Digital Music Forum :Summary

More than 400 industry professionals gathered for Digital Media Wire’s 5th annual Digital Music Forum at The French Institute in New York City on Wednesday. Discussion topics recalled the creation of the original Napster, examined the current business and legal environment, and looked ahead optimistically towards the future growth of subscription and mobile services.

In a widely anticipated keynote conversation, Napster founder Shawn Fanning described how early peer-to-peer file trading networks fundamentally changed consumer expectations for the breadth of music content available to them. Speaking about his new venture, Snocap, Fanning outlined his plans to create a central database for rights clearance while introducing a digital identification and acoustic fingerprinting architecture for file trading systems. Fanning expressed his hope that the creation of a trusted third party to manage rights administration will create an environment in which the interests of peer-to-peer companies, retailers, and content owners will not be in conflict.

Technology and rights management remained in the spotlight during a panel discussion about the forthcoming MGM v. Grokster case that will go before the Supreme Court on March 29th. At issue, according to Digital Media Association Executive Director Jonathan Potter, is whether a software developer can be held liable for the actions of its users. Martin Elgison, a partner at Alston & Bird, advocated separate assessments of legality for a company’s business conduct and the associated technology. Jim Delong, senior fellow at The Progress & Freedom Foundation, agreed that the courts need to examine a company’s underlying business model and question whether it depends on copyright infringement.

Speaking to technology’s current effects on artist management, Nettwerk Productions CEO Terry McBride conveyed that digitization currently represents a mixed opportunity for his clients like Avril Lavigne, Sarah McLachlan and Barenaked Ladies. On the one hand, McBride reported, Barenaked Ladies sold more than 900,000 live tracks in the past year and archives 150 concerts for sale online. On the other, he voiced concern that his artists’ catalog sales are being negatively affected by peer-to-peer file trading. On the whole, McBride was bullish on technology’s long-term potential, both for management companies seeking to provide for all their clients’ needs, as well as for artists pursuing long term careers.

In an afternoon keynote, Yahoo Music Vice President and General Manager David Goldberg highlighted the opportunities created by consumers’ desires to discover and control their music in an on-demand environment. Goldberg predicted the continued emergence of subscription-based digital music services, as well as the use of customization and community functionality to drive traffic and consumer engagement. According to Goldberg, playlists will become the “killer app of music” for users confronted with more than a million tracks at their fingertips and services will need to focus on delivering appropriate recommendations to create the ultimate listening experience.

MSN Marketplaces General Manager Mike Conte addressed Microsoft’s digital music effort which initially launched last October as an a-la-carte download service. According to Conte, Microsoft is principally involved with music to drive traffic and advertisers to while contributing to the company’s strategy to build an overall ecosystem for digital media. While emphasizing that Microsoft’s plans were still in their early stages, Conte echoed Goldberg in emphasizing the importance of building community to engage customers and alluded to future digital music integration with messaging, blogging and playlist capabilities. Conte also agreed with predictions for the future growth of subscription services, citing company research indicating that the younger the consumer, the lower the likelihood that they desire to own their music.

During morning and afternoon panels, participants painted a positive future for the mobile music marketplace. Sony BMG Senior Vice President Thomas Gewecke noted that mobile services continue to be the dominant digital revenue stream outside the United States. Gewecke further predicted that mobile devices will become the dominant method for initial music purchases, even if the content is eventually consumed on another platform. Sprint General Manager of Wireless Music and Personalization Nancy Beaton reported that music represents an important way for the company to boost its current average monthly bill of $62. Beaton also cited successful ringtone launches with artists like Beyonce and 50 Cent, with both reaching platinum sales levels.

Thanks to Wesley Radez (wradez @ over at Digital Music News for this report.