Talking Blockchain at The Great Escape Convention

Taken from The Great Escape website:

More details have been announced today about CMU Insights @ The Great Escape 2016, the conference that sits at the heart of the TGE Convention. Taking place at Dukes @ Komedia on the Thursday and Friday of the festival, this is a totally different kind of music conference, putting the spotlight on four key themes: data + transparency; CDs + merch; YouTube + video; and diversity + health.

Each strand is packed with timely talks and conversations, with training elements, original research, case studies and lively debate. Today we reveal details about some of the speakers set to appear in two of our CMU Insights strands: ‘Transparency! Data! Blockchain! Let’s make buzzwords happen!‘ and ‘What if YouTube actually is the future?’

Making buzzwords happen
‘Transparency’ has been the big buzzword in the music community this year, while another buzzy term – the ‘blockchain’ – has been increasingly held up as the technology that could make digital music more transparent and more efficient. Leading the debate around the blockchain has been PledgeMusic founder Benji Rogers, who will keynote at The Great Escape this May to outline his vision of how new technologies could power a prolific music database that could in turn make digital payments quicker and fairer.

He will be joined by digital music experts Sammy Andrews and Andy Edwards, both also vocal proponents of the need for more transparency and the role technology can play. They will map out what needs to happen to fix the issues around music data and digital royalties, and then debate the issues with a panel of managers, lawyers, publishers and label chiefs, who will discuss the role different stakeholders must play, and why they should bother.

Ensuring everyone is fully up to speed with the jargon, CMU’s Chris Cooke will provide a Beginners Guide To The Blockchain, while earlier in the day he will be joined by music lawyer Nigel Dewar-Gibb of Lewis Silkin to explain how digital data and revenue currently works its way through the system, identifying where the blockages lie, and identifying what questions need to be asked of digital services, labels, publishers and the collecting societies.

The power of music video online
Hosted by digital entrepreneur and Tracks2 co-founder Brittney Bean, our video-focused strand will explore both the licensing challenges and the commercial potential of YouTube, explain why music video is now about more than the ‘music video’, and identify what kinds of video content really work online, on YouTube and well beyond.

Vevo’s Tom Connaughton will delve into how artists, labels and promoters can create video content that really engages and excites fans, whilst Rebecca Lammers of Laika Network, Claire Mas of Communion Music Group, and Chloé Julien of BandSquare will demonstrate how the music industry can really maximise the value of video online.

Are Power Lists A Bit Uncool?

This article first appeared in Record of the Day Magazine.

Billboard’s Power 100 has come in for severe criticism this week owing to the predominantly white male make-up of the names on the list. One commentator went so far as calling the list a “sausagefest”. Less than 10% of the list were female and over 90% of the names were white.

These are pretty appalling statistics for an industry that promotes a spectrum of music with black and female performers very often achieving a disproportionate level of success. The diversity issue in general is being hotly debated already by greater minds than mine, but what puzzles me most of all is why we continue to bother with these “power” lists at all? They seem totally anachronistic and out of touch with the modern world in which we operate.

A list of people doing cool stuff seems OK to me. We all want to know the people who are making things happen and breaking through. Perhaps we seek inspiration and ideas to inform our own perspective. That’s fine.

It is the word “power” that is troubling and distorts the make-up of these lists into a tick-box quasi-corporate exercise. It is a word deeply rooted in the culture of show business, a business historically driven by Svengalis and gatekeepers who sought to control talent, media and the market, whether it was movies or music or any other branch of the entertainment industry.

Power lists do not seem to exist to the same degree in other industries. I Googled “Silicon Valley Power 100” and got a renewable energy company in Santa Clara. Wired have a top 100, but prefer to call theirs “influencers”.

I have witnessed a number of these Power 100 people in action and can appreciate what they can achieve in a specific set of circumstances at a specific time. Another way of saying it is these people “make things happen” and you do not necessarily need “power” to make things happen and certainly not in the modern world.

Conversely, no amount of collective “power” from all the Power 100 lists over the past twenty years was able to stop an eighteen year old kid from writing a computer programme that would upend the entire music business. Shawn Fanning did not have any power, but a whole bunch of people downloaded that programme and others like it and the music business changed forever. The whole thing was consumer driven.

