Quite an interesting discussion from the perspectives of those across the new value chain - the world of digital music.

As Dom Hodge, from music consultancy Frukt Music, noted “We’re not in a TV or radio age any more - it’s not about push.”

Indeed, now that music is firmly entrenched in the ‘free content is expected’ online world, the drive for revenues is challenging to say the least.

Case in point - when asked how many people in the room use the Spotify streaming music service, nearly all hands went up.  How many paid the premium rate?  One.  Ouch.  The sales director wasn’t easily discouraged, however, citing that new premium services coming soon would sway site visitors into spenders.  Will CD-quality downloads and exclusive new music features be compelling enough?  If the company can capture the excitement of its new iPhone app for their premium services, there may be hope.  Yet recent revenue figures indicate otherwise with reported earnings of 14 pence per user per month.

The alternative?  Many suggested that brands will foot the bill via ads or sponsorships.  Media buying powerhouse MediaCom’s Richard Jacobs believes they will play a part.  “My brand clients are ultimately going to fund the free download or streaming of digital content,” he said.  But he also noted the limited reach and low audience participation per download and as such said, “while we are largely positive about these services we have to keep a keen eye out on behalf of our clients.”

Lest we forget, the artist, creator of this valuable content, reaps a very small portion of the money around it.

“Record companies get paid ten times as much as artists for revenues from streaming music,” according to journalist and musician Helienne Lindvall. “YouTube? I have never seen anything show up on my PRS statement.”  She believes that if fans knew the truth about how little artists are eventually paid, that they would be happy to pay artists directly.

Event chair and blogger Steve Bowbrick added to this idea by suggesting a ‘Fairtrade’ type of accreditation for music sites which gives fans assurance that when they buy music or services from that site, the artist will be paid.

All interesting to ponder and a little like my recent holiday - do we do the ‘right’ thing, support the local British economy and minimize our carbon footprint by staying in the UK and going on a camping holiday or to the beaches of Devon?  Or take the cheaper, sun-guaranteed alternative of the beaches of Turkey?   Sun in July wins.  For the music industry, there will be rewards for those who strike the perfect balance of offer, experience and value.

First stop, the Webby Awards, the International Oscars for the Internet world.  Take a peek at winners Wario Land Shake It and Apple’s iPod Touch online commercial.  Clearly, the Internet is shaking things up.

Forrester Research would agree - the firm recently predicted that Interactive Marketing is set to grow 11% to $25.6 Billion in 2009 and hit $55 Billion by 2014.  All this, at the expense of offline marketing - with direct mail and print being hit hardest.

Forrester’s forecast describes the ‘interactive marketing’ world - most are Internet-enabled technologies; however mobile marketing is at the top of the chart.  We’re so programmed to think of the internet as computer-based, however that is rapidly changing.  At the Webby Awards, ‘mobile’ is one of the four major categories of awards.  They aptly describe it as the ‘next big Internet frontier.’

Of course, mobile is not the only platform.  The Open Screen Project, led by Adobe, is an industry-wide initiative with the aim of enabling media rich internet experiences across any device - gaming, TV, mobile, in-car or on appliance consoles, the works.  It’s a vision at this point and faces an uphill battle due to the lag in standards and the continuing fragmentation in the industry stemming from development initiatives specific to devices, networks and companies.  However at some point in the near future, it will happen.  To get a flavour of what a ‘Rich Internet Application’ or RIA means, check out the latest rich internet applications on the Adobe site.

And this summer, if you work up a little thirst, why not visit the latest interactive café - the Coca Cola vending machine.  This ‘next generation’ vending machine which premiered at the Beijing Olympics is now being rolled-out across the USA.  Built in partnership with Samsung and an interactive agency, the machines will feature iPhone-like functionality and incorporate sound, sight and motion video - the machines will also offer mobile phone downloads, cashless payment and rotating promotional messages based on the date and time.  Oh, and you should also be able to get an icy can of Coke as well.  One hopes anyway

In the hype around iPhone Apps, Twitter and location-based services, SMS has become lost in the fray.  Indeed, SMS marketing should be implemented with consideration.  After all, as featured in recent Forrester blog by Nate Elliot, more than twice as many people use SMS as use the mobile internet or any other mobile service.

So what’s the problem?

The advantages of SMS marketing - direct targeting on a personal device - also create challenges.  How many times have you received a spam and quickly deleted it or more alternatively become a little angry at receiving it?  Not good for brands who want to engender positive communications with customers.

That being said, by following the basic tenets of direct marketing - opt-in, easy opt-out, offer something of value - SMS can be very effective.  It’s got reach, it’s personal and according to Forrester, it’s effective as a mobile marketing channel - garnering response rates of 5% to 25%.

