US On-line Gaming: US$4 Billion by 2008

Online gaming is growing rapidly. Even miserable old souls like me who can’t stand wizards, Wookies and the thought of being thrashed at Counter Strike by some smug 14 year old whose reflexes are yet to be destroyed by years of gin have signed up for the odd Massively Multilayer Online Roleplaying Game (MMORPG).

A new report from In-Stat/MDR makes some striking claims about the growth of the US market – they estimate it will expand from a measly US$1 billion (€818 million) to a much more lucrative US$4 billion (€3.27 billion) by 2008. Much of this income will come from in-game advertising.

Aside from the growing awareness and acceptability of online gaming, the report states that falling costs will spur growth – when online gaming costs as much as watching television, then it’ll really take off.

The report claims that online gaming costs about US$1 per hour, opposed to US$0.13 for watching TV. I thought the US$1/h figure was a little high, so decided to run my own numbers: a quick calculation shows that my 16 hours of Eve per week sets me back about €0.18 (US$0.21) per hour. I’m not factoring in my broadband connection costs there, because I use that for other things. Honest. Given that many online game players can easily rack up 40 hours a week plus, then cost per hour on a monthly subscription can often fall below €0.07 (US$0.09). But then, they have no friends.

Advertising in games is, as previously reported here, growing alongside the MMORPG field. In-Stat/MDR senior analyst Eric Mantion. States: “The secret strength of online games will be when the volumes of people playing grow to the point where advertisers will start buying ads that will not only be interactive, but also targeted at specific demographics of players.”

In-Stat/MDR hypothesise that half the US population will be playing online games by 2008, which is somewhat optimistic. My own finger in the air guess is about 25%, taking age of population, literacy and competition from less interactive entertainment into account.

Buy Quafe Ultra!

In-Stat/MDR’s report

Josaka: Why Are Record Labels Ignoring Fans?

Kevin Harrington in the studio, courtesy Keith CorcoranMusic and user-created content go hand in hand – a love of music inspires many people’s first web pages. Kevin Harrington, former trouble maker at Sony and once a marketing director at the BBC, has taken the the idea several steps further – dissatisfied with the lack of involvement from big record labels, he set out to create the sort of web portal that would link local bands with their biggest resource – their fans.

The result was Josaka (you’ll have to visit the site to find out what that means), one of the most popular local music resources in the UK, with an impact felt across the world, not just in leafy Berkshire.

I talked to Kevin to find out his thinking on music’s relationship with the internet, owning the relationship with the music fan, and of course, getting the labels to “shut up whinging and pay attention to the fans.”


What inspired you to start building a site with this amount of content?

My first interest in creating a website was pretty much around the whole subject of “Why the hell does it cost £150,000 to have a corporate website created that has virtually nothing on it?” So, I set out to discover how complex or how simple it really was.

The site started off back in 1999, and it set out to support live music in Berkshire. Starting off creating a site from nowhere then, it was very much “Let’s do this and see what happens.”

It lists just about everything that I can think of that is going to help people find gigs or musicians. The consequence of having a huge amount of content on the site and having it pretty Google-friendly is that people all over the world are finding it, and there have been great successes: there’ve been local bands who’ve had their music played on American radio stations, just because of information that’s been published on Josaka.

Have you tried going through some of the websites from big labels to find information? The success of Josaka is hardly a surprise. There’s no competition locally, and there’s nothing going on nation-wide that competes with it.

Why live music? Were you drawn into this because it was something that record labels had completely ignored?

I have a love of live music, and at the time [of the launch of the website] I was actively involved in doing sound for a band, my wife’s a singer – live music is a very important thing. And I play the guitar badly.

What thinking did you bring to the website that was different from that you’d seen around the internet at the time? What influenced you?

There wasn’t a huge amount around at the time that could be classed as competition for Josaka, and this whole discussion of what is competition for a site is an interesting thing. At the time my thinking was very much “Why are we talking about this as a medium, why aren’t we talking about what the content is all about?” If you just start thinking about the content, that’s ultimately what influenced how the site developed.