What I would love to see and what no music business power list has ever done is this: “Number 1) The Consumer” and then 99 blank spaces, because that is the reality facing the modern music business. This is what should focus our minds.

The music industry is moving in the right direction, but we are still weighed down by this notion of power. UMG may have more power than Beggars Banquet to negotiate terms with a streaming service, but neither company has the power to persuade consumers to adopt such a service. Far more people still use YouTube than any subscription based service whether the industry likes it or not and as Martin Mills pointed out earlier this week, the whole industry has to come together in a fair and transparent manner if there is any hope of addressing the safe harbour/ value gap issue.

Against this backdrop, power lists just seem hopelessly dated. Which is no reflection on the individuals whose names appear on these lists, they are all interesting and engaging people when you have the opportunity to meet them.

Spend time with Marc Geiger and he doesn’t tell you how powerful he is, although he is a powerful personality. He’ll bang on about how great his team are. The WME team are truly awesome and not just the music department, the brands team are incredible. They all weave together brilliantly and there are no weak links. Best of all are the WME assistants: they are the best foot soldiers in the entire entertainment industry bar none – well that is one show business tradition that is still relevant in today’s world, the WME Assistant. Geiger leads and inspires but he cannot do it all himself and neither does anyone else on that list, or elsewhere.

I have yet to meet a music business executive who can do it all, although some are perceived with a Wizard of Oz type mystique. A red carpet schmoozer may be hopeless with contracts and finances. Personally, I’m the other way around. I’m uncomfortable with the red carpet stuff, but if you owe my artist client money I will hunt you down until you pay. At least there were some teams on the Billboard list, acknowledging genuine collaboration.

Ultimately, no one is the Wizard of Oz. We are all people behind a curtain. Finding, developing, nurturing, collaborating, connecting, engaging, expanding and hopefully at the end of all that there is an outcome that people will remember.

Scooter Braun, also on the list, puts this beautifully, albeit in a slightly different context. His most impressive interview of late centred around some advice he received from David Geffen who insisted he read the poem Ithaka, “which is about the journey. It’s always about the journey. And he said something to me I’ll never forget. He said: ‘Hundred years from now, no one’s gonna remember me, and sure as hell no one’s gonna remember you.’ And I realized, he’s right. No one’s gonna remember me. But they’ll feel my impact, and that’s good enough for me.”

@andyedwardsbiz

Who Will Build The Music Industry’s Global Rights Database?

AE

The following MBW blog comes from Andy Edwards (pictured), Board Director of the UK’s Music Managers Forum (MMF).

The failure of the Global Repertoire Database (GRD) has left many people scratching their heads, wondering how such a huge problem can ever be solved.

Optimists such as Benji Rogers and the Berklee College of Music team point to Blockchain technology as the way forward.

Blockchain has huge potential, but there is still the question of how such a solution is organized, financed and administered.

The original GRD working group was put together by the EU and involved a wide variety of participants including Apple, Amazon, Google, various Collective Management Organizations (CMOs) and music publishers.

Given the GRD had the potential to benefit so many, it was disappointing that the cost of developing the GRD was ultimately met by so few: a handful of CMOs.

With an insufficient number of CMOs willing to back the project the GRD stalled, by which time costs had reached £8 million, with no tangible outcome.

“WITH AN INSUFFICIENT NUMBER OF CMOS WILLING TO BACK THE PROJECT, THE GRD STALLED – BY WHICH TIME COSTS HAD REACHED £8M.”

The recent lawsuits against Spotify highlight the responsibility tech companies face. The onus is on digital service providers to clear all the necessary music rights. The fact Spotify is planning to build its own publishing administration system is welcome but raises the question: if all DSP’s licensing music – Apple and Google included – face the same problem, why silo the solution(s)?

Collective problems are never simple or easy to solve and any solution won’t please everyone. The challenge is not dissimilar to those faced more broadly within the tech community.

The World Wide Web Consortium (W3C) and the Internet Corporation for Assigned Names and Numbers (ICANN) are two examples. Both organizations are far from perfect, but they managed to move reasonably quickly and establish an ecosystem.

