Things seen and heard at Midem 2014

by Emmanuel Legrand

The slogan of Midem 2014 – ‘Back to Growth? Make it Sustainable!’ – sounded more like a mantra than a reflection of the state of the business. There is still a long way to go to get to full growth, even if there are some positive signs. But to the participants of the trade show who made the trip to Cannes in the South of France, what mattered was that it was as busy a Midem as ever. Here's a round-up of things seen and heard on the Riviera.

Growth, what growth?

The french market for recorded music experienced growth for the first time in revenues after twelve years (yes, twelve years!!!!) of decline. OK, the growth was modest (up 2.3% at €603.2m) but significant nonetheless. Meanwhile, French authors' society SACEM announced collections in excess of €810m in 2013, 1.7% up on 2012. But revenues from digital in France are still below the level of other countries, despite the presence of a major streaming player in France (Deezer). Scale is not there yet. Other countries in Europe like Sweden, Germany or Norway have posted growth and everyone in the industry is looking for the day when scale will turn streaming into a real money machine. But many speakers felt quite confident about the future of the business.

Streaming gets massive boost

WME's Mark Geiger (Picture: Desjardins/Image & Co)

The apparent shift from ownership (downloads) to access of music (streaming) has been the source of many talks lately about the value and the sustainability of streaming as a model (Tom Yorke, anyone?). Marc Geiger, head of music at leading talent agency William Morris Endeavor, told audiences at Midem that time was no longer for lamenting, but embracing the trend. “We’re transitioning into the next stage of the system, which is streaming,” he said. But many questions were asked about the sustainability of the business model underpinned by streaming if operators of services could not convert free users to paying subscribers. Former Warner Music US CEO Lyor Cohen said he believed “in streaming as being the future of very healthy business.” And Radiohead’s manager, Brian Message, accepted that streaming was about scale. “It’s a volume game, and it’s going to get bigger and more important. And for everybody in the chain… we have to get to a point where everybody trusts and understands the revenue stream and revenue flow.” But at the same time, streaming is a massive promotional tool for music and artists, argued Emmanuel de Buretel, founder of Because Music. He said, “I spent a lot of investment on how to optimise streaming. The way you manage YouTube has nothing to do with the way you manage a physical release. It’s a total new world, and that’s why it’s exciting.”

Can streaming finance creation?

The question was asked by the CEO of Deezer Axel Dauchez who simply stated that “if 70% of the streams are done in the back catalogue, there will be no new creation.” He believes there is “a common responsibility to generate discovery, to force people to try new artists, new songs. Investing in new artists is not a marketing tool: it’s an industry need.” When shall we see Deezer, YouTube and others set up a pot to help finance new talent?

YouTube is under attack

YouTube has become a key source of revenues but many voices in the industry suggested that Google could do more for the industry. Googleannounced at Midem that YouTube has already contributed to one billion dollars in revenues to rights holders over the past few years, and the pot is growing. But Deezer CEO Axel Dauchez accused the video platform, owned by Google, of being “a legal pirate” by allowing non-licensed material to flow on the platform. Meanwhile, !K7′s Horst Weidenmuller questioned the end goal of Google. “I am concerned with YouTube entering the market because for YouTube everything is about dominance. And dominance is connected to destruction.”

Lyor Cohen thinks Twitter rocks

Lyor Cohen, until recently CEO of Warner Music US, was in Cannes to present his new independent company, 300, which counts Google among its investors. One of the first deals he's made was with Twitter’s music division. “We’re going to create A&R tools to find artists early, and help develop them,” he said. “We all are looking for talent in various places, and certainly Twitter is a terrific place to look at talent, just like YouTube. If you wanna get signed, I think you have to engage with Twitter, and of course YouTube. And we’ll be looking and trying to develop tools that the rest of the music community can utilise.” Well, aspiring artists, you know what you have to do now...

