“Without sounding like a smug bastard, it kinda vindicates a lot of what we did in the early days in pioneering some of these deals…”
Rob Wells, former president of Universal Music Group’s global digital business, is casting his eye over 2016 – and specifically the upturn in recorded-music industry revenues that has been driven by streaming subscriptions.
“Back then, we had two issues: one was fighting the piracy problem, and two was the dominance of Apple’s iTunes music store. We studied the pirate services long and hard to understand what it was that consumers were gravitating towards: first, it was free and second – equally important – was they had everything,” he says.
“There was always an inevitability, once subscription reached network effect and got scale, that it was always going to drive the revenue and the traffic.”
Wells adds that a whole range of deals from the 2000s planted the roots for 2016’s streaming growth, from licensing South Korean P2P service Soribada to Nokia’s Comes With Music – deals that gave labels valuable data on music consumption with unlimited-access catalogues.
“The realisation hit us that the best way out of the problem we faced was more courageous licensing. If you look at the period between 2006 and 2011, all of the interesting, colourful, creative deals were done with European music services: Last.fm, Nokia, Spotify, Deezer,” he says.
While Wells is heartened by the industry’s growth in 2016, he expresses caution about the possible impact on major labels’ willingness to strike similarly bold licensing deals.
“I met a guy recently who had a very interesting business model, but it took him four years to get just one of the major labels – and that was the easy-to-clear repertoire where publishing and masters were in the same building,” he says.
“I felt disappointed: now the business is healthy, are they slipping back and tightening control again? I don’t sit on that side of the table any more, but I’m not sure how easy it is to get deals done with the major labels.”
Wells thinks that 2016 was the prelude to more consolidation in the streaming market, with most of the survivors already pencilled in.
“At the end of the [streaming] transition you’ll settle down with, I think, five global partners. I think Spotify will survive, despite the fact that they’ve got profitability issues. Apple will obviously survive because they have other businesses,” he says.
“Google will be there, although we’ll see whether it’s Google Play or YouTube. Amazon Music is the stealthy nuclear submarine in the market: they don’t do things badly, they know their audience, and they’re so data-driven they’re a very well-run ship. But I also think there’s definitely room for a fifth player.”
Wells thinks Pandora may be more likely to secure that fifth slot than rivals like SoundCloud or Deezer.
“I think Pandora have got a shot. If you look at the global marketplace, the true scale – the true volume numbers – is only going to come from activating new markets around the world,” he says. “Pandora’s model is going to sit very sweetly across the world: that interactive radio model is a huge opportunity.”
What about 2016’s other big music-industry debate: YouTube and the ‘value gap’? Well-versed in the tensions between Google and the music industry, Wells gives short shrift to suggestions that the tech giant is actively seeking to undermine copyright.
“I don’t subscribe to that: I think that’s bullshit, the music industry has always been really good at blaming other people. It’s always ‘Those guys, they’re bad guys!’. But I don’t think Google are that bothered about music: it’s just stuff that goes through their pipes,” he says.
“I think Google are apathetic to all content, not just music. They’re a technology platform: they just care about eyeballs and ad revenues. The only technologist who really gave a shit about music was Jobs, he was a fan.”
“The irony is that while creating music is a very creative process, so is generating software. A blank piece of music manuscript is the same as a blank screen with a blinking cursor. They’re both creative processes. The irony is never lost on me.”
Post-UMG, Wells has been active in the music/tech world, including running the US arm of ill-fated social music startup Crowdmix, as well as advising companies including Revelator and LoveLive. His current project, Music Media Inc, is a content/technology incubator.
“Some of the early-stage stuff we’re doing is focused on machine-learning and AI, and how that can help across social networks and music curation. That’s very exciting,” he says.
Wells is more sceptical about two of 2016’s emerging tech trends within the music industry: blockchain and virtual reality, describing them as “very interesting technologies, but not the silver bullets for the music industry”.
He thinks blockchain technology could play a role in solving some of the industry’s rights headaches, but is less sold on VR’s potential for music.
“As a gamer I get VR. As a massive music fan, it doesn’t interest me. The worst thing I could possibly do is join the Rolling Stones on-stage in a headset. It would scare the shit out of me! I don’t get that. But there will be opportunities,” he says.
“Machine-learning and AI and suggestive listening is far more interesting to me than what the blockchain or AR/VR can do. It’s not quite as sexy and maybe not as investable, but its impact on the music industry could be huge.”
Wells thinks that the growth from streaming subscription services will fuel a new wave of investment around music/tech, but hopes that rightsholders will meet it in the right spirit.
“My greatest fear is the industry gets comfortable, fat and complacent, and they don’t take advantage of the entrepreneurial spirit that’s about to flow back into music. I’m worried that they just lock down and forget about being brave: that they become cautious and risk-averse,” he says.
He also hopes that labels and artists will continue to move away from the idea of streaming exclusives for big albums, for fear of angering current subscribers and putting off potential ones too.
“I think the industry woke up to the fact that giving exclusives to individual services was a race to the bottom,” he says. “Service-by-service exclusives? That’s idiocy. I don’t get that at all, and I never got it.”
If Wells were starting in the music industry in 2016, would he still want to work at a major label, or would he rather go to a music/tech startup?
“I can’t say a bad word about working for one of the major labels: I spent 20 years in that world and it’s a fantastic meritocracy. If you want to to work hard, go to lots of gigs and be close to the artists then go and work for a major label or an independent – you’ll be well paid but you’re not going to get entrepreneurially wealthy,” he says.
“If you want to get rich and flirt with music, grow a beard and have a nice haircut and work in Hipsterville, it might be worth working for a technology startup. But you’re going to earn peanuts until something happens and even then it’s touch and go.”
“I loved the time I was in the major-labels world, but I’ve genuinely learned more in the last 18 months than I did in the previous 10 years.”
That includes the unhappy period of Crowdmix’s collapse before the commercial launch of its app.
“The Crowdmix business didn’t go bust because it was a bad idea. It went bust because it was badly run. But it was a new business in the ecosystem that was looking to extract value from the conversation around music and remunerate stakeholders around that conversation,” he says.
“It did fix some problems, which is what drew me in. I think there’s an ecosystem around the core business of distribution and listening to music that is undertapped. I still stand by the concept. I really believe that the promise of the platform was great.”
Like his former UMG colleague Beth Appleton, interviewed elsewhere in this issue, Wells thinks the music industry must not let fear of failure stop it exploring new ideas.
“That’s the way the industry grows, and the way that new businesses are formed and forged. You have to make mistakes. Without being reckless, you have to try things,” he says.
“You can’t get a new idea signed off in triplicate and go off and justify the concept to the board, there’s just not the time. Innovation has got to be done by the people at the front line. You’ve got to allow the skirmishers to skirmish. Allow them to fucking get on with it.”