Sunday, November 28, 2010

Is the content industry's future going to be mobile?

by Emmanuel Legrand

It’s the Internet, stupid!
Guess what? Consumers want to access the internet and web-based services through their mobile devices. Nothing really new here. That was on everybody’s minds – especially people in the phone biz and those in the content industry – since the beginning of the century. But it took roughly a whole decade to get there.
In fact, the tipping point was the advent of smartphones, with Apple’s iPhone as primus inter pares, and the new generation of 3G networks, capable – at last – to carry the volume of data required to offer these services.
So what we are seeing now is really the start of a new era, that of the web-based mobile business.
M. Newman
“It’s all about the internet and consumers want services from the internet,” said Mark Newman, chief research officer at Informa Telecoms & Media, at the conference Industry Outlook 2011, organised November 25 by British media and events group Informa Telecoms & Media.
This quite low-key event was a great eye opener for those trying to figure out where the next big thing is going to come from. According to Newman, the demand for services, content and applications on mobile phone – ‘stuff’ that will make these handsets really smart – will be the drivers of the mobile business for the years to come.
His views were backed by the results of a survey across the telecoms galaxy in which 67% of the people polled believed that in 2011 “content companies will successfully start to develop new business models to monetise their services”.
Newman pointed out that since 1996, mobile operators and internet companies were looking at each other without really knowing how one could benefit from the other. The mass-market adoption of smartphones makes this relationship possible now.
He also noted that the same survey listed among the key topics, companies or people in the telecoms world that will be important in 2011 the following: ‘smartphones’, ‘cloud services’, ‘Google’, ‘Apple’, ‘network sharing’ and ‘Android’.
When it comes to mobile phones, the overall figures are staggering. Informa forecasts that by 2015, close to 650 million (yes, over half a billion) smartphones will be sold in the world, about 41% of all handsets sold on that year, with Europe and Asia/Pacific leading the way. So with these phones comes content traffic.
At the moment, revenues extracted by operators from internet-related services are in the region of $95 billion a year, to be compared with global revenues of $713 billion on voice traffic. Yes, phones are still primarily used to…make phone calls!
But that’s going to change and Informa forecasts a major growth in revenues from web-based services. In a way, owning a smartphone encourages data consumption. And to provide what consumers want, operators will have to make partnerships with content providers such as Facebook (200 of Facebook’s 500 million users use the service on their mobiles), Yahoo!, Skype, or Spotify.
K. Hart
Ken Hart, senior director, business development, at Yahoo! forecatsted one billion mobile internet users by 2013, up from 600 million nowadays. “We see very big opportunities [in mobile internet services],” said Hart. “What we see in the US is that people do not drop their PC but there are gaps in the day, and there are now usages patterns combining mobile and PC.”
For Hart, the trend in mobile phones is towards simplicity. People want easy to access services, but he warned about having over-expectations. Consumers, he stated, do not need hundreds of services – they will turn to a small number of service sthat fit their needs. “The average smartphone in US has a few dozen apps,” he explained. “A third are utilities, one third are brands like Google then there’s a small number of Specific applications. There is only a limited number of things people are using on their phones. You’ve got to have something to differentiate you in the market.”
F. Galaria
Music and video were among the examples attractive content mentioned during the conference as good playgrounds for partnerships. French streaming audio service Deezer has a partnership in France with Orange. Spotify, the music streaming service, has partnered with operator Talia in Sweden and 3 in the UK. According to Spotify global head of business development Faisal Galaria, these partnerships can be beneficial to both parties. Operators can provide a much useful service to their customers without having to set up their own infrastructure and making deals with rights owners. In return, Spotify can leverage its brand and access new users. Sometimes, added Galaria, the partership can extend to operators taking charge of billings on behalf of Spotify.
“Telcos and mobile operators say that Spotify is an acquisition driver for them,” revealed Galaria, who added that Spotify aims “to be ubiquitous because we are a cloud-based service.”
Galaria quoted some Informa research forecasting that 5% of the $365bn of non-voice revenues in 2015 will come from music. “This is quite significant,” he quipped. How these revenues are going to be shared and how much will be back to rights holders is obviously the $18 billion question!