Jean-Michel Jarre (Picture: Desjardins/Image & Co)

Jarre extends the hand of friendship to tech companies

Although he had barely landed from Los Angeles where he is currently recording a new album, French electronic music pioneer Jean-Michel Jarre was in combative mode. He obviously takes very seriously his role as president of CISAC, the international body representing authors' societies. During his appearances at Midem, he repeatedly asked for creators to be given proper remuneration for the use of their works. “We are victims of a system that has not even been thought in the function of the content they are making so much money on. This is why this idea of fair remuneration is important,” he said. "If you think that digital is the future, we are in dire straits.. we need again to define a fair remuneration in the digital world." But he was also offering tech companies a way forward: “We need to sit around these people making billions with our content, and say ‘Guys, you love us, we are not hating you, we need to sit together and find a decent business model'.” Will he be heard?

And will.i.am wants the music to be more adventurous

Funny enough, will.i.am also alluded to technology during his keynote speech. In a video link with Los Angeles, the Black Eyed Peas's maestro had a few tips for the music industry. “Our industry is pretty lazy,” he said. “We should’ve been Facebook first. Our industry should’ve been Twitter. Our industry could’ve been Apple. Our music industry is powerful, but we don’t use it like we should.” He added, “The state of the music industry is delusional. I really encourage every single person in the music industry to try and compete not with other record companies, but compete with Samsung, compete against LG, compete against the big ones!” Hmm, competing with Samsung... Sounds like an interesting new mission statement for the music industry!

Paul McGuinness is in combative mode

One would think that now that he is no longer managing U2 Paul McGuinness would just keep quiet. Quite the contrary. The Irishman, who steered the career for over 30 years of what he called “a fascinating social unit” delivered one masterclass in artist management during the speech he delivered after receiving Billboard's 2014 Industry Icon Award. McGuinness could not let this occasion pass without giving a kick to Google, asking the tech giant to show “social responsibility” by “taking down the illegal sites” and to “pen their hearts a little and be more generous to the ecosystem that started their success a few years ago.” But most of his comments were about his protégés. There was an obvious bond between the artists and their manager, but McGuinness was keen to specify the limits of the relationship: “They were always my clients, not my partners.” McGuinness then stated, “When we started we knew nothing. They didn't know how to play their instruments, I didn't know anything about the music business.” Well, they all quickly learned! And in a video, the band paid a heartfelt tribute to their manager. “I don't think we've ever met another artist who have had the same manager for 35 years from day one and for that whole time who had been unfaltering in his integrity, in his excellent business acumen,” said Bono, while The Edge added: "We own our own master tapes, we own our own copyrights. We are in effect a a cooperative who shares those equally with the band and we were designed to survive and we were designed for something much harder: we were designed to survive success. And Paul it was your design.” Such design helped them sell some 160 million albums... Some achievement, indeed.

Ibrahim Maalouf
(Picture: Desjardins/Image & Co)

Artists adopt DIY attitude

Midem 2014 reflected the DIY attitude adopted by many artists these days. A lot of sessions were dedicated to showing how to better use the digital landscape. But it is not an easy road. The best way to sum up what goes through the lives of artists these days was expressed by Lebanese-born songwriter and performed Ibrahim Maalouf: "Artists can't afford 3 cooks. You have to be the cook and the salesperson. Artists have to do it themselves these days."

But labels are not dead!

“The whole idea that you don’t need a label? It’s bullshit!” said PIAS co-founder Kenny Gates, reflecting the common view that dis-intermediation was great to a point and that labels do serve a purpose. “A lot of management companies found out after doing one or two DIY deals that they actually needed a label,” said Gates. “[Artists] don’t necessarily need a label: they need a team around them,” tempered Colin Daniels, MD of Inertia. Alison Wenham, CEO of AIM, the UK's independent label's body, claimed that “independents are a natural home for artists: independents take a long-term view about their role. They’re very much partnership-based. Their artists should be supported, they should be allowed to express themselves creatively in whatever way they want without putting deadlines or artificial constraints on whatever the artist wants to do.”

And their future is?

In no uncertain terms, de Buretel said the future of labels is to become rights management companies. “It’s extremely difficult, and that’s the role of a music company – not a record company – to know how to manage it.”

Indie publishers want to be heard

The already crowded music eco-system will have to make room for a new player, the International Music Publishing Forum, which aims at representing and giving a voice to independent publishers. This new organisation was launched at Midem a few hours after its first board meeting which elected as president Pierre Mossiat from Strictly Confidential in Belgium (for those not in the know, Strictly is co-owned by Mossiat with Michel Lambot and Kenny Gates from Play It Again Sam, who are influential members of Impala, the European indie labels' organisation). Mossiat said that this new association will not work against but alongside ICMP, the global body for publishers, and will give indie publishers a voice and a forum.

