Coming off the back of 2014’s Dissecting The Digital Dollar report and 2017’s guides on both digital deals and transparency (as well as the beta launch of the Digital Deals Comparison Calculator), music management body the MMF organised a managers roundtable in London earlier this month, chaired by Music Ally.
The purpose was to openly discuss the range of data that managers are given access to, the types of information they are being locked out of and how this all affects their artists.
With renewed YouTube licences and the first music deals with Facebook being struck, these issues have never been more pertinent.
The managers debated: what “transparency” means in theory and how this is often very different from what it means in practice; how a class system could emerge in the artist community where only the biggest managers can invest in the data-processing tools they increasingly need to do business; how DSPs are finally giving more access to information to artists; why closed-doors deals like the recent Facebook one are signs of what is to come; and why the live music business really needs to sort out how it shares its data with performers.
The participants in the roundtable were:
Des A – manager and PhD student
Annabella Coldrick – MMF CEOsh
Jill Hollywood – Echo Beach Management
David Manders – Liquid Management
Ric Salmon – ATC Management
Lisa Ward – Red Light Management
“Transparency” as a word increasingly feels like “organic”, where it’s being overused and thus loses its potency. How transparent are things really?
Ric Salmon: I think there is historical inertia to all of this. The industry has changed so dramatically in the last couple of years – certainly in the last decade. A decade ago, Spotify didn’t exist and only a decade ago Facebook was being launched. Everything has changed […] We now live in a world where data is so readily available and there is no one way of doing business in the music industry.
It has now got to the point where managers and management companies can easily be treated as labels – or to be actively working day-to-day as labels – in as much as they are management companies. We will start to see more of that happening. A lot of it is scary for the major rightsholders because it is a little bit easier for them without loads of us scurrying around knowing as much as everybody else does. It’s a lot of complicated communication spaghetti.
We as managers – or for our artists, more importantly – have as much right to all of the information about everything to do with the Facebook deals, the YouTube deals, licensing models and subscription deals as other rightsholders do. That’s because they [artists] are also rightsholders.
How do you get this in an age of Non-Disclosure Agreements (NDAs)?
Lisa Ward: To an extent you understand why those major players and rightsholders go into a room with a closed door to negotiate their deals as they need the bargaining power of privacy to be able to do that. The problem then becomes, as an artist or as a manager, negotiating with a label to sign a new contract. You might negotiate a royalty rate better or worse [than someone else’s]; but if you don’t know what this company’s terms are versus that company’s terms, the change in your royalty rates could be useful or less useful.
Ric Salmon: This is a new precedent. Back in the day, we knew what a dealer price was [for physical stock] […] We also know what the rate are on radio for the most part […] But this is now the Wild West. All of a sudden we’re in this situation where it’s not a sale and it’s not a radio play but is a new thing – this thing called streaming – which is not anything that has existed before or anything that will probably exist after. It’s not a format, a sale, a distribution, a promotion or marketing thing, a radio play, a broadcast or whatever – it’s just a stream.
That, I suppose, is just us getting used to this new paradigm. As to the point about market rates – and it being a commercial and free market to negotiate the right deals for the rightsholders – of course they should be allowed to do that. The problem of transparency comes up when we know those major rightsholders also may have equity positions within some of these businesses. And we don’t know what has been done in lieu of whatever else. That is where the issue is.
Annabella Coldrick: It’s not wanting to put the entire contract that’s under an NDA on a website for everyone to pore over – but it is about knowing what terms are material. The question is: who gets to decide what is material?
If the labels think it’s only the streaming rate that’s material, they might tell you what they are paid on Spotify – not all the labels will, but some will – tell you what share you got and what the deductions and discounts were. But if there are lot to other side parts to that deal – like advertising and equity being exchanged or data being traded – the problem is that you don’t know what to ask because you don’t know what is in there; but it all might be pertinent for your artists. That is where the issues are with NDAs.
Some labels say that they will bring managers into a circle of confidentiality to discuss some of that, but obviously it’s all done on a one-to-one basis. You could say that’s fair enough – but it’s at least knowing what is material to the artist’s business.
Is there a risk of a class system emerging here where only the biggest managers of the biggest acts get this transparency, and the further down the pecking order you are, the less you see?