Sunday, November 21, 2010

Diane Warren To Keynote Midem’s Publishing Summit

 By Emmanuel Legrand

Diane Warren
Diane Warren is a hit factory. She’s some sort of modern version of the Brill Building, except that she is the sole songwriter in the building.

Since her first hit – ‘Solitaire’ performed by Laura Branigan in 1983 – she has penned over 1,000 songs and scored more hits in the Billboard charts than any other living songwriter.

She is not always the subtlest songwriter, but she sure has an ability to come with efficient choruses and melodies. ‘I Don't Want to Miss a Thing’, which she wrote for Aerosmith, or Toni Braxton’s ‘Un-break My Heart’, sum up her style pretty well, even though she is hard to pigeonhole.

The usually media-shy Warren will be part of Midem 2011’s International Music Publishing Summit, where she will be interviewed in Cannes by former Billboard editor Tamara Conniff, founder of the Comet web site.

Warren is in an interesting place: she is a very much demand songwriter in a world where, thanks to (or because of…) TV-reality shows, there is a need for good, solid songs to be performed by the aspiring ‘stars’ but also to established artists, searching for hit material. And that’s what she can deliver.

The other characteristic is that she is not interested in the least in the limelight. She is content with her role in the background, and does not aspire to be a performer of her own songs. 

She is also an astute businesswoman. She owns her copyrights through her company Realsongs, but it has not always been so. When she started, she made a deal with a publisher on terms that were not very favourable to her. When success started to kick in, she asked for the deal to be revised, but it was not to happen. So she decided to sue and fly on her own, and ever since, she’s owned her songs.

As editor of music publishing magazine Impact, which unfortunately stopped in 2009, I had the pleasure to interview her in her offices in Los Angeles in 2008. She appeared as extremely relaxed, witty and totally unfazed by celebrity. And like many of her peers, she is absolutely unable to explain what makes someone talented, and how songs come to fruition. So that remains one of the great mysteries of creativity...

Below you will find the interview in its full version.

(This Q&A was originally published in Impact’s issue 2, Spring 2008)

Diane Warren’s magical world

Diane Warren has had more hits in the past 20 years than any other living songwriter – 90 ‘Billboard’ top ten hits, 38 of which went to No.1, out of a catalogue of over 1,000 songs. Yet, if the American songwriter is a reference in the business, she is hardly known by the general public. She relishes this lack of celebrity attention, which allows her to concentrate on what she does best – writing hit songs for artists ranging from Whitney Houston to Aerosmith and Britney Spears.

Diane Warren
At the end of 2007, after years with EMI Music Publishing, her company Realsongs switched allegiances and signed with Sony/ATV Music Publishing in an administration deal for the world outside North America.

These days, she mostly works from Realsongs’ Hollywood offices located in the same building as the Los Angeles School of Film, where the notoriously media-shy Warren met with Emmanuel Legrand for an earnest interview.

Q: In 1998, EMI Music Publishing in the UK put out a six-CD box-set of your works. If you were to do that today, how many CDs would be needed? Twelve?

Diane Warren: Probably more!

Q: How can you be so prolific?

A: Because I don’t have a life. This is what I do. I’m starting to get a life though…I am trying anyway. I am a workaholic and I’ve been obsessed with writing songs since I was 14 years old.

Q: How did you get into publishing? Was it because you wanted to own your copyright?

