The dominance of the music download market

Tonight's BBC News reported that 50% of the purchases of singles that make the top 40 are downloads, following rule changes made in January this year to include downloads volumes in the charts. A whopping 70% of music bought in the UK is now via download.

Every track on the the Arctic Monkey's latest album has made the top 200, alongside the five from their previous album, giving them the record for the number of singles simultaneously in the charts, with an amazing 18 tracks. Given that this excludes downloads when an album is bought as a whole, it shows fans are cherry-picking their favourite tracks from the album.

In January of this year, the Sheffield band's album was outselling the rest of the top 20 album's combined.

No longer does a physical release of a track have to occur to qualify for the charts and hence it is far easier for back catalogue items to make a surprise return to the charts.


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What Do You Do When Someone Steals Your Content

This post from Lorelle VanFossen should be helpful to most website owners who she asserts WILL have their content copied without their permission. Aside from providing useful pro-formas on what to say to the perpetrators of the crime and the steps to follow, there are tons of links to other useful resources.

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Is Facebook creeping up on us

I met up with Paul Lomax last week and we got onto the subject of Facebook, which sometime last year opened its' gates to all comers, instead of the college communities it had formerly focussed on.

In London, it now has nearly 365, 000 registered users. How many of these are active it's hard to assess from the outside.

Venturebeat reported in March this year that Facebook claimed to be seeing about 1.5 billion page views a day, up from about 1 billion daily views in February 07. Facebook is now at more than 20 million registered users, up from 7.5 million users last July. Finally, it has more than 1.3 billion photos on the site, more than the 1 billion last month.


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Is that regular or large infrastructure to go?

At lunch last week, I was chatting with a "techie" about whether one should spend money upfront on building an infrastructure that scales or whether it should simply be designed to be capable of scaling.

It's a debate of keen interest to an investor. The latter should be cheaper and hence offers the appeal of keeping the bet size down until the venture is demonstrating success, at which point, no one will refuse money to scale up. You also get the impression that hardware should be capable of being added easily (famous last words).

However, who can predict when the infrastructure will be required i.e. foretelling the timing of success with sufficient certainty that the infrastructure upgrade will begin in time. The big fear, of course, is missing the "wave" of popularity and actually generating negative sentiment when "customers" find the service isn't working because it's overstretched.

Artificial peaks are the worst though - an example of which is the "Techcrunch bounce", that Mike Arrington acknowledges. In this situation, there is a sudden surge of interest in the site following a blog post or launch piece, which then fades away before a "normal" level of traffic is established. The challenge is whether to build an infrastructure capable of dealing with this only for it to be redundant for some time thereafter.

Many argue you should invest upfront. After all, disk spaces and servers are relatively cheap these days. Yet does that include full resilience from the outset such that the likelihood data loss or service outages is minimised/eliminated. After all, depending on the website offering, losing your customer's data or being temporarily unavailable may wipe out your business on reputation grounds alone eg calendar service, online document storage.

I'm not sure there is a right answer but I know that good design is essential. Peter Van Dijck's has a useful post linking to 10 presentations from some of the large websites on their scaling efforts which offer some fascinating insights. Essential reading for all sites builders.

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Skype take down a blogger

Phil Wolff reports that Skype lawyer Seema Sharma emailed blogger Jan Geirnaert Friday afternoon. She told him his popular skype-watch.com and skype-gadgets.com blogs put him in legal jeopardy, because they use "skype" in the domain name. As consequence, these popular sites have been taken down.

What a great PR move for skype - not! Of course they have to protect their brand name, but it doesn't feel like this was a competitor trying to pass itself off as skype. Nor was the site portraying itself as an officially endorsed site.

It'll be interesting to see how the skype "big company" machine plays this one out.

Update: Robert Scoble thinks Skype did the right thing but suggests Skype could have easily licensed Jan if they felt he was a positive force.

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Accountants are soooooo hip (not)

How nauseating is this corporate video from Ernst & Young that rewords the tune "Oh Happy Day" with backing vocals from E&Y staff.



Do you ever get that feeling that this was one of those situations in which it was a funny idea when corporate communications thought about it in the bar after a few beers, but it lost something when they sobered up.

Thanks to Tom Morris for the pointer. This is definitely one for Dennis Howlett's benefit!

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The real story Chanel 4 News didn't tell you!

Following my post about the Channel 4 News coverage of Open Coffee, Mark Cunningham, who is the CEO of Moveme.com got in touch with me via my meebome widget on the blog. He also posted a comment on the post.

