Analysis

Indie veterans talk YouTube, freemium streaming and emerging markets


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The impact of freemium streaming services and YouTube led a discussion between a trio of independent label executives at Midem yesterday, who debated challenges currently faced by their sector.

YouTube is both “fantastic and a nightmare” said Cooking Vinyl’s Martin Goldschmidt, who was hopeful that one day the video hosting platform will transform into a viable money-maker.

“It’s interesting that we make money where we never used to make it before. 10 years ago, everyone was a complaining about piracy and YouTube has really been the most effective thing against piracy that’s happened,” he explained.

“People don’t really talk that much about piracy anymore, but it is a massive source of free consumption of music. [YouTube] is evolving, if the money can come up, it’s a fantastic opportunity. Let’s just keep our fingers crossed, let’s be optimistic.”

According to Goldschmidt, the debate over whether ad-supported tiers from services like Spotify should be killed, is “a while imperialist point of view” and people should be thinking about how streaming is monetising emerging markets instead.

“If you are in a first world country that’s rich, you can look at business models and look at options. If you are in a country with a lot less money in Africa, China, India, it’s obvious that the model for the industry is going to be freemium, it’s going to be where the big money is.”

However, there is a “massive problem” if services like SoundCloud and Pandora who “pay us completely next to nothing” become the end game, he added.

But Spotify and new streaming services like Russian social networking site VK, that has previously landed in hot water for operating as an unlicensed music service but is now on the way to securing licensing deals, will bring a host of new paying customers into the industry.

Said Goldschmidt: “If in the first world countries, Spotify and the new Apple streaming service take off and give us hundreds of millions of subscribers, we’ll have so much more money than we’ve ever had. In Russia, the main way people consume music is on a service called VK, it has 69 million unique users a day.

“They are about to go legal and start paying for every time someone streams any music on VK. They are about to [convert] 69m people into paying customers for the industry. It’s fantastic.”

Mute founder Daniel Miller wasn’t so convinced that streaming will provide a sustainable income stream for his label in future. “Right now, streaming is nowhere big enough, it hasn’t got the reach it needs to sustain an industry,” he said.

“I really don’t know, it doesn’t make any difference what I think, they are not listening to me. I just have to do the best job I can to make the best records I can and market them in the best possible way.”

PIAS co-founder Kenny Gates was similarly nonplussed about the developments in technology and digital going on around him, saying the only way to be successful as an independent label is to create something that goes beyond technology, finance or money.

“20 years ago, you would have said the music business was about the advance, the cheque, the finance, now some people claim it’s about how the good technology might be. But to me, it’s primarily about the music.

“It’s about the passion and the responsibility we have to keep the promises we make, try and create careers and the right revenues and a living out of it for the artist and for us.”

Rhian Jones

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