Do consumers care that HMV has gone into administration today? A personal view.
There will be a huge outpouring of industry opinion over the demise of HMV. So, where to start?
As ever, the BBC's Robert Peston provides some honest clarity and sharp insight so often missing from the trade press within the music industry on this particular issue.
Of course the record labels and industry pundits will bemoan the sad loss of the last bastion in high street music retail - claiming how terribly unfair it is that this once great pillar of the UK music industry has fallen to the sword of Amazon and iTunes. However, before you shed a tear, remember that it's no accident that iTunes & Amazon stole a march on the music industry establishment. Messrs Jobs and Bezos recognised the opportunity that the music industry perceived as a threat.
If you've not seen it, Steve Jobs' launch of the iPod in 2001 is still inspiring.
He saw the future, but for much of the early noughties, the music rights owning industries (record labels & music publishers) did their utmost to sue to death any business that sought for ways to satisfy the new consumer demand for digital music. The labels had made huge margins on CDs during the 80s and 90s and weren't about to relinquish that to geeks from Silicon Valley.
Some of you may remember the long battle that major labels fought to try to stem the tide of the mp3 format - They tried in vain to impose various digital rights management (DRM) controls, all of which eventually failed. By the time that the major labels realised they needed to embrace rather than kill digital (changing tack from litigation to licensing), they were too late. iTunes had already become the dominant player with Amazon not far behind. The future of physical music retail was inevitably doomed - it was just a matter of time as we watched Tower Records, Our Price, Virgin Megastore, Woolworths, Zavvi and finally HMV bite the dust.
Of course this is sad for the employees of these business, but do consumers actually care? This is where some personal perspective might be of interest.
Those of us with teenage children love to bore on about our offspring to friends and colleagues - The usual stories start "isn't it marvellous how they take to technology so naturally .... etc."
With two sons in this camp, it's always interesting to see how they engage with media content - how they find "appointment to view" broadcast TV completely archaic (and have done for many years) - how they laughed in disbelief when I first showed them a turntable and the concept of playing records (though bizarrely this is now cool again).
My sons wouldn't ever dream of spending money on CDs, partly because they know I'm lucky enough to receive many free samples from record labels. This is one of the nice perks of working in the synch licensing / music supervision market. Don't get me wrong, I'm very grateful for these freebies, although they're always converted to mp3 files, and it's actually easier just to receive links rather than physical product. Nevertheless, I still enjoy reading the CD liner notes - holding the physical item - it is of course a sign of my age.
However, when I offer to give some of these free CDs to my sons (even for their favourite artists) they do not want them. That's right, I cannot even give away free CDs to my children - they have no value.
My younger son (12) just wants to know if I've ripped the CD into iTunes and put the mp3s on the family server - so he can copy them to his phone. The older son (14) has a Spotify Premium account, so doesn't even want the mp3 files. For him, it's just about access - how important this is became apparent on the day I forgot to renew the subscription.
So, from this personal perspective, which I'm sure is very familiar to anyone with teenage children, how is a physical retailer of music ever going to survive against this backdrop? HMV's death is inevitable as they are simply irrelevant to an ever growing market segment.
As someone who grew up with the magic of records, saving pocket money to buy 45rpm singles, I have fond teenage memories of the local record store. (I still have all my 45rpm singles in the attic). However, those days are long gone, they will never come back, and the music industry needs to let it go. My sons love music as much as I did at their age, but it's uninterrupted (legal) access that matters, not collectible physical items. I used to boast to my friends how many albums I had. My younger sons boasts how many gigabytes of music data we have on the family server.
MIDEM is Europe's key annual music conference, held every January in Cannes. Increasingly it's become a destination for brands and agencies, looking to gain a better understanding of the music industry.
This year MIDEM have kindly asked me to moderate the Music Marketing Competition on Sunday 27th January. The competition has two sections:
In the second section, 10 finalists present campaigns from brands such as Renault, Blackberry, HTC & Coke Zero - each entry is judged by international experts in music supervision & licensing from Nike, P&S, BMG Rights and Sony Music Entertainment.
Here’s an interesting development in the murky world of music copyright .. It’s a watershed moment when one of the earliest Beatles studio recordings ("Love Me Do") falls out of copyright before the extended 70 year protection kicks in.
CMU's Article is both informative and impartial. Do read it all!
In contrast, Music Week (as one might expect) raises concerns on behalf of the record labels that have lost their exclusive right to control theserecordings.
