The Week in Musical Innovation

It’s been a busy week in the music industry – here’s what caught our attention. Facebook’s expansion into music has stimulated all kinds of exciting startups since the f8 introduction of the Open Graph. 3^rd party developers can display users’ activities on their Facebook pages, and on the real-time Ticker. So, users see what songs their friends are playing and become exponentially more likely to give them a little listen themselves. Facebook reports that Spotify has garnered over 4 million new users since f8, and lists Mog, Slacker, Earbits, Rdio and Deezer as just a few of the startups which have seen grown as a result of f8. And in case you need a shocking statistic to enliven your day, Facebook users have listened to 1.5 billion songs on Facebook already. On the more traditional side, we were saddened that EMI is going to be broken up and sold to foreign operators. The Wall Street Journal reported an hour ago that the recorded-music branch of the business will be sold to Universal for $1.9 billion and the publishing arm will go to a group led by Sony for $2.2 billion. The deal totals $4.1 billion, surprising many observers who did not expect Citigroup to get their $4 billion asking price because of the turbulence in the music industry. EMI was the last great British record label, boasting Kylie Minogue, The Beatles and Coldplay among its artists. Citigroup, of course, prefers to represent the deal as a move into the global business market. Amazingly, ringtones are worth half of EMI. In a recent study, Gartner found ringtones to be worth $2.1 billion, 34% of the entire music industry. This may reflect the vast numbers of people who don’t yet own smartphones. According to mobithinking.com, smartphones made up just 20% of mobile sales (not ownership) in 2010. Owners of usual phones can’t use their phones to download songs or access Spotify, but they can buy ringtones. For more interesting Gartner music stats, click here. Finally, we’d suggest you keep an eye on brand new Google Music, now available in beta. It’s a free (for now) music sharing service relying heavily on the Cloud to keep users smiling and devices synced, not unlike Amazon’s Cloud Player. Google planned to rival iTunes but it was unable to reach agreements with record labels. As a result, Google Music users won’t be able to buy any songs. Looking forward to seeing iTunes, Amazon and Google duke it out in the music sharing field! That’s it for the week from us! And if you want to ride the wave of musical innovation by investing in a sparkly new music startup, brief the Exchange.