Tuesday, June 16, 2015

Things seen and heard at Midem 2015 (part 2): US copyright, Vivendi, IAO...

By Emmanuel Legrand

In part 2 of our Midem coverage, we looked at what's happening at Vivendi, checked the pulse of the indie community, heard Harvey Goldsmith dismantle the live music industry, saw Europeans bemused by the mess in the US copyright system, and much more. 

The US copyright system is "a mess"... 

The Midem panel on the US copyright system had all the ingredients of a good discussion, and it did not disappoint, not least because of the caliber of the speakers: Jacqueline Charlesworth, General Counsel & Associate Register of Copyrights, US Copyright Office, Elizabeth Matthews, CEO of ASCAP, Cary Sherman, Chairman & CEO of record labels trade body the RIAA, Daryl Friedman, Chief Advocacy & Industry Relations Officer of the National Academy of Recording Arts & Sciences, which organises the Grammy, Ralph Peer, Chair & CEO of peermusic, and Mike Herring, CFO of internet radio service Pandora.

But the discussion quickly turned into what was wrong with the US system, from the antiquated consent decree system, to the lack of performance rights for sound recordings on terrestrial radio, the Copyright Office's need of modernisation and the rate fixing system, among other things. "We have a system that is dysfunctional, has been for decades and we should be fixing it ourselves," summed up Sherman.

Friedman stepped in by stating that the ball was also in the hands of the US Congress, but there, also, things are not as smooth as they seemed: "Congress love us and hate us. Congress wants to solve this problem. But they hate us because we do it in a dysfunctional and segmented way. We deal with Congress as a series of one-offs. We all have a different agenda. We can't get there if we don't get our house in order."

After that preamble, it was fascinating for the US visitors in Cannes to hear the comments from the follow up panel in which non-Americans were sharing their views on the US system. "It's a mess...," said Jean-Noel Tronc, CEO of France's SACEM, who added that Europe creates more value for copyright than the US.

"In Europe, we have situation where regulation is better, more balanced between interests of rights owners and the interests of users, whereas it is the opposite in the US. [In the US], State involvement is higher in copyright than in Europe and for many of us, especially in France, this is a paradox."

These comments were echoed by Robert Ashcroft, the CEO the UK's PRS for Music. "The US is obviously the largest music market in the world and is important to all of us in Europe and especially to UK songwriters," he said. "We look with alarm at the turmoil and what looks to be a manifest lack of level playing field. It is very very difficult to achieve equilibrium in a market with so many tectonic plaques."

Ashcroft fears that the "turmoil" in the US could spread to other parts of the world It has a negative effect on the future of copyright in rest of the world. "We are surprised to see to see such a strong exporter of cultural goods earn so little at home and so much from our countries. We are not expecting to change our laws to copy you."

How nicely were these things said! "It was an eye opener," said one of the American executives present in Cannes. 

Vivendi is getting ready for growth  

Arnaud de Puyfontaine has been at the helm of Universal Music Group's parent company Vivendi for now over a year, and his performance at Midem left a few people in the room wondering if he was the real deal. His keynote Q&A was filled with corporate newspeak ("we believe that we are geater than the sum of our parts"; "first is first and second is nowhere"), and was poor on specifics about the group's strategy.

He did say, however, in a typical French understatement, "We have some money and we are expected to make a few moves to grow again." Indeed, there's a war chest of several billion euros following a series of asset disposals that brought in €36bn. In the past year, the company has been completely re-focused and is now "a pure player in media and content," with UMG and Canal+ Group, with revenues of €11bn, and 50,00 employees.

De Puyfontaine -- who speaks in a staccato manner as if he was paid by the number of words per minute, or is it a tactic to get people lost in the flow? -- said that Vivendi was more interested in organic growth than acquisitions, but was looking for new investments (he confirmed that Vivendi was closing the deal to buy French video platform Daily Motion, with the ambition to trun it into a world leading service).

Asked if did not regret saying he would sell Universal "over my dead body" he said he could "reiterate this statement," describing UMG as an "amazing company" which was No1 worldwide, with "a fantastic team with Lucian Grainge in Santa Monica." This could be read as an endorsement of Grainge but the industry in France -- including Universal employees -- is expecting much more involvement from main shareholder Vincent Bolloré in the music business alongside his son Yannick who looks after advertising group Havas (yes, another typical case of parental cronyism, showing that it is not exclusive to the Murdochs). The question -- a senior Universal executive told me -- was not if there were going to be changes but when, although it seems that Grainge's position is secure at the moment.

When yours truly asked De Puyfontaine how was his relationship with Bolloré, he gave a typical diplomatic answer: "There is no [strategic] difference between Bolloré and the Vivendi team." Which means that Bolloré calls the shots like never has a Vivendi shareholder done in the past.