The fact it’s on the internet does determine certain ways of delivering content, but the core thinking has to be “Who is the audience? Who is the consumer of this? Who’s going to benefit? Who’s going to read the pages on the site?” It has to be a very consumer orientated thought-process that gets you round to deciding how the site should be.

If I was the publisher of a magazine, I’d be much more concerned about the content rather than the format.

Why do you think the internet and music go together so well? It’s not just a delivery mechanism is it?

The reason the internet and music are so right for each other is that everything can be now, everyone can share, everyone has an equal voice if they’ve got something sensible to say, and the cost of getting the message around is remarkably economical.

What surprises me is that the people who complain about the costs of overheads to their business, like big record labels, don’t use the internet better. They should be the ones that are leading the way, they should be the ones that are setting up ground-breaking websites that aren’t just about saying “Aren’t we bloody wonderful?” They should be standing right in the middle ground and saying “Hey, we’re the heart of the music community!”, and they should allow themselves to be criticized on their own websites. They should use the format for distributing samples themselves, and take control of things. In it’s own little way, Josaka does that, but if I was a record label, if I was a Sony, I’d do it for the whole country. Just think of the impact that would have if it was done on a genuinely approachable, honest, open and fair way.

The whole issue of being able to share files and download MP3s, whilst important is not the core reason why there are websites about music. There are countless websites that you can’t download music from. I think the reason why the whole area of music and the internet sit well together is music becomes successful when it’s accessible and there’s a community feel about it. What the internet allows is a very strong feeling of community to develop quite quickly, which other delivery formats like a magazine don’t tend to do.

A comparison to that would be the NME [infamous UK music newspaper, the New Musical Express] – there’s very little sense of community with a thing like the NME. With a website, you can very quickly get that feeling of ownership from readers of the site by allowing them to have their views published in discussion forums and so on.

Now that we have websites about music, and bands’ own websites, particularly small bands – what social effect do you see this having on consumers? How will self-created content affect consumers’ habits?

There are obvious positives and negatives. On the negative side, the fact is that it is so easy for people who have no marketing, press or media experience to be able to publish their views – in seconds people can go and create themselves blogs or websites and if they get the tone of it wrong it can put people off going to see bands or going to see events.

I have recent experience of people saying that to me, from running quite a lively discussion forum on Josaka. I’ve had people who have read the discussion forum and decided not to go to an event because it sounded too cliquey. A lot of people go and publish things without enough consideration for how it’s going to be read.

The responsibility of publishing content on the internet is a considerable one, but there are no great rules for it. My analogy is if I went and stuck a huge transmitter on the roof of my house and started broadcasting radio or television, there’d be a whole lot of rules I’d have to comply with, and that’d be after I got my license, if was lucky enough to get one. I’d have to take it all very seriously, and there would be a lot more consideration about the content, but on the internet it’s remarkably free – and long may it be so. The downside is that people can pitch stuff in the wrong way for their target audience and consumers. On the positive side, there’s this wonderful, raw unedited immediacy to it, and it means that bands who in the past could never get feedback from audiences are now receiving it – good and bad – and they’re able to respond back, and dialogues start happening. That’s an enormously positive thing.

Now so many bands have web pages, how can they stand out? How do they still get exposure with the internet so crowded?

Ignoring the number of band websites for the moment, the real problem is that a band’s site is generally speaking a dull affair – which is why many bands have gone down the “let’s have loads of Flash everywhere” route. How many things can a band say during the course of month that’s going to get people returning to their site? I think that’s been the issue since bands first started having sites – if it’s just one band’s content, it’s not going to be that exciting, it’s not going to be refreshed, there’s not going to be that much news on there. There are exceptions of course. Sites like Josaka have benefited the Berkshire music scene as everyone is linked from the bands page, and all the key headline news gets published It becomes the place to go to find out the latest news about bands who are quite often 15, 16 years olds, pro, semi-pro – it doesn’t matter what size or scale they are, they all get a sensible airing if they go to the effort of making an event.

What’s the most exciting part of Josaka for you?

Free entry to gigs?

And?