It’s worth noting that:
1. The sound recording of "Love Me Do" has only become public domain in the UK though is certainly not public domain in the US. Therefore any on-line exploitation couldn’t take advantage of this opportunity to potentially avoid a licence from the relevant record label (EMI Records, now controlled by Universal Music Group).
2. The underlying composition "Love Me Do" is of course still in copyright. Even though John Lennon has sadly been dead since 1980, Sir Paul McCartney is still very much alive. As a co-written song, the composition remains in copyright until 70 years after the death of the last writer (in this case McCartney).
The issue of public domain is complex and often misunderstood by brands and agencies that might look to by-pass traditional licensing structures. Any exploitation of 3rd party controlled copyright without an appropriate valid licence is likely to lead to a claim by the rightful owners. Wise brands and agencies engage the help of expert licensing and legal resource before making dangerous assumptions that potential public domain rights allow them to use any music assets for free.
Getting it wrong on the basis of ill-informed advice is no defence for infringement of copyright. As the saying goes:
"If you think hiring a professional is expensive, trying hiring an amateur!"
Doritos "parodies" East 17's "Stay Another Day" Many brands like to take existing well-known songs and adapt them to the needs of a particular campaign. This typically involves the creation of a new sound recording, thereby avoiding the need to secure clearance from the record label that controls the original artist recording. However, any use of the underlying "composition" or song requires approval from the relevant music publisher. Where this usage involves a change of lyrics or any arrangement that could be considered as "sending up" the song, publishers deem this use to be a parody. In these instances, it's almost always the case that the original songwriter's consent is required, which may be denied if they don't feel comfortable with the use. Doritos use of East 17's "Stay Another Day" in its latest campaign can safely be assumed to be a parody use. However, the brand was smart in inviting East 17 band member Tony Mortimer to have a cameo role in the TV spot. As Mortimer has the majority writing share of the song "Stay Another Day", he would effectively hold the casting vote on whether it could be parodied in the way that Doritos wished. A cameo role in the TV spot would encourage greater engagement with the campaign plus, one would hope, an additional appearance fee on top of the synchronisation licence fee paid to Mortimer's music publisher (of which he would expect to receive the majority share). So, what can brands learn from this example: 1. Clearing songs for parody use always takes longer than non-parody use. Allow plenty of time, say at least 2 - 3 weeks if possible. 2. Be precise and up-front about the exact proposed use of the song. 3. Avoid building the script around a specific song, which allows the brand to have back-up song choices. Also, never mention a specific song title in the script, which just demonstrates to the music publisher the extent to which the song is essential to the creative idea. 4. Without back-ups, the music publisher has significantly more leverage in the fee negotiations and the brand has little. In any event, a parody use will always attract a premium fee compared with a non-parody use. 5. Offering the songwriter(s) greater involvement in the campaign (e.g. a cameo role) will encourage greater engagement with the campaign and hopefully improve the chance of securing clearance of the chosen song.
There's been so much written about the UMG / EMI takeover but I spotted an interesting Independent article on the perspective of artists. In particular, Blur "leading the revolt" against being treated as 'assets' in the sale of Parlophone.
It's always struck me as a sad irony that, when catalogues change hands, none of the sale proceeds flow back through artist and writer royalty statements. I'd argue that, without the artists' copyrights, Parlophone would have no value to potential bidders. Yet, whatever UMG secures from the sale, it certainly won't be shared with the artists that made Parlophone the great label that it is. Equally, the artists involved appear to have no say in the sale, nor control over the final destination of their recordings.
You can see why Blur's Dave Rowntree feels aggrieved and it's an interesting development that those artists affected may withhold their future product and consent to regain some leverage.
All this points to the underlying problem of the traditional recording agreement. Artists pay (by way of advance recoupment) for their recording costs, yet the label owns the actual recording - which is then free to be sold elsewhere. The sale benefits the vendor of the catalogue but not the talent. Is this unfair? How might this be changed going forward?
Given that advances to new artists are considerably smaller than in the days when Blur were signed, many artists now choose to retain their IP in recordings & simply license it to labels. A further protection might be to include a reversion of such licence in the event of a sale of the licensee company.
A more traditional method was the inclusion of a key man clause in the recording agreement, typically for the A&R man (& it usually was a male executive) that originally signed the artist. In this way, where the clause was breached (as a result of the catalogue being sold to a new company), the key man clause was invoked in order to free the artist from the recording agreement.
So, while securing a record deal always way (and for some still is) the key objective for new artists, it comes at a big cost. You may eventually be helping to line the pockets of the label owner through a trade sale, but not share in the proceeds.
