The Impact of the Web on the Music Business. 2 The Leading Digital Distributor Founded in 1997...

The Impact of the Web on the Music Business

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The Leading Digital Distributor

Founded in 1997 Thousands of labels Every music genre Catalogue of more than 1 million tracks Supply the leading legal digital music

retailers and mobile operators throughout the world

Headquartered in New York and London with operations in 22 countries

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Orchard Artists

Afrika BambaataaAlexander Shulgin Anthony BraxtonArchie Shepp Art BrutAsha Bhosle Astor PiazzollaB.B. KingBad BrainsBay City RollersBeckBenny Goodman Bill Laswell Billie HolidayBilly Bob Thornton Bing CrosbyBlack Flag Black UhuruBlazin' SquadBlink-182

Bo DiddleyBob MarleyThe Brand New Heavies Bright EyesC&C Music FactoryCab CallowayCarl PerkinsCecil TaylorCharles MingusCharlie ParkerChris de BurghChuck BerryChuck Loeb ColdplayCount BasieCurtis MayfieldDaniel JohnstonDave BrubeckDead Kennedys

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Orchard Artists

Death Cab for CutieDeep Purple Dinah WashingtonDionDon McLean The Donnas Dr. JohnDuke EllingtonElla FitzgeraldEric DolphyEvan & JaronThe Fall Fats DominoFito Paez Frank SinatraGeorge CarlinGlenn MillerGreen DayGregory Isaacs

Hank WilliamsHarry BelafonteHelmetHerbie Hancock The Hives  The Hold Steady Howlin' WolfIke & Tina TurnerImmortal TechniqueThe Jerky Boys Jerry Lee LewisJerry SeinfeldJody WatleyJohn CageJohn Coltrane John Denver John FaheyJohn Lee HookerJohn Legend Johnny Cash Keane

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Orchard Artists

Kim Waters King Sunny Ade The Kingsmen The Last Poets Lata Mangeshkar Laura CantrellLeadbellyLee “Scratch” PerryLewis BlackLightnin’ HopkinsLittle RichardLos LobosLouis ArmstrongMad ProfessorMahalia Jackson Masta KillaMatisyahuMedeski Martin & WoodMelvinsMe'shell N'degeocello

MF DoomMikis TheodorakisMinistryThe Minutemen Mojo NixonMotley Crue MotorheadMuddy WatersNat King ColeNina SimoneNorman CookNusrat Fateh Ali KhanOfra Haza Ohio PlayersOjos de BrujoOl Dirty BastardOperation Ivy Paul Oakenfold Perry Como The Pharcyde

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Orchard Artists

PigfacePilar MontenegroPublic EnemyRalph StanleyRavi ShankarRay CharlesRoger McGuinnRZASam & DaveScreamin’ Jay HawkinsSeu Jorge The Silos Simply RedSir Mix-A-LotThe Skatalites Sly & RobbieSolomon Burke Son HouseSouliveSoundgardenSublime

Sufjan Stevens Sun RaSwing Out Sister Taj MahalTed Leo / PharmacistsTim BuckleyTom WaitsTone-LocTownes Van ZandtTriumphThe Turtles The Vandermark 5Walter Beasley The Wedding Present WeenWilson PickettYellowmanYoung MC Zakir Hussain

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CD’s Are Dead! Finally We All Agree

Europe – 30% decline in sales by 2011US

– Retail Sales = $12.5 billion 2005

– Retail Sales = $10.5 billion 2010

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Digital is the FutureAnd We All Agree On This

2004 – 2005 the market nearly tripled from $400 million to $1.4 billion

Mobile operator 3 sells more than 200k full track downloads a month

Gnarls Barkley reached the top of the singles charts with a digital only release

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What Is Impeding the Business?

Implementing old business models in a new world

Email vs. Mail

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Pricing

99 cents - 79 pence (same cost as physical world)

Even higher cost for mobile“Respect the value of music”

People pay for services

Services pay for music

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Usage Restrictions

ControlCopyingInteroperabilityPortability

Old world business model gives the consumer more freedom!!!

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Customer Service

Paradox of Choice – Consumers demand an abundance of choice

Recommendation

Marketing and Promotion in the old world – Demographics

Marketing and Promotion in the new world – Psychographics

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Ownership

Stop asking the consumer!!!Learned helplessness – When presented

with a better option it is not taken.DVD vs. Video Tape

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The Business Models

P2P – low price and low serviceSubscription – higher price better serviceStreaming – free but no interactivityInteractive streaming – low price with

some functionalityGames, tones, websites, user generated,

etc. – charge, charge, charge!!!Charge based on size of wallet

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When will this happen?

After Majors are sold and new companies exploit their copyrights

When indies find their lost spiritWhen companies start serving their

customersWhen retail stores disappear and there are

no other options

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Contact Info:

Scott CohenFounder and VP Internationalscott@theorchard.com

The Orchard25 Floral StreetCovent Garden, LondonWC2E 9DSUK