One of the most pleasing things is that it’s been going for more than five years, uncontested and running successfully. It’s been doing that because it’s not run on a commercial basis – it doesn’t need income to survive. My standards for it mean that it has to get better and provide better content, and it has to grow – it has to constantly evolve and improve.

There are many sites locally that have tried to do similar things but they’ve always started off by saying “We’ll get some offices, they’ll cost UK£10,000 a year, we’ll have a finance director, we’ll get our income from banners.” You know the maths as well as I do – how many banner ads are you going to have to sell off a site to pay your rent?

For me, the most exciting thing is saying “This is a vehicle to promote live music”– at its core it has to be the content that lets it survive – not its saleability for banner ads. Editorial and content-wise it has to be successful first. If at one point in the future it became a commercial site, that would have to be in a way that didn’t dilute, interrupt or interfere with the content.

How much consultation with the public do you do to find out what people want? Do you talk to people at gigs? Questionnaires?

Most of the major changes on Josaka over the years have been driven out of asking the visitors to the site: I’ve done questionnaires and invitations to people to come up with ideas.

Because it’s such a passion, because it’s so successful, it consumes a lot of time – it’s my principle activity outside of money earning things. I’m going to another gig tonight, I produced a radio programme yesterday for Reading college.

What do you think are the key things you’ve learned?

I guess in the earlier stages I spent too much time quietly developing it and pushing it towards people and some of my character traits of being a control freak were probably too much to the fore. I’ve learned that the discussion with the audience and getting them involved, getting them to contribute, has been the major breakthrough for the site. When it finally twigged that it couldn’t be a sort of stand back “here’s the music business, come and get it” kind of thing, that was a turning point for me.

What thinking and ideas do you most admire in the industry?

We’re still a long way off downloads becoming that significant in the market place, and the current whinging from the music industry about how downloads are increasing and single sales are decreasing…

Down 32% this year, I believe…

… allegedly. If you’re in a band, the record label always tells you that you lose money on singles, you make money on albums. The singles are there to promote albums. There is an argument that says that the record labels should shut up whinging and be pleased that single sales are going down.

Album sales are going up…

If I sit down in front of my TV, there’s probably about fifteen channels of music on there that are playing new singles weeks before they’re launched, and they give me an idea of what an album might sound like. Let’s stop talking about downloads, let’s talk about how the music industry should promote their artists and bands so that these profitable things called albums sell. I think people are getting much bigger samples of music from cable and satellite than from downloads.

Downloads of singles and samples are probably a very positive thing for the industry.

The start point has to be labels appearing to engage the subject sensibly, and most of their forays into working with downloads seem to be led by the finance director. A bit of understanding of how the consumer wants to do things is the way forward.

Make music available to buy – the only reason P2P sites exist is because it’s often the only place to get some music. People are prepared to pay money. Record labels trying variable levels of pricing could actually end up setting the right price quite quickly.

As legal music services open up, people do use them. They often only turn to download sites when a particular piece of music isn’t available to buy.

A lot of people genuinely don’t realise the laws they’re breaking – that doesn’t make them innocent but shows how poor communication has been by the entire industry. Most people do respect the issue of copyright – what they don’t accept are the excessive levels of profit that appear to be made by record labels.

If record labels want to genuinely defend, and explain, and get CD consumers to agree that £17 is a fair price for a CD I’d like to see them put the case.

The industry needs to start thinking about the consumer. They’re worried – quite rightly because they’re looking after shareholders – about what appears on the balance sheet and the various costs of doing but let’s start worrying about what the audience wants.

I know a lot of people who would prefer to download music from an official band site. Why? Because they’re going there to sample a track before they decide to buy an album and they want to find out a bit more about the band. Pure download sites, whilst they’re very functional, actually from an industry point of view would be better if there was relevant and informative content surrounding it.

Then as an industry we could be saying “We might not be making a lot of money on the download of samples, but we know at the same time we are able to get the message across about a band or about an act, we’re able to get the imagery across, we’re able to get across gig dates, we’re able to sell merchandise, we’re able to talk about tour dates and we’re able to get people to subscribe to discussion forums.”

