Monday, June 15, 2015

Things seen and heard at Midem 2015 (part 1): Streaming, streaming, streaming...

by Emmanuel Legrand

Some 18 months after it last happened, Midem was back in Cannes (June 5-8), leaving winter for early summer. So it was not surprising that most of the side conversations during the trade show/conference were not about the eco-ystem and it's future, but rather about Midem's future in June and in Cannes. There were rumours about Midem moving to Cannes, about the event staying in Cannes but moving a couple of months back in April. Eventually, Midem organisers confirmed that the next event would take place at the end of June in 2016 in Cannes.

Personally, I have always enjoyed Midem in January. For those coming from a colder climate, it was usually a blessing to be by the seaside in a warmer pasture (except when it rained, of course) so I was never convinced by the move to summer, in a town already filled with tourist. So for me, Midem by the beach in June was not the best experience. And I even like less the idea that next year's Midem will end on the day the millions of people will take the road to their holidays, plus it is the weekend of the 4th of July, which or those who live in the US is one of the busiest in the year.

That said, it was a good Midem when it comes to the discussions that took place at the Palais des Festivals. The 'Main Room' sessions were packed with interesting speakers from all sides of the industry. The tech sessions were very instructive, and the 'Music business stage' where a lot of the panels took place was a bit of a noisy spot as it was set right in between the aisles and the stands where people were talking shop, but the discussions were usually quite inspiring.

Here's a round-up of things seen and heard at Midem, focusing mostly on streaming.

Streaming, streaming, streaming... 

If there was any doubt that streaming was the immediate future of the music industry, Midem provide many talking points about the importance streaming in today's business and also many questions about the viability of this new model of music consumption. Most keynote speakers mentioned streaming either to explain their models (Deezer, Tidal, SoundCloud) or to comment on it (Sony Music's Doug Morris, Vivendi's Arnaud de Pyufontaine, European Commission's VP Andrus Ansip).

Considering that it was taking place the weekend before the Apple Music announcement, it was amusing to see that a sentence said in passing by Doug Morris on Sunday got picked up all around the world. "It's happening tomorrow," he said. In Apple's world of rarefied information, this became major news and the whole world went crazy about something that wasn't really news.

Aside from this amusing distraction, the key issue for many remained the capacity for the music industry to be financed by streaming as it overtakes downloads. Deezer CEO Hans-Holder Albrecht might may have claimed that streaming “is the model for the future,” Mute founder Daniel Miller probably summed up the overall feeling from the record labels and publishers' side when he said (in a different session) that it "hasn’t got the reach it needs to sustain an industry.”

Albrecht pleaded the industry to wait for scale to kick in, noting that the world's smartphone population has reached one billion users worldwide, with another billion to be added in the next three to four years. The discussion also focused on the ongoing debate on freemium vs. premium. "If you talk about freemium, let’s talk about all the free music, and how can we reduce the free offering to customers in order to accelerate subscription," he said.
Meanwhile, Tidal chief investment officer, Vania Schlogel was trying to brush away some of the negative comments that followed the launch of the service by its new owner, rapper Jay-Z. Interviewed by a very sympathetic and kind Ralph Simon, she claimed that there was “a lot of misinformation out there" and that many comments "hurt" especially that Tidal did not acre about indie artists. It was a nice PR attempt to re-address the tidal waves (sorry!) of negative vibes, but it will probably take more than that to convince the industry that Tidal has a viable model. 
Rdio CEO Anthony Bay believes that the big elephant in the streaming room is YouTube, which he considered more as a competitor than Apple or Spotify, since it provides all the music for free. "The biggest challenge for the industry is that YouTube is too good and it is hard to get people to pay, especially if it is already on YouTube for free. Safe harbour is not intended for this."

