Sunday, July 15, 2012

A manifesto for the new music industry in the digital age


by Emmanuel Legrand

Last week, Universal Music Group chairman/CEO Lucian Grainge said that he would propose a “manifesto for the new music industry” that would define his company's relationship with other stakeholders in the new digital environment.

Since Mr. Grainge is certainly a very busy person, I thought I could give him a hand and help him by drafting the “manifesto” below.

A manifesto for the new music industry in the digital age:
  1. Artists are entitled to equitable and fair contracts reflecting the realities of the digital age.
  2. Artists should not be coerced into giving away their rights (especially their publishing rights) to gain a recording contract.
  3. Recorded music contracts with record labels should only be for a limited period of time, with the full rights to the masters automatically reverted to artists after a period of 15 years.
  4. Music companies that have a domestic or international market share of 5% cannot be involved in artist management services.
  5. So-called 360 deals can be tolerable if, and only if, they are 'real' deals, providing services in all the areas that the artists have handed their rights, and all these services should be offered at acceptable market rates.
  6. Labels, publishers and collective rights management organisations will approach all new digital music service with openness and will provide quick and flexible licensing schemes.
  7. Digital music services, labels, publishers and collective rights management organisations will provide quick, accurate and transparent royalties reporting and payment.
  8. Music companies will not ask for equity in digital music services.
  9. Licensing deals with digital music services should be equitable and fair for all players, should not involve advances paid by the services and the terms should be transparent for all stakeholders, especially artists and their management.
  10. Artists and songwriters should be entitled to a share of the financial transaction if the recorded or publishing company they are signed to is sold. Equally, shareholders of digital services that have benefited from music content to harness the value of their services and then sell then with massive profits should also chip some money back to the creative community without whom they would have not been able to develop their project.

Let's go into the details of the manifesto.

The new Universal-EMI entity will have a greater market share than any other competitor (in the same way that Sony/ATV + EMI is a real powerhouse in publishing), and this is bound to give the new combined entity a tighter grip on the talent market and more clout in its dealings with the rest of the eco-system.

It is therefore important to balance that power by asserting certain rules. The idea with this manifesto is to provide open, transparent and simple principles that should ensure the growth of the digital music market in a equitable way for artists, music companies and digital services. By the way, these principles should not only apply to Universal but to all music companies, majors and independents, and to all digital music services.

Point 1 to 4 are about re-balancing certain contractual aspects of the relationship between music companies and artists in favour of artists. Artists are asked to sign 360 deals or give away their publishing rights if they want to get a recording contract. This should not happen, even though it is understood why music companies would do it, unless there is a trade out, such as better conditions, better services, etc. Too often, artists are not in a position to bargain, and that is the definition of abuse of dominant position.

The reversion of master rights to artists is about fairness. Fifteen years is already a long period of time for labels to recoup their investments. A few years ago, when Jay-Z took an executive position at Universal's Island Def Jam in the US, fellow rapper Chuck D from Public Enemy was asked at Midem if there was anything he wanted to ask Jay-Z. “Give me back my masters,” fired Chuck D. And many artists would probably concur.

The 5% market share limitation to set up artist management services would prevent major operators to also become artists' managers but would allow small operators in genres such as dance, jazz or world music to continue to cover multiple aspects of a creative project (management, production, distribution, touring, etc).

Points 6 to 9 would ensure a level playing field between music companies of different sizes and digital music services. It would also create the conditions for quicker and more transparent dealings.

Both rights holders (from music publishers and record labels to collective rights management organisations) and digital services would benefit from abiding by these principles. Digital services would have quicker deals, allowing to launch and develop more rapidly, while rights holders would see their repertoire offered on a wider scale in a dynamic competitive market. It would also cut through the crap of hearing digital services claiming that they cannot get licenses fast enough. It would not prevent all parties from negotiating terms, nor limit the scope of deals, but it would make it easier to close deals.

As a prerequisite for a new digital music market, labels would end requesting services to pay them advances or music companies taking shares in services (this would also apply to collectives such as Merlin for indies). However, this would not prevent music companies to set up their own platforms like Universal and Sony did with Vevo or Yves Riesel in France, who operates the label Abeille and launched the hi-fi download site Qobuz.

The whole eco-system would benefit from more transparency and this would create a level playing field between majors and indies. Add to that quicker and more transparent royalties processing and payments and you have a digital market truly geared towards the future.

Point 10 will probably be seen as a “communist” clause... There is something normal in the capitalism system to see music publishing assets or record labels being sold with (hopefully) a profit for the shareholders (even though it could be an open question with the Citi/EMI situation). However, it was the creators's works that built the company's value in the first place, so not seeing the artists or the songwriter earning any additional reward from the sale looks unfair.

It seems that a little payback to the creative souls who are the foundation of the value of these companies would be a good and fair gesture. If you look at it from a capitalistic perspective, it certainly does not seem natural, but can labels and publishers pretend to have the interests of the artists at heart and continue to use their works for financial benefits without compensation for creators when these deals take place?

Similarly, when digital services use content like music to create value and then sell for a wide profit (think Last.fm for example), wouldn't it be normal to have some of this money back to rights holders? Billy Bragg build a case in 2008 in the NY Times after music site Bebo had just been sold by its founder for a huge amount. “The musicians who posted their work on Bebo.com are no different from investors in a start-up enterprise.” wrote Bragg. “Their investment is the content provided for free while the site has no liquid assets. Now that the business has reaped huge benefits, surely they deserve a dividend.”

This still rings true today, and needs to be addressed.


And unfortunately, there is much to bet that this manifesto will remain a work of fiction!


[Typed while listening to France's new electronica/dance sensation Gesaffelstein (his recordings are out on his own label Zone and on Bromance and Turbo) and Beak>'s new album '> >' (Invada Records).]

3 comments:

  1. Hi Emmanuel,

    Points 1 to 9 are really well thought. I agree with all of them. They would ensure greater fairness for artists, composers and digital music services and could really boost the digital music market. They would also allow digitakl music start-up to devote a greater share of their funds to invest in innovation. As to point 10, I am not a communist, but I love it... :)

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