Conference Report: MIDEM 2015
Hello and welcome to Digital Media Finland’s report on MIDEM 2015 from Cannes, France. MIDEM is the leading international trade fair for the music business. It took place this year exceptionally on June 5-8 instead of the usual late January. Jari Muikku reports some of highlights of the debates (before hearing the forthcoming Apple announcements, which was the number one issue for speculations during the event).
Leitmotiv of MIDEM: streaming
The leading theme of the event was streaming. Even though streaming represents still a relatively small share of the income on global level, it is generally considered to be the future of the music industry. Most of the debates and keynote speeches approached the subject from two points of view: how to make consumers to engage more deeply with the digital music services, and how to reshape the business models accordingly.
The IFPI statistics show that digital and physical income was in pairs on global level in 2014. Out of the ten biggest market areas, in four of them digital income has already passed the physical. The majority of the digital income still derives from downloads. However, in forerunner countries like Sweden the total market share of streaming is already 80 %.
Artist-fan relationship gets weaker with streaming
Mark Mulligan of MIDIA Research published some interesting results from their new study concerning the listening patterns of music fans.
According to the results, the abundance of choice represented by 30 million tracks of online music services seems to be leading to shallower engagement, especially among subscribers. 58% of subscribers report listening to individual albums and tracks just a few times while 60% are doing this more than they used to because the are discovering so much new music. With CDs and downloads the buyers typically listened many times over because they had paid for the release, and it was the only new music they could listen to on-demand. With streaming no such barriers exist.
The total listening volumes are up but the depth of engagement with the majority of those listeners is low, which is leading to casual fan relationships. For an artist this means that more people are listening to your music but fewer times, and the artist–fan relationships are moving from long-term liaisons to short-term flings.
One of the consequences of this is that, in the long run, less people are willing to buy tickets to individual artists’ gigs. Furthermore, this may lead to a situation where the future of live music business as whole will be much more about festivals and multiple act tours, which in turn means that artists will end up with a smaller slice of revenue.
Online video – the savior of music business?
The importance of music videos in various audiovisual streaming services is evident. It was estimated at MIDEM, based on the recent Nielsen surveys, that around 50% of the individual audiovisual streams, which can be monetized, are music videos. This was considered to represent a huge opportunity for all parties in the music industry, as video is nowadays the primary tool for getting consumers’ attention.
However, doing this in practice is not an easy task as the number of various kinds of platforms is growing all the time. In addition to this, the way to get consumers’ attention in each service is different. Music companies should therefore recruit more people who are savvy in this area. The basic formula for making money was told to be, firstly, to have a great idea for a video, and, second, to make most of the data and tags attached to a single video.
Internet also allows to develop various kinds of strategies for choosing the point of the ecosystem where to make most of the money. Foo Fighters’ “Sonic Highways” tv series was mentioned as a good example where the audiovisual content boosted both the album sales and, especially, the ticket sales of the band’s tour.
Shake the foundation: regulation under pressure
The fast pace of digitalization has produced pressure towards the regulation both in the EU and the US.
Commissioner Andrus Ansip talked about the recent 16-point initiative by the Commission to boost the growth of the internal digital market within the EU. Ansip stressed that Commission has chosen to take a holistic approach, which aims to benefit all parties and to create more win-win-situations.
Commission’s main aim is to create a level playing field for all, and to make it possible to use digital content legally across the borders. Ansip said that the Commission is aware of the value gap or value transfer problems created by, for example, the safe harbor clauses. They want to collect views and evidence, and do an impact assessment on this before making any further decisions.
In the US the currently ongoing copyright reform is a complex process. The easiest way to get acquainted with the topic is to read Copyright Offices recent report, which was praised to be one the best papers ever on the subject.
During the debates it became evident, that one of the underlying problems is that most parties of the music industry are looking for short-term quick wins and too few are concerned about the long-term success of the whole industry. One of the paradoxes of the US music business is that other institutions than the commercial parties of the music industry define a major part of the industry’s income levels and terms.
What is common for both the EU and the US is the situation with new online music and other content services. Most of them are global by nature, and therefore they need global licenses. From their point of view the copyright and licensing structure is broken and needs to be mended.
Jari Muikku has attended MIDEM regularly since 1990.