A: It was kind of an accident. I was signed to a man named Jack White, a German producer and publisher who was working with Laura Branigan and David Hasselhoff (smiles). I guess I made some money on that…kind of funny. I was signed to Jack, he was producing Laura Branigan and she was the first artist to perform my songs [‘Solitaire’ in 1983]. Later, we had a dispute and we were in a lawsuit together. At that time I had a couple of hits, nothing really huge, but good hits like ‘Rhythm of the Night’ [for DeBarge in 1986]. After that a lot of people wanted to sign me and my deal with Jack was really not a good deal. I wanted to sign with other publishers but because of the deal, I couldn’t. My lawyer at the time said to me, “You have to keep your publishing.” And I was like, ‘why?’ (smiles). I wouldn’t say ‘why?’ now. My lawsuit settled, and I wrote a couple of songs that were big hits and that I owned, and I never looked back.
“I have been offered staggering amounts of money for my company but I would not sell it.”
Q: And now you have probably one of the most important and valuable self-owned catalogues.

A: My catalogue is huge and just keeps earning, and I have new songs recorded all the time. Many songs in my catalogue are constantly recorded or licensed. There’s all this new activity for catalogue songs and it’s pretty exciting. It’s like real estate that keeps going up and up. And these are all songs that I have been writing by myself. I have been offered staggering amounts of money for my company but I would not sell it. These are my songs and obviously I don’t need the money.

Q: In the first issue of Impact, [Sony/ATV Music Publishing CEO] Marty Bandier said that you looked after your songs as if they were your babies. The two of you go back a long way, don’t you?

A: Yes, I was at EMI [Music Publishing] for years and when he left, there was no reason for me to really stay there.

Q: So, Sony/ATV will now administer Realsongs for the world outside North America. What do you expect from that deal?

A: I would hope to get more activities on the songs, although we do pretty well already around the world. You know, whatever they do, I just hope they pay me… (laughs) I trust Marty, we have history – history is a good thing. He’s cool.

Q: You wanted to be a songwriter from a very early age, but always stayed away from the limelight. Usually, you would expect people who want to be in the music business to relish it.

A: I never did. I never wanted to be in the limelight. I never wanted to be a performer. For me it was always about wanting to be that little name on the record sleeve. When I was buying 45rpm records, I was always looking at the centre of the record and looking at the names. That’s what I wanted to be, that’s what I aspired to.

Q: A lot of songwriters want to be the performers of their songs…

A: I don’t. (smiles)

Q: Have you tried?

A: No. I might do a record for the hell of it, just to do one, but I’ve never wanted to be a recording artist. I think you’ve got to do what you are good at.

Q: So what inspired you to be a songwriter?

A: I was inspired by a lot of different people like the Brill Building writers and The Beatles, but mostly I was inspired by the radio. I grew up in the 60s and to me that was the prime period for pop song writing. You had Motown, The Beatles, Burt Bacharach; all these people at their prime and there were so many great songs to have as an influence.

Q: You cover a huge variety of styles.

A: I love writing lots of different songs in many different genres. I guess growing up I heard so many different styles of music. When I first started to listen to music, I heard everything, and I’ve always been a sponge, taking on board all these different influences. I was lucky to grow up in such a fertile musical time. My parents had a lot of records at home so I had a well-rounded musical education as a listener.
“[Songwriting is] a mysterious process for me, so I don’t even like to think about it. I can’t really analyse it, because it’s magical.” 
Q: And how about your education as a musician?

A: I wasn’t educated at all, I’m self-taught. I don’t know how to notate music. I don’t do scores, I write songs. I had one theory class but I didn’t pay attention to it. But I know chords, I can find my way around. I kind of taught myself, really.

Q: So how does it work?

A: I don’t know. Sometimes I sit at the keyboard and play a chord progression or sometimes I start with a title or sometimes with the lyrics. It’s always different. It’s a mysterious process for me, so I don’t even like to think about it. I can’t really analyse it, because it’s magical.

Q: You said somewhere that you would advise aspiring songwriters to start with a publisher. Why?

