Jeremy Sirota, CEO of Merlin (Part 2): 'We are going to outpace the market and post significant growth in 2020'

This is part 2 of the interview of Jeremy Sirota, CEO of Merlin, the licensing company for the independent music sector, with Emmanuel Legrand.

What's the biggest misconception that tech companies have about the music industry and vice versa? 
Jeremy Sirota: I think there is not a lot of people who have been on both sides of the equation. I started in music and I moved to tech and now back to the music side at Merlin. But there aren't that many with similar experience. The first 14 years of my life, working at a law firm and at a record company, I worked with technology. At the law firm I did a lot of deals with a lot of content companies at the intersection of copyright law and content. Then nine years at Warner doing every deal you can imagine with technology partners and vendors from all sides of the supply chain, and I don't feel I truly understood tech until I started working for Facebook. The reason why is that it is one thing to work with tech and one thing to work in tech. It helped me better understand the challenges that they have, and how they operate. And how they think about building products and what they think about success. That is typically difficult to understand if you don't work in tech. My recommendation would be that there would be more value driven to the eco-system if there were more people from the record side going to tech and come back, and vice-versa, because the understanding of what drives organisations and how they think is what allows you to better understand them and relate to them. I think Merlin always understood tech well, and I could amplify that further to better relate to where they are and better understand how to interface with them and find more opportunities. On the technology side, I read an article saying that not everything can be quantified, not everything is binary. The thing about music is that it is emotional and it affects at a different level than ones and zeros. The more technology understands how that drives the artistic and creative process the better it is. It is about earning a living but it is also about an artistic product that is created and affects people. The more technology can remember that as part of what they're doing and that it is driven from a slightly different place, that would help better understand actions and what drives people in the music industry.

Have you noticed more willingness from platforms to do the right thing and get licensed? 
Jeremy Sirota: I'll respond tangentially. I do two things: we go out and we strike premium deals on par with the majors. People sometimes forget that you can't time-shift money backwards, so the first time you do a deal with a platform, that is revenue and opportunity that you can't ever recapture. I will never sacrifice speed for value, but it is something we keep in mind when we deal with licensing. And two, you can always disagree with some [platforms] and still be in a conversation. I do not like to raise my voice, this is not my preferred way of doing things, but I can have conversations with people I have deep disagreement about direction and yet and still have productive conversations about where it's heading.  

Any hot issues with with licensing at the moment?
Jeremy Sirota: Driving value is always the hot potato for me. We look at the eco-system in a way that can drive value for our members. I love hearing about my members because we have such diverse background of members from around the globe that they hear about new things, new platforms launching, new services. We are not just interested in who is in the news cycle. We are just as interested in who is not in the news cycle and that we should be in conversation with them. There are a number of platforms that are not in the news and that we are talking to and are not talking to anyone else because we approach them about our opportunities. That's about how I think about the licensing place.

Have you seen an evolution from the business models adopted by platforms? 
Jeremy Sirota: Obviously I can't talk about deal terms. The best I could say is that we are in an evolving landscape with new types of services, and there is an evolution as where music is being found, so there is an opportunity to be at the forefront of that evolution and help drive these models in a direction that is beneficial to the platform and what we want to bring to our members. Here too, even if you are not in a licensing conversation, it is good to be in a conversation with the platforms.  

What do you make of the #fixstreaming and #brokenrecord campaigns? Is user-centric the answer? I asked over a year ago that question to your predecessor Charles Caldas and he said that evidence at the time did not really support a change in model. 
Jeremy Sirota: We've always been in favour of the testing approach. It's a position we continue to have. What Charles said back then still holds true today. We haven't seen any new data since then to say otherwise. For myself, having spent some time in the tech world, one of the things that we need to keep in mind is the massive logistical cost that could be associated with a change in the royalty reporting at a user level and I am probably a bit more sensitive to that because of out membership and the resources required to support that. I don't think anyone has looked at that and that's one thing to keep in mind. What is my remit? It is to drive an absolute maximum revenue and opportunities to our members from our digital partnerships. That was my focus in 2020 and this is where organisations like WIN and IMPALA and other trade organisations can serve the role of advocacy and research, and have the conversation in this space.

