MIDEM 2012 went through a complete overhaul, with greater focus on
aspiring artists and technology companies. All this takes place as the music
industry’s legal environment is changing fast. Here are a few thoughts on this
new copyright eco-system based on things heard and seen in Cannes at the end of
January. The pdf version is available on MIDEM’s web site.
1. Know your rights!
The opener to The Clash’s 1982 album ‘Combat Rock’ would be appropriate
as the tag line to any music industry conference attended by a significant
number of artists, including MIDEM. And it certainly was the motto of US jazz
composer and pianist Marcus Johnson, founder of Marimelj Entertainment Group,
who repeated the message at both his mentoring session and during the panel
‘Publishers as an Early Ally in an Artist’s Career’. “Rule number one,” he
boasted, “know your rights. Then you can protect them and learn to better
exploit them.”
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| Marcus Johnson |
For Johnson, artists who do not apply this basic rule face the risk of
making important mistakes that will have consequences on their careers and
their financial well-being. “Copyright is an asset,” he said.
Fellow composer and board member of British author’s society PRS for
Music Simon Darlow went in the same direction when he advised artists to “never
sign any contract without fully understanding its implications” and urged to
find proper legal representation before signing any legally binding document.
Why does it matter?
Because nowadays, artists have now a bigger and more complex playground
to contend with, and legal shenanigans could often overwhelm them, but if these
legal issues are not addressed, they stand to lose a lot, as many sessions at
MIDEM has shown.
2. The last of the Mohicans
There’s a small tribe that is trying to survive in the current
environment: the independent publishers. Many of them, seen in Cannes, have the
feeling that they are an endangered species. Their business, in their view, in
under threat from the rise of super-publishers (the big remaining three,
following the pending merger of Sony/ATV and EMI Music Publishing), the new
comers with big wallets (BMG Rights Management, Imagem, Kobalt) who also try to
combine recording and publishing rights, and all those who have the backing of
bigger groups.
“The stand-alone independent publisher is going to be a rarity, an
anomaly,” says Francois Millet, founder of Paris-based Vital Song. “Most
publishers these days are attached to a label or a media group, or have the
financial backing of VCs. It is going to be very difficult in the near future
for people like me to set up shop and trade as stand-alone publishers. They
will not stand any chance to survive and compete with stronger and better
financed companies.”
In addition, they will not have the capacity to compete on the
sub-publishing market, which can give a steady stream of revenues to those who
have the financing and the infrastructure to take on sub-publishing deals.
Why does it matter?
Because in a market that is seeing more consolidation on the recording
and publishing side,
independent publishers are crucial to the eco-system in that they are very
often the first port of call and the champions of up-and-coming artists/songwriters. See below…
3. Publishers as the A&R engine of the industry
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| Bobby Bazini |
The central role of music publishers in today’s environment can be
highlighted by the story from a MIDEM regular, Diane Pinet, founder of Les
Editions Bloc-Notes Music in Montreal, Québec. Instead of simply focusing on
major acts or catalogues (she has both), she has continued to invest in new
acts. A few years ago, she signed to a publishing deal newcomer Bobby Bazini,
who showed promises as a songwriter and as a performer. She shipped the artist
to all the labels in the French-speaking part of Canada, without any sign of
interest.
Out of desperation, she self-financed the recording of the artist’s
debut album and decided to release it herself (and eventually sign a license
with Warner Music, which released the album in 38 countries). The album has
yielded a top 3 hit single in Quebec, where it has sold in excess of 80,000
units. And since Pinet controls both the publishing and the recording, she can
strategise all the major steps of Bazini’s career.
“Our work has shifted and A&R is back at the core of what we do as
publishers,” says Pierre Mossiat, CEO and co-founder of Brussels-based Strictly
Confidential. “Label used to do artist development and invest in careers. But
there’s not many people left doing that at majors and most indie labels cannot
afford this role. So it is up to us to sign unsigned artists, help them record
demos, eventually recordings of their songs, pay for independent promotion to
put them on the map, find agents and tour promoters and build their careers.
Our job has never been so interesting.”
Mossiat recently signed to publishing British alternative rock band
Editors and its lead singer Tom Smith, ex-Pipettes Rose Elinor Dougall, Carl
Barât and Liz Green. “These signings have one thing in common: they all have
great songwriting skills,” explains Mossiat.
Why does it matter?
As custodians of musical works, they are the key component that can help
aspiring songwriters to transform their musical dreams into careers. As in the
new environment they are back at the heart of the A&R process.
4. Artists and labels could benefit from copyright extension in the
EU
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| Michael Sukin |
It took a few high-caliber US lawyers to explain to an avid MIDEM crowd
in which way the recent extension of copyright for recordings in the European
Union from 50 to 70 years.
At the panel ‘New Horizons in Copyright Law’, Michael Sukin, chairman of
Sukin Law Group in New York, said that the new EU Directive will ensure that
“songs get better protection, records get another 20 years, artists get new
money, artists get termination rights." During the International Music
Publishing Summit, Sukin broadened his point by suggesting that the Directive
created legal certainty and clarity on a pan-European level.