If I was running a band, one of my concerns would be about owning the relationship with the audience, owning the relationship with the person who is listening to the track. I want to be able to communicate with them – and that’s what the internet’s about, two way communication, it’s not just about someone downloading a track. That contact with either an existing or potential fan is enormously valuable. We know music fans are fairly promiscuous types of people, so use let’s a bit of intelligence, let’s use the medium to grab hold of them and retain them.

Napster has launched several new sites this year. When we discovered that the UK was twice as expensive at the US and Canadian versions, we were told by Napster that it was because UK industry charged higher wholesale prices than elsewhere. Why does the record industry in the UK seem twice as greedy as elsewhere?

To be blunt, they’re completely out of touch with the consumer. They cruise into work and answer a few emails before they go out for lunch. How many gigs do they go to? How many people in bands do they talk to? How many people in audiences do they see? Do they really have had any respect for the people that are fans?

I know there are exceptions to that, but as an industry it’s unapproachable. Even the big bands have suffered from the problem of becoming unapproachable. A lot of the bands that are linked from Josaka will use the sense of community that’s been engendered by the site to get to know people, to communicate both ways, to build up a base so that they can tell people about new material they’ve got. It becomes a friendly, fun thing to do. Music is not just about listening to music, it’s about who you listen to music with, where you listen to and and the group of people that you associate with. It’s a lot more than just having an MP3 or CD.

This brings us back to creating community sites, doesn’t it?

I know that Josaka has taken a ton of effort and has more than 1,400 pages on it so I recently did a cost structure on what it would cost to put together from scratch and produce that level of content, and it came out in excess of £100,000.

What really surprises me is that, with the relative ease of being able to put together an informative and useful website, why so few people have managed to do it in other areas. If every county had one, and they linked together, you’d have a really powerful tool to then go to record labels and say “Hey, if you want to get your message across, get the tone right for this audience and we can start talking to people through this vehicle.” And what happens? Big record labels ignore community sites.

Interestingly, there are quite a lot of small indie labels that probably employ up to ten people that send sampler CDs, press releases because they know where it’s at, they know where the audiences are.

So it’s greed and apathy from within, then? You don’t think it’s because people are getting less interested in music, because they’ve got lots of other things to spend money on like DVDs and games?

I see absolutely no evidence that people are becoming less interested in music, I see plenty of evidence that they’re getting pissed off with the pap that they’re being given by record labels. Time and time again, regurgitations of something that was once great, now in a really bad form by bands that frankly shouldn’t be bands.

There’s a healthy desire for recorded music, night clubs, live music, outdoor gigs, festivals. If people want to get involved in a market that is highly lucrative the music industry is the one to be in. Run efficiently, there’s a whole load of money to be made – but you can only ever make money in business if you’re doing what the customer wants.

I think you’re wrong to say that music labels are suffering from greed and apathy. I believe they think they’re being really dedicated, I believe they think they’re doing a good job.

The bottom line is, I think they’re out of touch with who the consumer is, do they really understand what the consumer thinks and believes or are they just going by the surveys they read in the Sun?

Headline news is an easy thing to respond to – it’s easy to react against “Single sales are 32% down!”, but what genuinely lies beneath that? I said earlier, I think that single sales being down is a good thing. Why should I spend £4 on a single? When I want the content of a single it’s because I want to understand what a band sounds like. By the time I’ve spent £4 I might as well buy the CD, but I probably won’t – I’ll probably just be a bit pissed off about it, so I’ll wait until I hear it on the radio. Or, hey, I might go and download it.

A lot of people on Berkshire Live might say “I’ve come across this band” and post a link to a track and all of a sudden you’ve got people talking about a band that hadn’t been talked about before. It’s exciting stuff, it’s dynamic, it’s real, it’s immediate. For the big record labels, immediacy is not something that’s in their vocabulary.