A: Just look at what I did: I was a ‘nobody’ and I might have had a bad publishing deal but in all truth, I did not deserve a huge deal because I hadn’t proven myself, right? Part of the issue I had with my deal is that when I proved myself, my publisher was not ready to work that out. I probably paid back his investment a million times, but that’s not the point. The point is that in the beginning, you need someone, you need a champion, so if there’s a publisher who believes in you, just do it, because you cannot get through the doors that a publisher can get into. It does not hurt to have a publisher who is excited about you, who’s willing to break down walls for you. As time goes by and you earn money and you become successful, yes, you are in a position where you can own your copyright.

Q: Do you sign other writers to your company?

A: No, we don’t. This is all about me. (laughs)

Q: And why is that?

A: Because I have so many songs…that’s why I got into it. I want to own my own songs; I don’t want to own other people’s catalogue or songs. I’d feel bad. They can keep their own songs. It’s not where my heart is. It’s about my music.

Q: When it comes to licensing your music, are there any brands or products you would not like to see your songs associated with?

A: I don’t think I’d let my songs be used for cigarettes. I wouldn’t do anything for any products that harm animals, that’s where I would draw the line.

Q: Have you ever created songs for specific ads?

A: No, I’ve never done anything like that. But I’d be open for the right thing.

Q: The list of the people who have sung your songs is quite staggering. Do you pick them or do they pick you?

A: There’s a lot of different ways. If I have a song that I feel is right for somebody I will call them. Some will call me. It could come from a manager, a label. If I think a song is great for Daniel Powter, I call the manager, and if he comes over and he does the song, it’s great. Or Lenny Kravitz, or whoever. I’m not shy about calling someone if I think I have the right song for them.

Q: Have you written for artists who have specifically asked you to do so?

A: Yes, I have but mainly I do not write for somebody [in particular]. I wrote a song for Meat Loaf and I wrote a song for Whitney’s new record, her comeback album. A great song, I think, and I wrote it specifically for her. At times I do that, but most of the time I just try to write great songs. If I write a great song, it can be done in lots of different ways, as opposed to writing for one artist, or one style. That’s why my songs are so open – they can be country songs, rock songs or dance songs.

Q: You do have a lot of songs in movies, like recently in ‘American Gangster’. How does it happen?

A: I am usually contacted by someone from the studio. For ‘American Gangster’ it was [Universal Pictures president of film music] Kathy Nelson with whom I’ve done a lot of movies such as ‘Coyote Ugly’, the Aerosmith song for ‘Armageddon’, and ‘Pearl Harbor’. It’s always good to work with her because she knows what she wants. Movies are really hard because there are too many opinions. I call them commidiots, you know, a committee of idiots, because there’s just too many people. Nothing good is done by committee.

Q: Do you isolate yourself from the world of record labels?

A: No, I’m not isolated. I deal with people from record companies. I deal with artists. I am very hands-on in my music but I don’t say I am just a songwriter and I can’t do business. I do both.

Q: What current projects are you involved in?

A: Whitney Houston, Jennifer Hudson, Daniel Powter, Lenny Kravitz, Faith Hill, Pussycat Dolls, and several new artists.

Q: Céline Dion?

A: I wasn’t really interested.

Q: Someone told me that she asked for a cut on publishing to those who supplied her with songs.

A: Yes, they did ask for a cut on publishing. I don’t think it’s right when people do that. I didn’t give them any but I know they got it from some other people. I think it is so wrong.

Q: Are there any artists you have never written for and you’d like to?

A: Probably people I haven’t met yet. I’ve been lucky enough, and I’m currently lucky enough to have worked with some great artists. I always wanted to work with some of the greats, but there’s always someone new to work with. I love great singers, great voices, so there’s probably a great voice out there that I don’t know yet that’s going to knock me out and for whom I will have to write a song for. That’s what’s so exciting – there’s always someone new to write for and maybe my song is the one that’s gonna give them the chance to have a huge hit and become a star, and I could say I was there right from the beginning, and then they’ll go, “Diane who?” (laughs)