Mark was very angry about the slant that C4 News had taken, essentially representing the current scene as simply a repeat of the heady excesses of the (first?) internet bubble. At his request, this is a transcript of the IM we had, which I am posting at his request.

MC: They filmed around 15 mins asking how we were funded who we met what stages we went through and so on. I will give you a full run down but the big lesson is see the edit before it goes live

johndwilson:
I was commenting on the clip which gave the impression that funding came on the back of one of the meetups
which I didn't think had happened

MC:
You are correct. First we met advent; they liked the idea a lot however the amounts required were a little lower than they like to invest so to make the management of the seed investment they looked to get an Angel they work closely with to over see the investment.

MC: Let me correctly time line it, tell you what happened and exactly what we were asked and if you want to post it you can otherwise just ask your readers to beware cameras bearing gifts

johndwilson: robin klein is one of the investors I seem to recall
MC: Robin is out chairman and he is fantastic. Robin is a seriously top guy. TAG were brought in by Advent to oversea the investment as the rev stream is very similar to early TAG or pre TAG companies Robin has been involved in. Brent (Hoberman) came in after TAG. That was supposed to be the general edit,

Brent invested because the idea was great,
TAG (represented by saul) because the team worked and Advent were in because of the capital required.

W
e explained, the whole initial pitch to close was infact three weeks from first e contact to close, however we only finally got everyone in one place at a Second Chance Tuesday, which was the one saul was presenting at in November. After this it was largely a formality as the deal itself had been done we were simply tidying up the agreement and investment vehicle structure.

johndwilson:
thought it was an SCT event. made for a great "story" though for TV news.

MC: Of course! we met saul at a SCT for the first time which is what we were being asked, in the context of the interview. we had already met Robin and Frederic, we met brent after the SCT, but by that time the initial deal was pritty much closed. This was all explained to the researcher and the interviewer, the question itself was relating the length of time from finally getting Robin, Saul, Frederic and Brent in one place and getting the investment in. Like i said the devil is in the detail and that privilage is not ours that lives in the hands of C4.

MC: to be fair Keith and I were fairly worried about the angle of the story as soon as we got to the even that evening there was too much camera time spent getting close ups of champagne, the roof top hot tub ect

It was obvious at this point the story was not about London the new hot investment scene and the development of a UK/Eurpoean emergent internet tallent to rival the valley, the show was going to be about would you risk money with these guys and at that stage it was too late. We left deciding that it was a really bad idea to be on camera in the evening shots

T
he next morning the camera crew came to the office and fired of fairly sensible questions is this a bubble? ans No, if it were then c4 would not have invested so much in OnDemand its own TV delivery portal,,hahaha yes good answer...and so on

Basically it looked like the report might just save itself from decending into sensationalist nonsence. But alas not. The cruel reality is the party was filled with great people who have some fantastic ideas, London is booming right now, there are great opportunities as people get more into moving from a analog solution into digital presentations, there are web apps that genuinly beat the current off line limitations into the floor and they had the perfect opportunity to tell the story

We fed them a try moving house with us and try doing it on your own - property story, hope story we could have given them any one of 1000's currently using the site to get comments, we have 300 beta comments from users who recommended everything from code improvements to local car washes in a new area. But Channel 4 wanted to get a picture of kids drinking inthe Sunset with a strap line like boom or bust, it was a giant waste of time for them and it dammaged the chances for young business people looking for a place to get a start and to discuss ideas.

Frederic Court our team member from advent who has been nothing short of brilliant said the difficulty with the coffee mornings like this is unscrupulous investers call them filter coffee mornings, because the give the VC community the opportunity to kill what could be a great idea by de formalising the pitch process. Having been through the mill I tend to agree. Ideally they should be "money free" so you can meet people and swap ideas, and perhaps then provide a path to meeting VC funding, if and only if that is the correct source of funding for your business.

Sorry for the rant, you can correct the spellings if you want to post it, but please no editing. There is enought of that going on already - kind regards Mark Cunningham, CEO Moveme.com

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The Cloud - Wifi in the City

The Cloud launched their much heralded wifi network that supposedly covers the City of London (as distinct from Greater London inc West End etc). There is a free month's trial, which I signed up for.

As I spend much time travelling round the City to meetings, I'm an ideal prospect for the service, but I'm not sure that there are many others in a similar situation.

Well my experiences with it have been very poor in the first couple of days, manifesting itself as low strength signal and slow connectivity, assuming I could even connect in the first place. This post was going to have been sent from a coffee shop near Aldgate whilst I was waiting to go to a meeting opposite but the Cloud's was proving unreliable. Thankfully someone had left their wireless network unsecured in a nearby building so I was able to hitch-hike on it to post this.