Licensing is still the oil in the business

Whatever the means of distribution, music gets to consumers via a licensing process between rights holders and platforms. At least for those who work with legal frameworks. And there was a lot of licensing discussions on stage and offline. While pan-European hub Armonia (regrouping France's SACEM, Spain's SGAE, Italy's SIAE among others) announced a major deal with YouTube covering over 120 countries, digital platforms and rights holders had several behind the scenes meetings, trying to iron out deals and partnerships. On stage, there were at least four, if not more, sessions dedicated to the theme. Florian Drücke, managing director of said Germany's trade bodies BVMI/IFPI, stated that "the next big thing is even better licensing, get more things licensed. We are making a lot of progress but there is a lot to be done."

Licensing in Europe is still a complicated game

Kerstin Jorna
(Picture: Desjardins/Image & Co)

“If you think that launching a new digital music service is easy, you are wrong,” said Yves Riesel, founder of French hi-fi platform QoBuz, when asked how he found the current state of music licensing. But he said that complexity and dealing with rights fragmentation was a natural part of the process that platforms tend to factor in when starting, adding ironically that it was now “easier to deal with authors’ societies than with record companies.” Efforts have been made by authors' societies to create in Europe (and also elsewhere in the world) hubs to license repertoire. One such is Armonia, which regroups Italy's SIAE, Spain's SGAE, France's SACEM, among others. Another is project, currently under review by Europe's competition authorities, aims at regrouping PRS for Music (UK), STIM (Sweden) and GEMA (Germany). “We believe that authors' societies are the appropriate answer to massive use of creative works in Europe,” said Kerstin Jorna, who is in charge of the copyright unit at the European Commission's Internal Market department.

Europe is a worry

Several professionals and creators present in Cannes expressed their worries a a new consultation on copyright set up by the European Commission. Jarre urged fellow creators to go online and fill in the 80-question document. Started early December 2013, and initially due to close on Feb. 5, the consultation was given an extended deadline (March 5). SACEM's Jean-Noel Tronc expressed his worries that the process has been steered in such a direction that “sometimes it felt that the answers were already in the questions” and that the document only available in English was not easy to navigate for non-native English speakers. Jarre put this consultation into a wider context: “At a time when Bruxelles scratches its head on copyright, China and Korea see copyright as a way to boost economy, and many look at Europe as a model since Europe has been visionary as being the first continent to understand that if you want to have a strong identity, your culture has to be strong.”

Data, big data, metadata!

If the music business could cash in a cent each time someone mentioned at Midem the word data in all its guises, the woes of the industry would be over. Richard Conlon, BMI's SVP for corporate strategy, communications and new media, acknowledged that societies have to deal with a “huge volume explosion” of data which require the best business processes to make sure that data is identified and rights holders paid.

Where's the GRD?

The main absent at Midem this year (that is, with the sunshine…) was the GRD. Unlike previous years, no update was provided on this key project for the industry. The fact that some rights societies are having cold feet when considering the level of investments required to launch and operate the global repertoire database could explain such silence. Sources were telling me that the situation should clear up in the coming days as all the other societies contributing to the pot were awaiting for the decision from a major North American society to chip in or not. If not, some other societies could follow suit and put in jeopardy the whole project.

What's next for Midem?

Bruno Crolot (Picture: Desjardins/Image & Co)

The future of Midem was a subject of many discussions on the Riviera. Some were wondering if the trade show would be able to continue to weather the challenging crisis facing the music industry. Others were unfazed but the debates and just went on working, and apparently doing good business. Midem's boss Bruno Crolot announced 6,150delegates from 75 countries (slightly down from the year before) and confirmed that Midem 2015 would take place in Cannes January 31-February 3. So we'll be there next year to monitor if, indeed, growth has been sustainable.

PS: total respect to Stuart Dredge for his amazing coverage of Midem. This guy can type faster than people speak!

[Typed while listening to Mark Kozelek & Jimmy LaValle's 'Perils From The Sea' and I Break Horses's 'Chiaroscuro']