Harvey Goldsmith takes no prisnoners

Harvey Goldsmith is known for not mincing his words and his keynote at Midem was vintage Harvey. The concert promoter who worked with anyone from John Mayall's Bluesbrakers to Pavarotti, and co-organised Live Aid and Live 8 was in splendid form as he lined up all the things that were not going well in the live music biz.

Agents? Greedy. Festivals? Having a hard time except boutique festivals because of the lack of headliners. Headliners? Missing in action, with the exceptions of Ed Sheeran, Sam Smith, or Beyoncé. Rock acts? They are dying. Labels? They still don't get live music. Ticketing? Sucks! VIP tickets? Regular fans cannot afford them. Secondary ticketing? Racket used to overprice music to the fans. Productions costs? They're rising and sometimes for no reason! (does Michael Bublé really need a super light show?) Comedians? They are the one now filling concert halls and arenas. Extra shows required by agents? Rarely justified, even for McCartney. Live Nation? Maybe theirs -- with management, ticketing, venues and promotion --  is the right model "but we cannot have just one monolith in this business."

It was good fun watching him and it is difficult to argue that he is spot on on quite a few counts, not least on the fact that the music industry cannot seem to be capable to find a place like the UN to solve its internal problems (and in the end, "the only people making money, as always, are the lawyers"). 

The indie spirit lives on 

Midem is by and large a business platform for indie publishers and labels. The true spirit of independence was evident during the keynote talk of three of the leading figures from the indie mouvement: Daniel Miller from Mute, Martin Goldschmidt from Cooking Vinyl and Kenny Gates from PIAS. Miller explained that he experienced life on both sides of the equation before and after he sold to EMI (and then re-gained his independence). "The first years they left us alone," he said. "It was not that bad. I could do pretty much I wanted and had the budgets to do it. Then the relationship changed."

Interestingly, the main problem Miller encountered at EMI was its international release process, by which not all artists get global attention. "I work records from a global perspective. In the end I did not want to sign artists because I knew I would not be able to develop them the way I wanted. I always had very strong independent partners around the world. Being an indie gives me more flexibility in how we work with artists. And the indepedent sector globally has developed into a well run machine to break artists worldwide."

Goldschmidt was on a roll regarding digital opportunities for indies and quite positive overall (see part 1). And Gates sees indies as being responsible. “It’s about the passion and the responsibility. We have to keep the promises we make, try to create careers and the right revenues, and make a living out of it for the artist and for us.”

Elsewhere, Because Music founder Emmanuel de Buretel also heralded the indie spirit by celebrating the value of strength in numbers, through a tool like licensing agency Merlin, which harnesses rights from thousands of indie labels in order to negotiate with online platforms. "Companies like Google don't care about the content, or they are starting to care because content will be more and more important and more and more valuable," he explained. "Big companies use lobbying power to change the law and to be free to do what they want. But we got organised and we can fight back. We lost a lot of ground. The next ten years will be about fight for the lost ground and getting value for what we create." 

Featured artists get organised and make their voices heard 

The International Artist Organisation (IAO), a coalition of performing artists' bodies from around Europe, disclosed at Midem that they have invited the three major companies to work on a code of practice following the disclosure of the contract between Spotify and Sony Music.

Speaking in Cannes, IAO chair and CEO of the Featured Artist Coalition in the UK Paul Pacifico said that the issue of breakage -- ie. the unallocated income from advances or royalty payments - raised a lot of questions. "We invited Universal as market leader to work on a code of practice," he said. "We are waiting for their response and we hope to work with them soon." The invitation will also be extended to Warner and Sony.

This initiative, according to Pacifico, shows that the IAO "is not just a nice talking shop to talk about how to make the world better, but an organisation actively engaged in campaigns to make a difference for all the performers." The IAO wants to get its voice heard in the current European debate on copyright and overall, wants to foster a better music eco-system. "Our intention is not to destroy the industry and create some sort of rebellion but to improve the industry," said Pacifico.

Pacifico added that IAO supported IFPI's position on safe habours or WIN's declaration on transparency. "This sets benchmarks for accountability and transparency. We as an industry have plenty of internal issues but there are plenty of external issues that we can work together on." 

Obviously, the message was heard. The IAO gathering at Midem was attended by a number of high level executives such as IFPI CEO Frances Moore, RIAA chairman/CEO Cary Sherman, and Impala Executive chair Helen Smith. 

Neighbouring rights are a big business 

At the initiative of French neighbouring rights society Adami, I presented at Midem the findings of a report on the global market for neighbouring rights. Co-penned with former SoundExchange CEO John Simson, the study shows that the global market is North of 2 billion euros (music and audiovisual repertoires combined). Europe accounts for close to 50% of the collections and the second largest region is North America, thanks to the on going growth of SoundExchange in the US. The top 10 markets account for 82% of total collections, with the top three being the US, the UK and France. South America shows promises, and SE Asia and Africa are almost virgin territories. The report is available in French on Adami's web site. An English version will be ready soon. 