I will persevere during the trial but right now I am not a buyer. Meantime, I was also alerted to ipass.com which reportedly provides a global aggregator service to connect you to wifi networks worldwide via a single account, just like a roaming agreement but for a single monthly price. Sadly their website is very unfriendly and I can't see where you can see the pricing or where to sign up!

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Oh God, am I being duped?

Whenever we fly away on holiday, as we did last week, I book a "meet and greet" for the car at the airport. Aside from the huge convenience of dropping your car off at departures and having it returned to arrivals, it eliminates the hassles of humping my eldest daughter and her wheelchair on and off transit buses.

It's in my nature to hunt for the best price, no matter that the differential is a few pounds and the time cost is normally greater than that - I actually enjoy the hunt and also discovering how these services are marketed and how easy they are to book with.

Anyway, I was delighted to find a service called 1stmeetandgreet who were a staggering £50 for one week versus the general going rate of £78. What a bargain and a find. And then my doubts kicked in.

Why? Well, I was going to
- hand over my details including credit card information to a web site and company I'd never heard of before
- I was going to show up at the airport and hand over the keys to my car without protest to someone I'd never met before
- tell them how long I would be away from home and hence that the house would probably be unoccupied

Furthermore the website only had a telephone number (0800) and a mobile number - no address info or details about the company.

You see where I'm going with this?

Hmmmm. If this was a scam whereby this was simply a device to extract my credit card infomation, steal my car easily and rob my house then it would be a perfect crime. Would a police officer or the insurance people have any sympathy in such a situation. "So Sir, reading back through my notes you voluntarily gave them your information, credit car info and your car
after finding a web site on the internet. And you only realised your car had been stolen, your house ransacked and your credit card maxed out when you arrived back in the country Sir."

GULP

TRUST

That is what matters when conducting commerce online or even offline, albeit to varying degrees. You trust that the in exchange for the money you hand over you will receive some goods. You trust that the thing you buy will work and if it doesn't that the retailer will still be there and willing to refund/exchange.

Yet how does one get a feeling of trustworthiness when dealing with a new service that you've not encountered before, nor had recommended, particularly in circumstances like the one above?

By the way, despite my reservations I went and booked it. Thankfully, as well as being by far the cheapest, 1stmeetandgreet were best service I've used by way of great personal service (timely, polite, friendly) at Gatwick and am happy to recommend them.

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Open Coffee - gonna make you a star

The week I go away on hols, the TV crews roll up at Open Coffee in London to report on the success of the internet albeit under the headline "Dot Com Boom or Bust".

Channel 4 News carried a report which you can see here which included a brief interview with Saul Klein who founded Open Coffee, which has now spread to 22 other cities worldwide.

Included in the report was the CEO of Moveme.com who claimed that after attending "one of these" events on the Thursday he had received £1m in funding by the Monday. As it happens, they got their funding from Robin Klein (Saul's Dad) and others sometime before Open Coffee launched, so a distortion of the truth somewhat. However, today is the first Open Coffee since the TV report went out, so I rather suspect that the attendance numbers are going to be considerably up on usual (which is 100+) with claims like that having been reported.

Could be scary to be an investor today!

Other amusing thing is that the event has become so well attended that the Esprit store in which Starbucks is located, has asked that the event be moved elsewhere following complaints from their customers. Seems that the footfall resulting from the event actually wasn't buying anything from the store!

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Run Meebo in Firefox Sidebar

If you read this blog on its home page rather than via an RSS reader, you may have noticed a meebome widget on the page, which enables anyone visiting to IM with me when I am online or leave a message if I am offline.

It is this widget than persuaded me to use meebo as my IM aggregator rather than any other online IM aggregator.

However, one big problem with meebo is that it doesn't operate a pop-up to let you know incoming messages have been received and you are reliant on spotting that the meebo browser tab is showing the text - browser limitation presumably.

Until today, I'd not figured out how to overcome this inconvenience. So I'm indebted to Sika at Neilson Reference Department, Smith College, Northampton MA 01063 for emailing me with this link which shows how you can run meebo in a Firefox sidebar window in the browser and thus keep it permanently in view in the browser session.

There are a couple of drawbacks.
- It does reduce the browser display size
- It doesn't resolve the situation when the browser is not your active window, but as most of my PC activities are done within the browser this is fine for me

I believe that this is a technique you can employ for other webpages too.

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Webkinz made my child a computer junkie

It's astonishing but my 6 year old daughter has become fixated by an online world called webkinz and so have her school friends.