Jill Hollywood: I think it’s worse from a producer’s point of view. Producers have traditionally stood behind the artist. We go into these negotiations saying [to the artists], “We’ll get a piece of what you get.” We don’t ask the questions necessarily because we can’t ever get a better deal than the artists. So it’s even worse for us because we don’t see what the artist gets half the time.
Annabella Coldrick: It should all be easier now because a lot of that data is there and should be enabling you to audit more easily than before. On our Transparency Index, we came up with 20 pieces of information [that managers need to ask about]. Some of it has been driven by the DSPs handing over lots of information directly to artists and managers. Spotify has been great about that and the other DSPs are now doing something about it.
Lisa Ward: Some DSPs. There are definitely some top-level DSPs that make it very clear that they believe that their primary relationship will always be with the rightsholder – so their primary responsibility and data sharing is with the rightsholder and they say it’s up to the rightsholder to then share that information with the artist.
But we all know that’s just another filter. When you look at the definition of what transparency actually means in terms of clarity and communication, a lot of that comes down to trust. And there is a massive trust problem – an inherent trust problem – in the music industry. It is very us and them. There is a trust gap in the middle.
David Manders: We are now in a situation where a lot of us are releasing records ourselves – so we are the label – and we are seeing the information that is coming from the distribution companies. We can see everything. We can see all the streaming rates. We can’t see these behind-closed-doors deals, but we can see what is being paid and we can see all the data in terms of where the streams and the downloads are happening. There is a lot of information there.
All the conversation around streaming stresses the positives in the long tail and how the licensing deals with the DSPs taking place are all based on this long tail outlook. There are also advances, minimum payments etc. being made to some of the bigger labels, distributors etc. This is great for them and does give them some money early in the music’s shelf life, as well as equity for the majors and larger independents which they are now agreeing to give some sort of share of that to their artists when those shares get sold.
It’s fine for established artists to be happy with a long tail approach as they are up and running and earning a living. The problem is for new artists and smaller indie labels that badly need more funds early on to help develop the career artists of the future.
I feel the DSPs need to take more responsibility for this artist development and a way needs to be found to get more money to new artists and smaller labels to help with this development. They need to keep an eye on the artists of the future for the interest of their own businesses.
It needs a lot more discussion, but one idea I had was the DSPs paying a higher rate to non-major, non-large indie label artists for their first 1m streams. God knows how that would be greeted or how that could work without the majors moaning they should be entitled to that as well; but, as I say, they do get some upfront assurances within their deals already. It would be great advertising for the DSPs to be seen helping support new music across the board, not just a chosen few, and the artists that are going to be the future of the music industry.
I’m not talking about the privileged few that both Spotify and Apple get behind with big campaigns; it’s those artists that are looking for those slots, who are just getting started. I am also aware that Spotify put a fair but of money and promotional support into the PRS Momentum fund.
Do many managers have the resources to properly process these billions of lines of data they are now getting?
Annabella Coldrick: That is where the competition is now. That is where it is interesting with some of the labels and distributors as that is how they are trying to sell themselves into the market – that they are the best at this.
Jill Hollywood: I am on a test-case panel with Kobalt where they are talking about separating royalty streams according to producers and maybe, ultimately, writers. That’s with the idea being that they become the most appealing label to work with because they will account to you separately – so the producer gets their piece before the artist gets their piece. So it’s direct accounting from Kobalt as opposed to relying on the artist to do a net receipts deal.
Ric Salmon: All this is great news because it moves us away from a royalty-based model towards a revenue-share model. The resistance, perhaps, to moving fully over to a revenue-share model is that you can only have a revenue-share model if you know what the revenue is. You can only work out what your share is if you know what the total pot is. Of course a royalty is a royalty of X and you get a royalty of a royalty of X as a producer manager. It is really difficult to work out what X equals.
Jill Hollywood: Those net-receipts deals are traditionally much worse for producers than they are on a traditional record deal. On a net receipts deal, you are standing behind all the other costs like styling and marketing and so on. We would never stand behind those normally. It’s a mystery when you go into these because you’re thinking that theoretically it’s a better way of getting accounting.
