New report for the European Commission calls for the creation of a European Music Observatory

A report commissioned by the European Commission's Directorate for Culture and Creativity has concluded that a European Music Observatory would be a significant tool to help “fill data gaps, contribute to a better knowledge of the sector and help inform music sector policy within Europe.” We published here an edited version of the report's executive summary. The full report, penned by Panteia and KEA, can be found here.

As part of the 2018 Preparatory Action “Music Moves Europe: Boosting European music diversity and talent”, following a 1.5m EUR budget allocation from the European Parliament, the Commission's EAC Directorate for Culture and Creativity launched four calls in the spring of 2018, among which was “The feasibility study for the establishment of a European Music Observatory (EMO), and a gap analysis of funding needs for the music sector”. This final report, published this week by the European Commission, addresses the feasibility study for the establishment of a European Music Observatory.

  The aim of this study was to investigate the options for a data collection organisation, called "the Observatory" as a core strategic resource to drive relevance and value for future policy actions in the music portfolio and across the sector. The specific objective of this study was to analyse different scenarios for the set-up and operation of the Observatory, including considering the models from other European (cultural) observatories, taking into account the specific characteristics and requirements of the European music sector.

In order to meet this objective, several tasks are carried out:
  > Determining the scope of a future Observatory (what data should and can be covered);
  > Identifying gaps in data availability;
  > Researching the potential costs and possible organisational basis for a credible Observatory function;
  > Analysing the different options, taking into account the above elements, and identifying the most viable option. 

  One of the key findings of this research has been to confirm the fragmented, scarce and poorly-harmonised nature of the data collection landscape in the field of music. These data conditions and the problems they present for effective management and policy development are the fundamental reasons for supporting the creation of a European Music Observatory. 

  In particular, robust and meaningful comparative data collected at a regular basis are essential when it comes to assessing the need for interventions at the EU level to address gaps in the market and enhance the efficiencies and global competitiveness of the sector. The sector is therefore calling for systematically-collected and centralised music data and an intelligence hub at European level.

  A European Music Observatory would help fill data gaps, contribute to a better knowledge of the sector and help inform music sector policy within Europe. 

Benefits of a European Music Observatory

  The authors of this study have found that the creation of a European Music Observatory would have an impact on the European music ecosystem by identifying gaps in the market and informing policies to address these challenges.

  At a general level the following benefits were identified: 
  > It would contribute to setting better data standards for the music sector on a pan-European level.  
  > It would stimulate European statistics agencies to incorporate new and more granular standards for data pertaining to the music sector.  
  > It would encourage national statistics agencies in EU Member States to work in sync with EU statistics agencies and provide country comparable economic data on a structural basis about the sector across the EU.  
  > It would incentivise music industry organisations representing the various sectors to improve the quality of their data collection and distribution, and, in some case, to generate schemes to collect and start providing data which was previously unavailable (e.g. on live music, music publishing and neighbouring rights, societal impact of music, among others).  
  > It would create a set of best practices in terms of data collection that will trickle down to all levels of the music sector. 
  For European and national policymakers, a European Music Observatory would provide additional specific benefits:
  > Act as a structure providing data and intelligence about the music sector in order to identify issues specific to the sector and pave the way for targeted evidence- based policies and solutions for the sector.
  > Being able to monitor quantitative indicators on the sector, in order to measure the impact of public policies, and assess improvements in the way the sector operates.
  > Greater in-sight and understanding of the importance of music for society by looking at participation in music activities per Member State and across Europe, including educational, amateur and volunteering work, considering social and environmental impacts.
  > Information gathered by an independent specialised institution rather than information provided by the sector on an ad-hoc basis to inform public policies related to the music sector. 
  For the music sector, the benefits would be as follows:
  > There would be a European structure the sole purpose of which would be to collect and produce data and intelligence about the sector, covering all the aspects of the music eco-system, and providing this insight to the sector.
  > The European music sector would be able to have a pan-European overview of the economic and social value of the sector, with the opportunity to monitor the evolution over time.
  > The music sector would have the tool to research gaps, barriers and challenges in the way the sector operates in order to suggest remedies and policies.
  > It would foster a culture of transparency in the sector, by setting up new tools to monitor the changes and progress made by stakeholders.
  > The music sector would have the proper tools to monitor the circulation of repertoire within the EU, but also outside the Union and measure diversity within the sector. 

Four pillar structure  

  One of the main tasks of this study was to analyse the main data needs of the music sector. The backbone of the proposed data collection structure should be EU-added value. Taking these elements into consideration, the report suggested a “four-pillar” model that would categorise data-collection and analysis as follows:

Potential options for a future European Music Observatory

  Based on the research carried out in the context of this report, several feasible options were developed:
  > A light touch Observatory function that would be maintained by the Commission centrally managing and contracting out several studies per year through calls for tenders/proposals.
  > Another option the authors explored was integration of the tasks (or certain tasks) of a European Music Observatory within the structure of existing cultural or related observatories. In particular, the European Observatory on Infringements of Intellectual Property Rights (EUIPO) and the European Audiovisual Observatory (EAO) were identified as possible options for integration of European music data collection activities. 
  > The most advanced solution proposed by this study is an autonomous fully-fledged European Music Observatory, based on the model of the European Audiovisual Observatory. This would be an autonomous structure, which would require a large amount of political support to develop, both from within the EU institutions and Member States, as well as very significant financial resources. Very importantly, it would also require more staff in order to carry out the larger scope of work, as well as a suitable location to work, implying very significant financial resources. However, it would allow for efficiency gains, in that there is a consistent and dedicated team working on the analysis and research activities. 
  > As a short-term means to deliver on some form of a European Music Observatory, the most feasible option that is recommended by this study would be the ‘scale up’ approach. This would involve creating a light initial support structure and increasing the scope of the Observatory over time, allowing it to expand and develop its activities over time.

Conclusion

  The main message of this study is that the majority of stakeholders and policymakers consulted support the establishment of an independent European Music Observatory which should be financed mostly (if not exclusively) with European Union funding. Stakeholders consulted in the course of this research expressed interest to cooperate with the European Commission in the development of a future European Music Observatory.

  The creation of an independent and trusted source of data and intelligence would help achieve greater transparency in the sector. For example, policies would no longer be influenced by the needs of a particular sub-sector, but based on the analysis of empirical data. Transparency would also be achieved by ensuring that each sub-sector would indeed contribute – with help and incentive from the European Music Observatory – to the data mining processes, helping to create a larger set of data than the existing one.   

  The creation of a European Music Observatory has been part of discussions within many European stakeholder organisations, as well as within the broader European music community. This “appropriation” of the EMO idea by sectoral stakeholders also is a clear sign that the Observatory is seen as an important potential tool for the sector. A European Music Observatory would be of collective interest for commercial, not- for profit and public operators active in the field of music.

