Author Archives: Andy Edwards

When They Go Low, We Go High: EU Copyright Directive

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This article first appeared in Record of the Day, which you can read here.

The European Parliament’s decision not to immediately pass the new EU Copyright Directive in July was seen by many as a major setback. It was defeated by 318 to 278, a margin of 40 votes. This means the proposed legislation now moves forward to a full plenary debate and vote next Wednesday 12 September.

As the music industry faces this pivotal moment, it is worth reflecting how we got here and what we are now facing.

The creative industries as a whole have long argued that embryonic digital legislation passed in the mid 1990s is outdated and simply not fit for purpose. The legislative process is slow at the best of times. Meanwhile, the tech industry “moved fast and broke things,” incurring the wrath of creators whose livelihoods have been upended as a result.

The publication of the draft EU Copyright Directive in late 2016 was an achievement in itself. Not only did the draft legislation address copyright protection and safe harbour loopholes, it also contained provisions concerning fairness and transparency towards creators. Following further debate and lobbying, is even more of an achievement that the key elements of the draft directive remain mostly intact.

The Directive has not been without it’s critics, as is the case with any proposed legislation. Academics, libraries and dignitaries such as Sir Tim Berners-Lee have all put forth concerns. We in the music industry can acknowledge some concerns as understandable even if we believe they are unfounded.

What is not understandable are the thoroughly vile and dishonest tactics deployed during the course of this year, whose objective is to stop the legislation in its tracks at any cost. The scale of this activity reads like set pieces straight out of the Cambridge Analytica playbook.

Some in the music industry have questioned how we fight back given the vast funding involved and the sheer scale of this enterprise. But fight back we must and the actions of those we face only serve to give us greater strength.

As any Jiu-Jitsu grandmaster will tell you: use your opponents’ force against them. In this case, we should call out the deceitful actions from within the tech sector and elsewhere and those actions speak louder than any words.

  • The Financial Times reported some MEPs received death threats

  • MEPs were each bombarded with over 60,000 emails from bots

  • These emails contained identical content according to The Trichordist

  • The same blog named the domain name from which a large number of these emails originated and its link to a US Inc. entity.

  • The same tactics have been found on Twitter: multiple bot accounts promoting #SaveOurInternet and similar hashtags

  • This contrasts to real world protests that only drew a few hundred protestors combined across Europe. The bots did not show up.

These actions must also be viewed against the current backdrop where tech firms have been scrutinised for avoiding responsibility concerning:

  • Blatantly dishonest content

  • Content that incites hatred and violence

  • Little accountability in how such content is disseminated

  • Minimal transparency in how user data is abused in facilitating all this

Mark Zuckerberg and Jack Dorsey are amongst those tech executives rebuked by lawmakers on both sides of the Atlantic, for failing to take responsibility and failing to act in managing their own platforms. This is reflective of a broader failure that lies at the heart of a misguided and libertarian ideal, that somehow tech firms are exempt from laws and rules that govern the rest of the world.

The music industry and broader creative and media industries are made up of real people, filled with passion and blood pumping through their veins. They compose their own emails, speak to politicians and show up in person.

At the UK Music organized #LoveMusic busking event in London earlier today, artists, executives and even politicians turned out in support. Artists such as Brett Anderson, Ed Harcourt, Dave Rowntree, Madeleina Kay, Newton Faulkner and BASCA Chair Crispin Hunt. In addition a number of cross party British MPs who support the directive including Tom Watson, Nigel Evans and Kevin Brennan were amongst those in attendance.

One has to ask, if those opposing the EU Copyright Directive have such a compelling argument, why do they resort to such deceitful means? If we judge their actions, the arguments of those opposed to the directive hold no legitimacy and the European Parliament should vote in favour of the directive.

Andy Edwards, music manager and consultant
@andyedwardsbiz

Kendrick Lamar wins the Pulitzer Prize for Music

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Andy Edwards explores what having a Pulitzer Prize winning rapper means for the music industry and the arts landscape as a whole.  This article first appeared in Record of the Day.

DAMN. Kendrick Lamar is the first non-classical or jazz artist to win the Pulitzer Prize for Music. The Pulitzer Prize was launched in 1917 and the first Pulitzer Prize for Music was awarded in 1943. Kendrick Lamar is the 67th recipient.

The Pulitzer is a name with overwhelming gravitas, commonly associated with American journalism, poetry and literature. The music category recognizes “distinguished musical composition by an American that has had its first performance or recording in the United States during the year.”

The award itself comes with little fanfare, no red carpet sizzle, but, rather, the recipient will forever be known as the “Pulitzer Prize winning author/journalist/ poet/ composer/ etc”. The attention heaped upon Pulitzer Prize winning rapper and songwriter Kendrick Lamar has been truly global. His award made headline news here in the UK, prompting widespread comment. The significance of this moment cannot be understated and had many layers relevant to all of us in the music industry and in a number of ways.

The significance for hip-hop and black music

As Jasmine Dotiwala pointed out on Sky News, in the early ‘90s the US government tried to shut down the likes of NWA, Ice T and Snoop Doggy Dogg. Twenty-five years later a 30-year-old rapper from Compton is being feted by the establishment, hopefully signaling a new level of acceptance.

It sets a significant marker for the music industry itself. The last black artist to win Album of the Year at the Grammys was Herbie Hancock in 2008. Lauryn Hill and OutKast have won Album of the Year in the past, but in recent years no black artist has won the accolade. At a time when black music has reached new artistic heights and cultural resonance coupled with poor female representation, The Recording Academy has been blasted for being out of touch.

DAMN was actually shortlisted for Best Album at this year’s Grammys, Lamar’s third nomination for the award. Childish Gambino and Jay-Z also made the shortlist but they all lost out to Bruno Mars. Beyoncé has made the shortlist three times, culminating with her greatest work yet, Lemonade, leaving her empty handed again last year prompting many to ask, what has the lady got to do to win Best Album?

In winning the Pulitzer Prize, Lamar has leapfrogged the Grammys in recognition. Perhaps this serves as a challenge to The Recording Academy to go further and do better as it considers options for 2019?

The significance for contemporary music

Bob Dylan, Neil Young and Bruce Springsteen, have all won many plaudits over the years as authentic and significant American artists and storytellers, but none have won a Pulitzer Prize for Music. The overwhelming majority of recipients are classical. In recent years, a handful of jazz artists have won the award, first Wynton Marsalis in 1997, then Ornette Coleman in 2007 and Henry Threadgill in 2016. These gentlemen are masters of their art, but it took them years to reach that level of acceptance by the American arts establishment.

