Does the phrase ‘fireside chat’ conjure up a vision of warm cosiness? Not when Ministry of Sound boss Lohan Presencer is one of the chatterers, it doesn’t.
An actual fireplace may have been lacking, but there was plenty of flaming going on during Presencer’s on-stage interview at the Fireside Sessions event in Brighton today, as music conference The Great Escape got underway.
Interviewed by Music Business Worldwide’s Tim Ingham, Ministry’s MD was in familiarly combative form as he discussed the dance brand’s evolving digital strategy, including his views on streaming music. Yes, including Spotify.
“No one likes us and we don’t care. Our business is different,” said Presencer of Ministry’s decision to carve its own path through the music business with an enterprise that includes compilations, an artist-signing label, a nightclub, a radio station, a live touring business and digital services.
“We’re not just one thing: we’re many things. We have to consider the cross-pollination between all of those businesses which makes us different. And we have to carve our own path. Our record business is very different to everybody else’s. We’ve had to carve our own way. which sometimes makes us seem a bit possibly aggressive. I’m not sure if that’s the right word…”
“Obstinate, maybe?” wondered Ingham. “Fuck off!” said Presencer, raising the first laugh from the audience. He admitted that a few companies down the years have “come in to kick the tyres” of Ministry with a view to a potential acquisition, but most have been sent away with a flea in their ear. “It’s that ‘we don’t understand what you are’ thing,” he said.
‘Certain big green companies lose a shitload of money…’
So: big labels don’t understand its clubbing business, companies from the latter world wonder why it’s still putting out records, and digital people – so Presencer claimed – struggle to figure out how to value Ministry as a company on account of its… profitability?
“Certain big green companies lose a shitload of money and yet have astronomical valuations,” he said – if you’re playing the Lohan Presencer Spotify drinking game while reading this article, time for your first swig, by the way.
“You seem to be hindered by the fact that you’re profitable. It means that you can actually invest in people and talent and ideas as opposed to borrowing money to do it,” he continued. “We’re an odd-shaped beast, and y’know what, we’re not for sale. We’re really happy being us and being independent… fucking things up, which we do a lot, but learning from it and moving on. And experimenting and having fun while we’re doing it.”
In truth, Presencer lobbed as many brickbats at major labels – Universal Music in particular – as at Spotify during his interview. For example, he criticised the “short-termism” that he sees within major labels as hampering the overall recorded music industry.
“Ever since the 80s and the beginning of the consolidation of the record industry… the way that the people who run those companies are contracted and remunerated and rewarded is all short-term,” he said.
“People do things within big companies that are immensely damaging to the industry, but I do understand the reasons why they do them… you’ve got very short-term decisions made by people on the basis that they have five or sometimes three-year contracts that pay them a lot of money.
“As we have seen from the Sony Wikileaks emails, they are incentivised to deliver short-term goals. So what they do is all driven by that… and the decisions they have made have completely fucked everyone up the arse. I’m not optimistic about that: I think that culture is very ingrained in the big record companies and music publishers. And in the big movie studios too.”
‘I think some of the things they’ve done digitally are awful…’
Presencer also talked about the recent change in messaging coming out of Universal Music, with its boss Lucian Grainge criticising free, on-demand streaming music after a long period during which UMG – epitomised by its recently-departed digital chief Rob Wells – had been championing the model.
“All of a sudden the guy at the top has changed his mind, and all the executives below are saying ‘ I was saying this, now he’s saying that, and… Am I going to keep my job? Oh FUCK’.” he said, before pausing to praise Universal’s boss. For a bit.
“I’ve got a tremendous amount of time and respect for Lucian. I think he’s a great executive. He’s consistently taken risks, taken chances, rolled the dice, done big deals, signed great artists – right at the heart of Lucian is music and he really gets that,” said Presencer.
“I think some of the things they’ve done digitally are awful, and they have created a landscape for themselves that they’re now trying to dig themselves out of, and they don’t quite know how. That has massive, rolling implications for all of us.”
Which brought the conversation neatly on to Spotify, and free streaming more generally. Presencer has sued the “big green company” of course, over compilation infringement, and more recently spent a large part of a Mobile World Congress panel session tearing into its model – albeit with representatives from Deezer and Rdio taking the brunt in Spotify’s absence.
“The music industry’s response to piracy was ‘lets give everything away for free legally. The movie industry didn’t do that and the TV industry didn’t do that. Even the book publishing industry hasn’t done that. And newspapers have managed to put paywalls around their content,” he said today.
“And the music industry’s approach was to give everything away for free, initially on the pretext of promotion through YouTube… that cat is out of the bag. That horse has bolted. But I get sick of these streaming services telling us that they are an antidote for piracy when they’re paying us fuck all for those free-level services.”
‘Let’s be clear who designed the licensing system: Universal’
Presencer reiterated his past view that streaming services are acting entirely understandably according to their corporate aims: “Let’s be clear about what these streaming services are there to do for their businesses: either IPOs or sales to exit to pay their investors and for their executives to make money,” he said.
“I wish they’d just be a bit more honest about what they’re doing: they’re trying to run businesses not to make a profit or to save the music industry, but to make themselves huge amounts of money… good for them, but not for us.”
Interestingly, Presencer happily admitted that not every independent label shares his views, partly because “if you’re running a smaller label and somebody turns up at your door with a cheque, that’s a bloody good thing” but also because the model may work for their artists and catalogues.
“Maybe streaming is better for smaller labels when it is not hit content: maybe people are more likely to sample it through a streaming service… so the mechanic works better if you are a small label developing talent. But my business is a hits business,” he said.
