It’s all too easy to be gloomy about the health of the music business, yet publishers are weathering the storm better than anyone. And that’s probably because, amidst all the talk of music companies needing to provide 360° services, publishers have actually already been doing that for years and are best placed to do it now.
'new digital services must be seen as opportunities'
A music publisher’s role remains fundamentally simple: to maximise the returns on the music they control. And the traditional ways of exploiting catalogues by licensing music remains the core income source. As owners or representatives of musical works, publishers generate royalties from mechanical rights (the sales of CDs and other physical music carriers), performance royalties (from live and broadcast performances), and synchronisation income (from music used on TV programme, commercials, video games, and movies).
To illustrate the strength of this traditional market, the MCPS-PRS Alliance paid its publisher and writer members over £500 million in royalties in 2006 - the bulk of which came from those traditional revenue sources which the Alliance licenses on behalf of publishers. So why the need for angst?
Well, looming large are the new digital platforms that have become huge commercial music users, making music available to millions of consumers; consumers who are increasingly prepared to pay less and less for the music they listen to.
But are the new digital applications the spectres or saviours of publishing’s long-term future?
Stephen Navin, CEO of the Music Publisher’s Association (MPA), believes it’s the latter. ‘We see (the new services) as opportunities,’ he states. ‘We’re in the business of turning any kind of (music) distribution into value propositions.’
Publishers, of course, have a history of licensing new business models: from sheet music to cylinders, from music hall to radio broadcast and everything in between. Instead of resorting to the piracy lawsuits that have dogged the recording companies in the last decade, publishers have always worked with start-ups, via the MCPS-PRS Alliance, to find ways of licensing.
So the challenges of now aren’t any different. Just a little more complex. But it’s still about the licensing.
Navin is intrigued by the complexity that ensues from the newly found digital powers of consumers. Consumers have become influential but often unauthorised music distributors, via peer-to-peer file-sharing networks and social-networking sites.
They have been empowered by high-speed broadband Internet, now used by more than 200 million people worldwide. Analysts predict mobile phones, which are gradually becoming mini computers, will have three billion users worldwide by the start of 2008. And let’s not forget the more than 100 million units of Apple’s iPods sold worldwide.
This has allowed fans to consume more music than ever before, but not music that is necessarily being paid for.
‘User-generated content has been a phenomenon in the last two to three years, and we’ve reacted very swiftly. You’ve got to deal with that tsunami of change; you can’t fight against it,’ Navin continues.
This has resulted in several landmark deals (see side panel), most recently the Alliance deal with YouTube - which means remuneration for music accessed via social-networking services by their tens of millions of subscribers.
There are many who concur with Navin, including music-industry futurist Gerd Leonhard who has advised the publishing sector to be bolder and be prepared to monetise their lyrics, digitise sheet music, and even music stands. He believes that the global music industry is evolving into an interactive multi-media sector, growing at a revolutionary pace and that publishers have to adapt and provide simplified solutions. These might include offering publishing and master rights in one package and stepping back from concluding deals based on territory.
Peter Cornish, director at Fairwood Music, which administers the rights to works by JJ Cale, Jimmy Cliff, David Bowie, Oleta Adams, and Paul Oakenfield, amongst others, believes that publishers must embrace new media to their advantage: ‘In some instances,’ he says, ‘we need to be more creative in finding licensing solutions that allow businesses to develop to a point where everybody involved can profit from their eventual success, while accepting that some will fail.
'businesses need to be allowed to develop to a point where everybody can profit'
As a niche genre, classical music appears to be confidently riding the digital wave. John Minch, CEO of Boosey and Hawkes, points out that as much as 12% of the digital downloads on Apple’s online store have been classical music, compared with the 3-4% that represent classical in traditional music shops.
‘All concert halls and opera houses are looking at new ways for distributing music; at any way to widen their market,’ Minch explains. Some digital distributors have tried to nab the music cheaply, ‘but we’re not going to fall for that,’ Minch adds. ‘The new businesses are still small, but they absorb a lot of our time because that will set a precedent for the future.’
Many of Boosey & Hawkes’ composers have their own social-networking pages. ‘They loved the idea that their music will be heard by and engaged in by younger people. That has also made us more creative and dynamic with our composers and our estates,’ Minch adds.
It’s all very well to throw yourself headlong into the online world but it’s equally important to publishers to embrace the new without losing sight of the old.
Chris Butler, Chief Operating Officer of the Music Sales Group, believes that music publishing is at heart a cottage industry. It remains about building strong relationships with composers and those that wish to use their music – in whatever format they choose.
He disagrees with the notion of the publisher being cut out of any future value chain. ‘Writers will always need publishers and vice versa,’ he says. He argues that each bring separate elements to the table: writers create and publishers promote on their behalf and most still want to take advantage of this mutually beneficial relationship.
