The last few weeks have seen a couple of new entrants to the competitive digital music space. What makes these particular ventures significant is that both offer unlimited free music, are apparently legal and powered by YouTube’s vast music database.
DropPlay
DropPlay looks basic, but Facebook integration could drive usage
Last week saw the launch of DropPlay, a free web-based service allowing users to create, share and stream music playlists with Facebook friends. The site also incorporates a recommendation engine reminiscent of Pandora, an internet radio station streaming personalised music based on user preferences.
Launched by four recent Stanford graduates, what stands out about DropPlay is its attempt to marry YouTube’s breadth of content with an established social network - something YouTube itself has failed to do effectively. While the DropPlay interface is fairly basic and you do have to wait for songs to load, it’s an improvement on existing YouTube music aggregators such as Songza. Furthermore, like Songza, being a web-hosted application means that DropPlay can be used on any computer, particularly useful for listening to music at work for example.
Muziic
Muziic's slick interface is reminiscent of Winamp
Just weeks earlier, 15 year year-old developer David Nelson and his dad Mark launched Muziic, another free YouTube-powered music application. Unlike DropPlay, Muziic is a downloadable media player, whose slick interface is reminiscent of Winamp. However whereas DropPlay leverages users’ existing Facebook network, Muziic seems to be aiming to build its own community instead. Nonetheless, provided you have a half-decent internet connection, Muziic is impressive. As examples such as iTunes, Google and Facebook have proved, ease of use is key when it comes to attracting new users, which is encouraging for Muziic.
Free music - how does that work?
YouTube’s popularity means that it’s possible to find pretty much any song you could ever want to listen to, including many unreleased and live performances not available on sites such as iTunes, as many recordings are uploaded by users without prior permission of record companies. Indeed, the breadth of content available on YouTube is a major plus for services like DropPlay and Muziic, particularly if your taste in music extends beyond Britney and Whitney.
However, YouTube appreciates the value of its music content and pays licenses to music industry bodies to compensate artists and publishers, based on the number of plays.
While it’s always been possible to use YouTube as a music player, the recording quality varies significantly between tracks and playlisting facilities are basic to say the least. As mentioned above, services such as Songza have already previously used YouTube’s API to integrate the video site’s breadth of music content with a playlisting facility, however, long load times, inconsistent quality, a basic interface and limited functionality mean that these services haven’t really broken into the mainstream. Indeed, the gap in the market for a truly user-friendly YouTube-powered player was so glaring that it prompted me to discuss the idea with developer friends last year.
Limitations of the YouTube-powered model: Licensing
The owners of sites such as DropPlay and Muziic claim that as the content is hosted by YouTube, YouTube is responsible for paying licenses, therefore their sites are completely legal and are promoted as such.
While this argument is far from watertight, it is all fairly academic when question marks still hang over the way YouTube itself compensates artists and publishers.
Google’s recent spat with PRS couldn’t have come at a worse time for the YouTube-powered music start-ups. On 9 March, Google announced it was to pull all music videos from YouTube’s UK site after failing to agree a new licensing deal with the Performing Rights Society (PRS), the UK trade body that collects music royalties.
Given Google’s size and importance as a promotional channel for artists, it seems likely that the situation will be resolved, but it does raise question marks over the long-term sustainability of start-ups that are dependant on YouTube content and its licensing agreements.
Opposition from YouTube
Furthermore, challenges come not just from the music industry but from YouTube itself. In an interview with CNET’s Greg Sandoval, Muziic co-founder Mark Nelson revealed that he had deliberately not contacted YouTube prior to launch to clarify questions over whether YouTube’s licenses cover third-party developers:
Mark and David may have had some of these questions answered prior to launch had they spoken with YouTube. They said one reason they didn’t was to avoid exposing their work to other developers. The other reason was David and his father didn’t want to risk getting shutting down, David said.
Greg Sandoval, CNET
Furthermore, the danger for YouTube-powered start-ups is not just licensing, it’s that their sites provide users access to YouTube’s content, but not its ads.
15 year-old Muziic developer David Nelson
So far, YouTube has taken a wait and see approach in respect to these start-ups. While initially a YouTube spokesman said Muziic seems to violate its terms of service, Greg Sandoval’s CNET daily podcast on Friday reported that YouTube has since applauded Muziic co-founder David Nelson for coming up with the idea, provided it honours the terms of service for its API.
The Muziic team’s lack of experience may be its saving grace, after all, ‘Google dumps on 15 year old developer’ wouldn’t be a very flattering headline for the internet giant. However, with YouTube struggling to monetise its content through advertising as it is, it seems inconceivable that YouTube would pay the licensing for other sites to stream its music without receiving significant revenue in return.
The traditional strategy for music start-ups has been to build an audience, then negotiate with rights owners once they have established a sufficient following to be in a stronger bargaining position. However, as Sandoval points out, attracting a high volume of users does not guarantee that rights owners will cut a deal. ProjectPlaylist is a high profile example of this - the site’s widgets were removed from Facebook and MySpace after record companies put pressure on the social networking sites.
What about comeptition from other music sites?
Last.FM
The situation is complicated by the fact that record companies such as CBS now have a commercial interest in legal music streaming site Last.FM, which also has a well-established social media dimension and some free content. Similarly, more recent entrant Spotify has started offering fully licensed, free ad-funded legal streaming through an easy-to-use, instant play iTunes-style interface. Early indications suggest that Spotify is the biggest threat, with strong buzz from influential bloggers such as Cnet’s Matt Rosoff. More analysis of Spotify and Last.FM can be found on the BBC Technology blog.
Spotify
While DropPlay and Muziic’s reliance on YouTube is potentially a major drawback, if they can iron out licensing and advertising issues, it could paradoxically be the key to their success. Last.fm and Spotify both negotiate their own licensing agreements with rights owners, however, while this might make them safer bets from a legal standpoint, it has also resulted in major gaps in their music catalogues and global coverage. For example, Spotify is currently only available in a few European countries and lacks material from big artists such as Led Zeppelin and The Beatles.
Who will be the winner?
So far, Muziic seems to be getting the most buzz, although the fact that it was developed by a 15 year-old can’t hurt when you’re fighting for column inches. Furthermore, Muziic claims 500,000 people have dowloaded its app in the first two weeks since launch. While Muziic currently lacks integration with established social networks like Facebook, its polished website and ease-of-use set it apart. Muziic’s position would be further strengthened if it was to offer a web-hosted application to enable you to access music when you’re away from your home computer.
There’s no doubt that this is an exciting time for digital music. The key question is how Muziic etc are viewed by YouTube and the rights owners. If they can negotiate those hurdles, then there’s potential for them to change the way we listen to music. On the flipside, if Muziic fails to reach a satisfactory agreement with YouTube, the path looks clear for Spotify to develop its offering, expand its catalogue and become a serious challenger to iTunes.
The one thing that hasn’t been mentioned so far is these start-ups’ own revenue models. At this stage both are self-funded and focusing on developing the service and encouraging take-up. Given that both are using YouTube’s content rather than negotiating their own deals, advertising seems to be the most likely option long term. However, as we have seen with YouTube itself, attracting users is one thing, monetising them is quite another.
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