Why does it matter?
Because this puts Europe on par with America when it comes to duration
of copyright, and it will provide artists and labels with longer periods of
time to earn revenues from their works, or the ownership of musical works,
before they fall into the public domain. Opponents to this measure argue, on
the contrary, 50 years is already a long period of time and that the extension
to 70 years gives ownership for too long before the public can benefit from the
works without restrictions, and that it does not generate significant
additional revenues for artists. This is certainly an issue that will be
revisited during the next few MIDEMs…
5. It’s the data, stupid!
One of the hot topics at MIDEM was the state of development of the
cross-industry project named GRD or Global Repertoire Database. In a more detailed MIDEM blog I outlined the discussions that took place in Cannes. These were
reports on the public discussions at the panel that took place during the
International Publishing Summit, co-organised with music publisher’s body ICMP,
but there were many offline meetings between professionals in Cannes, trying to
iron out a whole range of issues, such as governance, transparency, integration
of existing databases, commitment of all parties, etc.
Sources close to the discussions (that have continued since MIDEM) say
progress has been made, even though Sami Valkonen, head of international music
licensing at Google, expressed his irritation in Cannes at what he considered
was the slow pace of the project.
One sticky issue will be the ownership of data in the database. Will it
be open to everyone, will it be “owned” by each stakeholders, or will the
ownership stay with authors, as suggested by the CEO of German society Gema
Harald Hecker?
Why does it matter?
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| Karen Buse |
Simply because data will be the foundation to the 21th Century digital
business (see below). Proper identifiers will be the oil in the engine of the
licensing machine. And as metadata evangelist FX Nuttall usually says: “If you
put crap in, you’ll have crap out!” The better the data, the more chances you
will have to be remunerated, whether you are a composer, a lyricist, a
publisher, a performer, or a label. And it simplifies the job of digital
services and collective management organisations in their task to identify
rights holders and remunerate them (ever wondered why Google is so interested
in the GRD project?). As PRS for Music director of international Karen Buse
pointed out, the GRD will allow “speedier and more accurate distribution for
our members”. For songwriters and composers, it starts at the very basic level
of properly registering songs with local authors’ societies, but it is also the
responsibility of publishers and labels to provide clean data.
6. Shifting the digital business from ownership to access
The recent digital trends are streaming and the cloud, and they are not
necessarily exclusive to one another. In 2011, streaming became ubiquitous,
thanks to the development of Spotify, at last in the US since MIDEM 2011,
Deezer, Rdio, We7, and others. In addition, three major players went “into the
cloud”: Apple, Google and Amazon. And Sony launched in 2011 Music Unlimited,
which offers unlimited streams and a cloud locker based on the scan-and-match
technology.
Scott Bagby, head of strategic partnerships at Rdio, the new digital
platform that launched in the US last year and in a few other countries,
considers that these new services represent “the next generation in the
industry, it is about access. Consumers are changing from a consuming &
ownership model to an access model.”
But it will not happen without having to redefine the contractual
relationship between rights holders and the platforms. At the panel ‘The Cloud… Is it just a licensing issue?’, moderated by yours truly, Charlie Lexton, head
of business affairs/general counsel for indie labels’ Merlin, said that “it was
the rights holders’ job to turn cloud services into licensed services”.
Why does it matter?
 |
| Richard Conlon |
Simply because, as Bagby said, this is “the next generation” for digital
music and both streaming and cloud platforms are likely to become the services
of choice for consumers. And eventually the volumes traded by these services
will become such that they will generate significant revenues for rights
holders.
For Richard Conlon, Richard Conlon, senior VP of corporate strategy,
communications and new media for US performing rights society BMI, these
services represent “a creative opportunity as well as a commercial opportunity:
more repertoire is accessible generating more micro payments”. Hence the need
for the best metadata (see prior point).
7. Digital revenues are up as more repertoire gets licensed to more
platforms
The recent ‘Digital Report’ unveiled just before MIDEM by international
labels’ body IFPI showed that global digital revenues were growing, with two
main sources of revenues: downloads and streaming. At $5.2 billion in 2011,
they represent 32 % of the global music industry. In the US, digital revenues
have exceeded those from physical formats. They are now the primary source of
revenues for record companies. And this is apparently a taster for things to
come.
 |
| Mark Mulligan |
Analyst Mark Mulligan pointed out that digital revenues have been
growing significantly in 2010 and 2011 and that the trend should continue. The
biggest growth was experienced by streaming services such as Spotify (which
eventually launched in the US in 2011), Deezer, We7, Rdio and others. The
leading digital music services are now present in 58 countries, compared to
only 23 at the start of 2011, according to the IFPI.
Another source of satisfaction for the industry is the increase in the
number of users opting to subscribe to a music service. The report points out
that at the end of 2011 there were 13.4 million subscribers worldwide, a 65%
increase year-on-year.
