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City Slang boss calls for governments to close the ‘value gap’


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Christof Ellinghaus, founder of Berlin-based indie label City Slang, is keen for governments to take action to remove YouTube’s safe harbours, and thus address the ‘value gap’.

“We’re all stopping to sell records at this moment. Our bands are getting bigger and bigger, but we are selling less and less of their music,” said Ellinghaus, citing the example of a City Slang band that recently played to a crowd of 2,500 people in Warsaw.

“That stands in no relation to our sales or streams.. Everybody is just on YouTube. And so as long as YouTube gets away with this – and that’s one of the things that the governments of the entire world really need to figure out – it’s going to hinder Spotify,” he said.

Ellinghaus cited Spotify’s just-filed DPO documents revealing that its net loss was €1.24bn in 2017 as proof that the streaming service is “obviously struggling” against a backdrop of competition from YouTube.

“If this value gap is not closed, it is the biggest problem that we are all facing. Because YouTube is raking in gazillions of money off all of this, and all the other services are struggling,” he said. “This whole neo-liberal bullshit of ‘the market will regulate itself’? That’s all crap. So get on it, governments!”

Ellinghaus was talking on a panel of European indie labels at by:Larm (pictured above) in which much of the conversation focused on historical challenges of distribution and promotion. However, when the major labels cropped up as a topic, City Slang’s founder talked about how they are evolving in the streaming era, and what that means for music more widely.

“They are getting more dominant. They control the conversation everywhere. They control the conversation at YouTube, at Spotify, and everywhere else,” said Ellinghaus.

Fellow panelist Joakim Haugland from Smalltown Supersound in Norway said that he sees major labels as less focused on albums, which leaves the way open to independent labels to carry that format forwards.

“I think they are going in the wrong direction, I don’t think they understand what they are doing, and I think they’re going to go back to the idea that albums are important. The big artists: the Beyoncés and Frank Oceans and Kanye Wests, they all want to do albums,” said Haugland.

“But the major labels don’t seem to want to do albums… One of the reasons Adele is so big is that she was on an independent label, and they gave here the time to grow and be strong and have great albums.”

Ellinghaus offered another take on this view, however. “The majors are just going with the flow, and the flow is that there are tech stories telling the story of how music is being used. And the tech companies are interested in getting one song, and one song only, for their themed playlists that keeps the user in their ecosystem,” he said.

“The majors are simply adapting to that. But let’s not forget they’re also making a buttload of money, and finally seeing growth after years of heavy comedown… Being hung up on an album? An album is a good talking point in this day and age, but is it a commercial proposition still? I have my doubts.”

He did have some positive things to say about streaming and the internet, however, noting that they have made it much easier for City Slang to sign artists and release their music worldwide.

“The internet has made that a lot easier for us, yes. The US is so far advanced in digital music usage. If we have something that streams really heavily, our streams in the US are usually off the charts and twice as much as anywhere else. So the internet in that sense is okay. I like it! A little…”

Stuart Dredge

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