Thursday, November 11, 2010

You Can’t Always Get What You Want…

by Emmanuel Legrand

This may not be the best rendition of ‘You Can’t Always Get What You Want’ but it is certainly the most cheerful of all (check it out on YouTube).
It was shot in a rehab centre where patients with severe physical damages try to get on with their lives. Theirs is a world of broken bones and shattered lives, with lots of pain. And yet, through this version of the Rolling Stones classic, they manage to bring a smile to your face and lift your spirit.
The video is the brainchild of an old friend, Eric Dufaure, whose life was turned upside down in August when he was run over by a bus in Paris while cycling.
One of his legs is in pieces and he’s been in this rehab centre ever since, following multiple surgeries. He is now allowed to go back home for the weekends.
Eric’s life has always been about music. He was destined to be a banker after completing his Harvard MBA. But then, at the end of the 70s, Chris Blackwell (whom he was related to by his mother), tempted him to work in the music industry. “Come on,” he said, “you are not going to be a banker all your life.”
Eric jumped ship and never looked back. While in New York he ran Blackwell’s management company and started a music production company (Whale), an indie label, Cachalot Records (Comateens, Thomas Leer), wrote a few songs (‘Pigalle La Blanche’ with Bernard Lavilliers), and got married to Carol.
Eventually he went back to France, where he secured a job at France’s rights society Sacem, and went on working for EMI Music Publishing, before launching a new music company, Beluga.
A huge fan of the Beatles, Eric has music in his blood. He is a relentless optimistic, and that’s what transpires in this short movie. Thanks for the music. And bonne chance!

Friday, November 5, 2010

Hands v. Citi – It’s a gas!

by Emmanuel Legrand

“We’re all in it for the money” and obviously some are more in it than others. But the irony in Frank Zappa’s lyrics was certainly lost on Terra (not so) Firma boss Guy Hands when a New York jury decided that he was not duped by Citi when buying EMI, and that he made a conscious decision as an investor.

Guy Hands
Hands v. Citi was above all a case about who, in a pond where gangs of piranhas were circling around hordes of crocodiles, was the baddest. Hands is some kind of 2.0 version of Gordon Gekko. His whole life is about making money, more money (or else why would have he been dodging taxes by living in Guernsey, at the expense of only seeing his parents and family on rare occasions).

And here you have a jury of nobodies, not chosen among the masters of the universe, who tell the world that, after all, he is not so good at his business. That he should have thought about it twice before spending billions on EMI. That he knew what he was doing or else his due diligence process was faulty. That he should have been more careful when choosing a bank that was adviser as well as lender.

So Hands’ reputation is in the gutter. Citi’s does not come across as too pure either. And EMI is in deep shit. The best thing that could have happened to Hands was a verdict going his way. He would have had his exit strategy. Now, EMI’s future will be in the hands of Citi if Hands cannot meet its financial obligations. And that might not necessarily be a bad thing. As an owner and operator, Hands has not really done such good job there too (see previous posting).

Maybe it would be time for Hands (who also bears the title of 'chief investment officer' at Terra Firma) to consider retiring. But will he? As one EMI artist eloquently put it, “Money – It’s a gas!” It sure is…

Tuesday, November 2, 2010

Chrysalis for sale…again!

