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music as the ideal
virtual good
             Nabeel Hyatt of Conduit Labs
                    www.conduitlabs.com
hi, nabeel here
 Conduit Labs
 Prism Ventureworks EIR
 Ambient Devices
 (MIT spin-out, profitable)
 Teamtalk (’01 IPO)
 internetsoccer.com ($15m sale)
 Interphase Designs (dead)
behavior doesn’t
change online
                   Photograph by Robbie Cooper (NY Times)
the typical market for
virtual goods
$200m
           2006
           2007
$150m



$100m



$50m                                                Note: some of these
                                                     are “hand wavy”
                                                        estimates
 $0m
        Habbo Second Life IMVU     Nexon Facebook
                    virtual good sales
what about music
$1,500m
           2006
           2007
$1,125m



 $750m



 $375m



   $0m
          Habbo   Second Life   IMVU        Nexon    iTunes   Rock band
                                virtual good sales
what about music
$1,500m
           2006                                               Not
           2007
                                                              counting:
$1,125m
                                                              - amazon,
                                                              emusic, etc
 $750m                                                        - ring tones

 $375m



   $0m
          Habbo   Second Life   IMVU        Nexon    iTunes   Rock band
                                virtual good sales
what traits make music
tracks work so well?
functional
             Photograph by homardpayette (Flickr)
authorship
             (c) the label
decorative
infinite
          Photograph by lickyoats (Flickr)
transportable
                Photograph by ~Theresa (Flickr)
How’s that compare?
                                 Habbo
                     Music       Furni
Functional           Yes         No
Decorative           Yes         Yes
Authorship           Yes         No*
Infinite              Yes         No
Transportable        Yes         No

* - some advertising supported
How are we performing?
                            Gaia
                      Habbo Clothi Rock        Kart    Second Facebo
              Music   Furni ng     Band   IMVU Rider   Life   ok

Functional    Yes     No    No    Yes     No    Some Yes     No

Decorative    Yes     Yes   Yes   Yes     Yes   Some Yes     Yes

Authorship    Yes     No*   No    Yes     Yes   No     Yes   No

Infinite       Yes     No    Some Yes      Yes   Yes    Yes   Yes

Transportable Yes     No    Some No       No    No     No    No
which items correlate to
revenue?
                   note: totally and
                    completely not
                           scientific
which items correlate to
revenue?
                    note: totally and
                     completely not
                            scientific




                      Help me get
                  more data so this
                            is real!
of course all is not rosy
in music land
                      Source: Enders Analysis
and it’s not piracy
passive media is
dieing
recorded music
as we know it is
niche
there is a place for
active music in media
and it is a growth
              business
              20%
              15%
              10%                                                                Concerts
                                                                                 Recorded Music
Growth Rate




               5%
               0%
               -5%
              -10%
              -15%
              -20%
                  2005     2006                                 2007


                         Source http://www.ft.com/cms/s/0/2c2ce6ce-626b-11dc-bdf6-0000779fd2ac.html?nclick_check=1
                                                              Neilsen Soundscan
Music games accounted for 16%
of U.S. video game sales in 2007
and 44% of growth
                                   Source: UBS Securities
and many new places
for it to go
and many new places
for it to go
Questions?


         Nabeel Hyatt



email me for the presentation:
  nabeel@conduitlabs.com

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Music As A Virtual Good VGSummit08

  • 1. music as the ideal virtual good Nabeel Hyatt of Conduit Labs www.conduitlabs.com
  • 2. hi, nabeel here Conduit Labs Prism Ventureworks EIR Ambient Devices (MIT spin-out, profitable) Teamtalk (’01 IPO) internetsoccer.com ($15m sale) Interphase Designs (dead)
  • 3. behavior doesn’t change online Photograph by Robbie Cooper (NY Times)
  • 4. the typical market for virtual goods $200m 2006 2007 $150m $100m $50m Note: some of these are “hand wavy” estimates $0m Habbo Second Life IMVU Nexon Facebook virtual good sales
  • 5. what about music $1,500m 2006 2007 $1,125m $750m $375m $0m Habbo Second Life IMVU Nexon iTunes Rock band virtual good sales
  • 6. what about music $1,500m 2006 Not 2007 counting: $1,125m - amazon, emusic, etc $750m - ring tones $375m $0m Habbo Second Life IMVU Nexon iTunes Rock band virtual good sales
  • 7. what traits make music tracks work so well?
  • 8. functional Photograph by homardpayette (Flickr)
  • 9. authorship (c) the label
  • 11. infinite Photograph by lickyoats (Flickr)
  • 12. transportable Photograph by ~Theresa (Flickr)
  • 13. How’s that compare? Habbo Music Furni Functional Yes No Decorative Yes Yes Authorship Yes No* Infinite Yes No Transportable Yes No * - some advertising supported
  • 14. How are we performing? Gaia Habbo Clothi Rock Kart Second Facebo Music Furni ng Band IMVU Rider Life ok Functional Yes No No Yes No Some Yes No Decorative Yes Yes Yes Yes Yes Some Yes Yes Authorship Yes No* No Yes Yes No Yes No Infinite Yes No Some Yes Yes Yes Yes Yes Transportable Yes No Some No No No No No
  • 15. which items correlate to revenue? note: totally and completely not scientific
  • 16. which items correlate to revenue? note: totally and completely not scientific Help me get more data so this is real!
  • 17. of course all is not rosy in music land Source: Enders Analysis
  • 18. and it’s not piracy
  • 20. recorded music as we know it is niche
  • 21. there is a place for active music in media
  • 22. and it is a growth business 20% 15% 10% Concerts Recorded Music Growth Rate 5% 0% -5% -10% -15% -20% 2005 2006 2007 Source http://www.ft.com/cms/s/0/2c2ce6ce-626b-11dc-bdf6-0000779fd2ac.html?nclick_check=1 Neilsen Soundscan
  • 23. Music games accounted for 16% of U.S. video game sales in 2007 and 44% of growth Source: UBS Securities
  • 24. and many new places for it to go
  • 25. and many new places for it to go
  • 26. Questions? Nabeel Hyatt email me for the presentation: nabeel@conduitlabs.com