In China, Alibaba is shutting down Xiami. Will that leave you with unpaid bills? Are there any risks for your membership?  
Jeremy Sirota: I cannot talk about deal terms or the nature of our relationship, but in every deal that we strike, in every relationship that we have, we are very thoughtful about these issues, about collecting money, collecting reports, currency exchanges, etc. These are the areas where Merlin can go above and beyond just striking a deal. Can we get in early, can we get in first, can we get a premium deal, these are all the places where Merlin can drive value and ensuring that we can get responses and issues resolved.

Overall, it also validates your strategy to make deals in China with each single service rather than making one deal with a service that will then make sub-licensing deals with other platforms. 
Jeremy Sirota: I wasn't there when the deals were made but I think our approach really provides benefits to our members. So we make one deal with a platform, we get one report and we push that through our members. So the answer is yes, it worked for out members.    

Pandora is going to write off one billion dollars in 2020 and one of the reasons mentioned by the service is the cost of content. What do you make of that? Are you driving these companies to their death because you cost too much?
Jeremy Sirota: [Laughs] Pandora is a great partner and we've had a great relationship with them for some time. I appreciate the relationship we have with Pandora and the discussions that we have. What I would say, more broadly is that music has value! And music is something that gives value, not just to people but to platforms. Do I think music is too expensive? No, I think music is one of the most valuable artistic product in the world and that's why I have dedicated my life to being in this space. I will always fight for the value of music because it's had such an impact on my life. It bring joy to people's lives.

What's in the bag for Merlin in 2021?
Jeremy Sirota: This was the first change at Merlin at a CEO level, it was my first time as a CEO. One of the important skills of a leader is not just how they make the best during good times but how they manage things during difficult times. So in 2021 the first ting is to support my team; 2020 really tested us all and was sort of the year that proved resilience, what it means and how you engender that in people, giving them the tools to get there. So I want to make sure my team feel supported, whether through wellness, learning, or growth. We are company with a mission and we have an impact on our members. Two, I'd say stretch yourself. How can we keep stretching ourselves as individuals at Merlin to drive value? We've always been a goal-setting organisation. But we have made it more rigorous at company level, department level, individual level with a goal-setting process that we are about to kick-off. That will bring more value to our members and to our partners. It's about the things that you did not think you'd achieve that year. I love having that thought about something I need to stretch to reach. The new brand is a big part of this year, understanding that the world knows the value of Merlin, and what it means to be a member. Strategically we'll keep making deals. We already have a couple that we haven't announced yet, so we'll continue to be strategic and thoughtful and grow the number of deals we're in. And we'll just continue to deepen our partnerships with all the different music services. We'll also continue to evolve our technology, our tools, and broaden what we do with data and analytics.

How did Merlin perform in 2020? 
Jeremy Sirota: We haven't closed our books for 2020 but we I think we are going to outpace the market and post significant growth in 2020. Some of our members have maturely outgrown the market by something like 20 or 30%. So we are seeing some very interesting growth within all of our members. Another way to look at it is that we have the largest amount of data about independent labels, and one of the things that we are seeing is that we are over-indexing on social media platforms across the board. There is a deep wealth of audience around the world who are very much gravitating towards independent music.

Do you growth in the streaming business can be sustained or 2020 has been such an unusual year for growth that it will be hard to replicate in 2021?
Jeremy Sirota: There is always opportunities for growth. Look, in the US, many colleges moved to remote learning. So you had an influx of young adults, many of whom were headed home and, depending on the age group, you may have had a large segment of the population that had not yet using streaming services, and suddenly their 24/7 was deeply rooted in that world, whether they have a Spotify, an Apple, or a Deezer account, so you have that large segment of the population interacting with streaming services in a way that they did not before. Do I think there will be other pockets of opportunity? Absolutely. Look around the world. Issues like the cost of broadband has dropped, the cost of smart phones is dropping, and that creates new opportunities. I think a lot of social platforms are driving awareness towards streaming and people wanting to switch back and forth from social platforms to streaming services and listen to music they discover there get inspired by. So yes, there's still more opportunities out there.