By Emmanuel Legrand

Here we go again: the board of independent music company Chrysalis has decided in its great wisdom that it was the right time to sell or merge the company.
Déja vu? Sure, the company was up for sale only three years ago! The plans were shelved after the credit crunch crisis and because apparently no one was prepared to match the high price asked by shareholders.
History repeats itself, and with the same causes creating the same effects, Chrysalis’s day-to-day business will be deeply affected (would you sign to a company whose future is totally uncertain?) and the life of the songwriters who are signed to the company and its employees will be severely disrupted.
Chrysalis songwriter Ray LaMontagne
With a rich catalogue of over 100,000 works, and representing the publishing of such acts as Ray LaMontagne, Damon Albarn, Mastodon, Pendulum, and dozens of other songwriters and composers, Chrysalis can be a very attractive target.
According to some press reports, “shareholders expressed their frustration at the company’s low share rating”. It did not make enough money for them.
At the moment, the company has a market capitalisation of about £74m ($119m). Shares closed on Nov 1 at 130.5p, and some estimates suggest the company could be sold at 200p a share. But that was also the price that they were expecting in 2008 and no one was prepared to pay that amount. However, the financial climate has changed and music publishing has proven to be quite resilient in the current environment. Last year, Chrysalis reported a net publisher's share (NPS) of £13.4m ($21.45 million).
Suitors, according to press reports, could include Imagem, the company backed by the Dutch pension fund, which has been very active purchasing companies in the past couple of years, and BMG Rights Management, the joint venture between German media group Bertelsmann and the “global alternative asset manager” KKR, launched in 2009. Bug Music, which is backed by private equity investors, could also be a player.
A couple of majors will probably look into the deal: Universal, always interested in new acquisitions, and Sony/ATV, whose chairman/CEO Marty Bandier has indicated in the past that he was keen to grow his catalogue through acquisitions.
Chrysalis is the perfect example of why music companies should not be publicly quoted. Over the past decade, under pressure form shareholders, the company – chaired by co-founder Chris Wright, who owns 29% of Chrysalis, and now run by CEO Jeremy Lascelles – has been going through a process of divesting from one business after another. Off went the books division, the TV production arm, and the radio group.
In the end, all that was left was the music division, mostly the publishing catalogue and the label Echo. In 2007, institutional shareholders asked Lascelles and Wright to explore the selling of the company, with no apparent success. Meanwhile, during the time the company was on the blocks, business conditions deteriorated, all signings were frozen, and the company started to lose market share. This situation is quite likely to happen again, with serious consequences on the viability of the company and the well-being of its songwriters, should the process drag on.
In an interview with Impact Magazine in 2008, Wright described the selling process as “quite debilitating for everybody connected with the company”. Lascelles added that it was a situation that the management was reluctant to get into but had to because of its institutional shareholders.
The real issue in publishing is that there is a limit to the value one can extract from a catalogue. It is the new repertoire that pulls the company forward and Chrysalis has always been noted on the market for its aggressive A&R policy, which paid serious dividends, thanks to the quality of its team and its signings. Talent requires time to develop, and investors, at least this type of investors, want a quick return.
Therefore, is hard – but not unexpected – to see any industrial strategy here from the shareholders. Building a strong entertainment company was not their concern – maximizing their investment was certainly their priority. On the other hand, Chrysalis is the work of a lifetime for Wright, and he probably has a clearer vision of the business than his shareholders.
In 2008, Wright said in Impact that having institutional shareholders helped Chrysalis expand and develop, including in the music business. At the same time, he added that they did not always take the long-term view and did not factor in the cyclical aspect of the music industry. “Institutional investors who come to an industry for a short period of time, [if] they feel that the industry is not in a growth cycle, they don’t want to be part of that any more,” was his analysis.
“They look at everything like a commodity, but music publishing is not a bad commodity if it is a commodity,” he explained. “If you own the copyright to, say, ‘My Way’ in America, which is something that we own, you have something for which, at the end of the day, you will receive a cheque. You’ll never receive a bill; you’ll always receive a cheque. It has some value, it is like a bond. It is probably a safer place to have your money than in some of the banks.”
Obviously, Chrysalis investors would prefer to put their money in some “safer” place. 

Update (10 October 2011):
Chrysalis was eventually sold in November 2010 to BMG Rights Management, the joint venture between German media group Bertelsmann and VC fund KKR, for £107m. CEO Jeremy Lascelles left the group shortly after, while chairman Chris Wright joined the supervisory board of BMG Rights Management. 
BMG Chrysalis also bought in September 2011 Bug Music for an estimated $300m. And are bidding for some of EMI Group's assets.