David Manders: You are doing those net-receipt deals for your producers with the labels rather than with the artist. Otherwise the artist would have to give permission for the distributor to be passing this information on.
Jill Hollywood: Traditionally most of the distributors won’t pass that information on. So you are asking the artist, where at all possible, to ensure direct accounting from whoever their label partner is; but nine times out of 10 you won’t get it if you are working with the band without a record deal, so you are prophesising where that is going to be. It’s conjecture, really.
David Manders: Speaking for my artists, I would prefer that to happen – if the distributor was paying direct. It would make my life easier, especially if I am self-releasing. As an artist manager, it would take that whole strain away and keep everything straight.
Jill Hollywood: I don’t know many people who are willing to do it. Most of them will shy away from it – unless it is a major. But Kobalt looks more attractive in a way.
Is it just easier for managers to outsource this?
Annabella Coldrick: It makes sense if that’s where the label’s expertise, potentially in the long term, will lie. It is about bringing together all these different data sources. You have Spotify providing some information, YouTube providing other information, Apple providing its information, Deezer, Amazon and so on. As a manager, you probably don’t want to be having to go into all of these individually. It is useful to know that you can sense check if the stuff that you’re seeing is actually accurate.
So is data analysis just going to become jumped on as another division of expertise within a label like marketing or sales?
Annabella Coldrick: It already is in some of them.
But is there a fear of ceding control here if you default to the label as the data expert out of necessity?
Annabella Coldrick: Obviously that data is about your relationship with your fans – and as the artist and manager team, you are not just thinking about your connection to your fans on the recorded side; you are also thinking about all your other connections and data. I know that some management companies are looking at specifying that in the deal terms with the labels, saying that that data belongs to the artist.
Lisa Ward: There are two different types of data here. There is royalty data and money and then there is fanbase data. If we’re talking about the latter, who owns the fanbase? Here’s an example. If I fancy a cheese sandwich, I go to Tesco and see that Cathedral City cheese is on offer, so I buy that, go home and have a sandwich. As a consumer, do I belong to Cathedral City or do I belong to Tesco? Who owns that data? Who owns that consumer?
With a lot of the traditional deals, the labels have always owned the data and owned the fanbase. In an attention economy, whoever owns the data has the money. So Facebook control your fanbase and they control how much of your fanbase you can reach. You have to pay to reach your fanbase and advertisers pay to reach your fanbase. So technically Facebook owns your fanbase – not you. And labels sell access to artist data all the time. Where does that money go? Do you see that being accounted for?
Annabella Coldrick: That’s a very good question! Where does that money go? Some of the labels are much better at sharing across the fanbase.
Lisa Ward: They will let you see the data. But who are they selling access to?
David Manders: It gives some labels so much more power with the direct-to-fan model that is out there at the moment. The labels will be concerned they are going to lose their business even more so over the years.
Lisa Ward: Forget about the email addresses for a second – think about the cookie data. Every artist website that we work with has cookie data implemented by distributors [and labels]. Where is that cookie data going? Who is using that?
Aside from the loose analysis you might get from a product manager of this is roughly who the fanbase is and how much web traffic they drove to the store from Facebook or whatever, that cookie data is hugely valuable. The data platforms – like Facebook and YouTube – know that and the labels know that; but there is absolutely no transparency as to if and where that is being monetised. That is a big question.
David Manders: The amount of data is just too much for a small management company to spend time trawling through, so how can they handle this better? I’m not sure I know the answer to this; but possibly these management companies need to start thinking more seriously that part of their running costs needs to include hiring an outside specialist digital company to assist them in using the huge amount of data to the benefit of their artists.
Facebook has started doing its deals with labels and publishers. What have you heard about what those deals involve? Or have you heard nothing?
Annabella Coldrick: We know a lot of stuff that has been rumoured and leaked. We know that it is a lump sum and that it is a two-year term. We also hear that they don’t have decent enough content ID so it is going to be unattributable for now. But we only know this via the press and leaks.
Ric Salmon: I have had conversations at the right level with a couple of the majors and a couple of the big indies. I don’t even think a lot of the guys right at the very top of the companies necessarily know exactly how the deal is structured. I know that sounds silly, but these are complicated things. There is an assumption, I think, but that’s because we don’t get the information or that the information is being withheld.
