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Paul Brindley, manging director, Music Ally

It’s hardly that original to tell the music industry that sometimes it can be its own worst enemy, but you know… sometimes the industry can be its own worst enemy.

The recent disappointing sales stats for the first half of 2007 saw income from recorded music in the US drop by 11%, Mexico go down by 21% and Brazil lose a whopping half of last year’s market value (-53%). Digital is still failing to make up for the decline in physical sales and some countries like the Netherlands and Italy even witnessed a decline on the same period in 2006.

But the figures didn’t have to be quite so poor. For one thing reported income doesn’t include any income from licensing music to film, TV and advertising. And when it comes to digital, those multi million dollar advances from online music services are also excluded and there’s no money included from ad-supported models.

At such a challenging time the industry should be counting whatever income it can get its hands on. The 21st century recorded music business is increasingly going to be about deriving value from blanket fees for the label’s collection of music as a whole, not from unit sales. And it’s going to be about sharing in a whole host of revenue streams and deriving value from all aspects of the band’s brand.

Of course the IFPI (International Federation of Phonographic Industries), which publishes the stats, can only measure what its member labels allow it to measure. There may be issues surrounding the standardisation of the reporting of some revenue streams; but they should at least be counted.

Sync income is likely to be one of key growth areas going forward. And if labels are demanding multi million dollar advances from online start ups like Spiralfrog (cf Universal’s publicly reported $2.2m advance) then those revenues should be counted for what they are – digital income. There needs to be a whole lot more transparency surrounding such advances and how they get distributed to artists but that’s a separate issue. Let’s relax those rules, focus on the bigger picture and start counting every penny.


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3 Comments

  1. While it’s true these figures don’t show up anywhere, on the scale of things I’m not overly optimistic. The arrival of bargain bin licensing sites that take – in one case – up to 65% of fees that are already way too low is doing nothing to increase the value of music overall. Add to that the channels that refuse of pay “upfront fees” (weren’t these once called synch licences?) and you get an idea of where a large section of the market is going.
    The use of music in advertising is certainly welcome, but it has always been there. I also see many labels are not really equipped to truly leverage the exposure that it can bring.

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