Let's hope that Dave Rowntree secures some concessions.
Here's an interesting story on possible further consolidation in the advertising holding group market. Is Interpublic about to be absorbed by a rival? There's a strange parallel with the seismic changes occurring in the music industry as Universal seeks to finalise its acquisition of EMI's Recorded Music division by placating the EC with label disposals. The landscape in both marketing communications and music industries could look very different in the coming months. Whether this is good news for advertisers whose revenues finance the former (and have become increasingly important to the latter) remains to be seen.
The Great Escape : The Brand Band Partnership Panel
Last week I attended The Great Escape in Brighton - my third time at the event. I spoke on the The Brand Band Partnership Panel together with:
Tim Dellow (Creative Director, Love Live)
Jemma Downey (Director of Marketing Partnerships, Live Nation)
Jasmine Skee (Head of Music Sponsorship, O2) - Panel Moderator
Here are some of the questions we addressed and some thoughts in response:
(A) Why do brands spend money on new artists? Music is of course a consumer passion point and therefore a powerful short-cut to engagement. In this context, there was a general consensus that some brands like to adopt the role of "patron of the arts". We discussed how an element of philanthropy / altruism can be justified as part of corporate CSR strategy - a role in which the brand is seen to be "doing good works", unmotivated by profit. It's also true that new artists are more cost-effective. Some brands pay little or no fees to new artists. Finally, brands like to be positioned as taste-makers - a conduit to music discovery for consumers. Partnerships with new artists help to reinforce this positioning.
(B) What do they really want in tangible terms? Exposure? Access to audience? Content? Intellectual Property ownership?
For Brands, clearly authenticity and credibility are important objectives in any artist partnership. We examined the idea of "fit" - though it's certainly a subjective term. There were some strong views on partnerships that worked and those that didn't. Brands with a heritage, or "permission" to be in music, received praise. Some examples were:
CONVERSE - RUBBER TRACKS Converse Allstars have been many musicians' footwear of choice for several generations.
RAYBAN - BLACK CAB SESSIONS Like Converse, Rayban clearly has heritage in music - The Wayfarer model in particular is a favourite of musicians the world over.
BLACKBERRY - TINIE TEMPAH Whilst some panellists felt Blackberry's U2 tour sponsorship was purely a badging exercise, the Tinie Tempah partnership was deemed more credible. The artist openly spoken about his daily use of the product which adds authenticity to the relationship. In a similar way, Black Eyed Peas' will.i.am has used Blackberry's BBM IM service for live raps which adds a product-demo elements to their partnership with the brand.
We also touched on the IP issue - clearly something close to my heart as rights management is Resilient's core business. Some brands are already securing IP ownership of commissioned content i.e. assignment of copyright in bespoke music rather than a traditional usage licence. While this might be seen a controversional by some, I see this as a natural development which will only expand over time.
Turning to Artists, what do they want? Certainly exposure via brands' owned, earned & bought media channels. In many cases, brands can offer artists far greater reach (and far deeper consumer insight) than record labels. Logistical touring support and/or travel is also very desirable.
Tim discussed Love Live's work on Ford's Bands In Transit activation. Clearly all artists need transport for touring, and the classic Ford Transit has been the van of choice for many generations of UK artists. There's both a credible heritage (or "permission") for Ford to be here, plus a utilitarian/functional benefit for artists who participate.
Finally, investment in content creation was seen as very attractive lure for artists. Brands can easily fund high-production value filmed content in a manner which artists (and many labels) cannot do for themselves.
(C) What will they really offer in return? Money? Free product? Audience?
Yes, all the above. On Money, Tim felt that artists should always be paid. Jasmine commented on how O2 rarely paid emerging artists. I believe that "value exchance" is certainly a better strategy for both parties (rather than a straight financial transaction), especially where longevity of relationship is a key objective. Where brands pay fees, managers take commission and labels/publishers withhold artists' shares against unrecouped balances. In contrast, artists receive the full benefit directly for any goods or services provided by a brand within a "value exchange" deal. A manager can't take 20% of a van or jacket!
(D) How can artists access brand money, or get involved in brand-funded new talent initiatives? All the panellists stressed the need for artists and their managers to "do their homework". Prior research is vital before making any approach to a brand or agency.