More streaming 

Meanwhile, several record company executives did also share their views on streaming. Arnaud de Puyfontaine, CEO of Universal Music Group parent Vivendi, said he believed "in the future of streaming" as a condition "to recreate good mechanical growth in the industry." He added, "We want to help and stimulate and be part of the future of the streaming business. We are very happy to see Apple coming. It will be an accelerator of this growth and will add momentum that will be good for the industry."

Sony Music Entertainment CEO Doug Morris was quite outspoken on streaming during his keynote interview. Most of his conversation focused on past anecdotes, and as pleasant as they were, they did not reveal much about the seasoned executive's visions about the challenges of today's world. But he got going about streaming, which he described as "a tipping point in the music industry" which has the potential "to bring [the industry] back to where it was before." He took solace in the fact that Sweden's music business revenues was back to where it was ten years ago thanks to streaming.

Apple arrival in this business will build momentum because "Apple will advertise, they'll make a big splash. I think the result of this will have a halo effect on the streaming business. I think it's been the beginning of an amazing moment for our industry. And after what we've been through for the past 10 years, we all deserve some happiness."

"You can't have a streaming service without music, so we are really in a great position," he said. As noticed with the leaked Spotify/Sony contract, this means lots of nice perks (worth noting that he was not asked any questions regarding this issue). He also praised Spotify founder Daniel Ek for doing "an incredible job with Spotify because pushing that boulder up the hill."
And he certainly made known his preference between free and premium... "“Paid? Good. Ad-supported? Unless there’s a conversion factor into a paid service, not so good," he said, adding that 100 streams on Spotify equal a dollar while it would take 900 streams on the biggest on-demand ad-supported platforms to get to a dollar. "So you can tell which one we like,” he concluded.

And even more streaming

Cooking Vinyl founder Martin Goldschmidt is an optimistic. He sees a lot of positive points in the current landscape. Take YouTube. Goldschmidt views the free, ad-supported video platform as something “fantastic and a nightmare” with its capacity to provide all the music for free to a wide audience, but with very little in return for rights holders. He thinks YouTube has been "the most effective thing against piracy that’s happened” but it is also "a massive source of free consumption of music." He added, "If the money can come up, it’s a fantastic opportunity. Let’s just keep our fingers crossed, let’s be optimistic.”

For him, the freemium/premium debate is a rich country's issue, while in places like Africa or Asia, "freemium is going to be where the big money is.” He also described the transformation of VKontakte -- the most popular streaming service in Russia -- from being an unlicensed music service to a fully licensed platform as "fantastic," as they will start paying rights holders and convert millions of users into legitimate consumers of music.

Goldschmidt had less enthusiasm for a platform like SoundCloud that pays rights holders “next to nothing”. Well, that is about to change, according to SoundCloud co-founder Alexander Ljung, who described the platform as reaching 135 million unique monthly listeners who have access to 100 million tracks, a volume growing by the rate of 12 hours of audio content uploaded every minute.

Arriving in Cannes a few days after the announcement of a deal with indie labels' agency Merlin, Ljung could boast that he was "super excited" about this deal that gives him license to use music from 20,000 indie labels. In parallel, the service launched its On Soundcloud partnership progarmme, giving rights holders the possibility to monetise content. "Artist control has from day one been at the core of what Soundcloud is. That is no different when it comes to monetisation. I want artists to be in control when their music is monetised and how it is monetised."

His interest is to provide access to music with the free service but the platform will also expand with a paid-for service. "Today we are an ad-supported platform but we will be launching a subscription service later," he said. "We are interested in having 3 billion people on Soundcloud. Some will be through subs, some through freemium.

And Apple? "They are very large, have a lot of cash and are very good at marketing and they have very good hardware," said Ljung. "They are going to put a lot of marketing  into [their streaming service]. The future is ahead of us with streaming. Apple will rapidly increase the market overall. They will make the streaming market much larger. With our scale we are in a different position. But if Apple increases awareness for music streaming, I am all for it."

Check part 2 of the Midem report.


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