MIDEM 2013 Report

Hello and welcome to Jari’s report on MIDEM 2013 from Cannes, France. MIDEM is the most important international trade fair for the music business. The event was organised earlier this week for the 47th time and attended by 6,400 music professionals.

Streaming services leap forward

Audio streaming services gained new ground during 2012. In some cutting edge countries like Sweden and Norway streaming has already become the most important single income source for the recorded music industry. At the same time the competition is getting harder as new companies offering new kind of service solutions and business models are entering the international market. Established streaming companies such as Spotify told that they embrace the tougher competition as it helps to improve consumers’ awareness of the streaming services, and encourages them to find new ways to enjoy music from legal sources.

However, in order to create viable and sustainable business the subscription based streaming services still need to scale up. For example, Spotify has currently around six and Deezer three million paying subscribers but the numbers should grow to two-digit-million-level before they are able to show profit. Deezer’s CEO Alex Dauchez also pointed out in a panel discussion that one of the biggest problems of fair competition is YouTube who get away with much better terms than the other streaming services. The Google bashing continued in some other debates as well as the right holders are still unhappy with the search engine’s music listings which, according to the critics, still too often point out to various illegal sources.

Licensing, licensing, licensing

As the market share of the digital music sales increases all the time, the nature of the music business is shifting more and more away from manufacturing, shipping and selling physical goods to licensing of immaterial rights. Therefore it is no wonder that licensing was one of the hottest topics of the MIDEM debates.

The most important single topic was EU Commission’s proposal for the directive concerning the collective management of copyrights. The proposal aims to create a framework and a level playing field for all kinds of collective societies, and to improve their transparency and efficiency vis-à-vis right holders, other societies and licensees. The most debated part of the proposal is the section concerning the licensing of cross-border online music services. Commission aims to simplify the current complex licensing situation mainly by encouraging the societies and the right holders to aggregate their rights on voluntary basis.

According to Ms Maria Martin-Prat, Head of the Copyright Unit of DG Internal Market told that the reactions to the proposal so far have been very mixed as expected. Commissioner Michel Barnier said that in order to guarantee better availability of digital cultural goods to all European consumers Commission has launched a consultation process called Licenses for Europe which should produce during 2013 concrete ideas how to improve the market situation.

Infrastructure on the move

Another consequence of the digitalization for music business is the evident need for up-to-date and cost effective administrational tools. As the business is getting more and more dependent on the quality of the information, the importance of the Global Repertoire Database, the authoritative database containing accurate information on musical works, cannot be overestimated. GRD project was launched a year ago and is now underway. According to the plans discussed at MIDEM, the first phase of the project, which is in the hands of a Deloitte team, should by ready by the end of 2014, and up and running in 2016.

At the same time the shrinking but still very important physical goods business calls for consolidation actions. PRS for Music and Nordisk Copyright Bureau (NCB) announced at MIDEM that their joint venture Network of Music Partners (NMP) is now processing recorded media royalties for nine countries, and the Central Licensing Agreement for EMI Music as well as significant recorded media royalties from other physical sales. The initiative was established in 2011 to strengthen the international presence of its parent societies and reduce back office processing costs.

K-Pop breaks borders

Korean pop music made first time the global headlines in 2012 with PSY’s “Gangnam Style” which has been watched from YouTube 1.2 billion times so far. However, according to the K-Pop artists who visited MIDEM stated that PSY is actually not part of the K-Pop genre which is gaining popularity in all Asian countries. However, his success reflects wider trends, as YouTube’s Anthony Zameczkowski told that K-Pop music videos generated 5bn views on the service in 2012, up from 2bn in 2011.

Jari Muikku has attented MIDEM regularly since 1990.

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