Josaka

BSkyB Announce Free-to-Air and HD TV Services

BSkyB want some of Freeview’s market, and to do so they’re going to introduce a free to air (FTA) service later in the year. The proposed service isn’t just a handful of channels either – it’s currently looking more like 200 television, radio and interactive channels. Whilst many of those will be virtual horse racing or celebrity shopping, the core of the proposition is sure to tempt many households to let a Sky box live under their television. The service will carry all of the BBC FTA channels and stations, including regional variants, plus offerings from Channel4, five and ITV.

Households will be able to buy the package, consisting of Sky box, minidish and viewing card for a one-time fee of UK£150 (€226). Whilst there is no obligation for purchasers to subscribe to premium services, BSkyB is hoping that many will be tempted to pay for additional content – of course they will.

Separately, BSkyB announced that they are developing a premium High Definition TV (HDTV) package, for introduction in 2006. BSkyB have yet to confirm details of the upcoming content, but it’s expected to include coverage of events specially produced in HD format, HD broadcasts of films, plus drama and news.

BSkyB on the announcement

Speedera Content Network Picks Up Flash Video

Speedera Networks, a content delivery provider connecting more than 1,000 carrier backbones in the US, Europe and Asia-Pacific region has partnered with Macromedia to deliver video clips in Flash format.

Speedera manage the delivery of file downloads and media for companies that have no wish to host content themselves. Customers include Fox Broadcasting, AMD and NASA. No doubt Speedera were very busy this morning with everyone hitting the NASA site to see the transit of Venus.

Flash has come along way since the mid-90s when cropped-trousered Hoxtonites first used its sprite and vector-based tools to create annoying banner ads and awful games. Flash has matured to be an excellent development environment and has produced some truly great internet content. By incorporating a video engine based on Sorenson Media’s software, Macromedia are now pushing Flash in a direction that was never dreamed of when it first appeared. As en example, video conferencing application can be created in seconds by dragging objects to your work area, and can be highly customised with brand identity and further functionality.

Since there’s a Flash player on an estimated 90% of PCs out there, most users already have all that’s required to enjoy video embedded in a Flash object, as no further client software is required.

However, the reason that Flash video is not as prevalent as formats such as Windows Media is that Flash development tools are expensive, whilst Microsoft’s are free.

Speedera

Macromedia Flash

Apple’s AirPort Express Streams Music to Your Digital Home With AirTunes

Apple have just released AirPort Express – a wireless adapter that lets Mac and PC users set up an instant 802.11g network at home.

The seven ounce box fits into the palm of your hand and is essentially a 802.11g transceiver with an audio out connection on it – plug your stereo into it, and it’ll play music streamed to it from your iTunes-equipped PC or Macintosh. AirTunes even has a feature to select which AirPort Express adaptor receives music.

The unit also contains a mains adapter so it can be plugged directly into the mains without any further cables.

You can do all the usual things with AirPort Express too – share your internet connection and printers, and the unit has a built in USB port and network socket.

AirPort Express costs US$129 (€105), which might seem a little on the pricey side for a 802.11g transceiver with only one network port on it, but then this one is based around being easy to use, acts as a repeater, contains the AirTunes circuitry and has Apple’s usual lovely stylings. Home wireless kit is currently very ugly and is not as straightforward to set up as some manufacturers would have you believe. With AirPort’s design heritage and simplification of the wireless networking concept, if anyone can get 802.11g to go mainstream, it’s Apple. Promoting the unit to PCs users is a great idea, as Apple no doubt learned from making the iPod PC-compatible. Apple’s Airport Express

BT to Use Technology to Block Child Pornography

BT have reported to the Home Office that trials of their Cleanfeed (not connected with the Cleanfeed company who offer internet filtering software, coincidentally enough) program have proved successful, and from next month they will be blocking access to child pornography sites.

The move has been applauded by children’s charities, with other internet service providers looking to adopt a similar strategy.

Internet Watch Foundation’s register of illegal sites has been around for a while to warn authorities, but technology and the fact that most of the sites are outside the UK has meant that, up until now at least, no real action has been taken.

The ban is an initiative of John Carr, internet adviser to NCH who prompted Home Office minister Paul Goggins after Carr’s successful campaign to block offending internet usenet groups. Goggins approached ISPs, including BT, for an answer.

