Continue to follow us at www.musicballoon.com/blog.

Thanks,

Alex and Steve

www.musicballoon.com

Doubtful. Record companies have a history of being greedy bastards and as the number of services offering ‘free’ keeps on growing, as a cruel twist of fate the global advertising revenues that feed ‘free’ are shrinking. At Music Balloon we’re biased – we won’t rely on ad-revenue or subscriptions when we launch – but it’s part of the future of how we are going to consume music so it’s worth having a look at it in more detail:

As of June 2009, Spotify were running up £60K bills per day in royalty obligations alone and their advertising revenue was bringing in just £82K a month. (Music Week article, August 2009). That’s almost a £2mil loss per month before subscription revenue. Recent Guardian figures are even more alarming, estimating streaming costs could be as high as £6.8mil per month. Whatever the costs are, they are significant. Therefore, Spotify also have to rely on a subscription model to bring in the real money in return for an ad-free music listening experience but at the moment they are way off the volume of subscribers needed to make the maths work. Spotify is cool; they have already made a massive impact on changing the mindset of the music industry and as they launch in the US they can only get bigger. Bigger sounds expensive though. The record companies have a vested financial interest in making Spotify work, but we hope they make a success of ‘free’ in the long run; a lot more people are starting to listen and experience music legitimately and to see that fail would probably send these new converts back out to sea on their pirate ships.

So, although the maths doesn’t work the impact that these streaming services are having on the music industry feels good. Their underlying theory about more ubiquitous music is capturing fans’ imaginations but for long-term success the financials also need to add up…

That means the ad-supported model becomes one piece of a much larger puzzle. They introduce and promote music to a fan-base but when that audience is offline or on holiday or like me, get huge enjoyment from building a music collection, actually owning some kind of experience with the artists becomes more important. And delivering an experience is key. The industry really needs to innovate with this in mind; the over-priced iTunes LP format is now building an even bigger toll-bridge between artists and fans – can digital music really get more expensive! An innovative, new download experience has great potential for artists, fans and even labels as the second stage to a ‘free’ streaming service… any ideas welcome, we’re launching ours in January next year.

Alex and Steve

www.musicballoon.com

The idea of Music Balloon was born one evening in April 2009 when Steve and I were throwing around business ideas in the pub after work. We were excited about music and the changes happening in the industry. We could see that more people than ever were enjoying music but the industry itself was loosing touch with the musicians and their fans.  We had an idea for a business that would do two things: put the fun back into discovering new music and look at the industry from the artists’ and fans’ perspective. We did our market research and off the back of that we both quit our jobs in Summer 2009 to go commando – we were actually going to start Music Balloon.

It’s been a crazy few months and from where we stand now, we are set for a beta launch in January 2010. We wanted to start a blog to keep people updated about what’s going on pre-launch in the Music Balloon world, share our controversial opinions about the music industry and hopefully spark some debate to get people engaged. We’d love you to interact with us by either leaving comments, linking to us from your blogs, contacting us in person or just following us on our journey. Starting from the beginning of November, if you’re an artist you will be able to leave your details on our website and become part of the Music Balloon from the very beginning. It’s a rapidly changing time for digital music at the moment, get involved!

Music Balloon loves unsigned and Indie artists. It’s an online platform for digital music. Some stuff that we offer – the killer 3 or 4 ideas that we came up with that night in the pub – can’t be discussed in detail here because they are our ammo against the big boys. We’ll tell you all about them as we get closer to launch. But the principles and opinions that steer the Music Balloon can be discussed here. There are some industry experts out there who get these principles and opinions and we respect them – for example David Kusek and Gerd Leonhard who wrote The Furture of Music in 2005, Radiohead, Mojo Nixon and co. who continually push the boundaries of how they get their music to their fans and the Featured Artists Coalition, for example – but so many in the industry don’t. Is it right for the music industry at large to make Internet Service Providers’ responsible for illegal file sharing or should the over-protectionist record companies be more innovative with their royalties? Should music be free or should it just not be so damn expensive? The likes of Spotify (Europe), MOG (US) and Google Music (mainly China, for now) have catalysed the record companies into doing something new. That’s great but the digital music evolution has only just begun.

Please join us, follow our journey and leave comments and questions when you feel like it.

Alex and Steve

www.musicballoon.com