Four years ago, Amsterdam-based music distribution and marketing platform FUGA had just 12 employees and its only office was in the Netherlands.
Since then, it has expanded to 90 staff, with offices in New York (opened in 2016), London (2018) and Milan (also 2018). The company also raised €6m of investment from its shareholders in late 2017.
Latin America, Asia and Africa are next in FUGA’s sights for international expansion. It is also boosting its offering for clients with more-flexible deal structures, experimentation with blockchain technology, and significant improvements to its data dashboard.
This rapid expansion has been driven by the appointment of Pieter van Rijn as CEO in May 2014. An MBA graduate and also once an artist signed to Sony Music, van Rijn worked in the M&A and operations department within Dutch media giant Endemol and then moved into management consultancy.
One of his clients at the consultancy was Fintage House who were early investors in FUGA and who directed him to the music company. At that time, FUGA had reps in New York and Paris, but the business was still run out of Amsterdam. His opening remit was to drive global expansion.
“The company then was a startup with lots of ideas, good vision and entrepreneurial spirit,” he says. “But it had to start living up to its promise. My task was to do that.”
How he did that was through expanding the company’s client network and growing the business organically.
“That was really important,” he says. “Also creating the right structures within the organisation to make sure that the company became more scalable. That means you have to look at some other skill sets in the company. We also had to make sure we had the right people who could lead us through the mission. Although we may not be the biggest in the market, we are actually a highly specialised and reliable company. You have to build trust in this business.”
It is malleable deals being offered to label and artist clients that van Rijn regards as FUGA’s key market differentiator. They can sign up to deals negotiated by FUGA or also come onto the platform with deals already negotiated by a third-party – in most cases this being Merlin. FUGA is a member of Merlin and participates in most of Merlin’s deals (while having many more of its own), so that means label partners can also participate in Merlin’s deals through FUGA.
“The way that our clients interact with us can vary a lot and that is based on flexibility,” he says. “It is a combination of being at the forefront from a digital supply chain perspective to providing a flexible solution to our clients so they can work via our platform and distribute through their own deal or Merlin or whatever they like. They can also opt in to our deals. They can mix and match that.”
While FUGA focused initially on the UK and America (as the Anglo-American markets have historically been so key to global success), the company was also building its footprint in the markets that will shape the future of the international music business – seen most obviously in moving its Asian reps from Singapore to South Korea and Japan.
“At that time they were representatives who were very sales-driven, which was great because it helped us grow the company to where we are now,” he says of FUGA’s international strategy. In 2017, the company started to localise its service even more, building up its team in Italy and also South America.
“We have always been a very global company,” says van Rijn. “We now have close to 500 clients in over 50 countries. We have defined a specific roadmap for international expansion. It is focused on Asia and it is focused on Latin America. We have clients, of course, in Asia – but we will be looking at some specific markets where we feel there is lots of opportunity to really focus on those individual market.”
He adds, “It is also about getting a stronger foothold in those markets where we are at present. We will also be expanding to some other US regions – you have LA and you have Nashville, obviously. We will be looking at those sub-markets to have people there. That’s very important to the international expansion.”
Anne Jenniskens is FUGA’s head of licensing and explains how her role is about staying ahead of global trends and moving into new markets and regions at the optimum time.
“The most significant thing to happen in the past two or three years is Asia – notably China, Japan, Korea and India,” she says. “For the licensing team, they were significant happenings.”
Having local knowledge and feet on the ground in all of these markets is of critical importance, especially as the growth of local services in all these territories have a different shape and thrust to the dominant Western services like Apple Music, Spotify, Deezer and Amazon that distributors and labels might be more used to.
“The most fascinating thing about Asia is that we were used to looking at EU- and US-based services,” she argues. “There you see that it doesn’t matter what continent you are in, the services basically look the same and what is happening in the territory looks the same. But what you really have to do is treat it as separate and individual countries with different dynamics and different players.”
She adds, “They are approaching music streaming more holistically than services like Spotify and Deezer. They are usually part of a much bigger social media or social entertainment platform – like Tencent and NetEase in China or Naver and Melon in South Korea. Obviously we have Amazon with its retail arm and Apple with its hardware, but when you look at services like Tencent, NetEase, Naver and Melon, they have a lot of different services around them.”
Beyond Asia, Africa is where Jenniskens is anticipating significant growth in Africa, naming Boomplay Music as the music platform to watch “It is a great service,” she says. “They have a lot of users and it is being backed by NetEase.”
In a market defined by accelerated consolidation – notably The Orchard buying up regional distributors like Finetunes and Phonofile – distributors have to stay ahead of the curve and offer clients a range of services and opportunities. International expansion is clearly one, but of equal importance is cutting-edge data and insight tools.
Michael Cassidy is director of product & development at FUGA and talks about the challenges around pulling in daily streams and downloads data from the key digital services, then presenting it to clients through a dashboard that makes sense of the figures, to help them take decisions.