  The creation of a European Music Observatory would ultimately be a sign that the music sector is receiving the full attention from European policymakers and Member States as part of the efforts to support and promote Europe's cultural and creative sector. The music community was among the first to be hit by the digital revolution, which shook its established business models, and yet it has proven extremely resilient, thanks partly to the strength of the booming live environment, music streaming and the recorded music sector’s ability to adapt quickly to a fast-changing environment.

  Now that there is a renewed optimism as a result of the rise of streaming, the music eco-system is also more complex and interconnected than ever. Not only should the European Music Observatory reflect and monitor these systemic changes, but it should also provide the tools to make the European music sector stronger and fitter for purpose in the digital age while fully playing its role in the building of a knowledge- driven, culture-centric and community-diverse Europe in the 21st Century.

Europe is a leader (and an exception) in the global collection of revenues from private copying levies

 By Emmanuel Legrand

Private copying levies accounted for over a billion euros in revenues for rights holders around the world in 2018, according to a recent study 'Private Copying Global Study 2020', produced by the International Confederation of societies of Authors and Composers (CISAC), in partnership with BIEM, the international organisation representing mechanical rights societies, and Dutch society Stichting de Thuiskopie.

  Private copying levies are in place in a number of countries to compensate rights holders for the copying of copyrighted material within the private environment of content users. The levies can be applied of blank media such as CD-R, but also memory sticks, hard drives, TV boxes, smart phones, among others. The levies can be set by the states or through negotiations between stakeholders.

  "If a private copying levy system operates effectively, it can provide a substantial source of revenue for rights holders. Furthermore, the importance of levies is increasing in the face of widespread copying on digital media and the growing popularity of mobile devices with large storage capacities," reads the report.

  Global collections of private copying levies for all rights holders amounted to €1.046 billion, up 5% year-on-year, of which €367m were allocated to authors, representing 3.8% of global authors’ collections. 

  Europe, excluding the UK, which does not have provisions for private copying, is by far the largest source of private copying income, with 90% of total collections. Germany and France are the largest contributors with respectively €332.5m and €277.5m collected in 2018, or 60% of total collections.

  Africa is the second largest region in terms of collections, followed by Latin America, Canada-USA and Asia-Pacific. In the two latter regions, collections are virtually non-existent.

  The report insists on the importance of private copying in revenue mix of countries that have a strong and efficient system, supported by laws and a good network of collecting societies, in particular in Europe. The report is intended "as an information tool for governments and policy makers, a reference for negotiations on fees and a source of data."

  “Private copying levies are an important source of income for rights holders, with tremendous potential for growth," said CISAC Director-General Gadi Oron. "Our challenge is to promote the legal, enforcement and operational environment that would support further growth in this area. The new report offers invaluable insight and important guidance to decision makers for unlocking the economic potential of private copying levies, to the benefit of local creative communities.”

   The 2020 Global Study combines and extends two previous reports, by Stichting de Thuiskopie (International Survey on Private Copying – Law and Practice 2016, in collaboration with WIPO), and by CISAC (the 2017 Global Private Copying Study).

  “Private copying has always been a key concern of BIEM members," said BIEM President Georg Oeller. "Today’s publication is the result of a good cooperation between three complementary organisations in the defence, diffusion and acknowledgment of private copying around the world. We hope this report will help in further developing the scope of private copying, in terms of territories and equipment concerned, at the benefit of the creators by raising awareness of the authorities.”

  Added Hester Wijminga, Director of Stichting de Thuiskopie: “In 1991 Thuiskopie started compiling information on the existing private copying systems in the world in order to learn and share best practices in collecting and distributing private copying remunerations on behalf of rights holders. Now, so many years later, we are very pleased that in partnership with CISAC and BIEM we are able to present a global report on private copying. Sharing our knowledge and combining our expertise have resulted in the most extensive and complete work on private copying yet to be published.” 

 
  This study examines the copyright laws of 194 countries in 5 continents and classifies, for each continent, the countries under four categories, from the lowest level of development to the most developed:

  • Countries without a private copying exception;
  • Countries with a private copying exception but without a remuneration system;
  • Countries with a private copying remuneration system but without collection and distribution mechanisms;
  • Countries with a private copying remuneration system and collection and distribution mechanisms
Here's an overview by continent:

 > Europe

  Total collection in 2018: €1,019m
  Europe is the world leader in collections from private copying levies, which exist in 21 of the 27 EU member states, as well as in eight of the other European countries introduced in the report. Only the United Kingdom and Monaco have no private copying exception in the law. The remaining European countries have an exception but have not (yet) introduced levies and/or a corresponding collection and distribution scheme.
  The report notes that copyright reform "remains a hot topic for the European Commission as laws and business models are being adapted to the digital environment. Some countries abandon levy systems altogether and turn towards state-funded remuneration systems as a mean of compensating rights holders for private copying."

  > Africa

  Total collection in 2018: €21.1m
  The situation in Africa regarding private copying remuneration "is poor overall," according to the report, which noted that in recent years the market has shown "signs of recovery," as several countries have "explored improving or implementing private copying collections." In the region, 48 out of 54 countries have a private copying exception in their domestic legislation, but only 9 of them (Algeria, Botswana, Burkina Faso, Cabo Verde, Ghana, Kenya, Malawi, Morocco and Tunisia) have a remuneration system for private copying with a distribution mechanism under national law. Algeria is the main contributor in the region with collections of €15m.
  The report noted that in the Africa region, four new countries have recently started collecting private copy remuneration (Malawi, Morocco, Tunisia, and Cap Verde). The West African Economic and Monetary Union, supported by CISAC, is pushing for the adoption of a Directive aimed at implementing private copying levies in 8 member states (Benin, Burkina Faso, Ivory Coast, Guinea Bissau, Mali, Niger, Senegal, and Togo).

  > North & South America

  Total collection in 2018: €4.9m
  The American continent has "a very low level of development of private copying remuneration," according to the report, which is mainly due "to the traditional doctrine of 'fair use' or 'fair dealing' largely implemented across the continent and strongly supported by consumers and importers."
  Of the 35 countries studied, 12 do not provide any private copying exception (Argentina, Belize, Bolivia, Chile, Cuba, Ecuador, Guatemala, Guyana, Jamaica, Saint Lucia, Salvador and Uruguay). Of the 23 countries with a private copying exception, only 5 countries have implemented a compensation system (US, Canada, Paraguay, Dominican Republic and Peru) and the Dominican Republic does not even seem to have an effective collection and distribution mechanism. And the remaining 17 countries (Antigua and Barbuda, Bahamas, Barbados, Brazil, Colombia, Costa Rica, Dominica, Grenada, Haiti, Honduras, Mexico, Nicaragua, Panama, Saint Christophe and Nevis, Saint Vincent and the Grenadines, Trinidad and Tobago and Venezuela) have a private copying exception in their legislation "but do not foresee a remuneration system in favor of rights holders." In most of these countries, the private copying exception is limited to a “time-shifting” exception.
  In the US and Canada, the scope of the levy is limited to blank audio recording media and, according to the report, collections "have been decreasing for many years and do not generate much income for rights owners."