A lot of the time these guys are very busy running very big companies and this is a bit of a sideshow. So as long as the deal is done and the lawyer who is dealing with it is happy with the way it’s structured [they’ll be happy]. Let’s not start from the position of total cynicism – but maybe have a little bit of cynicism. I think there are two sides. I try to err on the side of trust – at least a little bit.
How I see it is that there is a two-year deal and a nice lump sum to the rightsholders on the publisher and the masters side. There is a pot for each of the majors and then an indie pot. It is based broadly on market share.
How the pots then get divvied up, which is especially relevant in the indie pot, is a bit more complicated because that is then a sub-market share of the indie pot. They are saying they will pay the money through to the artists, but how they will do that they haven’t worked out yet. There is no content ID system on Facebook so they don’t know what’s been played specifically.
They do have a system up and running. It might not be as robust as on YouTube, but they have something.
Annabella Coldrick: They are saying they don’t have one now, which is bizarre because they have been taking stuff down in the past.
Ric Salmon: The positive bit is the acknowledgement that music needs to be paid for on the platform. That is good news because the writer will get paid hopefully. The more cynical view is then around what happens to the money.
Annabella Coldrick: What I have been told is that they will definitely share with the artists, at some point, this big lump sum. But is there an industry standard about how that should be shared? Should it be based on a revenue share or a royalty rate? Or is it going to be decided completely differently? So Merlin might decide one way; but will all the labels within Merlin do it differently? And will the majors do it differently? We don’t know.
There has been no, as yet, communication directly. It is probably cock-up rather than conspiracy. But it is about if they see artists and managers as among their business partners.
Ric Salmon: A large part of the responsibility lies with us as trade organisations [like the MMF]. When it comes to the independent artists we are representing as managers, we have to have a very clear and transparent relationship with our trade bodies like Impala, Merlin and AIM to make sure that we are actually part of the conversation. In order to do that, we really have to be open-minded enough to be together around a table to talk about it. There is some work to be done on that front.
The industry had a real reputation back in the day for a lack of transparency – or at least a lack of trust or a lack of communication – but organisations like the MMF and hopefully others are going some way to remedy that. As far as I’m concerned, the more we communicate on that information, the more powerful it is and the better it is for us at the end of the day.
Annabella Coldrick: I think everyone is super positive that it [Facebook] is being licensed and there will be money coming into the industry. I don’t think managers are saying it’s a bad thing. It’s just about making sure that everyone shares in it – including the people who make the music.
Is there a risk that it could be lambasted as having set a bad precedent in a few years – like YouTube is now?
Ric Salmon: The problem with YouTube, let’s all face it, is that we all remember YouTube as a promotional channel that supported selling albums and tours. Of course now it absolutely isn’t. It is exactly the same as Spotify and Apple Music – it’s just got a different interface and some videos. But it’s the same thing! But we shouldn’t be getting paid a fraction of what Spotify pays as a per-stream rate.
David Manders: Facebook has its brand to look after. It doesn’t want to be seen as being in the same place and getting the same flak that YouTube has got over the last few years with their payments. I think there will be a little bit kinder in how they approach this – I would hope.
Apple, Saavn and Deezer are trying to compete with Spotify in terms of creating and expanding their artist insight tools. How good are they?
Ric Salmon: They’re excellent. We are all trying to make sense of quite how to use the data – because data is useless unless we are using it. I think they’ve done a brilliant job. The DSPs in general have done a great job, but I think Apple Music are way behind – but that’s just because they launched after everyone else. They are catching up.
Spotify is great and that has always been front and centre of their sales pitch. Google is, of course, incredible – and therefore so is YouTube. Even having data is fucking great. Five years ago, we didn’t know who our fans were. If someone went into a record shop and bought a CD, we didn’t know who they were. We didn’t even know if they were going to play the record or how many times they were going to play it. Or even if they liked the record. Thank fuck we have moved on for that because that was never going to work.
What’s on your transparency wishlist?
Annabella Coldrick: A lot of the information is out there – it’s just about bringing it together and making it actionable. It’s about thinking what the marketing and user data is and being able to look from that and across to the financial data – because the two are linked. Maybe the dream is that the artists are in control of that and are able to aggregate it, understand it, action it and not have all the other bits of their data owned by other people. They should be able to pull it together and take control of it themselves.
