This is the latest in a series of liveblogs by Music Ally‘s Stuart Dredge.
Yesterday saw a new idea for MidemNet: a panel of rightsholders responding to a fictional case study of a music service, to say how they would deal with that company.
The panel: Nic Garnett, partner at Holme Roberts & Owen; Bob Frank, chairman of Merlin; Steve Savoca, head of digital at Domino Recording Co; Kenth Muldin, chair of CISAC’s board of directors and CEO of STIM; and Andrew Jenkins, EVP International at Universal Music Publishing Group.
Here’s the setup: My Media is the company. “It’s a digital entertainment service that aims to be the single destination for all your music, film and TV content,” explained moderator Paul Brindley, from Music Ally.
It’s backed by a Chinese entrepreneur, Dr Hu Fei-Lee. It has confirmed deals with three of the major music publishers, indie aggregator The Orchard and Universal Music Group. However, the CEO has denied reports that the deal with UMG involved handing over 50% of equity in the company, two of Dr Hu’s skyscrapers, and his own first born.
Warner Music is not yet on board. When quizzed about it, Edgar Bronfman Jr. merely retorted ‘Dr Hu?’. Yes, there were jokes in this session too.
The service will launch in North America, key European countries and Japan this year. The business model is freemium, with free ad-funded music upselling to premium packages, and an ‘M locker’.
Free near on-demand radio streaming service funded by advertising. Then a fully on-demand streaming lower-tier package for computers, including film and TV content. Then a higher tier subscription package, which also includes portable device support – not Apple devices though.
Then the M-Locker is a cloud-based element, where users can store content bought from the service, and also their own collections. It uses the BitTorrent protocol for distributed streaming, to share that content with other subscribers to the service.
“This is not a straightforward model, it’s a complex model,” said Garnett, playing the role of My Media’s lawyer. “We’re finding that the response has been positive on a lot of fronts, from labels and publishers.”
However, there was some early suspicion from the rightsholders. “Never trust anyone!” says Savoca. “This is quite the soup to nuts type deal. We would tread very carefully into this agreement.”
Frank pointed out that from Merlin’s perspective, in any deal it’s looking to add value to its labels. Savoca came back in talking about the “general word on the street” which dictates what stance Domino takes in licensing negotiations. He’s looking for signs that a startup and deal are “friendly” – and not just seeing the independent community as a “pain in the ass” that needs to be licensed.
Garnett suggested that My Music is keen to strike global deals, but asked whether that’s possible. “We’d like to simplify it too, but there is no easy way,” said UMPG’s Jenkins. “You are going to have to go to a number of different places to get rights.” Not least because My Music is using several different business models.
Muldin was asked about the situation from the collecting societies’ point of view, and the overlap between publishers and societies from a rights perspective.
“What you have to do, in terms of collecting societies, is to start your negotiations well in advance of your planned launch, otherwise you won’t make it,” he said, while explaining just why it’s not possible to get a pan-European licence for a service like My Music from one place.
Merlin’s Frank came back in, stressing Merlin’s belief that it should have parity with the major labels in any negotiation, “or at least damn close to it”.
UMPG’s Jenkins said that the music publishing market “seems more complicated than it is”, and also that: “One of the things I’m passionate about at the moment is a global repertoire database,” he said. He also warned against seeing Europe as too difficult to license music services across.
“If you wanted to license for the whole of Europe, you’d probably have to go to 30 different places. That sounds like it’s a lot, but actually, for 20 million songs that’s not a lot.” However, judging by reactions on Twitter from audience members, startups disagree with his verdict.
How long would it take a company like My Music to get its deals in place? Muldin suggested from two to six months to collect repertoire and negotiate, but Jenkins suggested there are shortcuts.
UMPG likes services to come in with a lot of information about their offering. “More information upfront helps,” he said, while warning about the effect non-disclosure agreements (NDAs) can have on the process, when publishers come into the process late.
Jenkins also said that he thinks the industry recognises the difficulties, and is hoping to get those 30 contracts down to five or six for Europe.
Garnett posed the logical question – how can a startup set a launch date if it has to deal with all these entities? Jenkins said most services tend to roll out gradually – for example, US firms will seek to license the UK first, while being smart about nabbing rights as comprehensively as possible. “Where you can get rights for the whole of Europe in one place, get them first,” he said.
He also warned startups off trying to get discounts on established tariffs. Meanwhile, Savoca said the faults lie more with collecting societies rather than publishers, and Jenkins called for a dialogue on pan-European tariffs in the digital music market.
Garnett asked about the idea of My Music easing its way into a licensing relationship with rightsholders, via some kind of pre-commercial agreement. “We’d want to know as much as we possibly could about the service,” said Merlin’s Frank. “We would probably want to have the deal closed before we give you our content.”
Jenkins warned, meanwhile, of UMPG’s fears about services that are looking to grab a bunch of content, then sell out as quickly as possible.