Beyond mobile marketing, companies should consider SMS as an opportunity to engage in dialogue with customers.  A company I’m working with - Datasquirt - offers software called CONTACT which enables companies to interact with customers via SMS and other non-voice channels including email, webchat and e-fax.  The solution has been highly effective in marketing and also for industry specific needs, such as debt collection, voter enrollment and customer service, to name just a few.  Companies using CONTACT are seeing impressive ROI in the form of improved productivity, reductions in avoidable input, higher throughput, greatly enhanced levels of service and often reductions in headcount - all of which are great benefits, especially in these recessionary times.

Receiving an SMS from a bank lender to acknowledge receipt of documents or approval of a loan is a win-win for both the lender and the customer.  It also opens the door for richer communications and more robust banking applications with the mobile internet.

SMS - it can drive results now and pave the way for all those more engaging iPhone apps, location-based services and the mobile internet.  Why not include it in the mix?

At that time, just four years ago, MySpace was the social networking leader vying for dominance with VC investment darling Friendster; and Facebook was a closed community only for college students.  How the landscape has changed for all companies.  It is a not-so-subtle reminder how quickly the digital media environment evolves.

The executive changes at MySpace mark a watershed moment for the digital music industry.  MySpace’s success is rooted in music, as we’re all reminded every time we land on the site to hear a new track or seek out a new band.  However, it is a social networking site and as such, must generate revenues from its user base.  Unfortunately for MySpace, advertisers are leaning towards Facebook, which boasts an older cash-spending demographic.  As new CEO Owen Van Natta seeks to bring some of his Facebook experience to MySpace, it will be interesting to see how the music plays out.

It’s no easier in the digital music distribution arena.  Apple’s leadership with iTunes may seem unassailable, yet it faces many threats with the rise of competitors that offer lower cost, higher quality music downloads without Digital Rights Management (DRM).  iTunes’ recent introduction of variable pricing illustrates posturing with the likes of Amazon, Rhapsody and Beatport.  Amazon’s digital music partnership with MySpace Music is also nothing to scoff at, after all MySpace has 76 million unique monthly visitors in the US alone, according to comScore.

One young London-based company blazing a trail is 7Digital, which creates download stores for record labels, TV stations, artists and brands.  The company recently announced a partnership with AOL which integrates MP3 purchases into downloads.  This is a big win that follows recent liaisons with streaming-music hot property Spotify and open source media player Songbird.  What 7Digital taps into is offering high quality DRM-free downloads in various formats - not audiophile quality yet but nonetheless a compelling proposition for increasingly discerning tech savvy consumers.

In the world of P2P, a copyright conviction in Sweden is making waves.  Four co-founders of torrent site Pirate Bay were recently sentenced to a year in jail and a fine of 30 million kroner (£2.4 million) for facilitating the illegal sharing of copyrighted material.  Some suggest that this sets a precedent that could shake the likes of Google and YouTube for leading consumers to illegal content, however, a columnist for the Register argues that these convictions are virtually insignificant outside of Sweden.  In a stroke of coincidental timing, BI Norwegian School of Management released a report indicating that downloaders of illegal music also purchase more legal music than those who squeaky clean types who do not frequent P2P sites.

So what does the future hold?  Will MySpace become less relevant in the years ahead?  Will Apple lose its lead?  Will anyone be able to halt the headlong downward plunge of music download prices? Will other artists follow the lead of Radiohead and Trent Reznor of rock band Nine Inch Nails (NIN) by offering free high quality downloads of new albums directly to fans?  Both bands have seen success in building a stronger community with fans and also selling premium priced album sets and other merchandise.  Reznor is taking it a step further with a new iPhone app that allows fans to get news, see fan remixes, stream concert footage and link up with other fans via Google Earth GPS.  Perhaps that is Apple’s trump card in the battle.  Four years from now?  It’s anyone’s guess.  What we do know is that it will be an exciting journey.

Great traction, but where are the revenues?

It’s a big store with a lot of players.  Say you’re an entertainment content developer.  According to MobClix, there are 3,144 entertainment downloads available in the Apps Store - and of those, more than a thousand are free.  In this vast market, first, how do you get noticed; and second, generate profits?

Take one case study for game app Galaxy Impact developed by Team iBokan.  Launched free-of-charge in iTunes App Store, it has 220,000 downloads in the first two weeks and ranked No 10 in the ‘Top Free Apps’ in the Game category and No 20 in the Top Free Apps overall.  Then, the company moved to charge 99¢ per download.  The result?  Free downloads vs for-fee downloads eked out at 400:1.  For 220,000 downloads, they stated that revenue amounted to $550.  Not great.  They moved to an ad model with the free offering, which increased revenues but in hindsight should have been done from the start.

But is advertising the answer?  To be sustainable as an ad model, the app must be used on a regular basis.  Pinch Media recently noted that generally only 1% of apps are used past the first 30 days.  Ouch.