The future of neighbouring rights and publishing

I moderated two panels on the 'Music business stage', one on neighbouring rights and the other on the new generation of music publishers. The first one -- featuring PPL CEO Peter Leathem, Adami CEO Bruno Boutleux and the Featured Artist Coalition chief executive Paul Pacifico -- fully confirmed the importance of neighbouring rights as a significant source of revenues for both performers and record labels in the digital age, and the enormous potential of growth in many parts of the world where these rights are still in their infancy. But also the need for the whole network of neighbouring rights collecting organisations to step up their game and modernise their systems and the way they operate. 

The other panel was a good occasion to hear from the new generation of music publishers: Benjamin Bailer, President, Globe Art Group (Germany/US/UK); Edwin Cox, Managing & Creative Director, West One Music Group (UK); Jessica Ibgui, A&R/Creative Manager, Buddemusic (France) and Tommi Tuomainen, CEO, Elements Music (Finland). They did show that there was still room in the music business for young talented and passionate executives, who understand both the value of a song and the ways to add value to songs.

Will India soon have a new PRO? 

Ran in Cannes into a music publisher based in India who was very happy the share the info that, in India, a competing authors' society to the existing IPRS was currently been set up with the aim to start operating next year with, most likely, the repertoire from all the major publishers. Authors such as Javed Akhtar and international publishing houses have been complaining for years about the inefficiencies of IPRS and by its governance and lack of transparency. That's what I like about Midem. In five minutes, you get updates from all around the world...

And to finish, here's a selection of quotes from Midem:

UK recording artist Sandi Shaw is egotistic:
"The music industry has an ego-system and we need an eco-system." 

Mute founder Daniel Miller has limited patience for bad managers:
"I work with a lot of managers and a lot are not very good -- they are just mouthpiece for the artist. The worst managers are the ones who try to divide and rule and they are generally insecure. The best ones are the collaboratives ones." 

Concert promoter Harvey Goldsmith is not keen of free:
"We don't work for free, record companies don't work for free, employees at Deezer do not work for free. So we need to get them [streaming platforms] to pay."

Sony Music Entertainment CEO Doug Morris does not like to be yelled at:
"The thing about running a company is to treat people with respect. Make people working for you feel great, make them know you appreciate what they do. People are your most important asset. That's the culture I believe in. I hate screamers, I hate people who abuse other people, and at the companies I'm in charge of, that's not tolerated."  

Doug Morris on his biggest contribution to the music industry:
“Taking on the internet service providers. We turned videos, which cost tens of millions of dollars in expenditure to promote the artist, into a tremendous profit centre which is increasing every day. You can’t be afraid of things, you have to go and face them. It was a wonderful victory for the industry.” 

Martin Goldschmidt, founder of Cooking Vinyl, knows a few things about artists' psychology:
"We try to underpromise and overdeliver. It is all about managing expectations, and try to do better. We don't have a long contract with Billie Bragg. it is a two year contract. And we've been together for 20 years. He sees us as working for him." 

PIAS co-founder Kenny Gates has clear views on what makes majors different than indies:
"At indies, we work for artists, at majors, artists work for them." 

Vivendi CEO Arnaud de Puyfontaine knows at least three Universal Music artists:
"We want to find the Stromaes of tomorrow, the new Sam Smiths, the new Aloe Blaccs. We have team to find them promote them. This is our raison d'etre." 

De Puyfontaine understands what makes artists tick:
"At UMG and at Vivendi we want talent to come to us and stay with us because it is the best place to grow, be successful and make money." 

De Puyfontaine is not afraid to offend primates:
"If you pay peanuts, you get monkeys, so we need to be able to fund content in the new economic environment."

De Puyfontaine does not give a monkey's about answering journalists' questions:

"What are we going to do with out our cash? I am not going to answer your question." 

Laurent Petitgirard, chairman of the board of French rights society SACEM, is full of love for the European Commission:
"When the president of the European Commission Jean-Claude Juncker, in his inaugural speech, talks about silos of authors' right as one of the main problems of Europe, we are more than surprised. This is plain amazing: Copyright is not a problem but the solution."

 SACEM CEO Jean-Noel Tronc is looking for friends in the US:
"The US market is one of the worst in the world in terms of creation of value for copyright." 

Robert Ashcroft, CEO of PRS for Music, tries to be positive
"The US is just eons behind [Europe] in looking at its fundamental copyright system and I would not want to be influenced by that." 

Attorney Dina LaPolt has issues with the way her country treats artists:
"[The USA] represent 33% of the world's [music] market and we are treating our creators the worst."  

LaPolt on Darwinian laws applied to songwriters:
"The most vulnerable group [in the music eco-system] is the songwriters and they are on the verge of extinction." 

ASCAP chairman/president and songwriter Paul Williams begs to differ:
"Songwriters are not an endangered species. But we need protection and we need respected for what we give."

Check part 1 of the Midem report.

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