Only last week, the debate surrounding Arts Council funding in the UK contrasting the attitudes afforded to opera and classical at the expense of other genres, illustrates how far contemporary music still has to go in winning over the arts establishment in the UK. Kendrick Lamar’s achievement is significant not only for hip-hop, or for black music, but for contemporary music as a whole. It challenges the arts establishment around the world to fully embrace the cultural significance of contemporary music.

Arts Council England could learn a great deal from the Pulitzer’s and the process behind them. Kendrick Lamar’s award was the result of not only diverse and inclusive voices, but also diverse and inclusive process, thought and debate.

As David Hajdu, one of the jurors and also a writer for The Nation, explained in the New York Times, “some pieces of classical music that drew upon hip-hop as a resource, that led us to put on the table the fact that this sphere of work – rap music – has value on its own terms and not just as a resource for use in a field that is more broadly recognized by the institutional establishment as serious or legitimate.”

The tone and conduct of the debate brought together jurors from a range of artistic backgrounds, including those more traditional, to this unanimous outcome.

Be unashamedly artistic

In the streaming age, play counts are the new heavy rotation. Play counts have become an obsession. The challenge of introducing new artists to the market and making an impact is one the industry continues to grapple with. Once that artist finds an audience and begins to grow, however, the only limitations are the artist’s own ambition and hard work.

As the man himself, explained: “you have to listen to it over and over and over again to fully understand the direction and the message that I put in there; the execution of it. And I want you to do that. I wanna challenge the way you think and the way you take your music.”

We could be clever and conclude that Kendrick Lamar is taking a counter intuitive approach to music making in the streaming age, but really he is just being a true artist: thought provoking and provocative. He is putting out his music on his terms and he wants you to listen to it on his terms. Streaming included.

This Pulitzer success, coupled with DAMN’s commercial success signals very clearly that the album, as a format and a concept, is not going away. Moreover, whenever anyone says “could {insert classic album} be made today?” Stylistics aside, the answer is a resounding yes.

#BLACKLIVESMATTER

What this award also recognizes is a journalistic quality to Kendrick Lamar’s work that documents contemporary African American life. YouTube and social media have exposed long-held injustices affecting the black community to broader white audiences and almost every form of artistic expression has harnessed this moment.

Black creators are succeeding in every creative field around the world, be it movies such as Get Out and Black Panther, television comedies such as Issa Rae’s Insecure and Michaela Coel’s Chewing Gum in the UK. In non-fiction, Reni Eddo-Lodge has produced a global best seller that began with a frustration at that typically (white) British trait of brushing uncomfortable truths (race) under the carpet. Pulling it all together is a renewed focus on Africa not only as a source of inspiration, but also a source of creative talent. This dynamic has not gone unnoticed by Midem organisers who will be exploring African markets such as Nigeria, Ivory Coast and the Congo in Cannes this year.

A political thread connects all of these creators and across all continents, albeit from many different viewpoints and experiences. It also serves as a reminder to all recording artists and the industry that supports them, that in challenging times a political message has artistic resonance with a mainstream audience.

There is a generation of executives too young to remember the civil rights movement and Vietnam War that produced such a rich body of music in the late ‘60s and early ‘70s. Instead, that generation was brought up to think of politics in music as being aligned to “Red Wedge” or “New Labour” or some form of party political affiliation. Understandably, this resulted in cynicism and disengagement, whereas millennial artists and audiences display idealism reminiscent of their grandparent’s generation.

The politics of 2018 cuts across party boundaries and country borders. Even in this past week, the Windrush debacle in the UK has prompted a global outcry and it was revealed that Grenfell was entirely preventable. Politics fuelled Stormzy’s electrifying BRITS performance. Politics has taken Beyoncé to new creative heights. Politics is not something for artists to be wary of, nor their managers nor their A&Rs for that matter.

A political narrative can fuel any artist from any background and any genre of music. As a former artist and current music executive said to me only last week, “grime and hip-hop are cutting through because those artists have something to say, other genres have to look to themselves and do better,” (he was once in a guitar band).

Kendrick Lamar has raised the bar not just for hip-hop but all contemporary music. Pulitzer Prize winner. DAMN.

Tweet Andy Edwards your thoughts to @andyedwardsbiz

Arts Council England v the Music Business

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Andy Edwards explores the facts and figures behind the Arts Council v Music Business debate.  This article first appeared in Record of the Day.

The role of the Arts Council is once again in the headlines. This week, leading figures representing the music industry locked horns with senior opera figures over Arts Council funding.

UK Music CEO Michael Dugher branded Arts Council England (ACE) “too posh for pop”, pointing out that 62% of ACE’s National Portfolio goes to opera and a further 23% goes to classical music. In contrast, only 8% goes to popular music and 7% to other genres (including jazz, folk, etc).

Hitting back in The Daily Telegraph, Michael Volpe General Director of Holland Park Opera, responded “I’ve been hearing the word ‘posh’ in relation to opera for 30 years. Very few people in opera are posh – certainly not the performers”, although Volpe conceded in the same piece “Opera companies get a lot of money, perhaps more than they ought to, and that’s an ongoing argument.”

ACE has £1.45 billion of public funds and £860 million National Lottery funds to distribute over the next four years. Of the £368 million allocated to music, opera will receive £229 million, classical £85 million and pop £27 million.

The debate is especially timely because ACE has initiated a public conversation to help inform its strategy for the next 10 years. Given the music industry is only just returning to growth having suffered 15 years of decline, a lot is at stake. A barrier to that discussion is a fundamental misunderstanding between both sides.

Some might argue the opera world, and the arts establishment as a whole, seem to look down on the music industry or, perhaps, hold the view that it is less deserving. Many in the music industry consider opera an irrelevance and an extravagance.

The reality is the music industry is vastly more complex, diverse and challenging than is often understood. It is also a reality that opera is accessible through multi-tiered ticket pricing and many opera companies are addressing their own diversity issues.

What are the key issues? How can both sides better understand one another and what does a satisfactory outcome look like?

THE FUNDING IMBALANCE

Not only is there a huge imbalance towards opera, but there is also a disproportionate amount awarded to the Royal Opera House in London specifically. During 2016 alone, the ROH received £28 million in Arts Council funding, which represents 20% of the ROH’s total income for that year. The remainder is made up of box office receipts, commercial income and other fundraising. This includes various charitable trusts and corporate backers such as Goldman Sachs.

By way of comparison, UK Sport fulfils a similar function to the Arts Council and also relies on a combination of public money and lottery funding. It is worth noting the spread of investment across the Olympic disciplines is much more even. Of the £265 million earmarked for the Tokyo Olympic cycle, rowing receives the most with £32 million, followed by athletics (£27m), sailing (£26m), cycling (£26) and swimming (£22m). Although medals success and underlying costs are a factor, the distribution of funds is far more even when compared to arts funding for music. Equestrian was further down the list with £15m, but imagine the uproar if Equestrian took 60% of available funding at the expense of other medal winning sports.