  > Asia

  Total collection in 2018: €0.3m
  In Asia, private copying exception with remuneration is "not part of the legal tradition, and rights holders are adversely affected by private copying," reads the report. Out of the 47 countries and the territory studied, no reference to an exception for private copying is mentioned in the law of 15 countries.
  Such reference can be found in 23 additional countries and only eight countries in the region have introduced a private copying levy scheme in their domestic legislation (Azerbaijan, Kazakhstan, Kyrgyz Republic, Uzbekistan, Turkmenistan, Turkey, Israel and Japan). However, of these eight countries, only the last two have an effective collection and distribution system. On a positive note, the report states that the system in Japan is to be updated to cover equipment and devices actually used for private recording.

DDEX Creator Credit Summit highlights the importance of all stakeholders in the quest for better data

By Emmanuel Legrand

Music industry standard-setting organisation DDEX held back to back its 36th Plenary Meeting and 2nd Creator Credit Summit in November, both as virtual events. The Creator Credit Summit featured over 30 speakers, including composers, producers, engineers, representatives from record labels, distributors, and international rights organisations, over three consecutive days.

  Topics included themes addressing different aspects of creator credits and tools to assist in their proper use, such as proper identification and payment; the conundrum of entering credits in the recording process; DIY musicians and metadata; and music metadata in audio/visual works.  The Summit also included presentations from seven companies (Creative Passport, Jammber, Muso.ai, Quansic, Session, Sound Credit, and VEVA Sound) that provide tools helping creators deal with data issues, all of them incorporating the DDEX Recording Information Notification Standard (RIN).

  Here are five takeaways from the Summit.  

 1 – Standards matter 

   Mark Isherwood from DDEX’s Secretariat (pictured below), summed up best in his introduction the importance of a common set of data for the music industry: “DDEX defines the lingua franca for the music industry.” It’s a data language that allows different parts of the industry to interact, and eventually for rights holders and creators to get remunerated.  

 

 “DDEX standards cover a significant part of the industry and business transactions have a DDEX standard to support these transactions,” said Isherwood, who added: “If you don’t speak DDEX, getting information from partners is going to be tricky.”  

  But Isherwood also added a note of caution: For the system to work, it all depends on where the data originates. If the data is from unreliable sources or badly entered, the system cannot function. It is up to all the various stakeholders to play their role in ensuring that data is accurate and also collected as early as possible in the process.  “Metadata is a love note to the future,” concluded Isherwood.

   

  2 – Give credit where deserved  

  In the digital world, one set of information that has often disappeared with the convenience of all-access music on streaming services are the credits that, well, give credit to all the people involved in the various aspects of the recording of music. No one better than Jimmy Jam, one half with Terry Lewis of the production duo Jam & Lewis (pictured, below), made a better call for the value of credits.  

  “I was always intrigued at the little names of songwriters, producers, engineers,” at the back of the record covers, said Jam, in conversation with Maureen Droney, Sr.Managing Director for the Recording Academy Producers & Engineers Wing. “It was always fascinating to me to see that there were certain groups that I liked and some records that sounded different,” he explained. “I was getting information as I was listening and that was part of my musical education.”

  In 1982, Jam & Lewis co-wrote their first hit, ‘High Hopes’ by SOS Band, which was engineered by Steve Hodge. “We knew the name Steve Hodge through looking at liner notes of albums from bands like Shalamar. So who is the engineer, and where did he record? That’s what we did. If it weren’t for the liner notes we wouldn’t be here.”  

  Hence his call for people to take seriously the need to enter credits at all stages, particularly during time in the studio. He’s been an evangelist on behalf of the Grammys, which use credits for the nomination process, to convince artists to take credits seriously. “People use the information that is in the credits, so if the information is there you are going to be part of the process, and it can only go as far as what is given to us,” he explained. Overall, Jam said he believed that standardising data “makes sense” in the digital age where data will determine what gets to the DSPs and how people will be paid.

  3 – No data = no money  

  In the wake of Jimmy Jam’s timely reminder of the importance of credits, the participants in the session ‘How credits improve contributor identification and payment’ dug deeper into the data alphabet soup and the need to get data right.  

  “Credits were on the back of an album, today we have a much deeper set of information,” said moderator Tony Brooke from Warner Music Group who emphasised the importance of standardised identifiers such as ISNIs (International Standard Name Identifier), IPIs,IPNs, as well as the ISRCs (recording) and ISWCs (composition). “It is really important that credits include identifiers,” said Brooke.  

 

 “Credits are no longer a rarity, they’re ubiquitous,” he added, noting that music streaming services are increasingly displaying credit information to help consumers access music through different angles, such as the producer of a recording or the songwriter(s). “Music services are showing this data,” he said. “Spotify is a leader in this space: who wrote the song, who produced it, and they make links to other works. It is super cool and very hard to do unless you have identifiers.”  

  Why does it matter and how do credits affect the market place? For Brooke, having the proper credits “boosts discovery and revenue, helps new content discovery, increases user engagement, improves user search results, is a way to differentiate music service interfaces, improves search engine optimisation, and fuels data science for algorithms used for playlists.”  

  Dae Bogan, head of third party partnerships at the Mechanical Licensing Collective, said "metadata has to be captured and distributed to all the different types of sources, and we have to make sure that everyone has that data. Every label and publisher has to make sure the collective management organisations (CMOs) get that data and also the DSPs and third-parties like Gracenoteor Audible Magic.”  

  Adam Gorgoni, a composer and founding member of Songwriters of North America (SONA), said his organisation has set up SNAG: the sexy metadata action group to educate songwriters about the importance of data. He admits that data is not necessarily a conversation that creators want to have. “You are talking to creative people who have no interest in metadata,” he said. “We are in a creative process, and it is hard to talk about splits and various data points. This is not the most creative conversation but we push songwriters at large to do it because the data collected in the studio is crucial.”

  4 – A cue sheet is the holy grail for AV and music metadata 

  Anyone who has been involved in music for film and TV knows the importance of cue sheets. These are documents that list all the various music segments on a show or a film, and the more accurate they are, the more likely anyone who contributed will be paid when the movie/TV show is played, streamed, downloaded, etc. This requires capturing data at source about music used in audio-visual productions for the various players along the value chain.

  For the speakers on the panel ‘Music and audio-visual production – a different spin on metadata’, the answer was that more collective work from all parties would ensure that data is listed correctly in the cue sheet, and then cue sheets have to be standardised so that studios as well as DSPs and CMOs work from the same, well, sheet…  

 Nick Osztreicher, Director of Music at Netflix, said the key issue with cue sheets is about developing actionable business solutions, and cue sheets are part of the process. A service like Netflix supplies cue sheets into the CMO system, and standardisation would indeed help. “Adoption has to be driven by societies; we can create the files but people have to accept them,” he said.  

