Tag Archives: virtual goods

Why Blanket Digital Licenses for Publishing is Necessary: a Developer’s Perspective

Some interesting perspectives from Tuhin Roy of MXP4:

Social games and apps on Facebook are the most recent miracle of the Internet, coming from nowhere three years ago to generate a projected $4 billion in revenue this year. Companies such as Zynga, Playfish and Crowdstar have grown with the phenomenon and become experts in producing massively popular and addictive games.  Titles like Cityville, Mafiawars, Pet Society and Restaurant City have all become multi-million dollar business.

Music has been totally absent as a category.

Working with the team at Paris-based social music games developer MXP4 last year, we started to research why music-which seems such a perfect fit for the social space-had not taken part in the social games phenomenon. The answer that quickly became clear was that social game developers had looked into what is involved in acquiring music licenses and had run screaming. With lots of fertile territory left unworked, it didn’t make sense for these guys to dive into the thicket of rights issues involved, or to work through the complex license negotiations that would be involved in an entirely new model for the music industry.

With our backgrounds in music, we were less intimidated although we understood that huge complexities would be involved. On top of all the other issues faced by digital music services like iTunes or Spotify, we understood that social music games would be harder to license because they implicate synchronization rights. This meant that in large part we would not benefit from the work the music industry has done over the last ten years to clarify and simplify licensing for straight forward digital download and streaming services. We decided to dive in anyway.

We faced two major challenges. First, we would be negotiating deals that involved payments made in virtual currencies for virtual goods that included the right to access music. Beyond the obvious questions of how fairly to split revenue, the social game setting required us to work with labels and publishers to define entirely new methods of calculating and reporting royalties.

Second, and more problematic, is the fact that unlike digital mechanical reproduction rights or non-interactive streaming, there are no statutory or bulk licensing mechanisms for synchronization rights. For historical reasons, artists and writers almost universally have the right to approve on a case-by-case basis sync licenses that their labels and publishers want to issue.

As a result, once the hard work of agreeing on a deal with a label group or publisher is done, the fun of clearing songs on a track-by-track basis begins.

Just to identify what might be “clearable” and thus which tracks to request, has required us to build a proprietary multi-million line database of publishing rights using multiple sources.  Once we have identified a track that we think we may be able to clear through our deals, we work with the clearance teams at labels and publishers to put requests into the relevant artists and writers. Oftentimes, we need to reach out to the artists and writers representatives directly to get them up to speed on what we are doing.

And all of that is multiplied by the number of writers, publishers, artists and labels on a particular track-which these days can be a lot given the popularity of collaborations and sample licenses. One particular David Guetta track, for example, has 14 publishers.

So the challenges are clearly huge, although we are working hard to develop internal systems and procedures with our label and publisher partners to “scale up” the effort. The publishing industry is also starting to look at more comprehensive solutions. The NMPA’s recent call for a one-stop shop for synchronization and other rights is recognition that the music industry is losing out on potentially significant opportunities to make money in the world of gaming and beyond.

Unfortunately, given the historical requirement that artists and writers approve sync licenses individually it’s hard to see how such a one-stop shop can be set up quickly. Essentially, the publishing industry would have to replicate the process that we have been going through with MXP4. They would need to get buy-in from a large group of publishers and then would likely have to get individual writers to opt-in to the mechanism. It’s a huge task, but we would love to see it succeed.

In the meantime, we will continue to work through the process with our partners as we look to put the music business into social gaming.

(Tuhin Roy is Chief Strategy Officer of MXP4, the developer of Bopler Games, a Facebook application that enables users to play multiple music games across a large catalog of music. Tuhin practiced corporate and intellectual property law at Perkins Coie LLP in Menlo Park, California, founded and ran the Digital Rights Agency, co-founded Echo Networks and served on the board of directors of the Digital Media Association.  Tuhin also advises a number of digital media start-ups and is on the investment advisory board of Pink, an early stage investment fund.)