It is hard to see how the imbalance between opera, classical and other forms of music can be justified. Moreover, if funding were to be taken away from opera and distributed more broadly, how detrimental would that be? Supposing ACE funding for the Royal Opera House is cut in half, that would represent a 10% cut in its overall income. Can the ROH be challenged to go without or make up that funding elsewhere?

MOMENTUM MUSIC FUND – A CASE FOR GRANT FUNDING

In 2013, Arts Council England supported the launch of the Momentum Music Fund, administered by the PRS Foundation. Momentum was aimed at artists existing outside the major label system, unsigned or signed to an independent, and who could demonstrable a case for £5-15,000 worth of funding to give their careers tangible momentum at a crucial point.

The scheme has been a great success. Over 270 artists have been supported by Momentum and for every £1 invested £7.46 has been generated. Recipients are truly diverse covering a broad spread of genres with a strong BAME representation, making up 49% of grantees.

Over 3,800 artists have applied for Momentum funding since its inception. Five years after its launch demand and impact has never been greater. The recently published outline of Government’s creative industries sector deal, which encourages partnerships between government and industry, mentions the Momentum Fund as an example of good practice.

The frustration is that despite this clear proof of concept, including the quality and diversity of the artists supported and the match funding & income it has leveraged there appears to be little appetite from the Arts Council to continue its involvement in such schemes.

ATTITUDES TO INVESTMENT NEED TO CHANGE

A key challenge is how the music industry is perceived and how it perceives itself.

Culturally, a disproportionate level of attention is afforded to a tiny minority of major artists earning vast sums at the expense of the majority who do not. This contributes to long held assumptions within the arts establishment, government and the wider public that all paths through the music industry are paved with gold. They are not.

Within the industry itself, there has been a tradition of self-reliance. Labels and publishers, especially, pride themselves on their investment in new music. This is very true, but that investment only comes at a certain stage. Leading up to that point, artists and their managers typically funded themselves. Prior to the launch of Momentum, grant type funding for artists was very rarely considered as an option.

Attitudes are very different when it comes to sport. Even world-class athletes such as Mo Farah continue to receive grant funding from Sport UK. In Farah’s case, this is despite considerable endorsement income and a personal net worth rumoured to be £4 million. Grant type funding in sport began in the late 90s. Twenty years later, Great Britain can look back on Olympic glory over the past three Olympic cycles in Beijing, London and Rio across a range of sports. This was no coincidence.

THE ROAD AHEAD

Leading up to the publication of the government’s Industrial Strategy (Creative Industries Sector Deal) earlier this year, there was much debate about funding. Early funding gaps were evident across the creative sector and especially so in music.

For a new artist, releasing music has never been easier: the major streaming platforms are readily accessible to any artist. The principle sources of investment remain labels and publishers although other self-release options such as Seed EIS are available. What has changed is the time it takes to reach that level. A new artist may take several years funding their own releases and live shows during that time. Few new artists have the means to do this, especially those from less affluent backgrounds. This has created very real roadblocks in the talent pipeline as the industry has shifted from CD to download to streaming.

There is a clear deficiency in investment at the seed/ angel level. Unlike the tech world, there are very few mechanisms providing a return to the early stage investor while safeguarding the artist. An artist’s business structure, especially at an early stage, can be fluid and may not have all IP and activities sitting in one entity. Very few new artists could be considered “investment ready” in a traditional sense.

This is why grant funding is so important. It does not require equity stakes or convertible loans. It is simple and when targeted correctly, as Momentum has proven, can be highly effective. Grant funding can play a central role in growing a sustainable talent pipeline that fits the streaming age that is now upon us and ensure the industry picks more winners.

The disproportionate level of Arts Council funds devoted to opera does not seem fair or sustainable and it would seem this is recognized even within the world of opera. Meanwhile, the music industry has proven that grant funding can provide a significant boost to more popular genres and sustain a diverse pipeline of creative talent that works in tandem with existing commercial models. Making the numbers work is a bigger question, but there would seem to be a clear imperative to develop a fairer and more balanced approach to Arts Council funding for music.

When it comes to racism, British “tolerance” is not good enough

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During a recent episode of The Pledge, writer and broadcaster Afua Hirsch raised the issue of closet racism. Her sceptical fellow (white) panelists, responded with a variety of set piece rebuttals including “I don’t see colour,” the eye popping “if its well intentioned it is not racism” and the most frequently used British rebuttal of all: Britain is the most “tolerant” nation in the world.

Afua took issue with the word “tolerant” and so do I. How often do we hear, in the context of discussing racism in the UK, “but we are the most tolerant nation in the world”? The rebuttal is passed around so freely but never challenged or understood. What do we mean when we say we are “tolerant”?

One can argue that on a personal level, just because someone is tolerated does not mean that person is accepted. It certainly does not mean that person will be treated equally. Think about what it means to say:

“I tolerate you” >> “I accept you” >> “You are my equal”

How do those words sound to you? Now think about that on a broader level. Think of where Britain is in our history. Think about the recently published government statistics that lay bare the extent of structural racism in this country: education, job prospects and criminal justice that illustrates very clearly people of colour are disadvantaged at every stage.

Tolerance may place Britain ahead of many other nations. The British are certainly not intolerant, but we tend not to display much emotion be it positive or negative, which begs the question, are we really that tolerant?   We can be polite, of course, but surely all this is just a starting point? It is a very British thing to sweep those things we do not wish to discuss under the carpet. I fear we do so with our racism.

Accordingly, structural racism and unconscious bias are rarely understood on a mainstream level, yet this is where the greatest challenges lie. Similarly, dog whistle racism often goes unchecked and unchallenged. The impetus for Afua Hirsch’s Pledge discussion was the overt racist comments from the girlfriend of the leader of UKIP, a political party that attracts mainstream media coverage despite the obvious dog whistle racism amongst its members.

The British often perceive America to be far more racist than Britain, because its racism is more overt, be it the actions of its police departments or the current occupant of the White House. Yet America is demonstratively more progressive in many respects, leaving Britain way behind.

In academia, Harvard University admits far more people of colour relative to America’s demographic make-up than either Oxford or Cambridge in the UK. Moreover, Harvard achieved this without compromising academic excellence disproving the notion that “affirmative action” meant lowering the bar. It does not. As David Lammy points out, Oxford and Cambridge could do the same, but have consistently failed to do so.

