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The future of the music business lies in streaming and cultivating a closer relationship between artists and fans, which will create a sustainable living for everyone involved… as long as labels, publishers and legislators stop fighting.

Those were the key themes during speeches from Deezer, Tidal and numerous US executives for day one of Midem 2015.

Kicking off proceedings was the newly appointed CEO of French-born streaming service Deezer, Hans-Holder Albrecht (below), who said he wasn’t worried about imminent competition from Apple. Albrecht welcomed the entrance of a big company into his company’s space as proof that streaming “is the model for the future”.

Hans-Holger Albrecht, Deezer

“In some ways, Apple will help us a lot to educate the market,” he explained. “With Apple coming in and penetration going up to higher levels, the tide hits everyone. It will increase the opportunity for Tidal and Spotify too. [We’ll all] find [our]place and market segments. I’m not concerned, it’s a positive thing.”

Focusing on local curated content, as well as non-music features, will mean Deezer stands its ground amongst the competition, he added.

On the issue of free subscription tiers (something various major label executives have been complaining about recently) vs. paid, Albrecht said there’s no point doing away with “something that’s working”.

We are converting free to paid on all sides. Yes, we have to optimise freemium, but before we stop something that’s working, let’s wait until we have something to replace it with. Let’s not kill and draw conclusions too early, the business is getting bigger, we’re achieving global penetration,” he said.

It’s that global penetration that Albrecht hopes will grow the streaming pie for everyone, as well as additional features that are tempting enough to convert unpaid users into subscribers.

Music industry analyst Mark Mulligan, however, wasn’t so sure that convincing free streaming users to shell out $9.99 a month for a subscription will save the business.
It’s the music aficionados that efforts should be focused on instead, he said, during a talk on how to capitalise the artist and superfan relationship.

17% of music consumers, who are willing to spend above the average amount of money and time on music, count for two thirds of money spent, Mulligan explained. According to his analysis, last year, 72% of the money that was lost in the decline of recorded music sales was down to a change in behaviour in that small group of people.

So how do you get them to pay over $9.99? “Connection, curation and engagement“, Mulligan concluded. “Experience is the product, that is what we’re selling.

“When Taylor Swift invites fans to come to her house and her mum makes them cupcakes, that moment is far more important than any amount of time listening to [her music].

“As much as everything starts and finishes with a song, it’s been devalued as a monetary commodity. The things we can sell are those money can’t buy unique experiences.”

Capitalising on the artist-fan relationship is what Jay Z‘s newly launched streaming service, Tidal, is trying to do, said chief investment officer, Vania Schlogel (top photo).

Generally speaking, the average streaming customer is currently male, tech savvy, aged 25 – 34, and from an urban area, she explained. Reaching all those that just “dig music” will be through unique content, early access ticketing, live events and culture, all enhanced by artist involvement.

Combating negativity around what they do (a lot of post-launch headlines suggested the service was out to grow the bottom line of already wealthy artists), she said there was “a lot of misinformation out there. One of the things unfairly said about us was that we didn’t care about independent and emerging artists. That comment actually hurts. But then we launched (new talent programmes) Tidal Rising and Tidal Discovery. Actions speak louder than words.”

Dina LaPolt, Midem

Wrapping up the day was a lively panel discussion on how US policy, copyright and creativity creates a “host of problems” for musicians, songwriters, labels and publishers. It was moderated by US music lawyer Dina LaPolt (above), who said that the “US is the biggest recorded music market in the world, yet we treat our creative people the worst.”

Solutions for the disparity between the amounts songwriters earn from digital services versus the rates given to recording artists and the lack of royalties paid for music played on radio were suggested by Cary Sherman, Chairman & CEO of the RIAA. Daryl Friedman, Chief Advocacy & Industry Relations Officer, NARAS (National Academy of Recording Arts & Sciences), and Mike Herring, CFO of internet radio service Pandora, also spoke.

While Pandora receives a lot of criticism for the amount it pays out to the music industry (4% of its users pay a subscription fee, while 83% are on an ad-supported tier), there’s no denying the future is digital, said Friedman.

Addressing Herring, Friedman explained: “We want businesses like Pandora to be successful and profitable, but the issue is the future. Terrestrial radio is a major part of revenue for songwriters, but every day the consumer is shutting down radio and downloading an app. How do we create a sustainable system for the future? We have to find rates that are fair, and it may involve converting consumers to pay more revenue to your company.”

However, getting government involved in rate-setting is dangerous territory, said Sherman, who instead proposed that the music industry work together with the digital services to reach an agreement.

We can’t separate publishers from record labels, we’re all part of the same ecosystem, and we all have a stake in the success of digital service providers. We really ought to be working all of this out as an industry, rather than leaving it to government. It just doesn’t make sense for third parties to try and figure out how this whole thing can be resurrected, it’s been dysfunctional for decades.”

 

This is the first in a series of daily conference wraps by freelance journalist Rhian Jones. More soon! 

Hans-Holger Albrecht photo via Frédéric Vallois

 

Watch Midem day 1’s sessions – plus all of this year’s top conferences – in full here:

 


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