“I understand that people have a different position on it. And the major labels… let’s be clear who designed the licensing system for subscription: it was Universal. Universal were the first people to engage with Spotify. Universal said ‘what we want is people spending £10 a month for subscription’,” he continued.
Presencer’s theory: that Universal’s drive for £10-a-month streaming subscription services with free tiers was an attempt to replace the money major labels earned in the CD format’s heyday by forcing people to buy albums to get a couple of tracks that they liked – “iTunes fucked that all up for them! Well, Napster and then iTunes…” – suggesting that the current streaming model is geared towards rewarding the companies with the biggest catalogues.
“What subscription gave them the opportunity to do was to put the cat back in the bag. It was to say ‘if we own 40% of the world’s content, we’re going to get 40% of the money that’s there’. It valued a track made 40 years ago at the same level as a track that’s made today: a frontline artist,” said Presencer.
“That’s very convenient if you own lots of catalogue because you’ve been acquiring it over the years… they’ve done what they did with the PROs, they’ve split up the remnant money at the end of the distribution among themselves on the basis of market share. And it’s just not fair.”
‘Why would anyone want to start a f***ing music service?’
Ingham wondered what Presencer would change: what would be a fairer streaming model?
“Why is it all or nothing: why is it the ad-funded side or 10 bucks a month split out that way? Well, it’s split out that way because it favours the three biggest players in the game: that’s clearly why it’s been designed that way. Clearly there are other models, but they’re not interested in licensing those other models,” he said.
Presencer added that there should be different tiers of (paid) subscription for, for example, deep or popular catalogue, for discovery-level artists, for high-definition audio and so on, but claimed such ideas face a struggle getting off the ground.
“The services all exist, they’re all out there… but when they go to the big content owners and say ‘we’ve got a different model’ the big guys go ‘hmm, we don’t want to damage Spotify because we’ve all got a piece of that… so the only way we’ll consider this is if you give us a massive advance or an equity stake, and we’ll give you a one-year licence’. Why would anyone want to start a fucking music service?! Why would anyone want to go and negotiate with those beasts?”
Ministry of Sound’s relationship with Spotify has actually improved in recent times: the companies settled the lawsuit, and Ministry has since put some of its artists’ music on the service, including previous holdouts London Grammar.
“At the beginning, I didn’t see the value for my business. We were selling lots of downloads: loads of compilations digitally, loads of compilations physically, lots of singles digitally… and the model very clearly from the beginning looked like ‘I’m getting that much money from there, but you’re gonna pay me a tiny fraction of that, and actually you’re going to pay most of the money you collect to the big guys?… And you have absolutely no model for monetising compilations. You don’t value curation, you only value content ownership’.”
So he passed. Then came the lawsuit, spurred by what Ministry said was a rash of playlists on Spotify that copied Ministry’s compilations, including trademarks and in some cases artwork. “A clear infringement of our intellectual property rights. We asked them to take them down, they refused,” he said. “We sued them. And then they took them all down! So make of that what you will.”
“The relationship’s much better since we resolved that. Our content is up there now. We can decide what we want put up there or don’t want to put up there. We’l have to see how that plays out. I don’t really like having stuff on the free service but that’s not an option at the moment. We’re just watching it: the numbers from our perspective are so pathetic that it’s irrelevant to us financially. But better to learn about it and understand it and be in the game than not.”
‘Apple like to be the good guys…’
What about Apple’s plans to launch what we now expect to be called Apple Music in the summer, focusing on a paid subscription streaming service? Presencer admitted to mixed feelings – “huge anxiety and massive optimism” – about Apple’s plans, although he admitted he was as in the dark about the specifics as most independent labels.
“I believe they are on our side. They did a remarkable thing for the music business… Apple gave people what they wanted. They gave us a way through, and they’ve been paying us an enormous amount of money as an industry over the last 10 years. They have consistently tried to be on the side of the creators. I’m not saying they always get it right and I’m not saying they don’t have other agendas. But Apple like to be the good guys. I don’t think they’ll want to put too many noses out of joint,” he said.
“We are right in the middle of this massive crucible of change. It feels like a pivotal moment in the industry. I suspect that whatever they launch is not going to go bang and change everything overnight. People’s consumption habits are very ingrained… I don’t think downloads are going to disappear overnight. I don’t think streaming is The Future. It’s part of the future, just as downloads are part of the future and vinyl is part of the future and whatever the next thing – having music beamed into your fucking brain! – is part of the future. Let’s just try and keep a perspective on things.”
Presencer also enthused about London Grammar, talking about the experience of receiving and playing demos for the band’s debut album in the office – “people were crying… even the bouncers!” – as well as an emerging singer/songwriter called Rhodes whose album is due out towards the end of 2015.
He also talked about his days working for Warner Music, which ended when he joined Ministry to run its compilations business 16 years ago. “There was a lot more money flowing around. I never saw any of it, unfortunately. But I learned how every aspect of it worked because I sat in the central division,” he said.
“We would look at the catalogue and try to think of ways of reactivating the back catalogue doing compilations. And working on this funny thing called the Internet, which at that time was about artists fucking about on little websites that nobody went to because nobody had more than a 14.4 dial-up connection.”
Ministry’s compilations were starting to build up a head of steam at this point, spooking some major labels according to Presencer, but making him curious about the potential for the dance brand’s business.
“As opposed to most people who met Ministry of Sound and thought ‘what a bunch of wankers they are’, I quite liked them. And I liked them enough to go there when they offered me a job…”