  The session happened the day the International Confederation of Societies of Authors and Composers (CISAC), teaming up with music publishers and producers through the Society Publisher Forum (ICMP, IMPA, IMPF, AIMP), announced the Cue Sheet Standards & Rules that will “harmonise music cue sheets” and simplify the rules governing the identification of musical works used in audiovisual productions. 

  “Standards are something we all want.” said Osztreicher, who added that Netflix brings a layer of complication as its business is global and “things have to apply globally, and it is not easy because of the scale.”

  Accuracy is what CMOs need, explained Helena Segersten from French rights society SACEM. Like many other CMOs, SACEM licenses video-on-demand services (since 2010 in the case of SACEM). “We take data from services and match it with what we have registered in our database and then distribute to our members,” she said. Hence the need for accurate and operational data. And quite often the data is, as she put it, presented in “exotic formats” that do not necessarily contain all the data. Segersten said CISAC’s harmonised cue sheet should improve accuracy. “We now want to promote the [CISAC cue-sheet] around the world,” she said.”It is a step towards a standard.”

 5 – Someone has to take responsibility for the credits

  So how can stakeholders make sure data is collected and attributed properly? Participants in the session ‘Entering credits in the recording process: Whose job is it anyway?’ simply agreed that “it’s everybody’s job.” According to The Recording Academy’s Maureen Droney, it is the responsibility of the producers, the engineers, the musicians, and any party who is involved in the creative process. “You don’t want to be talking about the money as you make music but this conversation needs to happen,” she said. 

 
  Producer, mixer and engineer Cameron Craig, executive director of The Music Producers Guild, says the data gathering process can be complicated by the use of multiple studios and engineers, and the fact that not all the information is collected at the mixing stage. But for him, the key issue is that “a lot of education needs to happen and session musicians need to get involved at an early stage.”

  Record producer Sylvia Massy concurred that the “studio is not an exclusive place any more” where music gets made. As a producer, her role is “to make sure credits are recorded” but due to the lower budgets, producers rarely have the means to keep an assistant on the payroll to write down all the credits as they happen. “So much data gets lost,” she said, acknowledging that "if credits are entered early we all get paid.”

 

 Artist manager Jr. Regisford, a principal at New Heat/New Heights Entertainment and co-founder/head of music of World of Dance Records, said it is often now the responsibility of the manager to ensure that all credits are properly entered. “I end up being responsible for helping producers track everyone down,” he said. “We have a template of what we need to get and we fill the blanks. It ends up being a group effort. Some producers are more on it than others, That’s how we do it, we piece it together.”  

  Labels have also a role to play. “As the label, we are really the receivers, the collectors, and the fact checkers of the information as it comes in,” said Craig Rosen, Executive VP of A&R at Atlantic Records. “We serve as proxy for the artists insofar as collecting credits for the artists. It is important that whoever receives the credits needs to understand that we live in dynamic world and first batch of data should be as correct as possible and then people have to adjust to that.”

This is an edited version of a story published by Synchtank's Synchblog.

US music organisations ask Congress to act quickly to support the live music sector

By Emmanuel Legrand

A coalition of American music industry organisation has sent a letter to congressional leaders urging them to pass legislation to provide "additional relief desperately needed by the many artists, musicians, engineers, producers, and venues who bring live music to the public" that have been strongly impacted by the Covid-19 pandemic. 

  In the letter sent to Senate Leader Mitch McConnell, House SpeakerNancy Pelosi, Senate Minority Leader ChuckSchumerand House Minority Leader KevinMcCarthy, the groups – among them ASCAP, Music Artists Coalition, Music Managers Forum-US, National Music Publishers Association, Recording Academy, Recording Industry Association of America, SESAC, SoundExchange– noted that "77% of people in the live events industry have lost 100% of their incomes, including 97% of 1099 workers." 

The devastating effect of Covid

  Thesignatories asked Congress for the following actions:

  (1) renew and extend Federal Pandemic Unemployment Compensation, Pandemic Unemployment Assistance, and Pandemic Emergency Unemployment Compensation;
  (2) pass the RESTART Act;
  (3) fix the CARES Act by passing the Mixed Earner Pandemic Unemployment Act;
  (4) expand the Saves Our Stages Act;
  (5) expand employer retention tax credits and pass a 100% COBRA premium subsidy;
  (6) pass the Performing Artist Tax Parity Act and the HITS Act.

  “There is no denying that Covid-19 has truly tested the nation, and it has had a devastating effect on our country’s music industry," said the organisations. "The music community remains grateful for Congress’s bipartisan relief efforts earlier this year, but more must be done soon to avoid a level of loss that could devastate artists, musicians, engineers, producers, venues, and everyone in the music industry for a generation.”  

Provide financial relief

  "Providing direct financial relief to the workers of all venues is critical to keeping local communities afloat," read the letter. "Indeed, dollars spent to keep venues open have a multiplier effect, as live music brings patrons to hotels, restaurants, and other small businesses that are also struggling to survive. Expanding Save Our Stages to include all different types of live events workers – and not excluding them simply for where they work – will help revitalise our economy at the ground level."

  It concluded: "Like many in 2020, our community has come together to speak with one voice to ensure that we all can enjoy better days in the future together.  We hope that with your leadership, Congress, in the upcoming lame duck session, will take this clear opportunity to save American music, culture, and countless small businesses."

ViacomCBS sells Simon & Schuster to Bertelmann's Penguin Random House

By Emmanuel Legrand

ViacomCBS has sold book publisher Simon & Schuster to Bertelsmann's publishing unit Penguin Random House, in a $2.175 billion deal that will create the world's leading publishing company, providing the agreement gets the green light from antitrust regulators on both side of the Atlantic. "Simon & Schuster strengthens Bertelsmann’s footprint globally, and particular in the US, its second-largest market," said Bertelsmann in a statement. The transaction will be paid "in cash from existing liquid funds."

  According to The New York Times, the deal "includes provisions that would protect ViacomCBS in the event that a sale is squashed by authorities," with Bertelsmann agreeing to pay a termination fee if the deal is not cleared.

Strengthening Bertelsmann's content business

  Simon & Schuster employs around 1,500 people worldwide and generated revenues of $814m in 2019. It publishes authors such as Hillary Clinton, John Irving, Stephen King, and Bob Woodward. Bertelsmann said Simon & Schuster "will continue to be managed as a separate publishing unit" under the Penguin Random House umbrella. Jonathan Karp, President & CEO of Simon & Schuster, and Dennis Eulau, COO and CFO, stay in their role.

