Popkomm as you are:
The Issues being Debated at Popkomm this Year

With a tagline of “movin’ music”, this year’s Popkomm was the first to be held in Berlin and it placed a new emphasis on industry panels alongside the trade fair. Five Eight spent a hectic few days running around the conference halls, sitting in on panels and taking the industry’s temperature.

Is the market renaissance really going to happen?
A sense of hesitant re-growth was the common theme running through most of the panels at Popkomm. Four years ago, industry panels were almost like wakes, with the occasional dig at the majors being the only respite from the panellists’ hand-wringing and teary-eyed despair at where the music industry was heading. This year, however, the cynicism was evened out with a (quixotic?) optimism and sense of possibility for how the traditional music business could rebuild, re-brand and re-badge itself.

But let’s not get too carried away. As the IFPI interim figures show (see pp. 14-16), the market for physical sales continues to struggle globally, but the fact that the US is showing signs of a turnaround could be a good omen for other markets. Many of the panels looked at new platforms and revenue opportunities (what used to be called – rather quaintly – ‘new media’ a few years ago) and how they represent enormous growth potential. Several people, however, voiced concern that too many hopes were being pinned on DVD, downloads and mobile. The responsibility bearing down on them to make up the shortfall in CD sales threatened to kill their potential as rights owners were demanding too high a split, not letting the markets establish themselves.

Will older consumers save the industry?
It was suggested in several panels that young consumers will be the ones driving the markets for new digital formats while consumers over the age of 30 will be the ones who determine how sales of music physical formats will evolve. While it is easy to explain this in cultural and generational terms, the divide between the ages and the formats is not as clean cut as that. The GfK panel suggested that the 30+ demographic was now the key one for the music industry in terms of album buying (certain front line releases and significant catalogue purchases). With the 50-year expiration issue (see pp. 17-19) making the industry go dry-mouthed in fear, GfK also suggested that young consumers would rather download cherry-picked tracks by catalogue and heritage artists than buy them on CD. The industry has to address this complex relationship that different consumer groups have with catalogue, all the time racing against the copyright clock.

It appears that 2004 is the year of industry limbo, dusting itself down from the beatings of the past few years and 2005-2006 will be the start of the industry turnaround. The panels focusing on music-to-mobile suggested that older consumers are only now being attracted to the potential of mobile as the technology and quality of content delivery has improved. They are not as concerned with the personalisation aspect of ringtones as teen consumers are. As high-quality audio and video delivery becomes more commonplace, however, the older consumer will be more prepared to buy music content both via and for their mobile. Ringtones, it was suggested, will not make up the shortfall affecting the physical market. They are not substitutes for traditional formats and the music industry needs to understand the long-term implications of this on its business and how it approaches the physical and the digital/mobile in its licensing and marketing activities over the next few years.

Is the traditional label model now redundant?
The decline in physical sales has seen the growing importance of non-music brands moving in and working directly with artists. The marketing expertise of other consumer brands and the deals they are offering are increasingly attractive to managers/artists. If the industry is cutting acts and possibly losing rights to catalogue acts in Europe, it will need to reformulate the way that it offers recording contracts. It will have to give artists more rights rather than less if they are not to be poached by brands such as Fila and Coca-Cola. In Issue Thirty-Three we considered how these brands are using music in their marketing. Is it only a matter of time before they cut out the labels and sign acts directly?

The Sanctuary model (working across a variety of business areas simultaneously) could soon become the rule rather than the exception. Previously it was the case that the majors used the indies as ‘wildcatters’, finding new acts and genres and then stepping in and buying them or the labels up. Sanctuary, however, has managed to grow and expand by picking up on acts dropped by the majors. In a culture of roster cuts this could see similarly-minded companies stealing a march on the majors. But will labels or brands run the new music companies ultimately? It was suggested that two-thirds of new acts’ earnings come from ancillary revenue streams making signing to labels under their current terms increasingly unattractive. It could prove that companies that break with the current album-based model will revive the music industry and many of them (consumer brands, mobile operators, online service operators) come from outside the traditional label system rather than within it. The gauntlet has been thrown down. Who will be brave and creative enough to pick it up? Over to you.

Eamonn Forde