Conference report: MIDEM 2014
Hello and welcome to Jari’s report on MIDEM 2014 from Cannes, France. MIDEM is the leading international trade fair for the music business. The event was organised February 1-4 for the 48th time and was attended by 6.000 music professionals.
Back to growth?
Even though IFPI has not released the recording sales figures for 2013 yet there were some good news concerning developments in various areas.
According to a new report from CISAC (International Confederation of Societies of Authors and Composers), gross global royalty collections for songwriters and other creative authors achieved a new record high of EUR 7.8 billion in 2012. (The delay is due to the various schedules of the societies.) The majority of CISAC’s members (43%) are made up of music collection societies, and approximately 87% of royalties collected worldwide (EUR 6.8 billion) came from music repertoire.
Performance royalty collections grew, compared to 2011, 3.3% to EUR 5.9 billion, which is just over 75% of total collections. Collections for digital use grew 7% to EUR 301 million, accounting for 4% of rights. Almost 60% of global collections were generated in Europe.
During the past few years all eyes of music industry have been on Sweden where streaming has helped to grow the whole local music market. According to IFPI Sweden, Swedish recorded music sales grew by 5% in 2013 to reach nearly SEK 1bn (around $155m), with streaming accounting for around 70% of the total. This was the third consecutive year of sales growth in Sweden.
Stream me to the moon
Streaming was one of the most debated things at MIDEM. Most people believe that streaming will be the first option for listening music in the future but it should noted that the pace of the development varies a lot in different countries. On global level the share of the online income is currently around one third. In leading streaming countries like Sweden the share of streaming is already 70% of the total market whereas, for example, in the UK it is still only around 10%.
According to analyst Mark Mulligan streaming has gained foothold faster in countries where downloading never quite took off. Furthermore, one should not forget that in some big markets like Germany and Japan physical CD sales still create almost 80% of the recorded music income.
The internet of things, one of the megatrends of online business, opens up new kind of possibilities for streaming as well. The latest cool gadgets like Google Glasses are quite evident cases. However, one of the most interesting battles will take place within cars as streaming services and car manufacturers work hard on improving the music experience in various ways.
In addition to streaming, copyright and licensing were once again one of the hottest topics of the MIDEM debates.
In EU music professionals wait eagerly the results of the ongoing public consultation on copyright issues. The deadline has been extended to March 5, 2014, which means that the real debate will start as soon as the Commission is ready with the analysis of the various contributions to this process. Another important issue is the directive concerning the collective management of copyrights, which the EU member countries should implement within the next two years. Directive will define, among other things, the framework for the societies and the right holders for aggregating their rights for Pan-European licensing.
The most heated debates on copyright reforms take currently place in the US. One of the most urgent issues concern whether the PROs are able to license big publishers’ digital rights to digital service providers, and whether the publishers are allowed to withdraw the digital rights from PROs in the first place (ref: Pandora case). Universal and BMI announced just before MIDEM that they have done a short-term deal to keep Universal’s digital rights in BMI. Despite this deal the underlying issue remains unclear until the final court decisions are done.
Multi-channel networks: missed opportunities?
Many people tend to forget that YouTube is still the biggest global music service. The concept of multi-channel network (MCN) is an example of an ecosystem that has been built on YouTube’s huge popularity.
YouTube’s Vivien Lewit told at MIDEM that “we are generating tens of millions of dollars every year for the industry. It’s a flow of revenue that never existed before. Video on YouTube is the cornerstone of income of a career for many artists.” YouTube has also created new kinds of stars who do not necessarily earn their living with traditional recording sales or touring but through various kinds of partnerships based on millions of subscribers of their personal channels. In these kind of cases MCNs are in the key position.
Patrick Walker of MCN Base79 warned that life is not going to be easy for every MCN in 2014 as some of them are already struggling for financing. “I think this year’s going to be a tough year, a lot of consolidation I think, and some death along the highway,” he said. “We have an obligation to our clients to remove our dependency on just one platform. It’s just normal business practice, but I think it’s an important thing to think about. You should take advantage of that tailwind of user activity… then identify, claim and monetize.”
Music industry has still a lot of work to do with making the most out of MCNs’ possibilities. Most speakers were confident that major steps will be taken in this respect during 2014.
Jari Muikku has attended MIDEM regularly since 1990.