  “Following the full acquisition of Penguin Random House in April this year, this purchase marks another strategic milestone in strengthening our global content businesses, which include Penguin Random House, the Fremantle TV production business, and the BMG music division," said Thomas Rabe, Chairman & CEO of Bertelsmann. "The book business has been part of Bertelsmann’s identity since the founding of C. Bertelsmann Verlag more than 185 years ago and has lost none of its appeal to this day. Bertelsmann continues to be one of the world’s leading creative companies with annual investments in content of around €6 billion."

IFPI report: Music is a €81.9 billion business in Europe contributing to 2 million jobs

By Emmanuel Legrand

The music sector contributed €81.9 billion in 2018 to the economy across the 27 EU Member States and the UK (EU28), according to the report 'The Economic Impact of Music in Europe' penned by Oxford Economics for international trade body the IFPI.  

  The study, based on 2018 data, looked at the contribution to GDP the music sector generated itself, and stimulated elsewhere in the European economy through its procurement and payment of wages; analysed the jobs supported around Europe by the music sector; quantified the music sector’s contribution to government finances in the EU27 and the UK through the payment of taxes in 2018; and highlighted the export earnings generated by the European music sector from sales to businesses and consumers outside the EU in 2018.

  “By investigating how the music sector interacts with the rest of the economy, our study maps how it stimulates economic activity, supports jobs and generates tax revenues throughout the whole of Europe. In doing so, we highlight how the music sector — an ecosystem of large and small firms undertaking a wide variety of activities — directly accounts for a sizeable contribution to the European economy, comparable to the entire economies of several Member States," said Pete Collings, Director of Economic Impact Consulting at Oxford Economics.

A wider footprint

  He added: “However, the sector’s economic footprint extends far beyond its own activities. The purchases it makes from firms throughout Europe support lengthy pan-European supply chains. These multiplier effects reach every part of the European economy, further sustaining employment, delivering tax revenues, and generating GDP throughout the continent.”

  Findings from the report include:  
  > The music sector supported two million jobs within EU28, of which 65% (1.3 million) were in the music sector itself;    
  > It contributed €81.9 billion in gross value added to GDP.  
   > Exports accounted for €9.7 billion worth of goods and services to countries outside the EU28 – of which record companies, music publishers, and audio streaming services generated almost half (€4.7 billion);  
  > The music sector generated tax revenues of €31 billion in the EU28 in 2018. This was equivalent to 19.4% of the entire EU budget in the same year; 

  > The music sector’s gross value added (GVA) contribution amounted to €37.5 billion;  
  > For every €1 in GDP the music sector directly generated in 2018, it supported the creation of an additional €1.20 in GDP elsewhere in the European economy.

  IFPI Chief Executive Frances Moore said that Oxford Economics’ report demonstrated that "music makes a vital economic contribution to the European Union and UK – supporting jobs, boosting gross domestic product and tax payments, and driving exports. At the heart of this contribution are the EU’s 7,400 record companies. In addition to employing nearly 45,000 people across the EU, they invest significantly in other parts of the music sector and make a major contribution to Europe’s exports."

An essential contribution

  Moore added: “For music’s essential contribution to Europe to be sustainable for the long term, fair value must be returned to those who create and invest in music. To enable this, the sector needs a fair legal and policy environment in Europe, and we continue to work with policymakers to achieve this.”

  In the study, the “music sector” was defined as encompassing the following sub-sectors, in accordance with the WIPO Guide methodology: record companies; music publishers; recording studios; authors; performers; artist management; collective management organisations; music radio; music television; digital music services; physical music retail; live music event production; concert venues; touring services; manufacturing and retailing of musical instruments and music equipment; music merchandising; and music teachers.

  Meanwhile, British music industry umbrella organisation UK Music unveiled 'Music By Numbers 2020', its yearly update on the value of the British music sector, showing that in 2019, the UK music industry contributed £5.8 billion (€6.49bn) to the UK economy, up 11% from £5.2 billion in 2018.

Devastating impact of Covid-19

  Employment in the industry reached an all-time high of 197,168 in 2019, up 3% from 190,935 in 2018. The total export revenue of the music industry was £2.9 billion in 2019, up 9% from £2.7 billion in 2018. UK Music also measured the music industry’s direct economic contribution, with music tourism alone contributing £4.7 billion in terms of spending to the UK economy in 2019, up 6% from £4.5 billion in 2018.
 

   

  “This report shows just how valuable our music industry is – and how important it is that we take action to protect it," said UK Music Chief Executive Jamie Njoku-Goodwin (pictured, below). UK Music noted that these figures "do not reflect the devastating impact of the Covid-19 just weeks later in early 2020" and called for urgent help to revive “our world-leading industry."

  The report outlined that due the pandemic and social distancing restrictions, venues were forced to close and that the "buoyant" 2019 figures are unlikely to be repeated in 2020. "The industry now faces a marathon effort to get back on its feet as it strives to return to pre-Covid levels of success as swiftly as possible," said UK Music.

Need for support

  “2019 was a fantastic year for the UK music industry, and we were firmly on track to be one of the great British success stories of the coming decade," said Njoku-Goodwin. “Music By Numbers 2020 shows just how successful our industry was before the catastrophic blow of Covid-19 knocked it down, and how important it is that we get it back on its feet."  

  He added: “When the time comes to recover from this pandemic, our world-leading music industry can be a key part of our country’s post-Covid economic and cultural revival – but we need the right support to get us there.”

  In the foreword to the report, Minister for Digital and Culture Caroline Dinenage said: “The UK music industry is at the heart of our arts and cultural sector, which is the envy of the world. It is a key national asset and something that should make us all proud. Music enriches all of our lives, but it also makes a huge contribution to our economy. However, we know what an immensely tough year 2020 has been for the music industry as a result of Covid-19 which has presented significant challenges for the sector. That is why the Government stepped in with an unprecedented £1.57 billion Culture Recovery Fund to help the sector weather the impact of coronavirus and protect music venues, festivals, and our vital cultural assets.”   

   
  Geoff Taylor, Chief Executive of the BPI, BRIT Awards and Mercury Prize, said the report underlined "the tremendous contribution music makes to the UK’s economy, its culture, and its reputation overseas," but surmised that "next year’s report will tell a bleaker story, and we are calling on government to sustain and expand the support it is giving to the live sector, so that music can play its full role in powering the UK’s economic recovery.” 

New York District Court denies motion for retrial in Wolfgang's Vault's case

By Emmanuel Legrand

A US District Court Judge denied a motion to reorder a damages trial in the copyright infringement case against William Sagan and Wolfgang's Vault, an online marketplace for music memorabilia, which was sued by music publishers for failing to have the proper licenses in place for the streaming of classic live concerts. Publishers argued that some 197 works were infringed by the Vault. The judge granted a motion for attorney's fees but substantially reduced the award by 60%.