Source: http://www.billboard.biz/bbbiz/industry/publishing/tuhin-roy-of-mxp4-on-blanket-digital-music-1005256822.story

Four Reasons Index Ventures Invested In Grey Area

Earlier this week Grey Area announced a whopping 1.9 million euro series A round from Index Ventures, London Venture Partners and Initial Capital. This is one of the largest single rounds into the Finnish gaming companies in the recent years for sure. What makes this all the better for the whole country and Northern Europe for that matter, is that the financing came from overseas from globally respected investors. Ben Holmes from Index Ventures outlined four reasons why they invested in Grey Area. I think this is a good read for all entrepreneurs to keep in mind if they are looking for venture capital.

The four reasons Ben outlined in the Index Ventures blog post are also shown below:

* Exploding market – The iPhone and Android ecosystems have transformed and democratised mobile gaming. I have written in the past about how fragmentation and the operator channel made the whole mobile app business a nightmare. This is no longer the case, entrepreneurs can access vast audiences by being creative around marketing rather than using the traditional brute force approaches.

* The right monetization model – We have seen with existing investments in Stardoll, Moshi Monsters and Playfish as well as other companies such as Gameforge and Zygna that free-to-play with in-game purchase is probably the most lucrative business model in gaming currently. In-game purchases were rolled out by Apple last year and now a few of the “Top Grossing” titles in the iPhone appstore charts are free-to-play games. I would predict that over the next year that the majority of mobile gaming revenues will shift to free-to-play games.

* Positive early traction. One of the challenges with finding investments in this sector is that there are literally hundreds / thousands of developers writing for iPhone and Android. Those with substantial traction and monetisation tend to be valued stratospherically. Finding something which was early but was already showing its potential was what we were looking for. Shadow Cities fitted this criteria precisely. The early beta data from Finland showed very promising metrics around both engagement and monetisation. The app fairly quickly became the Top Grossing game in Finland soon after launch. Now just the rest of the world to conquer …

* Great team – Just four people when we first met, but already achieved a lot in a short timeframe and on a shoestring budget. If you want to see how effective entrepreneurs will be once they have money, see how much they can achieve without financing – that is always the best pointer.

From: http://www.arcticstartup.com/2011/02/25/four-reasons-index-ventures-invested-in-grey-area

Social 50 Music Chart : Which artists are maxin’ it on Facebook

I read somewhere that there is a whole server at Twitter HQ data centre that is dedicated the Justin Bieber…or was it the data centre at Facebook? Anyway its a shed load and will only get bigger as these artists see even greater potential for promoting themselves and the stuff they love and endorse……

That reminds me, if I have a shave with a Gillette will I end up in the ‘off couse’ mess that Tiger Woods was in? Here’s hoping, as I never did like golf – spoils a good walk.

Social 50 Music Chart | Billboard.com.

Zynga Preps The Launch Of RewardVille: Earn Rewards For Playing Games

It’s interesting to see how these guys are looking at every possible angle to get you to spend…and also there plans for taking this stuff onto mobile.

Zynga is preparing to launch RewardVille. No, it’s not another ‘Ville’ game, but a custom rewards program apparently designed to let users earn rewards for playing Zynga games – which you can then use earn virtual currency, which you then use for purchasing in-game items.

Ok, let’s take a step back.

Earlier this month, domain industry vet and blogger Elliot J. Silver wondered whether it was Zynga who acquired the domain name RewardVille.com from its previous owner, for $4,500.

Fusible.com then pretty much confirmed Zynga made the purchase, by uncovering that the social gaming juggernaut had registered a European trademark for ‘Rewardville’ last month.

Fast forward to today, and Rewardville.com now resolves to a website that announces the rewards program in beta – the same website appears when you visit rewards.zynga.com, by the way. There’s a login screen, but you need to have a Zynga account (which, as far as I know, is usually created by connecting to your Facebook account) to get in.