Whenever racism is discussed in the British media, and on television specifically, the format is typically:

EITHER one black person making the case to two, three, for or more white people all of whom hold an opposing view. Occasionally, there might be a white ally. Instinctively the ally may well be on the side of the black person discussing structural racism, yet very often the ally tries to be the peacemaker in what is often a heated discussion, hoping to defuse any unpleasantness with another set piece such as “but we have come a long way”.

OR the researchers manage to find several black and south asian participants who, conveniently and in the interests of good television, hold opposing views. This may be authentic insofar as a sixty year old dark skinned black man who lived through extreme overt racism in the seventies and eighties will have a different perspective to a mixed raced woman in her twenties grappling with unconscious bias, othering and dog whistle racism today. Such formats over simplify the arguments almost always without time to fully understand the nuances around these varying positions. A recent episode of BBC Big Questions is a case in point.

In contrast, American television news and talk shows will often utilize two or three black commentators speaking on a panel about race (or indeed more general subjects), be they pundits such as Angela Rye and Bakari Sellers or presenters such as Don Lemon, Van Jones or Joy Reid. British television is way behind. When Republican commentator Cory Lewandowski made racially charged remarks about President Obama during the 2016 presidential election, he was very firmly put in his place by more than one of his fellow panelists.

For such a “tolerant” nation, we British seem to be remarkably slow in addressing structural racism, unconscious bias and dogwhistle racism. Yet, seemingly “intolerant” America is way ahead of us. The uncomfortable truth is Britain still has a lot work to do.

Tolerating is OK. Britain can do that.   But we are not “OK Britain” we are Great Britain and we can do much better than OK. That means continually improving ourselves as a nation to ensure all our citizens, regardless of background, feel not just tolerated, but accepted and equal and to feel truly British and not merely Brit(ish).

 

For a more complete and beautifully written account of why we British should do far more than merely tolerate, BRIT(ish) by Afua Hirsch is an essential read.

 

Moderating at MIDEM

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Here’s some footage of a panel I moderated at MIDEM on transparent rights management systems.

 

Copyright Summit – Building Transparent Rights Management Systems – Midem 2017

The recent months have seen the confirmation of a strong will from the music community to build comprehensive, transparent and simplified systems to manage music rights globally. This session will highlight who are the main players involved, what are the different initiatives launched and their models, as well as what we can expect from these developments in the future.
• Antony Bebawi, EVP Digital & Society Relations Europe, Sony/ATV (UK)
• Amos Biegun, Managing Director & Global Head of Rights & Royalties, Vistex (UK)
• Panos Panay, Co-Founder, OMI & Founding Managing Director, BerkleeICE (USA)
• Jean-Noël Tronc, CEO, SACEM (France)
• Lucie Caswell, CEO, Featured Artist Coalition (UK)
• Moderator: Andy Edwards, Board Director, Music Managers Forum (UK)

The UK Music Industry Tried To Agree A ‘Transparency Code’ For Streaming Royalties. It Collapsed – Here’s Why

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This article first appeared in Music Business Worldwide and details a project I have led for the past eighteen months.  Time to pass the baton now, but politicians are looking very seriously at this issue.  The matter was debated in the House of Commons today.  No complaints about anyone involved – including the major labels – but perhaps government can help move this forward.

In August 2015, I wrote an article for Music Business Worldwide entitled Transparently Obvious: The Music Business Has To Change. The article was based on my experience in artist management and as a director of the UK’s Music Managers Forum (MMF). It came in the wake of Berklee College of Music’s Rethink Music report, which caused quite a stir at the time.

The transparency agenda has been a response to the secretive culture surrounding the commercial deals between rights owners and digital services. Non-disclosure agreements (NDAs) were blamed for the opacity in accounting to artists and writers.

There was a feeling amongst creator organizations and the MMF specifically that a transparency code of practice could solve many of these issues. Jo Dipple and Andy Heath, CEO and Chairman of UK Music, agreed this was worth attempting within the UK Music community. The intention was simple but also extremely ambitious.

“THERE WAS A FEELING AMONGST CREATOR ORGANIZATIONS AND THE MMF SPECIFICALLY THAT A TRANSPARENCY CODE OF PRACTICE COULD SOLVE MANY OF [THE UK INDUSTRY’S] ISSUES. JO DIPPLE AND ANDY HEATH, CEO AND CHAIRMAN OF UK MUSIC, AGREED THIS WAS WORTH ATTEMPTING.”

Simple insofar as the code would be a non-legally binding plain English document detailing a general statement of intent. It was extremely ambitious insofar as it sought to unite the entire recorded music industry around a single position on transparency.

The entire recorded music industry being: music publishers, songwriters, major labels, indie labels, featured artists, musicians, producers, managers and collection societies. A varied bunch of constituencies: each with their own requirements and views and then differing views again within each of those constituencies.

Most of the ten organizations represented on the UK Music board had in turn at least 10-15 members on each of their respective boards. In the case of the majors, the document had to be signed off not only by the UK company but also each major’s global HQ. There were a lot of lawyers involved. This was not an n+y level of complexity, or even nxy complexity; it was ny complexity and then some.

All this for a code of practice I intended being as simple as possible: the first draft was 268 words and the final draft was 562 words. There were a lot of drafts.

Steve Jobs once said “simple can be harder than complex”. He was not wrong.

After almost eighteen months and an awful lot of calls, coffee meets, confidential chats and boardroom debates the project finally came to an end when it became clear that it would be impossible to reach a consensus at this time.

Despite the fact we did not get the document across the line, a great many positives emerged that are worth sharing. For me it was always about the process and not the outcome. The process was hugely beneficial on a number of levels:

THE PURPOSE:

Codes of practice tend not to be legally binding, but they do have legal weight. For this reason the code benefited from a great deal of legal scrutiny.

There were three basic principles: Transparency, Clarity and Alignment of Interests. That meant: be open about the terms on which you do business with those to whom you account (e.g. your artist or writer roster); be clear in how you manage and present information relating to those deals; and act in the spirit that whatever is good for you as a rights owner should be good for your roster, i.e. share the total value of the deal proportionately with your roster.

“THE MESSAGE TO RIGHTS OWNERS WAS: STRIKE DEALS WITH DIGITAL SERVICES HOW YOU SEE FIT AND AGREE PERCENTAGES OR REVENUE SHARES WITH YOUR ROSTER THAT YOU FEEL ARE APPROPRIATE TO THE SITUATION.”

The message to rights owners was: strike deals with digital services how you see fit and agree percentages or revenue shares with your roster that you feel are appropriate to the situation. The code is not there to interfere on specific commercial terms, but abide by the spirit of the code in how you conduct business.

The message to creator groups was: define precisely what you are asking for. Transparency does not mean sharing everything with everyone, points of clarity should be reasonable and alignment of interests should be in reference to the commercial deals from which you are a direct beneficiary (e.g. Spotify, Deezer, etc).