Points to consider included:
Identify brands with compatible values
Identify brands who work with artists in a similar genre
Examine the types of campaign that target brands have previously activated
Examine brands' campaign cycles and time your approach accordingly
I would also advise artists to:
Consider brands that the artist already uses in their daily life
Consider brands whose services or products it needs to support their career e.g. transport, clothing, footwear, equipment
In terms of identifying the right people within brands, my advice would be:
Reach out directly
Immerse yourself in Marketing trade media (e.g. brandrepublic.com)
Look for brand contacts who have a geniune passion for music - they may be musicians themselves or have held previous roles in music companies. These people may feel like more compatible partners than career corporate marketers who just happen to have been given music as a remit.
(E) Do artists have to compromise in anyway to capitalise on brand money? It's all about clarity and transparency. Both sides need to be clear on objectives & commercial terms from the outset. Eveyone should enter the relationship with their eyes open and walk away if they're not comfortable. No one likes surprises - both brands and artists.
(F) Should new artists really treat brands as a new form of media, rather than a new form of investment? Yes, brands are now media channels – much more so than the traditional music industry. Brands increasingly focus their energies and investment on earned media, namely social. In this context, engaging content is vital in driving consumer engagement - so music has a key role to play.
So, we attempted to cover a lot of ground in our 50 minute session. Hopefully the above points will be helpful.
My thanks to Chris Cooke (Unlimited Media) and all The Great Escape Team for organising the event.
I'll be at MIDEM 2012 next month in Cannes, participating as a mentor in a couple of sessions. The details I've just received are below. Hope to see you there!
1.Mentoring roundtables in the D2F Camp on the marketplace:
The format: 4 roundtables opened to the public, including 7 active participants (artists and music SMEs) and 1 mentor per table, for a duration of 30min. At the end of the first round, the participants swap to another table. Total duration of the whole mentoring session: 60 min. In the conference programme: Each mentor will lead an one-to-many discussion with 7 participants, during which you will be able to ask all your questions and get practical advises on the related topic. Don’t miss out! places are limited and available on a first come, first served basis. When: Saturday 28 January, from 12:00 to 13:00 in a session organised in association with Impala/Win
2.Meet-up session: Meet the Branding, Advertising and Sync Specialists, in the Hub (on the marketplace)
The format: 10 mentors are available to meet any midem participants interested to meet with experts from Branding, Advertising and Sync, through 5 minute speed meeting (12 meetings as a maximum) In the conference programme Come and meet with specialists in branding, advertising and synchronisation through a 5 minute speed meeting session, and boost your network. Don’t miss out! Places are limited and available on a first-come, first-served basis When: Sunday 29 January, from 15:00 to 16:00
Universal takes the label. Sony ATV takes the publishing company.
Instead of halting the uncertainty, these acquisitions raise more questions than they answer:
- Is this inevitable market consolidation in a struggling music industry?
- In the mid-1990s we had 6 majors, now we have 3. Is BMG Rights a challenger for the 4th spot?
- Does this provide additional marketing clout for artists fortunate enough to remain on major label rosters? Or reduced competition in a market where fewer artists sign to majors? If the latter, will Universal only sign artists who include all non-recorded music income streams within the deal (the 360 model)?
- For B2B music users (brands who license recordings & songs), what does this development mean? Surely reduced competition, which usually leads to proportionally smaller synch licensing teams dealing with larger catalogues and a marked increase in licensing fees. Slower service at higher cost?
- Monopoly enquiries (certainly in Universal's case) forcing the disposal of some recorded catalogues as part of the transaction? This previously occurred when Universal Music Publishing acquired BMG Music Publishing in 2006 (resulting in the sale of Zomba, Rondor, 19 & BBC catalogues to Imagem.)
My thoughts are with the staff of EMI, as the only certainty is that many of them will face an uncertain future.
We've been kindly invited by The Hospital Club ("THC") to present a Business@Breakfast session on music rights. Hosted in THC's smart Covent Garden premises, the event is part of their regular series of business insight presentations. Entitled "Music Rights For Marketers", the session will cover "10 things you need to know about music rights", specifically aimed at brands and their agencies. Attendees will gain a better understanding of this complex area, learning tips to improve cost and risk management when working with music tracks and artists in marketing communications. Event details: Time: 8.30AM Date: Tuesday, 15th November 2011 Venue: The Hospital Club, 24 Endell Street, Covent Garden, London WC2H 9HQ Cost: £10, which includes breakfast For more details and tickets for THC members, click here.
Non-THC members can book tickets by contacting THC Reception on: Email reception@thehospitalclub.com or Tel +44 (0)20 7170 9101
