Is there innovation going on in the music industry space? Perish the thought. Yet this was the question tackled by a ‘How the Music Industry Manages Innovation’ panel at Midem this afternoon.
The panel was Robert Ashcroft, CEO of PRS for Music; Rolf Budde, president of publisher Budde Music; Mark Hoppus, musician (of Blink-182 fame) and producer; Steve Rennie, manager of Incubus; Johan Lagerlof, CEO of digital label X5 Music; and Jean-Noel Tronc, CEO of French collecting society SACEM.
Moderator Helienne Lindvall kicked things off, asking Ashcroft about whether the music industry remains populated by roaming dinosaurs. “I’m not going to see myself in the dinosaur category, nor am I going to see PRS for Music in the dinosaur category,” he said, noting that the society was the first to sign a deal with YouTube, the first to sign up with Apple’s iTunes Match and so on.
“But the industry has got a problem,” he said. “Apple is now making more in profit than the recorded music industry ever made in revenue. I would like to think that the music industry contributed a little bit of that value to Apple, so my question is have we handled that well in this transition?.. I would say not. Apple have done much better than we have.”
Ashcroft says he hopes subscription streaming services like Spotify will become properly mainstream, and herald a “bright future” for the industry. But he warned about an alternative vision: “If on the other hand, the cloud locker services are filled up wit pirated content and we are fighting for scraps of that chain… we just haven’t played our cards right.”
Budde was asked if there is musical innovation going on in Germany, and he brought up the legal arguments between collecting society GEMA and YouTube there over licensing.
“We are the last fortress against this YouTube situation, and we are fighting hard on that,” he said. “The problem is the fair price, getting statements and getting all the business plans… The biggest problem to solve the YouTube deal is they want a non-disclosure deal, and we are not allowed by Germany law to do with any partners a non-disclosure [deal]. We have to do it open.”
Onto Hoppus to give an artist’s perspective. How does he manage the digital space? Are there innovations that are very useful for Blink-182, or things that he’s worried about?
“For us there’s a lot of opportunity. We just became an independent band, and with all the forms of digital distribution, we were able to release an EP on our own,” he said. “Are record companies dinosaurs? For the large part they are, just because of the nature of being a big business.”
But he was also positive. “Record labels now are in a good spot to use all these different technologies to get attention to bands, and to push bands – and for bands to do it on their own.” Hoppus talked about artists and labels as being in “partnerships of creativity” in the best examples, with trust and give-and-take on both sides. “There is still a balance to be made there: there is good that can come from that partnership,” he said.
Rennie provided a manager’s view. “I don’t know if I buy the dinosaur,” he said, before referring back to his own days working within a label. “The thing that was striking to me, I would sit in label meetings and we would talk about how to move the price up, and about how to make the consumer do everything the way we wanted to do it,” he said.
“It felt like that Sony and all the labels spent more time protecting than innovating… That was the undoing of the label business as we see it today.”
Now, Rennie thinks the industry “has got to keep innovating… I feel myself being suspicious of so many of the things that worked in the past, and looking more at ways people are doing it that are outside the mainstream of the business… The great people and the great ideas find a way to happen.”
Over to Lagerlof, whose label X5 is digital-only, and hails from Sweden – a country attracting lots of attention from the music industry for its rising sales, fuelled by streaming services.
“The market is bigger now than it was before,” he said. “In two or three years, it will be bigger than 2002, which was the biggest year, so it’s a bright future. But the labels haven’t changed that much their way of working.”
He talked about a regular question from artists: their concern about low payouts on Spotify. “I say to them what have you done today to make more revenues from Spotify? And they say ‘well, I’m up there, isn’t that ok?’.” So X5 ran a test. The company took 500 recordings on Spotify and tracked them – they generally did 7k streams a week each. X5 packaged them up in compilations and playlists and reuploaded them to Spotify.
“We traced streams for those for a week. We thought we could maybe double up at least. The streams were also published in an app on Spotify, and the streams were 247k for the new album. That’s an increase of 3,400%!”
Tronc gave another collecting society’s opinion. “I don’t come from this industry. I spent the last 20 years of my career in the IT business,” he said. “Frankly coming into this industry, I am really impressed, and of all creative industries… I don’t think anyone can quote another industry that has been so involved in grasping the digital world opportunities as music has been.”
The panel were asked to pick out a single innovation each that they think is important for the music industry to look closer at and take advantage of.
Rennie: “I would like to think that somewhere in one of these great technology companies, somebody can go out there and track the real plays that happen, and ensure the artist gets paid for it… If every time an artist sold a record, they actually got paid when the money cleared the bank, instead of six-month hold-backs… I’d like to see somebody track it, because it can be tracked, and get the money in your pocket!”
Hoppus agreed there has “always been that” problem, citing breakages clauses in contracts when Blink-182 first got a deal. “There is a lot less nonsense in the contracts now,” he added.
“All this affords a lot of opportunity for bands, but you have to weigh that against what a label can bring you, and the guidance a label can bring you. But it also puts pressure on the labels to get rid of all the bullshit and come up with a plan that works for the band as well as the label… Now bands have a lot of power. Once you have a following the labels are largely as dependent on you as you are on them.”
There was another slightly testy exchange over transparency of collecting societies, and how fast they pay out. “You can pay out the next day if you’re willing to risk getting it wrong,” said Ashcroft. Rennie suggested societies could hold back 10% for “the funny business” but pay the other 90% as quickly as possible, as an alternative. “I know you can do better,” he said in a comment aimed at wider labels and societies rather than PRS specifically.
It was a bit of a shame, if we’re honest: a session to discuss a wide range of innovations in the music industry descended – as it so often does at conferences – into a ‘why collecting societies need to be faster / more efficient / more transparent’ discussion. And it’s an important debate, but it’s not the only one to have.
“We’ve got to get a handle on streaming music,” said Hoppus. “I think it’s just fractured right now. As a fan of music I don’t really know where to go to… I’m really happy with the way that technology is coming around… Bands love people that love their band. Bands want their music everywhere… At the same time we want the respect of people who listen to our music to say ‘you create something that’s of value to our lives’… Now we’re begging people to spend $20 a month to get evey single fucking song that’s been made in the history of mankind? Having that kind of access is incredible, and it’s worth a lot more to people.”
Hoppus said he thinks people’s opinions are “coming around” on this point though: they’re willing to pay money, if not as much as he’d like. “It’s a lot smaller pie,” he admitted. “Streaming I think is great, it’s immediate, people get a choice of everything, you can get playlists, drag songs to people… That’s worth a lot, to me.”
Tronc moved the conversation on to the music industry’s anger at large internet companies (usually code for Google) who it perceives as trying to erode the rights of creators. “They are lobbying to destroy these existing regulations that will help to shift some of the revenues back to the people who created the reason for these revenues,” he said. And so ended the session.