  The music publishers — among them ABCKO, EMI Blackwood, Jobete, peermusic, Spirit, among others — were asking for a new trial as they felt that the March 12 ruling, a day before the US went into lockdown, had been precipitated by the jury, as it came after only an hour of deliberation, and awarded plaintiffs damages in the form of $1,000 per infringed work, a far cry from the maximum $150,000 per work allowed by the law. Publishers argued that the jury made a determination without asking to review any of the evidences, and in a hurry to get home.

  Judge Edgardo Ramos wrote in his 25-page opinion that the awards were "within the statutory range permitted by the Copyright Act" and that the Plaintiff's reliance on the relatively low damages award to ask for a re-trial was "misplaced." He also noted that since the trial started on March 2, Plaintiffs had ample time to make their case.

Not persuasive enough

  He contended that plaintiffs "do not persuasively draw any connection between the potential impact of the COVID-19 pandemic and the specific damages awarded. As Defendants point out, the jury could have just as easily settled on a higher award in the same amount of deliberation time."

  Judge Ramos also declined to review the $2 million legal fee that was awarded to the plaintiffs, whose lawyers were asking for $6m. "The Court acknowledges that the reduction imposed here is substantial," wrote Ramos. "However, the Court believes that the reduction is warranted given that the net amount of fees awarded — $ 2,420,226.00 — is still large. Such a hefty fee award surely constitutes adequate deterrence for would-be infringers, but is intended to remain true to the principle that such awards should not result in financial ruination for Defendants."

CISAC and music publishers team up to standardise and harmonise cue sheets

By Emmanuel Legrand

The International Confederation of Societies of Authors and Composers (CISAC), has teamed up with music publishers and producers through the Society Publisher Forum to produce the Cue Sheet Standards & Rules that will "harmonise music cue sheets" and aim at simplifying the rules governing the identification of musical works used in audiovisual productions.

  CISAC Director General Gadi Oron, said producers and video-on-demand platforms have been "involved to ensure optimum implementation of the project globally." For Oron, this initiative "will bring significant benefits to everyone involved in music productions for audiovisual works." He added: "The harmonisation improves the administration of music rights, brings a new consistency to the use of cue sheets, and will lead to increased efficiencies and potentially reduced costs for rights holders and users."

  Cue sheets provide detailed information to publishers, producers and authors societies enabling them to track the placement of music in audiovisual productions in films and TV programmes and facilitates the payment of royalties to the music creators and rights holders. 

  "The harmonisation will, in a nutshell, make life simpler and more efficient for all actors using cue sheets. The common goal is to ensure a standardised flow of data between publishers, societies and producers, and thus improve the flow of revenue back to the creators and rights holders," wrote Oron in a letter to CISAC's partners.

Improving efficiencies

  The project has involved the creation of a new comprehensive template – the Common Cue Sheet – and a set of standardised terminology that can be used by producers and publishers across all the different formats and platforms.The Common Cue Sheet describes the relevant metadata of both musical works and of the production in which the works are featured, incorporating many existing internationally recognised standard identifiers. 

  For CISAC, the benefits of harmonisation include:
  > Improved efficiency when processing cue-sheets and amending the details of a musical work;
  > A more efficient musical work registration process and more registrations of works;
  > Payment records can be linked to musical work documentation, so that publishers can efficiently track royalty payments;
  > Greater consistency between the publishers’ registrations and the societies’ payments for exploitation of film/TV productions.

Global implementation

  "The harmonisation is intended to benefit all actors in the sector and across the world.  In order to achieve those benefits, it is essential the project is communicated and implemented globally, comprehensively and effectively," said Oron, inviting all parties to "communicate this initiative to your members and business partners."

  The Society Publisher Forum is a joint initiative of CISAC, the International Confederation of Music Publishers (ICMP) and the International Music Publishers Association (IMPA), and is supported by the Association of Independent Music Publishers (AIMP) and theInternational Music Publishers' Forum (IMPF). Producers and video-on-demand platforms have also been involved to ensure optimum implementation of the project globally.

  The Cue Sheets Standard & Rules document (CISAVX17-1197), and sample documentation (CISAVX18-0490), are available for download on the CISAC web site.

ECSA accuses Spotify of 'disrespecting' the community of creators

By Emmanuel Legrand

The European Composer and Songwriter Alliance (ECSA) has accused Spotify of showing a "profound disrespect to the community of creators who struggle to make a living" by launching a new scheme that would “amplifying artist input in personalised recommendations” in exchange for lower royalty rates.

  In an open letter to Spotify, ECSA noted that the music streaming service had a per-stream rate that is "already one of the worst amongst music streaming platforms and has further decreased recently," and that the new scheme equal to “payola” and will result in a "pay-for-play model to the benefit of a few players with detrimental consequences for the vast majority creators, consumer choice and cultural diversity alike."

Call for proportionate remuneration

  For ECSA, creators who have already "subsidised its lack of a proper business model for years," should not be financing "yet another broken idea and deserve more respect from this company, whose current model prevents an overwhelming majority of them to make a living." ECSA called for "appropriate and proportionate remuneration" for the use of creators' works.

  ECSA called upon policy makers in Europe "to engage in critical assessment on the functioning of music streaming services including on the tools (such as playlists) they provide" and encourages them to "review and analyse the distribution of streaming revenues to various categories of rights-holders so that music creators can be properly paid for the use of their works and continue to be at the source of Europe’s cultural diversity."

Tencent Music takes a minority share in virtual entertainment platform Wave

By Emmanuel Legrand

China's Tencent Music Entertainment Group has acquired a minority stake in US start-up Wave, a Los Angeles-based company providing animated live concert technology that transforms artists and fans into animated avatars. Under the partnership, Tencent Music will be able to broadcast Wave's concerts on its various platforms, including QQ Music, Kugou Music, Kuwo Music and WeSing. Terms of the transaction were not disclosed.

  "Through creative cooperation models, both companies will also develop innovative promotional approaches, build high-quality music content, and bring interactive, unique and emerging concert experience to China's music lovers," said Tencent in a statement.

  The two companies will also create virtual concerts content for Tencent Music's own live performance brand, TME Live. TME Live was launched in March 2020 and is exploring monetisation through sponsorships, and offering services such as VIP packages and virtual gifts for users to engage with their favourite artists. To date, Wave has hosted more than 50 Wave events for artists such as The Weeknd, John Legend, Tinashe and Lindsey Stirling, among others.

An immersive experience

  "The collaboration with Wave marks an important step forward in our efforts to integrate technology and music, aiming to amplify the immersive music experience for our users, enhance user engagement and promote content consumption," said TC Pan, Group Vice President of Content Cooperation of TME. "With this strategic partnership, we will further extend the boundaries of music services through virtual performances, and build a broader music ecosystem."