This move from BT is sure to be a relief for many people, but at the same time poses free speech concerns: the UK is now the first Western country to impose mass censorship of the internet.

Pierre Danon, chief executive of BT Retail, said in a statement: “You are always caught between the desire to tackle child pornography and freedom of information. But I was fed up with not acting on this and always being told that it was technically impossible.”

The NCH’s guide to child safety on the internet

China: 300 Million Mobile Users by 2005

The Chinese Ministry for Industry has released new figures which demonstrate the vast scale of the mobile market in China, and its potential for growth.

Although the percentage of mobile phone owners in China will still be relatively low at just 24.5% of the population in 2005, this will still mean 300 million subscribers. In contrast, approximately 65% of Europeans own a mobile phone, with the US catching up at 50%.

Currently, China’s 295,700,000 mobile phones account for half of all money spent communications. There are still another 800 million potential customers to reach, though the barriers of bringing access to rural areas and the cost of services must yet be dealt with.

Chinese mobile users send 300 million text messages a day – accounting for one third of the World’s total 510 billion of SMS sent every in 2003. Not bad for something that was tacked onto GSM as a afterthought and costs network operators virtually nothing to handle.

China Mobile

eBooks on the Rise?

For as long as there has been ASCII, there have been electronic books, but every attempt to make eBooks into a commercial product with mass-market appeal has been a disappointment. However, new sales figures from the Open eBook Forum point to a 46% rise in eBook revenues in the first quarter of this year.

Additionally, Forum President Steve Potash claims that “eBooks represent the fastest growing segment of the publishing industry.”

Sadly, the titles that are shifting are not the forward-looking science, philosophy literary masterpieces I’d hoped for: Dan Brown’s nonsense numerology pot boiler The Da Vinci Code leads the bestseller chart, followed by Van Helsing by Kevin Ryan at number two.

Figures are still modest: 421,955 eBooks were sold in Q1 2004, compared to 288,440 for the same period last year. This translates into US$3.2 million (€2.6 million) in revenue, opposed to US$2.5 million (€2 million) for Q1 2003.

The market is still dogged with issues: competing formats, lacklustre content, over-priced products and expensive reading devices. People still prefer reading printed books, but the sheer convenience of being able to carry a number of titles for consulting at will has prompted people to experiment in the format. There’s still no “killer application” for eBooks (like iTunes was to the iPod), and certainly no “system seller” (for example, the Matrix DVD prompted many thousands of people to buy a DVD player), and there possibly never will, but we hope that this important media format gets the attention it deserves.

Open eBook

European iTunes: 15th June?

Apple has let major publications know that it intends to make a big announcement on 15th June, but isn’t giving away exactly what it is. The giveaway is that the press conference is billed “The biggest story in music is about to get even bigger”, and the invite carries the iPod dancing people motif. We think it’s going to be European iTunes – but will no doubt be disappointed when it turns out to be the UK launch of iTunes Mini.

Some websites are already quoting 15th June as an established fact – it’s just wild speculation at the moment, Apple aren’t telling anyone.

Which countries will get iTunes? How much will it cost? How many songs? Perhaps all will be revealed in the next few days.

iTunes

Mobile Peer to Peer File Sharing with PDAs

Simedia, a small software publisher in Bucharest, has ported a clone of Apple’s Rendezvous application to PocketPC and teamed it with a web server. The result? A mobile P2P file sharing program.

The application discovers other devices on the same WiFi network and allows people to share files and documents. And of course, music.

Simedia themselves give various uses for the application, including using it to “share your music collection with passers-by or listen to their collections whilst sharing a ride on the bus”. Features like these will no doubt have music execs jumping out of windows, whilst RIAA lawyers will be lighting cigars with $100 bills.

The software will be available from 16 June in two versions: a free version, and a paid version with corporate functionality.

Simedia already have a history for off-beat PDA products – they are well known for their SounderCover application which plays background noises (trains, the dentist, a errr, circus parade) over phone calls for those wishing to deceive spouses and employers that they somewhere different to their real location.

Simedia