The common standards set by the tech industry helped enable the greatest accumulation of knowledge and wealth in the history of mankind.  That is some feat and well worth closer inspection. Here are a few key take-outs:

  1. They did something. W3C was founded by Tim Berners-Lee in 1994, only five years after he first invented the world wide web. ICANN was conceived and founded in 1998, a green paper was issued in February that year and ICANN was incorporated by September that year.
  2. Neither organisation had everyone on board initially, nor were they completely global or democratic, but they were non-for profit and intended to be independent with some level of governance and oversight from the outset.
  3. Governments played a key role in their inception: the European Commission with W3C, the US Department of Commerce with ICANN.
  4. Academic institutions also played a part: MIT in W3C and Information Sciences Institute at USC in launching ICANN.
  5. Both organisations scaled over time. W3C members now include businesses, non-profit, universities and individuals. ICANN has a number of advisory committees and observers as varied as the European Space Agency, the League of Arab States and the World Bank.
  6. Both have faced criticism. In the case of ICANN, the role of the US government has come in for continued scrutiny and whichever path is followed no one will be completely satisfied. But at least ICANN exists and continues its important role that has evolved over time.
  7. Finally, there was something pioneering and entrepreneurial about both institutions. While the GRD is not a profit-making exercise in itself, perhaps some entrepreneurial spirit to kick-start its existence is needed.

Continuing with the start-up analogy:

  • Who will be the GRD’s co-founders?
  • Who will provide the seed capital?
  • How will it develop its offering?
  • How will it scale?
  • What will the roadmap look like for participants and for funding rounds?
  • What are the rules, governance and oversight?

Fundamentally this is about solving problems and setting common standards. It is not about power and control, which obsesses too many stakeholders and ultimately constrains everyone.

Establish common standards through a GRD and creativity and wealth will scale new heights for the benefit of everyone.

This article also appears on Music Business Worldwide

Why Sharing Equity Is A Big Deal

The announcement last week that Warner Music will share the proceeds of its equity stakes in digital music services with its artists, quickly followed by a similar announcement from Sony Music is hugely significant. The artist community has been in the dark about these equity positions for years and it has taken a great deal of persistence to reach this point. Universal Music is the only major not to formally state its position on equity but one would hope it is only a matter of time before it does so.

A number of commentators most notably Mark Mulligan and Tim Ingham have made the point that the net value of these equity stakes to the artist may not be that significant and that the real battle lies elsewhere. Mark suggests that streaming is not a license or a sale and that the correct remuneration for artists’ lies somewhere between the 50% rate for a license and the (roughly) 15% an artist might receive for a sale. The midway point between those two figures is roughly double what most artists currently get paid on streaming income. His point is this argument is worth more than the fight over equity.

 

EQUITY – THE BACKSTORY

Coming back to equity, it is worth remembering the reason major labels took equity in start-up music services in the first place. During the first dot.com boom, founders were exiting at huge valuations either by sale or IPO, very often without generating any revenue. It made sense to grab as much equity as possible as part of the music licensing negotiation and Jay Samit and other label digital executives at the time quickly set a precedent that has continued to this day.

In the case of Spotify, it was reported at the time by Techcrunch that the majors and Merlin collectively received a 17.3% shareholding on the Series A funding round and paid an aggregate €8,808 for that shareholding. It is worth pointing out that Techcrunch questioned this number at the time believing the amount paid was ten times that amount had the music companies matched what other Series A investors actually paid for their shareholdings. Clearly the majors did not do that and these were peppercorn payments as part of a broader licensing negotiation.

What also needs to be understood is the extent to which those original shareholdings have been diluted through subsequent funding rounds, of which there have been eleven. Further clarity is needed on this.

Where equity is a more valuable element for artists are companies such as Soundcloud in its present circumstances. Soundcloud is striking deals with music companies, but it has a long way to go to generate the sort of revenue numbers Spotify is already achieving. Accordingly, if Soundcloud is acquired, which is a strong possibility, then equity will form a greater part of the total value accounted back to the artist relative to advances and earnings.

 

ALIGNMENT OF INTERESTS – is what it is about

Equity is still hugely important for artists. Start-ups will come and go and each takes their own path. In certain circumstances, the equity piece will derive the greatest value, in other cases not. What is most important – and which Stephen Cooper of Warner Music stresses – is that the interests of the label and the artist are aligned whatever the outcome. This is an important step in the right direction and is greatly welcomed.

@andyedwardsbiz