Music Ally

It sounds like an obvious thing to say, right? Of course labels invest in music and the artists who make it: that’s the definition of a record label.

Except in recent months, there have been claims that this is changing – and particularly that major labels are unwilling to invest as much in as many artists, preferring to keep their powder dry for a bigger push behind a few select acts every year, while focusing more attention on making money from their back catalogues.

At last week’s Music 4.5 conference in London, several speakers mentioned the idea of an ‘investment gulf’ in the music industry, with UK Music boss Feargal Sharkey announcing that his organisation is taking steps to combat it by courting investment from external sources.

The IFPI has published a report today that aims to counter the idea that labels aren’t investing in artists though, claiming that labels of all sizes invest around $5 billion a year in music talent – 30% of their sales revenues. It goes on to point out that there are more than 4,000 artists on major label rosters today, and claims one in four artists on all labels were signed in the last 12 months.

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Chinese search engine Baidu has prevailed in its battle with the music industry over ‘deep-linking’ to copyright-infringing music downloads.

Baidu and rival Sohu were sued by UMG, Sony BMG and WMG in early 2008, but the Beijing No. 1 Intermediate People’s Court has ruled against the labels, saying that providing search results does not break copyright law. JLM Pacific Epoch cites a lawyer’s claim that the case fell through “because the plaintiffs failed to identify sites hosting unauthorized music downloads”.

The IFPI isn’t happy, needless to say. “The judgments in the Baidu and Sohu/Sogou cases are extremely disappointing, and we are considering our next steps,” says a statement. “The verdicts do not reflect the reality that both operators have built their music search businesses on the basis of facilitating mass copyright infringement, to the detriment of artists, producers and all those involved in China’s legitimate music market.”

IFPI boss John Kennedy says he expects the three-strikes element of the French Creation and Internet bill to become law, despite being slapped down by the country’’s Constitutional Council last week.

“We believe there will be a solution to this,” Kennedy tells Billboard, with that solution being the appointment of a special judge to rule on cases where consumers’ internet connections will be cut off. “That is our understanding of what will happen as the next step, and it will take some time, but there is still the determination on the part of the French government to make sure that this happens,” he says.

He’s also taken aim at suggestions that internet access shouldn’t be cut off as part of such cases. “It is interesting to me this concept that the right to access the Internet is a fundamental human right,” he says. “I don’t understand why we’re not balancing a fundamental human right of access to the Internet with the fundamental rights of intellectual property holders.”

It’s interesting, though, that today’s announcement of a deal between UK ISP and Virgin Media DOESN’T involve permanent disconnection – just temporary. Perhaps that’s a definition of balancing these fundamental rights.

Music industry body IFPI has welcomed today’s Guilty verdict in the trial of The Pirate Bay’s founders and financer, saying its effects will be felt far beyond Sweden.

“The trial of the operators of The Pirate Bay was about defending the rights of creators, confirming the illegality of the service and creating a fair environment for legal music services that respect the rights of the creative community,” says IFPI chairman and CEO John Kennedy.

“Today’s verdict is the right outcome on all three counts. The court has also handed down a strong deterrent sentence that reflects the seriousness of the crimes committed. This is good news for everyone, in Sweden and internationally, who is making a living or a business from creative activity and who needs to know their rights will protected by law.”

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Former IFPI director of strategic research Keith Jopling thinks bands and managers should be wary of the hype machine (as opposed to The Hype Machine) when building a fanbase. While the annual ‘next best thing’ and ‘best thing of last year’ polls may seem a quick route to popularity, in a post on his Juggernaut Brew blog he points out some of the downsides.

“The exposure is great, but the potential for over-exposure and worse, backlash, seems a very real risk. Analysis of both albums made and sales from each album reveals ever- shortening life-cycles for modern day pop artists. Looking back to one year ago – the collective ‘buzz’ being generated around any number of new bands that included The Horrors, Clap Your Hands Say Yeah, Palladium – was almost claustrophobic.”

He also points out that if such a thing as the Long Tail exists, it’s “currently being well stocked with an ever-increasing volume of short career span artists, who were ‘this year’s big thing’ at the time but never got past album two in the end.” Jopling’s view is that managers and labels should resist the hype machine and focus on longer term development of their artists.

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We’ve written separately about the IFPI’s Digital Music Report, which has just been released. But if you just want the hard numbers, here’s some of the main ones.

OVERALL FIGURES

- More than 1.4 billion legal single-tracks were downloaded in 2008, up 24% from 2007. The top-selling digital single was Lil Wayne’s Lollipop with 9.1 million sales.

- Digital album sales grew by 36% in 2008.

- Digital music generated $3.7 billion of trade revenues in 2008 – up 25% year-on-year.

- Digital now accounts for 20% of all recorded music sales, up from 15% in 2007. By contrast, the games industry generates 35% of its revenues digitally (but newspapers, films and magazines are way behind with 4%, 4% and 1% respectively)

- The IFPI estimates that more than 40 billion songs were downloaded illegally in 2008 – that’s 95% of total music downloads

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Music industry body the IFPI claims that more than 40 billion songs were illegally downloaded in 2008 – 95% of all music downloads.

The figures have just been revealed in its annual IFPI Digital Music Report, which presents them as further proof that ISPs should be co-operating more closely with the music industry to clamp down on piracy. That 40 billion figure is based on collating separate studies from 16 countries over a three-year period, apparently, with France and Spain singled out as being affected particularly badly by online piracy.

How about the positive side? Well, digital music generated $3.7 billion of trade revenues in 2008, up 25% year-on-year. The problem is that this growth is pretty poor, given the continued decline in physical revenues – digital’s share of overall recorded sales has risen, but only from 15% to 20% from 2007 to 2008.

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The IFPI has published its latest set of data on recorded music sales in 2007, including performance rights revenues as part of the total figure for the first time. Strip those out, and you’e left with recorded music sales of $18.8 billion in 2007, down 4% from 2006. Digital revenues increased by 39% during the year. South Korea was the best market for digital in terms of percentages  61% of recorded music sales there were digital. It was followed by the US (24%), India (17%), Japan (16%) and Canada (11%). None of the other top 20 music markets had double-digit percentages of digital revenue.

You thought the Czech Academy of Sciences was focused on funding magnetostratigraphic studies of cenozoic volcanics (didn’t you?), but it seems it was all a giant front for music piracy. Well, kind of. Okay, so the Academy is kosher, but it was the unwitting host of a server holding up to 4 terabytes of pre-release (more…)