Another new option recently added to the iPhone 3.0 API is the ability to include in-app transactions, which means that after purchasing a game or other download, users could be hit for additional costs to upgrade features.  Great for developers, but for users?  Adam Frucci of Gizmodo believes in-app transactions will diminish the user experience and in his words, ‘open the floodgates for the sleaziest app behaviors possible.’

Do I hear strains of Crazy Frog, v2.0?

Jim Hopkinson of Wired Magazine offers a good overview of different revenue models for iPhone developers, ranging from free apps featuring advertising through to high-cost apps.  His bets are on paid applications at a low- to mid-range cost targeted to niche markets - with the example of Winepad, a wine journal for those on the go.  This makes sense as you’re able to push it out and promote it on special interest blogs and sites without relying on the Apps Store to get exposure.

Lest we forget, there are other platforms out there.  After all, the iPhone accounts for only 1.5% of the handsets in the USA, according to The Neilson Company (Oct 2008).  Nor does the iPhone appear on Bango’s Top 20 list of handsets navigating to Bango’s mobile payments platform for premium content and ad campaigns.

With other handset vendors moving aggressively to create better mobile internet experiences and mobile network operators weighing more heavily into the game, the mobile content market is about to become increasingly interesting.  The question every developer and business should be asking, however, is ‘where are the revenues?

Have a look at TED for a great talk given recently by Web inventor Tim Berners-Lee. He says he originally created the Web as a “play project” on the side and goes on to talk about his next project which is to build a Web for open, linked data that could do for numbers what the Web did for words, pictures and video to “unlock our data and reframe the way we use it together”. It makes absolute sense when you think about it – after all the Web is the ultimate cloud computer.

I love TED, it’s one of the best sources of thought-provoking, stimulating, fascinating material on the web. TED stands for Technology, Entertainment, Design. It started out in 1984 as a conference bringing together people from those three worlds. Since then its scope has become ever broader. The annual conference now brings together the world’s most fascinating thinkers and doers, who are challenged to give the talk of their lives (in 18 minutes). I find a good way to keep up with what’s new on TED is to follow it on Twitter.

At a recent networking event, an executive said to me that he is now “seeing networking events through new eyes.” Although he holds a secure and significant role, he’s now making time for networking ‘just in case’, a reaction of course to the daily barrage of announcements about job losses, poor company results and the general economic malaise.

It’s no coincidence that LinkedIn registrations are up significantly, as are recommendations. According to a recent interview with Netscape co-founder and LinkedIn investor, Marc Andreessen, LinkedIn now has in more than 20m resumes on it. In the past few months I’ve seen a marked increase in attendance at physical events such as Mobile Monday London and various groups through meetup.com; along with increased activity in online networking platforms such as LinkedIn, Ecademy, Xing, Plaxo and many others.

Indeed, networking is no longer a back burner, ‘get there if I can’ activity. It’s essential – not only for finding that next role but also for success in a new position and generating new business leads.

For those looking to use LinkedIn and other sites for job prospecting, US venture capitalist Guy Kawasaki offers some good ideas in an old but still relevant blog post.

In a job now? A recent Harvard Business Review article, ‘Start Networking Right Away (Even if You Hate It)’ (Jan 2009) emphasizes the importance of networking when you are promoted – determining the best contacts for your success, introducing yourself and reciprocating in relationships. An earlier blog post offers insight on this concept.

Networking can also be vital in a commercial context. Every CEO today should empower employees to network for new business, find employees and build buzz about a company.

Focus is key. Get involved where your key targets will be spending time – in specific groups defined by market sector, skillset, topic or experience. LinkedIn and other sites offer a vast array of these groups or for local networks offering in-person networking, MeetUp is a great source.

Before attending a conference or networking event, it’s important to map out a plan to maximize your time: define goals, research attendees/speakers and arrange ‘meetings’ at the event. You can also keep involved by engaging in community debate via online forums and email exchanges.

Clearly, networking effort should have parameters. Employees should be reminded of corporate confidentiality policies. Privacy is a growing concern and should be considered carefully in setting profile viewing and sharing. Sometimes it pays to set up a ‘dummy profile’ so that you can see how your profile is viewed to other members and the general public.

Most important, realize that while networking is increasingly important, you should use your time wisely and keep it balanced with other priorities.

My intention with this blog is to offer topical commentary on various things which may be of interest to clients, partners and friends of Black Note - or which may only be of interest to me! My business background in management, telecoms, new media and technology, coupled with my fascination with the internet, mobile, consumer electronics and music will hopefully provide for posts that are sufficiently eclectic and varied to be of interest to others. The process of writing stuff down should also help develop my own thinking.

Finally, in closing off this first brief post, I’d like to thank family, friends, business colleagues and other professionals who have provided so much support, advice and encouragement to me over the past several months.