finally, what good would a discussion about any business be at this time without addressing the economy? Pakman, who’s leaving eMusic to join a venture capital firm at the end of year: “In terms of the best time to invest in entrepreneurs, it’s now… There’s no liquidity window right now so you’re focused on building a service.” Startups require fractions of what they did five years ago to build a digital music business, but there’s been few entertainment startup success thus far. Pakman: “There have not been any meaningful venture-like returns in the digital space in the past five years… How many digital entertainment companies that were startups have more than $20 million in revenue?” Six or seven tops, he said. – Ted Mico, head of digital at Interscope Geffen A&M: The labels would all make more deals if they were presented with the same boilerplate deal that MySpace made with all the labels for its music service. “I think subscription is our future … or a version of it.” Side-stepping all the criticism over labels suing MP3 search-engine startups, he went for timely political commentary instead: “I’m as qualified to talk about industry litigation as Sarah Palin is to run the country.” It got some laughter from the audience, but also capped any further discussion on the topic.