THE PROCESS:

Neutrality was essential. From the outset I insisted on being “neutral broker”. That meant metaphorically removing my MMF hat for the purposes of leading the project. It took a bit of adjustment from all involved, not least my MMF board colleagues, who were incredibly gracious in letting me get on with it as a collective project.

Having established that principle, I was sure to abide by it. Label executives could be incredibly helpful and creator representatives unrealistic at times. I had no hesitation in saying so and vise versa. It was about demonstrating fairness.

Reference points played a part in establishing the code. The WIN Declaration, first established by Alison Wenham in 2014 was one such point of reference. This dealt with establishing similar principles within the independent label community. It was quite a challenge for Alison to pull off. The challenge within the UK Music community was even greater insofar as it meant achieving consensus not only with independents, but also with major labels, music publishers, collection societies and all the various creator groups.

“ATTITUDES WERE INITIALLY VERY ENTRENCHED ON BOTH SIDES.”

Community and teamwork were essential elements. I led the project, but it was not about me. It was always about the community. On the creator side that meant building a coalition between managers (MMF), songwriters (BASCA), featured artists (FAC), musicians (MU) and record producers (MPG). It meant making sure the right people were in the loop at the right time. For instance, in meeting with PRS and MPA, Vick Bain from BASCA was present and her voice took priority over mine.

Listening is the most essential element of any dialogue. Attitudes were initially very entrenched on both sides. It was a question of getting under the surface of the sound bites and the headlines that had played out in the trade press. It was about identifying the underlying concerns.

As the document evolved those concerns were addressed. Many on the creator side felt the document became very watered down, but the underlying principles of the code remained intact. I urged everyone to be realistic and focus on the direction of travel, albeit acknowledging different organizations and companies move at different speeds.

THE OUTCOME 

We almost made it. The final version of the code was at a point where it could be considered by the respective boards of each member of UK Music. In the case of the BPI, whose major members were discussing the code with me directly, the major labels were considering the code at a global level.

The outcome was that all three major labels declined to officially support the code of practice. This is where the project ground to a halt.

In fairness to the major labels, there were some reservations elsewhere. For instance, a similar debate was in progress within some music publishers. My personal view is the support of the majors was essential in bringing all sides of the industry together.

The objections voiced about the code (not just from the labels) could be broadly summarised as follows:

  • Firstly, there was a feeling amongst some executives that transparency was purely a matter between themselves and their respective rosters.
  • Secondly, some felt they already complied with the code of practice (the final draft), so they felt there was nothing to gain. All the majors had announced varying improvements in transparency during the period the code was in discussion.
  • Thirdly, in light of the draft EU Copyright Directive published in September 2016, which contains transparency provisions, some executives felt overtaken by events, although from a UK perspective, post-BREXIT these provisions may not be adapted or enforceable.

Finally, there was concern surrounding a further aspect to the draft EU Directive on contract adjustment, whereby creators could renegotiate “unfair” contracts with labels and publishers. Some executives felt the code conflated this issue with that of transparency or could be interpreted as such.

I fundamentally disagree with this position. The code of practice merely seeks to “align interests” between creators and rights owners, it is not there to determine what is or is not a “fair” contract. Rights owners are strongly opposed to contract adjustment.

THE WAY FORWARD

Irrespective of what happens next, the process has been worthwhile. Even without a specific agreement, the respective sides of the industry better understand one another. Progress has been made. Rights owners have made, to varying degrees, public commitments on transparency even if creator groups want them to go further.

I can say categorically those major rights owner executives who did engage did so positively and constructively. Inevitably they were mostly lawyers, but they offered solutions rather than problems. I have nothing but praise for their efforts.

On the creator side, the code helped stimulate a more collaborative approach. Writers, artists, producers, musicians and their managers have more in common than not, so it makes sense for them to work together. This benefits rights owners, who sometimes find it difficult to accommodate varied points of view on the creator side.

So what next?

The voluntary code of practice on search engines signed by Google and Bing over the past week demonstrates very clearly what can be achieved. Government, tech and creative industries all support it, but it took years to reach an agreement.

“A CODE OF PRACTICE, IN PART, PROMOTES BEST PRACTICE WITHIN THE INDUSTRY BUT IT ALSO SENDS A POSITIVE MESSAGE TO GOVERNMENT AND THE WIDER WORLD.”

My comment to rights owners is this: think not just in terms of the relationship with your own rosters, but how to raise the bar for everyone. A code of practice, in part, promotes best practice within the industry but it also sends a positive message to government and the wider world.

My comment to creator groups is this: be specific in your requests and avoid inflammatory statements. Rights owners get very nervous when demands appear too open ended. In fairness, creator representatives have responded positively to that message and, in some cases, they have been way ahead of me.

To all sides of the industry my comment is this: keep believing in the process and keep engaging. By all means be joined up, but please avoid conflating issues. Transparency and remuneration can be dealt with separately, if further definition is required then find that definition. Avoid the long grass.

We are all fiercely creative and competitive, but we should learn to be more collaborative. In a world where technological, social and political forces increasingly impact on our world, we need to be more aligned that ever before.

What happens next is anyone’s guess. These are interesting times.

We must work smarter and more efficiently: Transparency, Clarity, Alignment of Interests are outcomes that must prevail one way or another.

Diversity In The Music Industry

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Diversity Part 2: Following Andy Edwards’ first diversity piece for RotD, he follows-up with the actions taken since and how everyone can get involved

This article first appeared in the Record of the Day weekly magazine, but can also be viewed online here.

One of the central talking points during 2016 has been the issue of diversity.

In a broader social context #BlackLivesMatter rose in prominence, while BREXIT and the American presidential campaigns have ignited racial tensions. The Rio Olympics celebrated sporting talent across racial and gender boundaries, although prejudices and barriers were all too apparent.

Islamophobia is a continuing issue across Europe and the USA, highlighted by the ‘burkini’ debate in France over the summer. That debate also raises broader questions concerning the rights of women and their freedom to dress how they please without fear of harassment irrespective of religion.

Workplace diversity is a hot topic. Financial services, media, arts, tech and even the public sector have all attracted scrutiny. Baroness McGregor-Smith will be publishing a report on workplace diversity in the UK shortly.

Within the music industry UK Music CEO Jo Dipple has made diversity a priority, giving that organisation’s full support to Keith Harris’ efforts to set up an industry-wide UK Music Diversity Taskforce. This was well in advance of the #BritsSoWhite and 30 Under 30 debates. Keith is now running that campaign with UK Music’s Director of Operations Ele Hill.