  Added Wave COO Jarred Kennedy: "We share the belief that gaming technology will dramatically expand the breadth of possibility for creative expression and audience interaction in music, and we are thrilled to be collaborating with TME to build that future." 

  Tencent said the partnership with Wave will allow TME to further extend "coverage of music services to virtual performances, developing a broader music ecosystem and creating a borderless stage for musicians around the world, opening a new path of sustainable and long-term monetisation model, while also creating unique opportunities for development and value growth in China music industry."

Q&A Merck Mercuriadis (part 2): 'Hipgnosis has a buy and hold strategy, not a buy and sell strategy'

 By Emmanuel Legrand

In part 2 of the interview with Merck Mercuriadis, we discuss his vision for Hipgnosis, the company he founded less than three years ago that has invested over a billion dollars in music assets, how he managed to raise money for acquisitions, and how he sees the company evolving.

You said you wanted to change the songwriter's position in the economic equation. How can you achieve that?

The stranglehold of Universal, Warner and Sony means that they stopped advocating for songwriters and they push as much of the economic improvement towards the recorded music company. By the way, my issue is not with the companies, or the people that work at the companies, because I think there are tremendous people working there, and they do a good job developing new songwriters and artists, but my issue is with the paradigm, and this paradigm has been allowed to exist for 75 years, and I want to change it. Whether you are [Universal Music Group Chairman and CEO] Lucian Grainge or [Warner Music Group CEO] Stephen Cooper, you can't argue with the fact that songwriters should be paid more money. I am very vocal about wanting to change the system. The British government has announced recently that they are going to investigate the quote-unquote business practices of the streaming services. As they dig into that, what they are going to find is that their real investigation is not going to be in the business practices of the streaming services – although services like Spotify need to be taken to task for their clumsy attempt to appeal the Copyright Board ruling – and that the business practice that need investigation is not how Spotify or Apple get 30% – yes you could make an argument that this 30% should be 25%, but I don't think any of us should argue that with 25 or 30%, Spotify or Apple or the other DSPs are being overpaid for the tremendous service that they offer – but the real issue is what remains of that 70% and how that 70% is split as 58% and 12% between recording and songwriting. If the recording artist is lucky, he will get one sixth of that 58%, and the remaining 12% is split between the songwriter and the publisher. 

As a manager, you signed contracts like that, didn't you? 

Yes, because I accepted the paradigm. But I created Hipgnosis to change that paradigm. The only reason that this 58-12 split exists is because the three big song companies are not fighting to get songwriters to be paid more money, because they are owned by the three biggest recorded music companies. I have no problems with Universal, Warner and Sony being in the recorded music business and being in the song business as long as the song company is independent and able to advocate on behalf of its own constituents. So you're right, I did it in the past as a manager, I accepted certain contracts, but I recognised that the paradigm was wrong and I decided to do something about that. As I sat there, managing the careers of people like Diane Warren, and The Dream, I thought, in a era where when I started, 90% of the people would write their songs, perform their songs, had a very good idea of who they were, or who they would become, what their album cover should look like, what their stage show should look like, and my job was to believe in them and make other people believe in them, and bring the success to fruition. That was 35 years ago. Today, 90% of the artists that are being signed are very talented kids for whom the ultimate goal is fame and celebrity, and it does not matter whose songs they are singing, or whether your fame comes from a TV talent show or social media. Right now we are seven years into an era where there has not been a Billboard Top 100 album that does not have an outside songwriter on it. Even Coldplay or Ed Sheeran! By the way, it does not mean that Coldplay or Ed Sheeran are not beasts when it comes to writing songs, it just means that we've evolved into a situation where the songs are more sophisticated, there are more hooks, there are more writers, etc. So looking at the careers of Diane Warren and The Dream, I decided that these people were not being paid fairly. And I thought, how could I possibly get them to do more? I recognised that the only way to fight this paradigm was to have incredible financial support an leverage. It does not matter that I happened to manage Elton John or Guns'n Roses, because all of that can be blown out of the water. What you can't blow out of the water is billions of dollars. So I set about to create the situation that would give me that kind of leverage.

But your model – focusing on established songs – is not helping regenerate the eco-system by investing in new songwriters. You are still expecting people to do that job so that eventually you can capture the assets that somebody else has created to make your business model work.

Two things. With the acquisition of Big Deal in America, which is now Hipgnosis Songs, now a small part of our business is the creation and development of new songwriters that will turn into new catalogues of the future. But my focus is actually somehow different. My focus is in empowering the biggest songwriters in the world in order to be able to change this system that has the lowest man or woman in the totem pole. What you'll see in the year to come is that not only have we empowered 82 of the biggest songwriters of this world, and put them in a position where they are no longer reliant on someone else's money to de-risk their future and make decisions that are in their best interest. Equally, I will fund what will be the first real songwriters' guild, that will be owned by songwriters for songwriters, and it will advocate for songwriters in the way no other organisation does.

How can you achieve that? 

My model is the Screenwriters' Guild. You are Emmanuel, the head of Paramount and I am Merck, the head of the Screenwriters' Guild and we meet every three years and I say 'Listen Emmanuel, it is great that you had Reese Witherspoon and Denzel Washington, but if you don't have a script, there is no movie to make. And you are not going to get my script unless you pay my writers properly.' Every three years, they scream, they shout, and call each others' names, threaten to bring production to a standstill, but at the end of the day, they figure out a way to pay the writers more money and everyone lives happily ever after. That's never happened in the music business.  

In the case of the music industry, who is Paramount? The labels, the DSPs or both?

The record companies, but it could eventually be both.

When is it going to happen?

It would have happened by now if it wasn't for the pandemic. It will happen before Christmas or early in the New Year.

Your business model comes at a cost. Many hold you responsible for bringing the price of music assets up, and paying multiples that are off the roof. How do you feel about all of that? Do you feel a responsibility?

So, first of all, we have established songs as an asset class, right? We’ve gone in two years and two months from being a listed fund on the specialist fund segment on the London stock market to being one of the 250 biggest companies on the stock market. We have been as high as the number 23 biggest yielder on the stock market. In a pandemic when people are cutting their dividends or not paying their dividends at all, we are growing our dividends. This is all about having established songs as an assets class that has predictable reliable income. Now, remember that one of the things that is key to this assets class and to being able to do this in general, is that these great songs are protected, as a generalisation, 70 years after the death of the last co-composer. So our catalogue as it stands right now has a 110 years worth of earnings coming from it. We’ve invested a billion and a half at a 14. 3 multiple and we're going to benefit for 110 years from this as an asset class. You don’t have to be graduate of the London School of Economics to know that’s good business. What I’ve recognised and what I’ve been doing by empowering the songwriter is recognising where the true value is. If you are paying 14.3 times for extraordinary assets that stand the test of time – 'Living on a Prayer' is 35 years old and has been massive success each of those 35 years, 38 years for 'Sweet Dreams Are Made Of This', 40 years for 'Good Times', 43 years for 'Le Freak', the biggest selling single in the history of Atlantic Records–, these songs are going to endure for another 110 years without question in my mind and we are the owners of them in perpetuity. At the same time not only are we delivering great value for our shareholders, but we’ve empowered the songwriter. I think the songwriters share of the income is only going up. 