“Every day we run this retrieval job,” he says. “This gets a report from the music services – Spotify, iTunes or Deezer – and unlike the other people who do analytics, we then take that report and match it to the catalogue that we have on the system. For every sales line in that report, we look up on the customer’s catalogue and then we add our customer IDs. So the data that we hold for your analytics data on our system completely matches your catalogue. That combines this data with your catalogue data on the API – so you can use one to reference the other.”
Clients can slice and dice the data any way they want. The default view on the dashboard shows the number of streams by DSP, but they can also view by downloads, by DSP or by territory. It takes around six seconds to recalibrate the data feeds and visualise them as clients wish.
“It is crunching a lot of data,” says Cassidy. “While those six seconds feel small, this data is not aggregated. It just lives on one table; so you can query it in any way that you want. Spotify and Apple have started providing much more interesting information – that has streams that have happened on a given day and in a given territory; but they also tell us a little bit more information about who is streaming it and from what playlist.”
The most significant development, however, is that Spotify has very recently started to give distributors skip data. Previously there was information on how long a song had been played after the 30-second mark (where it triggers a royalty payment and also feeds into local chart data), but nothing before 30 seconds.
This has been high on the wish list for labels, managers and artists for a number of years – but now it is available and FUGA is rebuilding its dashboard to incorporate this skip data.
“One thing that Spotify has done with its new 2.4 API is that they have started to give us information on pre-30-second plays – that is an actual skip,” explains Cassidy. “Here [on the dashboard] we illustrate a skip as up to 45 seconds. Previously they were not giving us sub-30-second data. We wanted to visualise something that gave people information about the low performance of tracks on playlists or in general. So we created this assumption that we should highlight what is below 45 seconds as a percentage on here [the dashboard].”
He continues, “They [Spotify] have just started giving out sub-30-second data. [At the start of November], they switched on the new API. We have integrated with it now and we are starting to pull data from that new API. Now we need to put this into our system and so very soon you will be able to see pre-30-seconds. We have had a look at the data and what we are seeing is that the number of sales lines is increasing by 20-25%. So that means, of all your streams, around 25% are skipped.”
“We will be processing a hell of a lot more data as a result. We are processing around 24m sales lines a day and ingesting them into the system on behalf of our customers. Obviously that is now going to go up by 25%. So we will get more data to crunch and match. It is really useful information. Although it is no-income information, it really gives you an insight [into what consumers are doing].”
Jenniskens says accessing this skip data was a key point in contractual discussions with DSPs.
“This is a new component or something that we explicitly negotiate – getting as much data as we are able to get,” she says. “That is something that we are focusing more on in our deals. We’re also looking very closely and how services are dealing with publishing. We are following that.”
Cassidy says – with digital in general and data in particular – being a moving target, it is essential that companies sitting as the link between DSPs and copyright owners have to be flexible and ever-evolving – and adding in skip data to the client-facing dashboard is just the latest example of that.
“This is all about being modular,” he says. “As a way of doing things becomes established, it starts to break up into smaller parts. That creates a more stable system. When streaming came in, you had a big organisation dominating. As it establishes itself, it breaks up into smaller parts. Being able to work in this modular way and offer your service so that it can fit in to many combinations of structures really enables us to play a wider role. That is part of our strategy – to work with all sorts of different partners to enable them to do this.”
He adds, “More and more things are going to happen – we just don’t know what they are yet. Being open to all of those is our position. It’s not like we need to be protectionist. We just need to enable and collaborate with many different projects. We don’t know what is going to happen; but we do know that if we are open and we think about how technology is going to change it, we can be on that edge and evolve.”
For van Rijn, expansion into new areas is critical for the company’s survival and continued growth. This year, FUGA has started to think beyond master recording rights and move into neighbouring rights, data processing and collection.
“We can see ourselves at some point stepping more into composition rights and enabling our clients to store music composition data and match that to recording data,” he says. “We are looking at various ways as to how we can do that.”
He sees rights increasingly converging in the digital age and so needs to prepare the company for this.
“It is a siloed industry still,” he argues. “We see it as a very interesting challenge, but also an opportunity, to bring that together to see how we can simplify collections for royalties and data processing. That is why we are looking at blockchain. But there are lots of other ways to think about that.”
van Rijn also sees blockchain technology as a huge opportunity for rightsholders rather than a disruptive influence.
“We want to be close to those developments,” he says. “We want to partner with initiatives around blockchain. We do believe it will become a factor in our business because it has the capacity to bring rightsholders together around a work; therefore monetisation and reporting becomes much more transparent and efficient. That is obviously a business we are very close to. We are very well placed because we are very close to the digital supply chain.”
With change a constant in the industry, he concludes, “We are now at a stage as a company where we are well positioned for the shifts that are happening in the market. That is because of our platform strategy, but also because we have this volume as a company that we can execute on those specific strategies.”
FUGA is the co-sponsor of Music Ally’s editorial subscription for independent labels.