BPI Chairman Ged Doherty is another industry leader who has made diversity a priority by hiring Ayesha Hazarika to drive its own diversity efforts and to work collaboratively across the industry. Ayesha is a former EMI executive with political experience that includes drafting the landmark Equality Act 2010.

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My first move was writing an article for Record Of The Day in March. This was a small contribution, but what followed were some useful insights worth sharing with those considering lending their support for the first time.

Get Involved (Even If You Are A White Man)

Diversity affects all of us and we can all benefit. It has been noted that companies with a more ethnically diverse workforce are 35% more likely to be profitable than non-ethnically diverse companies. This makes sense as local demographics change and the world becomes more connected. To remain competitive, companies must reflect their consumers.

Even those of us (predominantly white people) who are passionately anti-racist sometimes fear getting involved. We fear saying the wrong thing and either offending or patronising the people we hope to support. No one wants to fall into the trap of whitesplaining, as Matt Damon did last year, for which he later apologised.

Writing the RotD article was daunting. Thankfully the feedback from respected friends and colleagues within the Black and Asian community was overwhelmingly positive. That gave me the confidence to get more involved.

There are some great examples of supporting a cause that is not necessarily your own in a positive and respectful manner.

MTV produced an article about 9 ways white people can use white privilege for good gives useful pointers for discussing race from the perspective of a white person. The examples are very US-orientated, but the UK has the same underlying issues. There are plenty more examples on YouTube.

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In tackling gender inequality from a male perspective, Barack Obama’s article This Is What A Feminist Looks Like for Glamour magazine earlier this year is a useful reference point. Men can be feminists too, including the President of the United States of America. Men can also avoid mansplaining. Even in 2016 highly accomplished women, including NASA astronauts and Olympic athletes, have had to endure ignorant comments from lesser qualified men.

A bit of encouragement and cajoling always helps. Speaking at the inaugural UK Music Diversity Summit in July, Oona King delivered what can only be described as a master class in bringing people together.

Aside from her political career, she has huge experience in achieving better workplace diversity, previously as Head of Diversity at Channel 4, now in a global role at YouTube. Summing up this sentiment with great warmth and quite a bit of irony, Oona declared:

“I love white men [long and slightly playful pause], I especially love white men who come to diversity meetings, because when I see that I know that real change is possible.”

As a friend pointed out to me: “Oona is ironically acknowledging the status quo and white, male privilege. She acknowledged white males who use their privilege for good, being agents of change regardless of skin tone”.

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It is not about me, or people like me. We should not be centre stage. But we can be in the room and lend our support. Listen and learn and go from there.

But you are not reading a diversity piece to hear about white guys …

The broader context of diversity … what do we mean by diversity?

“Diversity” is turning into a buzzword. There has been a great deal of focus race and ethnicity this year. The concept of workplace diversity, however, is much broader and also includes: disabilities, religious and political beliefs, gender, education, socioeconomic background, sexual orientation and geographic location amongst other factors.

Diversity also goes hand in hand with “Inclusion”. It is one thing to have a diverse workforce, but if that diverse workforce does not feel like it has a voice and is included in decision-making and collaboration, then we all fail.

Diversity and Inclusion expert Charlotte Sweeney has written extensively on the subject, including co-writing a book called Diversity and Inclusive Leadership.

Understanding The Numbers

The UK Music workplace diversity questionnaire has generated a very high response from across all sectors of the industry. This is very encouraging. The next step is to analyze the data and publish the results.

A number of organizations and industries have conducted similar exercises in recent years. Many workplaces face challenges in balancing diversity, although the specifics vary from one workplace to another.

For instance, Facebook is predominately white (55%) and male (68%). Asian employees are well represented (38%), but Black (2%), Hispanic (4%) and female (22%) employees are not. The Facebook figures are broadly reflective of the tech sector as a whole.

Last year Facebook demonstrated its senior leadership hires comprised: 9% Black, 5% Hispanic and 29% female. The company also breaks out technical and non-technical figures. Job role is an important factor in the tech sector, as technical roles are even less diverse.

Through transparency, action and annual reporting to monitor outcomes Facebook is demonstrating progress, albeit slow progress. The company is not immune to criticism but when accepted graciously solutions can be found.

Not only do other industries and organisations consider the overall position, they examine the nuances whether that is job role, seniority and how that pattern changes year-on-year.

UK Music shall be publishing the results of its survey very shortly. This will be fascinating. Irrespective of what picture the numbers paint, it is incumbent on all of us to understand those numbers, take action and monitor progress.

Diversity is very firmly on everyone’s agenda this year and it is not going away. This is a great opportunity for the music industry to demonstrate leadership through its own commitment to transparency, insight, action and results. If music can cross boundaries, so can the industry that supports it.

Contact Andy Edwards via twitter here: @andyedwardsbiz

What The Tech Industry Needs To Learn About The Music Biz: Sympathy For The Devil (Part 3)

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This is the third part in a trilogy of articles exploring the misconceptions between the music and tech industries. It first appeared in Music Business Worldwide.

Part 1 questioned the manner in which rights owners contract with tech start-ups, Part 2 noted both YouTube and the music industry frequently appear to speak at crossed purposes. What about the tech industry? Should it not question its own misconceptions about the music business?

Challenging one another en famille is a good thing, but sometimes one also has to stand up for one’s own.

If the music industry is a family, to paraphrase author Chimamanda Ngozi Adichie, perhaps that makes the tech industry the “very rich uncle who doesn’t really know who (we) are”?

The tech industry is not some homogeneous mass of people: software engineers think differently to UX people, who in turn think differently to VCs who are not the same as corporate MBA-type people.

Yet there are some commonalities in how this broad constituency views the music industry – and not all of them are fair…

napster1) THE IDEA THAT THE MUSIC INDUSTRY DOESN’T “GET” TECHNOLOGY

This was true in the 90’s and early 2000s. One former colleague said to me “I don’t give a fuck about the Internet” six months after Napster launched.

There were plenty of executives who did not even know how to switch on their PC.

The next generation of music executives, however, comprises digital natives. On the label side, digital marketing and insight people play just as important a role as the traditional product manger. Aspiring managers are as likely to be working in social media or for a start-up as working for a label or promoter.

One of the most interesting facets to DJ Semtex’s 30 Under 30 list was the new school nature of people’s job roles, highlighting a significant shift away from the traditional music industry.

World Map - Spotify2) THE GLOBAL REPERTOIRE DATABASE 

The GRD did not happen, but not for want of trying. Having observed the GRD play out as a PRS major writer representative, I know how much effort went in to trying to make it work.

The PRS, however, should be applauded for bouncing back and striking a deal with STIM and GEMA to create ICE, a joint venture to streamline global digital licensing which is already making great progress.