My chum Sam Sethi of Vecosys who also has young children has written a number of times about his concerns about the lack of child-safe environments on the internet, finding serious flaws with offerings from weighty brands such as Nick Jnr.

Well, I have to confess Webkinz is impressive, both commercially and from a parenting perspective.

On the former, you get access to the Webkinz world via the purchase of an offline physical toy "pet" and there's a series to collect. I believe they may only be available in the USA presently - my daughter got hers (she has several) courtesy of the American parents of a boy in her class, the family of which have also become great family friends of ours. The formal "adoption" of the pet is done online and this grants you a year's access to Webkinz world. So in a year's time if her addiction continues, I know I will be forced to either get her another or pay for access. So it's effectively a subscription revenue model. More annoying/impressive is that kids are keen to collect the set and want to buy more pets they can adopt, but the pet subscriptions run concurrently rather than sequentially - you try telling your 6 year old to wait 11 months before adding her latest pet to the system

Inside the world, your pet comes alive! And just like a tamagochi, it needs to be fed, amused, bought trinkets/toys and rested. To pay for this, you have to earn webkinz credits/currency called Kinzcash by playing games. And boy, is this a motivational thing - the kids are competing like crazy to "earn" kinzcash. Moreover, they are learning about having to make spending choices and being restricted to things they can afford - no overdrafts or debts offered here.

The games are harmless enough albeit not massively educational. There is a large range of activities/games to choose from and the quality of their construction and the site generally is fairly good. Some of the games are single player, but some involve you playing against others who are also online.

So, I was initially alarmed when at the end of a game she was proudly demonstrating to me, the person she was playing against invited her to become a "friend". I was horrified by how easy it was for her to click" yes" in her innocence and connect with whomever. But then having insisted she decline any future offers, I took a close look at how this social network operated and was more impressed with its' structure.

You can only "chat" to others inside Webkinz using pre-defined words and phrases. Given that most young children haven't mastered spelling and sentence cosntruction, this is seen by them as a helpful feature. More importantly, you can't reveal your identity or age etc because these aren't approved words and numbers aren't permitted. So the opportunities for conversations that would terrify a parent are effectively eliminated.

Bear in mind this is a social network for tweenies and not your street savvy teenager. So the constraints operated are not a major turn-off. Were this simple technique applied by Nick Jnr or the BBC heralded Second Life for kids, I think it would certainly make life for parents and operators alike much less worrying.

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Breaking the news you are offline

I'd been sent a "friend" invite on Open Coffee today but when I clicked the link I was surprised to find that the host, "Ning", was evidently offline. Now this wasn't a time critical task and nor was I inconvenienced by it, but in some cases you may be offering a service that is business critical. In such a situation, is there anything you can do, leaving aside weeping over the harm to your reputation with existing customers and the potential loss of new customers?

It's been interesting to note that several of the largest sites that you might categorise as consumer entertaining and non-business critical attempt to use humour. This is how Ning responded.


Sadly, it's a fact that your service may go offline for many reasons, despite all of your well designed measure to build in resilience and fail-over features (you have these don't you?). How you handle the inconvenience to your customers will be a major business test and could "kill you" if poorly managed. This is just the same in the offline world - remember JetBlue's experience after leaving passengers on board planes on the runway for 11 hours on Valentines day.

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Koral acquired by Salesforce

Blimey, I was caught out by this one. Transpires I must have been asleep in March as Techcrunch today made reference to Salesforce's acquisition of Koral, an online document collaboration application which I have blogged and raved about in the past. That said, Koral only announced it on their quiet blog on Monday.



I was aware that Koral was working on a funding round in January which was being led by the States side co-founder of Koral, Mark Suster and targeting US investors. But I hadn't consciously considered that I'd not chatted/spoken with the UK based co-founder Tim Barker for over a month. The last conversation we'd had was about the work Koral was doing to configure their application to operate on the Salesforce platform and be offered via AppExchange.

Well, they went much further than this and Salesforce evidently spotted the same potential, electing to use them as a major plank in their continuing advance across Enterprise 2.0.

The terms of the deal haven't been made public but congratulations are in order for the (small) Koral team, who have now been subsumed within Salesforce.