However, one dissenting voice was heard in Cannes, that of U2’s manager
Paul McGuinness, who contended that Spotify “has yet to become popular with
artists because artists don't see the financial benefit of working with
Spotify. [But] I see no reason why the basic Spotify model should not be part
of the future.”
Why does it matter?
Digital has become a significant source of revenues for artists, labels
and publishers. For Mulligan, even if volumes are low at the moment, streaming
can now represent up to 50% of an artist’s digital revenues. And since the pot
is growing, revenues to artists will grow too (in theory).
8. Rights societies see rising revenues too…
Speaking of revenues, those from compositions and songs seem to be doing
well too. With rights societies were present in masse at MIDEM, which was the
event CISAC, the International Confederation of Societies of Authors and
Composers, chose to present the latest report on global royalties collections.
According to the Paris-based body, gross royalty collections reached a peak in
2010 at €7.545 billion, a 5.5% year-on-year growth. Musical repertoire
accounted for 86% of total collections and Europe, as a region, generated 61%
of total revenues.
Public performance accounted for the largest part of total revenues
(73%) at €5.5 billion (up 7.5%), with revenues from the recording industry
coming second with 23.4% of total collection. Digital revenues only represent
1.7% of global collections.
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| Simon Darlow |
For the organisation’s new Director General Olivier Hinnewinkel these
results show “that collective management is the solution for today and
tomorrow, generating wealth for creators while withstanding economic changes
and supporting digital music markets.”
Why does it matter?
Because rights societies represent songwriters, composers and publishers
collectively and negotiate on their behalf with all sorts of users of music,
they play a key role in the eco-system. Hence British composer Simon Darlow’s
invitation to songwriters to “register your songs with a collection society as
a first priority.”
[Disclosure: I work with CISAC as a consultant on the World Copyright
Summit for which I am the conference coordinator.]
9. …but societies are under scrutiny and pressure in Europe
It’s the final countdown for Europe’s new legislation on collective
licensing. A process that has started a few years back should find its epilogue
when a new Directive on collective management will be presented by the European
Commission this spring. The announcement was made at MIDEM by Kerstin Jorna,
the deputy head of cabinet of European Commissioner for Internal Market Michel
Barnier at the European Commission in Brussels.
 |
| Kerstin Jorna |
Jorna was one of the speakers at the session ‘Lost Property: The Future of Collective Rights Management in the EU’ presented by German authors’ society
Gema at MIDEM on January 30.
The Commission has been willing for long to establish rules that would
facilitate cross-borders licensing and fluidify the market. “We want to create
a digital single market for the benefit of all,” said Jorna, who added that the
Commission aims to provide stakeholders with framework and a level playing
field. “Want to have clarity on multi-territorial licensing,” she said.
The process will be long and complicated with lots of politics between
the Commission, national governments and all the stakeholders from creators to
digital services, mobile phone operators, ISPs, etc). The CEO of GEMA Harald
Hecker welcome the process initiated by the Commission, but reminded Jorna that
“collecting societies need the legal framework for two reasons: we have to
create a level playing field for fair competition – in the EU you have 27 rules
for societies and we need harmonisation of these rules. Without these rules
there is no fair competition. And we need legal certainty. As of today, there
is no cooperation with societies because we don’t know what we can do and what
we cannot do.”
Why does it matter?
First, as reminded by Hecker, societies in Europe need to know what is
their legal framework so that they can make decisions knowing what they can do
and what they cannot do. Second, it will create a framework by which in theory
repertoire will be easier to license for cross-borders usages. And last,
because – as reminded by Alfons Karabuda, executive chairman of Europe’s
association of composers and songwriters ECSA, “collective management societies
are the ones that can treat repertoire equally”. And Karabuda added,
paraphrasing one of the Rolling Stones’ 60s hit, “Time and cross-borders
licensing is on my side.”
10. Creativity and copyright remain the foundations of the music
industry
Amid all the discussions about the future of digital music, the impact
of new mobile Apps, the development of the cloud, the rise of subscription
streaming services, the existence of new stream of revenues for artists, it was
interesting to note that all this new economy would not exist if there were not
creations from artists. And these artists have relied for a couple of centuries
on copyright or ‘droit d’auteurs’ to ensure that their rights were protected
and the use of their works would generate some remuneration.
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| Peter Hanser-Strecker |
There is a debate at the moment in Europe and in the US about the level
of protection that can be applied to copyright, and policy-makers have to find
a fine balance between the aspirations of consumers and the rights of creators
and that of the industries that have been build around these creations.
There are many interested parties that would welcome a weaker level of
copyright protection and as Peter Hanser-Strecker, CEO of Germany’s Schott
Music, noted in Cannes, “Protection of copyright is as strong as the weakest
member.”
Why does it matter?
Because the whole point nowadays is to figure out if it is possible to
continue to have a sustainable eco-system around creative industries that can
operate with one currency, copyright, and one business principle, licensing. It
is the combination of the two that makes the system work, for those who want to
be in the system, of course.
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