Perhaps an even greater achievement is the joint venture between PRS and PPL. Not only does this demonstrate a more consumer friendly approach to public performance licensing, it potentially paves the way for a much closer working relationship on a data level. This is also a huge step forward.

There has also been plenty of focus from industry insiders about the potential for Blockchain and almost all the key players are engaging on some level.

There is still a long way to go and all sides need to come together, but the dialogue right now seems more productive than it has ever been.

Kobalt3) THE INDEPENDENTS INNOVATE… AND IT IS NOT JUST ABOUT KOBALT 

Kobalt, rightly, receives many plaudits for being a forward thinking and groundbreaking company. They have raised the game for everyone through applying technology solutions to traditional music industry functions.

Indie labels have always innovated, not just creatively, but also on a business level. Moreover, they have been doing so far longer than many of those in the Silicon Valley start-up ecosystem. Before there were “label services” deals, many indie labels paid artists a 50:50 percentage of net receipts and still do.

The tech sector has often been slow to recognize the importance of the indie sector, very often preferring to strike deals with the majors first. This is a mistake as more often than not independents have proven themselves to be more agile at adapting to new business models, which is reflected by the fact indies significantly over index on digital income streams.

Through the formation of Merlin, it has never been easier for the tech sector to engage with independent labels. Yet even Merlin has to fight continually for fair value on behalf of its independent label constituency.

universal_music4) THE MAJORS … IT’S A PEOPLE BUSINESS

It is easy to knock major labels, yet the commonly held reasons for disliking the majors could be applied to any corporation in any industry sector.

There are far worse examples found elsewhere. Remember United States v. Mircosoft Corp. first prompted by the latter’s behaviour towards Netscape?

One tech executive I met with recently seemed bewildered that any artist would want to sign to a major label. He didn’t get it. The answer is quite simple: artists don’t sign to corporations they sign to people.

If Darcus Beese and his team at Island Records (UK) wants to sign you and their vision meets yours, then, as an artist, you would be crazy not to. Amazing people can do tremendous things to further your career.

That is what record labels do and they come in all shapes and sizes. The trick is to find the label that best fits what you want to achieve. There are more options – majors, indies, label services, DIY – and that is a great thing.

Troy Carter5) MANAGERS AND LAWYERS

Those who represent artists, be they managers or lawyers, increasingly have a foot in both the technology and music worlds.

This goes way beyond headline names such as Troy Carter, Scooter Braun and Guy Oseary or innovative lawyers such as Fred Davis (who is now fully focused on tech).

Pretty much every major music law firm in both Los Angeles and London has a presence in both music and tech, with partners specifically dedicated to serving tech clients. This means, from an artist perspective, your advisors understand the value chain from all sides of the table.

Similarly managers, entrepreneurial by nature, are increasingly as likely to be connected with tech investors and entrepreneurs as they are with label and publishing executives.

A good manager finds common ground, brings people together and makes things happen. That can mean coordinating a tour with an album release or, these days, aligning the differing parties where both the merch company and the record label want to bundle product with the ticket pre-sale that has been agreed by the manager with the promoter.

On a broader level, managers are increasingly influential in the various music/ tech debates. They speak to everyone, they do business with everyone and they don’t take sides with anyone other than with their artist clients.

Beyonce Tidal7) NEVER UNDERESTIMATE THE ARTIST

There are so many misconceptions about artists it is difficult to know where to begin. Life in the public eye is never easy let alone for someone who bares their soul through music.

Accordingly, the stereotype of a fragile soul disinterested in business affairs persists. Very often tech people go along with that and take a somewhat patronizing tone when addressing the artist community.

The reality is an artist in the music business has to master not only their own art, but also the art of asking questions of their own team so they can make informed decisions about their own career. Advisors are there to advise but it is the artist’s career and their final decision.

The other misconception tech people have is all artists write and produce all their own music and then go on tour and sell their own merchandise etc. Alternatively they ridicule Beyonce’s track Girls on social media owing to its multiple writers and producers … how dare she not do it all herself?!

The reality is that songwriters, producers, mixers and session performers all add value to the creative process and must be paid too.

And, no, a songwriter does not make money from merchandise or endorsements, just the song.

Some backroom creators have been amongst the most tech-savvy people in the music business. It is no surprise former producers Kevin Bacon, Jonathan Quarmby (both AWAL) and Benji Rogers (Pledge) have found success as tech entrepreneurs.

It is in everyone’s interests that the tech industry engages directly with artists.

Mark Williamson, who leads Global Artist Services at Spotify, will tell you his toughest audience isn’t label executives or mangers, it is artists.

For all the brickbats that have been thrown at Spotify they are by far the most proactive tech company to engage with the artist community. YouTube and Apple are catching up and that should be encouraged not feared.

SO WHERE DOES THAT LEAVE US?

There has been a meaningful market for digital market for roughly sixteen years, during which time – conveniently for the purposes of rounding off this series of articles – there have been two American presidents.

George W Bush saw the world in binary terms proclaiming, “You’re either with us or against us”. Barack Obama acknowledged the nuances of the modern world but concluded, “Yes We Can”.

Who was the more effective leader?

Searching for common ground is a smart thing to do. Understand the upside for both sides.

All of us in the value chain, irrespective of where we sit, need to ask ourselves a question: do we aspire to be a Bush or an Obama?

YouTube And The Music Business: Sympathy For the Devil (Part 2)

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This article first appeared in Music Business Worldwide, which you can view here.

Oh no, not another YouTube article! There has been so much back and forth over the past few weeks. My personal favourites are David Balfour, Nelly Furtado and Irving Azoff – all of whom have put forth compelling arguments on the music side. Christophe Muller and Robert Kyncl (pictured) have argued YouTube’s corner.

As someone with a foot in both the music and tech what strikes me time and again is the two sides frequently speak at crossed purposes, as appears to be the case with YouTube and the music industry.

This article weighs up where common ground might exist and how both sides might work together once matters are resolved.

To be clear: my personal opinion so far as the value gap, etc is concerned is broadly in line with Azoff et al, but nor do I see YouTube as the “devil”.

So here goes:

1) YOUTUBE: THE NEW BROADCAST PARADIGM (BUT NOT NECESSARILY RADIO!)

The impact of YouTube goes way beyond the music industry. It seems an entire generation is turning away from traditional broadcast media, eschewing satellite and cable subscriptions and even television sets altogether in favour of phones, tablets and laptops with a super-fast broadband connection.

Against this backdrop, native YouTube talent has reached global scale without the help of traditional media.

A number of articles document this trend including this one and this one.

YouTube presents a massive opportunity for artists at all levels, but that opportunity – as things stand – is not the same as fully licensed streaming services.

