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Authorized lyrics sites struggle to grow

DENVER (Billboard) - More than a year after the introduction of lyric licensing programs, several online music services that implemented them are reporting mixed feelings about their results.

On one hand, there’s a great demand among music fans for accurate lyrics. According to Internet research firm Hitwise, music lyrics in June ranked as the 31st most searched-for topic on U.S. search engines -- a high ranking, given the myriad topics available on the Web.

The problem is that not enough of those searches are leading fans to authorized lyrics sources, provided by companies like Gracenote and LyricFind -- which struck all the necessary agreements with publishers in order to outsource their catalog to others.

“We’ve had what we call modest success,” said Michael Spiegleman, senior director of Yahoo Music, the first company to adopt Gracenote’s lyrics content more than a year ago. “It provides a fairly decent level of traffic, but it didn’t take off quite to the extent that we originally projected.”

So-called “rogue” lyrics sites -- which display song lyrics without any permission from, or payment to, the publishers that hold the copyrights -- still dominate the field. Because they’ve been around longer, they rank higher in Internet search results and therefore get the majority of traffic.

“The fact is, we don’t rank that highly,” said Howie Fung, senior product manager for Rhapsody.com, which licenses the LyricFind service. “There are so many illegal sites out there that it’s kind of tough to break through the rankings, so that hasn’t worked out as well as we would have liked.”

DROP IN CROSSOVER

In fact, fewer fans are visiting music services after searching for lyrics online. According to Hitwise, traffic to music services as a result of a lyrics search fell from 79 percent in 2006 to 68 percent last year, while the same traffic to social networking services rose from 5 percent to 9 percent.

As a result, authorized lyrics providers would like publishers to put more pressure on rogue sites in order to level the playing field.

“They would be helping themselves by putting a little bit more focus on that area,” Gracenote vice president of business development Ross Blanchard said. “That would benefit the entire ecosystem.”

According to the National Music Publishers’ Assn., the organization has sent cease-and-desist notices to more than 50 unauthorized lyrics sites, but at this time doesn’t have any plans for more aggressive legal action. Of those, 12 have shut down and 32 have removed at least some material. Only one, MetroLyrics, has converted to a fully authorized site by joining the Gracenote program.

And in keeping with the better-to-ask-for-forgiveness-than-permission business model that seems to prevail in the digital music business, MetroLyrics has thrived as a result. Its years operating as an unauthorized service give it the history needed to rank high in any lyrics search results, and its newfound respectability has attracted new advertisers. According to CEO Alan Juristoviski, traffic has grown from 14 million monthly visitors to 22 million.

HIGH COSTS

But gaining the attention of potential new customers through search engine results was only half the reason services like Yahoo Music and Rhapsody incorporated lyrics. They also want to enhance the music experience for users, but they find lyrics a difficult and expensive way to do so.

Today, lyrics are limited to a “search by” option -- where users can find a given song in a service’s catalog by typing in a few lines in the event they don’t know the name of the artist or track. But digital retailers ultimately want to enable users to access lyrics while streaming a song without having to open a separate browser window.

The current lyrics licensing scheme Gracenote offers allows users only to view lyrics, not cut and paste them into savable formats. Incorporating rights to stream or download lyrics would carry additional licensing costs and require the development time needed to implement it.

“Unfortunately, that’s how the licensing works,” Spiegleman said. “There would be additional, very high costs involved.”

So do retailers then raise the price of all downloads? Let users choose between lyrics-enabled tracks at a higher price? Increase subscription fees in return for more interactivity?

Gracenote senior VP of sales and marketing Jim Hollingsworth said such capabilities represent phase two of Gracenote’s lyrics program, but he didn’t provide a timeline for when that would roll out. He acknowledged the pricing challenges, but said absorbing such costs rather than passing them on to customers would pay dividends in terms of customer acquisition and retention.

“Adding to the cost model in a very margin-thin environment is difficult,” he said, “but a better experience draws more people in.”

But that message may prove a tough sell to services already disappointed in the results of phase one.

Reuters/Billboard

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