Sunday, December 30, 2007

Social networking widgets could reshape music biz

By Antony Bruno

DENVER (Billboard) - This year saw the emergence of a new buzzword in the digital music space -- widgets. Next year, we'll see if they do any good.

An offshoot of the global social networking trend, widgets are small applications that users can place into their blogs, profiles and Web sites, and thereby extend the functionality of an otherwise separate Web site or service. What's more, users can simply copy widgets found on friends' profiles and insert them onto their own, thus enabling a tremendously viral distribution opportunity.

The concept gained prominence in 2007, picking up momentum once Facebook opened its platform so that any developer could write an application using its user data and connections. Then Google upped the ante with its OpenSocial initiative, a standardized widget-development tool that would allow developers to write one application that can work with any social networking site adopting the technology -- which include MySpace and Bebo. ComScore, a leading Web traffic monitoring firm, even began a metrics service tracking the most popular widgets and their usage.

These widgets have opened the door to a whole new style of selling content and services online, called "distributed commerce." Simply put, rather than making customers navigate to a specific site to buy a concert ticket or a music download, widgets allow bands and their fans to sell the same from their own Web sites. If iTunes is the Wal-Mart of music, widgets are more like vending machines.

As a result, several styles of widgets related to the music industry have popped up. Some attempt to sell digital downloads, others concert tickets, still others merchandise. Some serve as fan club applications, while others are music discovery and playlist-sharing tools.

What follows is a collection of the top widget categories to keep an eye on in 2008, and the leading companies in each. Their success or failure will determine whether widgets will become a significant new revenue stream or just another Internet fad that never delivered on its potential.


By far the toughest sell in terms of attracting a mass market, the idea of selling digital downloads directly to fans via widgets on MySpace or other social networks is a compelling one for labels and artists alike. Issues like digital rights management (DRM) compatibility, tracking sales and revenue splits with the labels and artists remain a major concern.

SnoCap MyStores
Although it never made a real impact in 2007, don't completely count out the MyStores sales widget just yet. Snocap's attempt to let artists and participating labels sell digital downloads at their own price via their MySpace profiles was held back primarily by a focus on indie acts that agreed to sell their music sans DRM. Few major label acts took advantage. But two things could happen in 2008 to turn things around. First, Sony BMG and Warner Music Group may agree to sell music without DRM, making music sold via the MyStores widget available to all in an iPod-friendly way. Second, Snocap may get bought. Depending on who acquires it, MyStores may find more success as part of a broader, integrated service than a stand-alone product lost in an already busy MySpace environment.

Indie911 Hoooka
While it likely will remain a niche player due to its focus on relatively unknown artists, Indie911's Hoooka widget gets a lot of things right that deserve attention. First, it lets users create their widgets based on multiple artists, not just one. Second, it compensates fans hosting Hoooka widgets with 10% of each sale. Finally, it allows fans to not only buy songs, but also stream music, chat and watch videos. Don't be surprised if this one gets acquired, or if it gets copied by either a competing service or a mainstream act looking for a strong online presence.

While the company has a history of overstating the impact of its initiatives, Lala's widget sales strategy -- which focuses on selling full albums, not individual tracks -- has potential. If it grows more widespread, it could put an interesting twist on the model. The tracks are downloaded directly to users' connected iPods, not stored on a hard drive, while Lala sends a physical CD in the mail. So far Lala has licensing deals with only Warner Music Group, and has used the widget to sell only the latest James Blunt album. Expect wider use as the year progresses.

Close to 80 percent of all ticket sales are now conducted online, according to Ticketmaster. Meanwhile, the company says the No. 1 reason fans don't attend concerts by bands they like is because they simply didn't know a show was in town. Recruiting fans to become sales agents may increase the first stat while lowering the second.

When Facebook opened its social networking platform to outside developers last summer, iLike was the first music application created for the service, and more than 3 million people signed up for it in less than a month. The application lets users list which of their favourite artists are coming to town soon and which other Facebook members are attending that show, and enables streaming of music samples from those artists. It also creates artist-specific iLike pages for such partner labels as Eleven Seven Music. With funding from Ticketmaster, look for iLike to capitalize on its momentum with interesting new features in the new year.

Ticketmaster Event-Engine
The ticketing juggernaut launched an online affiliate network late last year that allows individuals and organizations alike to earn commissions for online ticket sales that originate from links on their Web sites. The Event-Engine widget, as it is called, lets users create a customized event list that keeps track of what they sell. The company says it will add additional tools and functions throughout the year.

PassAlong OnTour
One of the first tour-specific widgets available, PassAlong's OnTour software searches users' music libraries and alerts them when any of the acts are coming to town. As of late November, the company lets artists create their own OnTour widget, from which fans can search for local tour dates, and gives the opportunity to offer MP3 files and an RSS news feed. Alicia Keys and Cassidy are just two of the first artists to take advantage.

Rampant piracy may be complicating the sale of music online, but merchandise is much harder to duplicate. Artists looking to convert their Web traffic into cash are increasingly looking at selling physical goods instead of digital ones as a result.

While other widgets let acts sell merchandise online, Zazzle is the only one that lets participating artists sell merch that fans can customize. The company also handles all inventory, shipping and billing needs. Participating artists simply upload their images to the Zazzle servers, select which products they wish to sell (such as T-shirts, posters and caps) and then set their price. Fans can then pick the size and colour of T-shirt they want, select a design and then pay for it. Zazzle's automated production facility then applies the image to the product and ships it out, all for a flat fee. The company has deals signed with Warner Music Group and Signatures Network for content -- with such acts as Kiss, the Who and Maroon 5 -- and with MySpace for distribution.

Nimbit Online Merch Table

Nimbit's OMT is designed for artists looking for a way to make more money online. The widget allows bands to sell not only their merchandise, but also CDs and tickets to upcoming shows. It also lets fans sign up for e-mail alerts. Fans can post the widget on their own profiles, and the bands can update the information listed on those fan-posted widgets without the need to post a new version. The site charges various flat-rate hosting fees, depending on the functionality desired. Users include Robert Plant & Alison Krauss, Letters to Cleo and the Blind Boys of Alabama.


More for the DIY artist set, Cartfly is a simple application that lets users display their wares and take orders. Payment is handled via PayPal, and participating artists need to handle their own inventory and shipping. CartFly charges a flat 3 percent commission on all sales.

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