There’s more.

If you look at the menu at the bottom, you’ll see a link to a now deleted FAQ item about RewardVille, which is set to launch in the next few weeks, as you can tell from the screenshot above.

I did some digging, though, and found a blogger that cleverly took screenshots of several pages Zynga put up about RewardVille, which all return errors at this point however.

The screenshot of the overview page is the most revealing:

It reads:

“RewardVille is a new rewards program which lets players earn rewards for Zynga games! Each time you play a participating Zynga game, you’ll earn Zynga Points (zPoints) and increase your Zynga Level (zLevel). At every zLevel, you’ll earn Zynga Coins (zCoins) to use on free, exclusive in-game items in RewardVille!”

I sincerely zHope that was as zConfusing for zYou as it was for zMe.

Participating games include FarmVille, FrontierVille, Mafia Wars, Treasure Isle and Zynga Poker (and not hit game CityVille), although Zynga says they’ll activate zPoints on other games in the future.

On another – now removed – page, Zynga specified that users automatically earn zPoints for playing Zynga games, and will need to register for a Zynga account in order to redeem zCoins. Users will be eligible to earn a maximum of 80 points per game per day, with a maximum of 300 points across the entire Zynga network each day.

We’ve reached out to Zynga for more information, but didn’t hear back immediately.

Zynga image
Website: zynga.com
Location: San Francisco, California, United States
Founded: July, 2007
Funding: $519M

Zynga was founded in July 2007 by Mark Pincus and is named for his late American Bulldog, Zinga. Loyal and spirited, Zinga’s name is a nod to a legendary African warrior queen. The early supporting founding team included Eric Schiermeyer, Michael… Learn More

DICE 2010 – Design Outside The Box

A great video for those into online entertainment courtesy of Jesse Schell…but also what is next in terms of social gaming


Social Gaming Market to Surpass $1 Billion in 2011 – Revenues up 27.7% this year

The rapid rise in popularity of social networking sites as a venue for casual gaming since Zynga released FarmVille in June 2009 will make social gaming a billion-dollar business this year, eMarketer estimates.

Nearly 62 million US internet users, or 27% of the online audience, will play at least one game on a social network monthly this year, up from 53 million in 2010. Their numbers will continue to grow and, along with them, money spent on virtual goods, lead-generation offers and advertising.

“Forecasts of audience and revenue growth present an opportunity for marketers to promote their brands through social games,” said Paul Verna, author of the forthcoming eMarketer report “Social Gaming: Marketers Make Their Moves.” “Implementations include branded virtual goods, custom games, virtual environments within existing games and lead-generation offers. Some campaigns even combine virtual and real-world items, expanding the gaming experience beyond social networks like Facebook and Myspace.”

Revenues from virtual goods made up the majority of social gaming revenues in the past, and they will continue to bring in the biggest share of dollars through 2012. Ad spending will grow more quickly; in 2011, marketers will spend $192 million to advertise on social games, nearly a 60% increase over 2010. eMarketer forecasts a further rise of 41% in ad spending next year.

US Social Gaming Revenues, by Segment, 2010-2012 (millions)

Rapid growth in ad spending will help its share of total revenues grow from 14.1% in 2010 to 20.5% in 2012, when it will surpass lead-generation offers as a source of developer revenues. Such offers have been a powerful force in the social gaming market but are losing favor as marketers use games for more branding-oriented efforts. Virtual goods will hold steadily onto a share of about 60% of the market.

US Social Gaming Revenue Share, by Segment, 2010 & 2012 (% of total)

“Even though fewer than 6% of US social gamers spend money on virtual items, these avid players will produce revenues of $653 million in the US alone this year,” Verna said. “This is the largest segment of the social gaming economy, and one that marketers are increasingly turning to as a branding vehicle. We expect to see more branded virtual goods as social gaming matures over the next two years.”