“A HUGE AMOUNT OF MUSIC IS CONSUMED ON YOUTUBE BUT, OVERALL, IT IS PRIMARILY A PLACE WHERE CREATORS ENGAGE WITH THEIR AUDIENCE.”

A huge amount of music is consumed on YouTube but, overall, it is primarily a place where creators engage with their audience and present their personality, vibe, brand, or whatever it is they want to put out there.

Take a YouTube channel for any given artist. There will be a number of music videos uploaded over a period of time, maybe some audio tracks and hopefully a decent number of subscribers to that artist channel.

Now go into Content ID, block all the music content completely and instead feed the artist channel’s subscribers with a regular stream of vlogs, interviews and docu-footage all filmed and edited on the fly with a GoPro on a shoestring budget.

All of this is monetized through a variety of ad strategies available to YouTube creators.

It would take a brave artist/manager/label to make such a move, but supposing this resulted in more subscribers, more viewing time and more revenue? Even better, it does not require the use of highly prized music rights currently undervalued by the existing YouTube model.

This is not as absurd as it might sound.

2) THE CURRENT GAME AND HOW TO MONETIZE YOUTUBE

MBW notes that YouTube paid out $634m to music rights holders; but if music content makes up a third of all views, surely that figure should have been $1.6bn?

Here’s why: YouTube is not optimized for Total Views, it is optimized for Watch Time, which is about user engagement and encouraging users to stick around and watch more content. Channel subscriptions have a huge impact on Watch Time and as Mark Mulligan notes, music massively underperforms on channel subscriptions relative to other creators and especially native YouTubers.

If the typical artist channel only refreshes with three new videos every eighteen months or so, even if those videos clock up big viewing numbers it is no surprise revenues underperform (under the current model). Not enough advertising inventory is generated if users click on a music video and then click away.

In contrast, native YouTube creators constantly drip feed content, engaging with and growing their audience, encouraging them to keep watching their channel. This in turn creates more advertising inventory and more revenue.

“NATIVE YOUTUBE CREATORS CONSTANTLY DRIP FEED CONTENT.”

One YouTuber told me she quit her day job once her channel reached 60,000 subscribers as by that time she was earning enough from her channel to sustain herself. She did not have an MCN or a manager, only an agent for brand work.

Another YouTube channel I know has grown to 700,000+ subscribers. Its revenue supports a team of seventeen fulltime staff and fresh content is uploaded several times per week. There are plenty of similar success stories.

These channels follow a formula. There are no dark secrets; insights on how to make the most of the platform are there for anyone who cares to look. This approach is not right for every artist, but there are plenty of permutations for creative individuals to engage with their audience in their own style.

3) THE FOOT SOLDIERS “GET IT”

While senior YouTube executives trade blows with music industry figures, those closer to the coalface are doing some great work.

Within YouTube there is a global content partnership team. They run workshops and presentations for artist managers and provide a point of contact for rights owners of all shapes and sizes. Many are ex-music industry people.

On the label side, I speak to industry colleagues with lots of ideas to better monetize their artist’s YouTube channels.

“MANY REMAIN DEEPLY SKEPTICAL OF A PLATFORM THAT DOES NOT YET DELIVER FAIR MARKET VALUE.”

This requires buy-in not only from their label bosses but also managers and artists, yet many remain deeply skeptical of a platform that does not yet deliver fair market value for music assets. Once that skepticism is overcome, however, great things can happen.

One recent independent label client of mine doubled its YouTube revenue in less than a year purely through optimizing content and applying best practice across its artist channels. There are similar stories elsewhere for both artist managed and label managed channels.

The caveat is this: these revenues are substantial in the context of UGC generated content, but fall well short of the rest of the fully licensed streaming market.

4) EVOLVING THE BUSINESS MODEL

What is most striking about the current situation is that while YouTube’s business model very clearly does not work for the music industry as far as its traditional assets are concerned, it could be argued it does not work for YouTube either.

If music content is only generating $634m on YouTube when it should be making at least $1.6bn (current model), surely that should also be an issue for YouTube?

What is holding YouTube back from coming to the table? They appear fearful not only of paying a market rate but also limiting functionality for music assets in line with other, fully licensed ad-funded services.

Many observer’s comment that YouTube’s parent company, Google, is more concerned with data mining based around search rather than building a content business for YouTube. Search is the business Google knows best after all.

But what if YouTube could be persuaded to step out of its comfort zone and properly incentivize rights owners? Two things could happen:

  • Artists and labels may be more disposed to invest more in their own UGC content and deploy content strategies similar to native YouTube creators.
  • Up-selling to subscription services and possibly even a la carte services.

The latter point should be a no-brainer. Spotify has shown freemium is an effective funnel to higher value services and YouTube offers one hell of a funnel. Moreover YouTube already does this for TV and movies giving users options to rent or buy, as they can on fully licensed platforms. No wonder the music industry feels left out.

The former point is a significant opportunity not apparent to many music industry executives largely skeptical towards ad-funded business models generally and the current YouTube model specifically. But if YouTube came to the table and engage more positively they can win over the skeptics and build a substantial business within the music vertical on artist UGC content alone. On top of that is an even bigger business around premium content in one form or another.

5) MAKING THE NUMBERS WORK

In bringing all of this together, the broader opportunity needs to be understood. YouTube’s Robert Kyncl is underselling the potential of his platform when he says only 20% of consumers have ever been willing to pay for music. This is wrong.

Figures I have for the pre-digital era indicate that 20% consumers bought at least one album per month or more, a further 30% 1-2 albums per year and only 50% of consumers never bought music, not the 80% Kyncl suggests.

“IN THE DIGITAL AGE, SURELY THE GOAL MUST BE TO ENCOURAGE MORE PAID CONSUMPTION – NOT LESS?”

These are Gallup/ BPI figures for the UK market in the early 90s (which I relied on for my undergraduate dissertation on digital music written in 1993).

This was before mass-market retailers entered the market and CDs still sold at a premium. As the decade unfolded per capita consumption, if anything, increased. In the digital age, surely the ultimate goal must be to encourage more paid consumption not less?

Ad-funded services have a part to play, but the opportunities to up-sell are much broader, but also more granular. YouTube is an ideal platform to exploit that granularity and hopefully YouTube Red might unlock some of those opportunities.

WHAT NEXT?

YouTube is far too random a proposition for one business model. It is a pick’n’mix of traditional content creators, native YouTube creators and pure amateurs.

Artists and rights owners, meanwhile, have not tapped into what YouTube does best: monetizing artist and label channels with their own UGC.

Both sides need to step out of their comfort zones. That requires YouTube evolving its business model with strands and layers appropriate to vertical markets such as music.

It also requires further diversification from artists and rights owners to create and monetize their own UGC programming.

That is where the common ground lies.