Butler wholeheartedly embraces diversity and sees it as a vital part of a publishers’ armoury. ‘Music Sales is,’ he says, ‘a “full service” publisher that fully embraces all modern technology but it is also dedicated to producing the highest quality products in more traditional formats.’
Butler also believes that the current business climate may be better for smaller publishers that can offer their writers more of their time.
Paulette Long, director at Westbury Music Publishing echoes Butler’s thoughts: ‘the smaller independents have an advantage by being able to move more swiftly when it comes to exploiting and exploring new avenues.’
‘What used to be called “conflict of interest” is now called a 360-degree business,’ she quips.
Although a publishing company, Westbury also set up a new recording unit two years ago to produce a compilation album, Soul Fragettes, featuring female vocalists such as Bembe Segue.
‘It was about recognising that ad agencies preferred to see something physical, something concrete and tangible,’ she says about the move. ‘The label is still there; we might use it again.’
Another publisher with a more flexible approach to a competitive market is Simon Platz, of Bucks Music Group, who says: ‘Old publishing models required the assignment of rights to the publisher. We still do these, but also offer limited licences where we represent rights for a limited period of time, or for a specific right.’
'what used to be called ‘conflict of interest’ is now called a 360-degree business'
And yet a fundamental problem remains - innovative new business models only work if the value of music is maintained. ‘The biggest problem for our industry is that many of these models don’t build in the true value of repertoire at the early stages,’ Nigel Elderton, managing director of peermusic UK says.
Other publishers agree. ‘I don’t like the way copyright is cheapened by some companies who claim to be helping us because they are giving our music exposure. It is our music that is giving them value; we were here before they came along,’ Westbury’s Long asserts.
peermusic’s Elderton thinks that risks will be easier to take if Internet Service Providers (ISPs) make themselves accountable for the abuse of copyright content on their networks. A united music industry should strive together to achieve this.
‘TV broadcasters need licences, but ISPs often claim they do not; that is no longer acceptable. They are the pipes where (unauthorised) files are uploaded and downloaded.’
There is a new confidence within the publishing community and a belief that if any sector of the music business can carve a future for itself, it is publishing. As an industry that has offered all-round licensing solutions throughout its history, it is well-placed to be at the forefront of new ways of doing business. Publishers are innovative people from an innovative industry stepping forward with bold new ideas.
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So, what makes a good publisher?
‘A good publisher seeks out great music and great composers and songwriters, supports composers and songwriters in the creative process, promotes their catalogues across a variety of platforms, manages the business exploitation of the catalogues (including the registration of works and the collection of all due royalties) and generally seeks to protect and enhance the value of their works with passion and professional commitment.’
Stephen Navin
Chief Executive, Music Publishers Association
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Examples of New Business Models in Music Publishing
October 2007:- Radiohead elects to license the digital-downloads recording rights for ‘In Rainbows’, its latest album, directly to consumers.
Sony/ATV Music Publishing agrees to license songs from its catalogue to US-based SpiralFrog, the new advertising-funded online-music service.
August 2007:- MCPS-PRS Alliance signs a groundbreaking deal to compensate music creators for the use of 10 million pieces of music on YouTube, the world’s biggest video social-networking Web site.
MCPS (Mechanical–Copyright Protection Society) launches the Independent Production Company Licence to give independent TV production companies access to a blanket one-stop-shop licence for music for broadcast, on-demand, mobile and online programmes.
July 2007:- MCPS introduces the Web-based Limited Manufacture Licence to enable small-scale businesses and non-professionals to exploit music legally for the production of small-scale physical music carriers (CD, DVD and video).
The UK Copyright Tribunal sanctions the previously agreed rates for the use of music online; composers, songwriters and publishers collect 8% of the gross revenues for the use of music in on-demand services such as downloads and subscription-based streamed-music services; 6.5% of gross revenues for music usage in interactive Webcasting; and 5.75% for usage in non-interactive Webcasting.
April 2007:- Yahoo! Inc and Gracenote, the digital-media service provider, unveil what is reported to be the first industry-supported online lyrics service in the US.
March 2007:- The MCPS-PRS Alliance joins forces with Sweden’s STIM to create ICE (International Copyright Enterprise), a commercial service designed to centralise the administration, operation and costs of royalties-collection worldwide.
January 2007:- The MCPS-PRS Alliance introduces its own Pan-European licensing service for its members, offering to license their rights for online and mobile usage across Europe at a flat rate of 7.5% commission.
April 2006:- Skype, the free Internet-based telephone service owned by eBay, signs international ringtone-distribution deal with EMI Music Publishing, Warner/Chappell Music, Sony/ATV Music Publishing, and the MCPS-PRS Alliance. The move enables Skype to sell ringtones based on master recordings from Warner Music Group.
January 2006:- EMI Music Publishing announces that the contract for licensing its Anglo-Saxon repertoire for online and mobile usage across Europe has been given exclusively to the MCPS-PRS Alliance and its German counterpart GEMA.