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A guide to early stage board composition

Will Price has the following guidance to offer on early stage board composition

For aspiring entrepreneurs, I would seek a board with the following characteristics
  1. small and nimble
    1. 3-5 total directors (CEO, 1-2 VCs, 0-1 independent)
    2. start-ups are fast paced and iterative; often board issues are event driven and pre-scheduled meetings often fail to coincide with the natural cycle of progress
    3. being held hostage to scheduling logistics drives CEOs nuts and delays the time to decision and action
  2. economically aligned
    1. if the economic incentives of the board are different, consensus regarding financings, M&A events will become more complicated
    2. if people make money at very different exit outcomes...
  3. empowered
    1. ensure the VC board member is well established at their firm and has "juice."
    2. the start-up road is long and bumpy, VCs with limited internal power are often more proxies than decision makers and their limited internal power may unfairly taint the credibility of the company
    3. their political weakness will limit their ability to support the company in times of peril
  4. value-added
    1. VCs must be able to accelerate the cycle time to success and understand the business
    2. The best VCs truly understand the human, financial, and market dynamics of their companies
  5. effective CEO-board and director-director communication
    1. CEOs must share information - both good and bad
    2. Directors need to work well together in executive session issues: compensation, audit, financing and other core issues
    3. Failure to act quickly on compensation/bonus programs and other executive session issues impacts morale and limits the effectiveness of company management
  6. informed directors
    1. Early stage companies need to begin to track, measure and report on relevant and timely data. Good board packages make for good board meetings.
    2. This is normally an iterative process but data and KPIs enable informed decision making and analysis
  7. productive processes and meetings
    1. Develop well structured meetings with adequate frequency and cadence
    2. Focus the meetings on critical path issues

As companies grow, the size, make-up, and roles of the Board change with it. This post reflects my observations of the critical success factors for healthy, functionining Series A boards.

For a more in depth analysis, please read "The Basic Responsibilities of VC-Backed Company Directors."

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What makes for a compelling consumer experience

This was the first slide used in the EMI/Apple presentation today at which they announced that EMI would be making offering its' digital library a slightly higher price for consumers that preferred DRM-free and superior quality.

Personally, I think that this is a very narrow view, ignoring the most important - pleasure derived from use/participation, which you'd have expected to be near the top of a record company list. ie you might interpret this to mean that provided they sell records from many artists that are easy to hear at reasonable cost, then EMI will provide a compelling experience.

I took my 5yr old daughter and 7yr godson to see their first professional football match at the weekend (Queens Park Ranger v West Bromwich Albion). West Brom won 2-1 with the winning goal scored in the 84th minute. Aside from the personal delight of seeing my team win, few things could match the pleasure of seeing them experience their first game - the atmosphere; the chanting/singing with 3,000 travelling West Brom fans; the euphoria of scoring; the dejection and then delight at the award and subsequent saving of a penalty. This fails all of the above bullet points, yet delivered a fabulous experience (leaving aside the woeful ground catering).



PS - no need for cheeky comments on West Brom's performance, them scoring or this being a form of punishment for the kids!

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How to rig a selection process

I written several times recently about people actually disliking having to make choices, contrary to most claims, since the worry about making the wrong choice usually outweighs the perceived benefit of having more choice!

Seth Godin
highlights a counter-intuitive method for simplifying choices - by adding more choices! The technique is called the "decoy effect".

There are two wines for sale at dinner: $9 a bottle or $16 a bottle. Which one do you order?

Now, imagine that there are three, and the third is $34. Are you more likely to buy the $16 bottle now? Most people are.

As he points out, competition is almost always a good thing, and marketers can create it... or highlight it.

The Washington Post has a piece on this here, from which I've taken the following extract.

Joel Huber, a Duke University marketing professor, showed how the decoy effect works with restaurants. Huber asked people whether they would prefer to eat at a five-star restaurant that was far away or at a three-star restaurant nearby. As with many choices in life, each restaurant had different advantages. If the better restaurant was also nearby, there would be no dilemma. But the question forced people to compare apples and oranges -- trade off quality against convenience -- which ensured no automatic answer.

The human brain, however, always seeks simple answers. Enter the third candidate. Huber told some people there was also a choice of a four-star restaurant that was farther away than the five-star option. People now gravitated toward the five-star choice, since it was better and closer than the third candidate. (The three-star restaurant was closer, but not as good as the new candidate.)

Another group was given a different third candidate, a two-star restaurant halfway between the first two. Many people now chose the three-star restaurant, because it beat the new option on convenience and quality. (The five-star restaurant outdid this third candidate on only one measure, quality.)

What the decoy effect basically shows is that when people cannot decide between two front-runners, they use the third candidate as a sort of measuring stick. If one front-runner looks much better than the third candidate, people gravitate toward that front-runner. Third candidates, in other words, can make a complicated decision feel simple.

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