Day 1 at Midem -- The cloud, Vivendi, a global database and Barnier

by Emmanuel Legrand

A review of things that happened, were seen or heard today in Cannes at Midem, the music industry’s annual trade show and conference.

MidemNet:

The digital music conference offered its usual mixed bag of good and interesting (and sometimes off-base or boring) stuff about the state of today’s digital music business. There were a few inspirational speeches (Terry McBride, Saul Klein, Mark Mulligan, Tim Schaaff), a little bit of politics (European Commissioner for Internal Market Michel Barnier) and some showbiz attitude (French DJ David Guetta).

Most of the contributions focused on the notion that the online and mobile worlds offer lots of opportunities to artists to get known, build a fan base and to expose their music, but there were still very few avenues to make money in the digital eco-system.

It’s frustrating to hear that ten years after the launch of Napster, we are still talking about new business models and monetisation, while only a few services seem to be able to break even, and digital revenues seem to have reached a plateau, according to figures released this week by the IFPI.

Many sessions were offering hopes (yes, there are tools at the disposal of artists and labels) and cold showers (but no one has found ways to really make money from them).

Several discussions focused on the cloud and the shape of the said cloud (and its benefits to the music industry) remains an even bigger question mark. How can it be monetised? And how do you make it legal? And as usual, no one seems to have the answer!

There were also a few positive announcements. For example, Vodafone has registered over 100,000 people to its paid music subscription service in the UK, with a target of a million by the end of the year, according to Vodafone’s content services director Lee Epting.

Meanwhile, Sony Network Entertainment president Tim Schaaff announced that Sony’s Qriocity project, which will allow content to navigate across all of Sony’s consumer devices (350 million of which are available in the world) is starting to take shape. He said that Sony’s Music Unlimited, which launched in December in the UK and Ireland, was now available in France, Germany, Spain and Italy.

Reports on MidemNet can be found on Music Ally’s web site.

Jean-Bernard Levy

In his MidemNet keynote, France’s Vivendi CEO was very casual and open in his responses to the soft questions put to him by FT chief media correspondent Ben Fenton. Yes, he said, the music business is down but Universal Music Group has always provided the profits expected, usually in the region of 10% year on year. Even for a challenging 2010, the leading music company in the world should post a two digit profit rate. As a shareholder, Levy says he is satisfied with UMG’s performance and has re-asserted that music is “key” to Vivendi. “We are very happy to own and operate UMG,” said Levy. That should come s a vote of confidence for Lucian Grainge who took over from Doug Morris at the top of UMG.

Another interesting topic touched upon by Levy is his faith in the growth of the music business in emerging markets like China, Brazil, Indonesia, etc. He believes that, mostly thanks to mobile phones, these countries will add lines to the bottom line where there was nothing before. 

Francis Gurry

The director general of Geneva-based World Intellectual Property Organisation Francis Gurry has positioned his organisation, in his MidemNet keynote speech, as the potential depository and operator of one of the hottest potatoes in the music industry: the Gobal Repertoire Database. This Babylonian project consists in creating one single database for all the music works, listing the various rights owners for each work. The GRD is believed to offer greater fluidity for the digital market in enabling works to be identified and rights owners to be remunerated. Gurry invited the industry to gather at WIPO to discuss the issue. It is the start of a process, but it remains to be seen if a consensus could be reached on the GRD when so many stakeholders have conflicting views on how to get there.

Michel Barnier

For the European Commissioner Michel Barmier, in charge of Internal Market, and thus overseeing intellectual property issues, MidemNet was the opportunity to outline some of his views regarding some crucial issues for the industry such as copyright legislation, collective rights management in the single market, and the development of Europe’s digital economy. He confirmed that his department is preparing a Directive on collective management that will be presented for discussion this spring. He said this piece of legislation should ensure a more fluid system that would help develop a true single European digital market. Barnier did not give any details of the proposed Directive, leaving many, especially rights societies, in the dark about his real intentions. Without any doubt, this initiative will focus the attention of many stakeholders for the months to come.

Quotes from MidemNet speakers:

“Music in the digital age is ones and zeros. Lots of zeros.” – Terry McBride, founder, Nettwerk

“In five years from now, downloads will be over, or at least generational… People will be pulling music from their smart devices, and they will consume the music that way. They won’t own it, they’ll just pull it.” – Terry McBride, founder, Nettwerk

“What bits of EMI would I like to pick up? Not the debt! But if some artist contracts are up for renewal, we’ll take our chances.” – Jean-Bernard Levy, CEO, Vivendi

“In the music industry, the model is so badly broken that there is a lot of pressure on artists. They do feel they have to rise up to the expectations and replace what has been lost and I do not this is a reasonable and meaningful expectation.” – Eric Garland, CEO, BigChampagne

“Music’s got to be available whether it’s audio or video across all these devices. We need to get to complete ubiquity.” – Ted Cohen, founder, TAG Strategic

“Our studies show that about 85-90% of the consumers aren’t really involved in the digital music revolution at all.” – Tim Schaaff, president, Sony Network Entertainment

“Digital is just not working at the moment. Music products don’t yet meet consumer demand, and that is the crux of the problem.” – Mark Mulligan, analyst, Forrester