Are you going to buy into recorded music assets?

We do buy recorded music assets and I think they are tremendous assets as well, we do buy them when they are available with the songs. Obviously everything benefits from the same factors, which is the growth of streaming. We bought Journey's recording music assets at the same time we bought the songs. We bought Barry Manilow's recorded assets recently.  

Do you understand why it is easier now to find money to invest in music when for so many years the only people who could get money were the majors? What has changed?  

Hipgnosis! That’s a fact. What’s changed is Hipgnosis. We raised 200 million pounds at a point and time when no one else was listed, and we invested it very quickly in great songs. We managed those songs well and we paid dividends and we’ve now done that over, over and over again. We are growing and making massive acquisitions every day. Then you have the other factor which is that in systemic change there is always opportunity. We started to do this it was the end of the illegal downloading era, we had 15 years of technological disruption in this space and it almost killed off the music business. There is only one good thing that came out of that is that it left these great songs at attractive prices right at a point and time when streaming was growing the pie. I seriously considered why really great people that I think are much smarter than I am – like Richard Branson from Virgin or Chris Wright from Chrysalis – had failed in the stock market. Even Sanctuary! Andy Taylor was an incredibly bright man and a great partner for a long long time like 20 years. The reason why these companies failed in the stock market, or at least in my estimation, is that they were asking you as the institutional investor to believe in their track record and that their track record would deliver future results. And that to me was the mistake. So what I did was bringing this concept of proven assets to the stock market. I wasn’t asking you to invest in my track record and what I might do in the future, I was asking you to invest in proven assets that I had access too. So what you were getting from me was access, but what you were actually investing in was the best songs of Dave Stewart, Nile Rogers and Bernard Edwards, Timberland, Chrissie Hynde, etc. These are predictable reliable assets. What the financial community wants is data, so when you can deliver them six-month statements that are 10,000 pages long and then have billion of micro-transactions, they can have a field day analysing that. You can figure out what the predictable reliable income of this asset actually is and therefore you can invest in it. I have to give credit to someone like Larry Mestel at Primary Wave who was doing this before any of the rest of us were doing it, but he difference is that we did it in the public market and the reason why we did it in the public market was because I wanted permanent capital. I could have done this with private equity with a company like KKR that had funded BMG and make more money on a personal level but with those private equity companies there is a ceiling on how much they are going to let you invest, probably 500 million dollars, and there is a term to that money, whether that’s 5 year money, 7 year money, or 10 year money. What I wanted was permanent capital and the reason why I wanted this permanent capital was that I did it from the point of view of changing where the songwriter sits in the economic equation. To see that through, I needed to have permanent capital. 

What’s your exit strategy, if there is one?

Our strategy is a buy and hold strategy, not a buy and sell strategy, and that’s something that’s very clear with everyone that’s in our portfolio: all of our biggest shareholders – including the Church Of England, Investec, Axa, Aviva, Newton, that are just 5 of more than 75 institutional investors in Hipgnosis – understand this is a buy and hold strategy. I think that these assets will be worth triple what they are worth today inside of the next decade, I think that in the next decade there will be even more demand for access into this space than there is today. That demand will drive the multiples up to places that we have never seen. The multiples will be based on much, much fatter income streams than what I’ve paid for and it will be a tremendous ride for ourselves and our shareholders. Our job is to be focused on actively song managing these great catalogues and not only delivering what is an incredible net asset value for our shareholders and also delivering great income.   

You bought assets from Kobalt. What's your view on what they've done so far? 

We have a tremendous strategic alliance with Kobalt. I think that Willard [Ahdritz, founder and Chairman of Kobalt] set out with a goal 20 years ago that is totally in alignment with what we’re doing. His goal was to bring transparency to this business and to collect money. I think he has created a company that collects more money, collects it faster, and pays it through faster. Our goal is in alignment with that in terms of changing where the songwriter sits in the economic equation, taking him from the bottom of the pile to the top of the pile.

With Big Deal, you have also invested in infrastructure. 

Well, I am not interested in infrastructure for the sake of infrastructure; what I am interested in is building the best song management company. You said we did buy a publishing company in Big Deal Music. For me that’s not what I did, I bought a company that was a publishing company and I’m turning into a song management company. I bought that company for one reason and that’s because in the shape of Kenny MacPherson and his soldiers Casey Robison, Jamie Cerreta, Dave Ayers, and Pete Robinson there is a team there that has incredible chemistry and an incredible track record of success. They were operating in the publishing business but they were really operating as song managers and artist developers and therefore it wasn’t going to take much energy to transform what was Big Deal as a publishing company into Hypnosis Songs Group as a song management company. With Big Deal now I see three very key areas: song management, which they’ll do in conjunction with Ted Cockle, Amy Thompson, and all my team here; there’s song creation which is a very small part of our business, with Casey Robison who will continue to the lead the charge on developing incredible writers; and then there’s song administration. So what you will see is that more of our catalogue as it becomes available will become administered by Hypnosis Songs in Americas in order to give us a seat at the table for negotiations with the DSP, the settlements and everything that takes place. It’s the beginning of the transformation of our company into becoming a proper operating company on a global basis.  

Why did you name your company Hipgnosis? 

Hipgnosis was a great name. The great artwork of the 60s and 70s in music was made by Hipgnosis. Storm Thorgerson, who was one half of Hipgnosis [with Aubrey Powell], was both one of my best friends and my client. They gave up the Hipgnosis name in the early 80s because it had become so ubiquitous in the 60s and 70s with everyone from Pink Floyd to Led Zeppelin using their design that it was actually uncool in the 80s. My son is named after Storm, and a few years ago, before he passed away, sadly, he said to me, 'Listen, this new company you are going to create, what are you going to call it?'. And he caught me off guard so, facetiously, but somewhere deep inside, I said 'I want to call it Hipgnosisbut that name is already taken'. And a few days later he wrote me a letter stating: 'I want you to have the name' and there were also a bunch of logos that he had designed for the new company that had expensive price tags next to them. I ended up paying for the name by choosing one of the logos and even then, I didn’t get a chance to choose the one that I wanted. As was Storm’s style, I had to choose the one that he wanted. I called it an upside elephant. So I said to him, 'Look Storm, what does an upside-down elephant have to do with my business?' He said, 'Look, you’re an idiot.' I said, 'I may be an idiot but I know an upside-down elephant when I see it.' He said, 'No, that’s not an upside-down elephant.' I said, 'What is it?' He replied: 'It’s an elephant that is blown away by how good the songs are.'