The chief executive of the UK’s Entertainment Retailers Association (ERA) has criticised the trend for album exclusives on music-streaming services.
Kim Bayley came down hard on the practice in her keynote speech at ERA’s annual general meeting in London yesterday.
“What has been truly striking at ERA is that we are around the table with some of the biggest streaming services and we see their approach, long term, to this industry,” said Bayley.
“While they all acknowledge that short-term temptation to sign exclusive deals for releases, they are unanimous in agreeing that, long term, a policy of exclusives is detrimental to consumers and it may damage the credibility of the whole sector – ultimately driving music fans to piracy.”
Bayley argued that ERA is working hand-in-hand with organisations like the BPI to address piracy, but feels this could be undermined by retailers dabbling with exclusives to drive short-term growth in their user numbers.
“It would be ironic if exclusives through digital services were to be seen to increase piracy,” she said. Kanye West, Rihanna and Frank Ocean (pictured above) have so far struck time-limited exclusives in 2016, among other artists.
A later session during ERA’s AGM saw Deezer’s VP of Northern Europe Christian Harris back Bayley’s views. “Exclusives are really bad news for the sector,” he said. “They are damaging and disappointing. It’s bad news across the board.”
ERA says its members, who include streaming services as well as offline and online retailers, are unified on the issue of exclusives. That said, neither Apple nor Tidal, the two most enthusiastic exclusive-signers, are ERA members.
Harris also talked about how Deezer’s business is evolving, which appears to be away from the telco deals that fuelled its growth to six million subscribers.
Deezer has faced regular questions about how many of its users were so-called “zombies” – officially signed up to a subscription via their telco, but not actually using it.
In the prospectus for its cancelled IPO in 2015, Deezer revealed that 3.3 million of its 6.3 million subscribers at the time were classed as “monthly inactive bundle subscribers” who were not using the service.
Harris talked about how Deezer’s approach is changing. “Partnerships play a huge part in what we do at Deezer. The big story at the moment around partnerships is very much a move towards hardware partners and perhaps a little bit away from telco partners,” he said.
“We are coming towards the sunset phase of the telco partnering environment. If you look at the efforts that telcos are making around partnerships, they are becoming gradually less [prevalent]; and we are certainly broadening the range of things that we are looking to do.”
Harris added that live music is the priority area for Deezer’s marketing in the near future.
“We see a lot of opportunity as a streaming service to get into the events space,” he said, mentioning the shows they already do at the Hospital club in London. “We want very much to start to work with new artists. We believe there is a tremendous opportunity to do that – signed or unsigned – and we expect to see more activity around that in the UK and aboard going forward.”
ERA’s AGM also heard from Dan Chalmers, president of Rhino, East West and ADA UK, talking about how the transition from physical to digital is panning out for a label division focused on back catalogue.
Chalmers suggested that for many of his company’s biggest releases – from Led Zeppelin and David Bowie to Cilla Black and The Corrs – sales are still 90% physical.
“If you look at the Spotify streaming charts or the iTunes chart, you will notice that contemporary urban or dance tends to skew that way,” he said. “For us at Rhino, physical is still key, but we are looking at all of our offerings and how digital can add value all the time.”
While CD is still a significant part of its business, especially for boxsets and anniversary editions, the revival in vinyl could mean that the latter outlives the former.
“Vinyl isn’t something that we predicted as a business but we have seen eight or nine years of consistent growth in vinyl – which is incredible,” he suggested. “Arguably vinyl could be the longest standing physical format. Time will tell, but we don’t see it going away any time soon.”
Chalmers warned the industry that it writes off physical at its peril. He acknowledged the exciting aspects of digital, including strong streaming growth, but suggested that vinyl and CDs remain the bedrock of much of the business.
“I remember being in some meetings eight or 10 years ago where the new media would show graphs of exponential growth and suggest that that we license out our entire physical business,” he said.
“But if you look at that it was completely preposterous, particularly given some of the releases we are involved in. Physical is still a large proportion of the market – pretty much 40%. We see that continuing and we are going to invest in physical. It is something that we don’t see going away.”