David Manders: That would help greatly in terms of money being spent in a much wiser manner and not being wasted – and that benefits all parties.
Lisa Ward: The two dreams are these. Firstly, being in the room when the majors and their partners are deciding if this is a sync, a licence, a stream, a play or whatever – to help define that. So that means when the market deals are competitively made, we are all clear on what the very beginnings of that deal are. Secondly, in terms of the deals that managers are now trying to negotiate with indies or majors, those deals have to be fairer.
Jill Hollywood: We still have issues with traditional royalty statements. We looked through ours now and we see territories are they are actually minus for streams – and we have no idea how you can minus that! There is no understanding behind looking at the different territories and the different deals that the majors have done in those territories for streaming and how that relates to the royalty statements that you get […] But we had that before when we had territorial reductions. In some ways it’s the same issue. There has to be some onus on the record companies to make royalty statements readable and understandable. At the moment they are very difficult.
You are now having to link data across different information silos. How easy is this?
Ric Salmon: A huge focus for us is to ensure that the ecosystem between the artist and the fan is as pure and direct as possible. And only if that ecosystem is as direct as that can you use the data in the best way possible. If it goes to the point where it potentially could, there will be some casualties.
At the moment, the ecosystem is far from pure. Between the artist and the fan there are a huge number of mouths to feed. I am not sure what a lot of those mouth do – or I’m not entirely sure that’s a lot of those mouths could justify the extent to which they are taking out of the ecosystem.
With all of the different mouths in the ecosystem, it is quite difficult to take the data and use it in a very proactive way. In a perfect world, there is the artist, the fan and a group of people – hopefully the manager and their partners – who is in control of the data and can use it.
How transparent is the data you get from the live industry? Are you locked out of it?
Des A: It can be fixed as they have new data systems and things like geotagging. So you can see the interactions with certain artists. If you are watching someone at a festival and they happen to be performing between 1pm and 2pm – and if you have great relationships with someone like Facebook, you can geotag and then filter it. That is a great way to be able to access who is actually interacting with your artist.
Ric Salmon: Festivals are always going to be an issue because they are always going to lock in as much data as they can. With touring, however, if you are doing a deal with Live Nation or whoever, you can negotiate deals where you can check the data [as a headliner]. It’s probably trickier when you are the support act, however. In terms of sharing data between acts, I’m not sure how that would work with the imminent new data protection laws […] Quite often people will allow you to place your own pixels on pre-sales.
Lisa Ward: We were talking earlier about cookies data being resold by other partners – it’s the same with the live industry. They hold all the keys in terms of who is buying your tickets. They are using that data to sell other things. If, as part of my artist contract, I own my website, I own my data and I own my fanbase, there is a cost associated with me trying to create revenue streams from that. You have to rise to a certain point to be able to invest the funds into creating revenue from those streams.
Dice are quite good to work with. As I understand how it works, when you sign up to use it, you are agreeing that some of your data will be shared with the artists. I don’t think it’s set up the same way if I was buying tickets from Ticketmaster. I wouldn’t necessarily vilify one ticketing company over another because some of that comes down to the technical and legal aspects of data protection and how their T&Cs are set up. But I would say Dice is good at that.
Annabella Coldrick: That should be down to us asking people like Ticketmaster who haven’t got it set up that way to change it so they can share the data. But they still have to comply with the GDPR [General Data Protection Regulation].
Ric Salmon: The problem is for younger or smaller managers that it takes a huge amount of resources to handle all of this. But for the most part, I think that promoters – and labels and others – will share the data if you say that you want the data. If you tell a label that you want your own remarketing data and pixels on all mailouts, they will resist for a bit because it is nice for them to control that information; but ultimately they tend to give it up […] But then we were only starting to use things like Linkfire a year ago. It’s all fairly recent.
Labels quite like the idea of owning the [artist] website as then they can sell CDs and merchandise through it. But social data – remapping data, pixels, retargeting – that is a bit of a grey area. I have never personally negotiated it because we’ve always got what we needed ultimately when we asked for it. But it has only been fairly recently that we started asking for it! But it is crucial.