Conference is a Preference:
Tri-Conference Round Up

Last month saw Five Eight hot-footing it around a number of the key European music industry conferences. We dutifully sat in on the panels at the Amsterdam Dance Event, Music & Media (in Finland) and MusicWorks (in Scotland) in order to see how the industry is addressing and prioritising the key issues as well as how it plans to evolve its business as a result.

ADE: how genres on the periphery can make money
Several of the panels at the Amsterdam Dance Event focused on the ‘outsider’ aspect of dance music and how new technologies allowed dance labels, artists and managers to work outside of the mainstream. With dance sales having suffered a decline even ahead of the 1999 slump that affected the overall market, much emphasis was on how dance could monetise its outsider position.

An important issue that was raised in the panels was concerned with the opportunities opened up by new technology but how this also meant a loss of ‘authenticity’. This tension is between the declining market for - but high authenticity of – vinyl and the growing market – but ‘dubious’ authenticity of – digital music.

As record sales fall, dance acts will have to put renewed emphasis on their live work. Touring was commonly agreed upon to be the growing revenue area of importance and. In order for it to work, acts will have to make their performance more entertaining and create more of a spectacle on stage and embrace a more interactive relationship with the audience (e.g. sampling audience members’ voices and mixing it into tracks).

For dance music fans outside of the metropolitan areas of the main dance markets, finding releases was a near impossibility and the late delivery and high import costs made them out-of-date and prohibitively expensive. Now, however, tracks can be put online globally almost instantly. Online speeds up consumers’ access, but there is an unresolved tension about how ‘valid’ MP3 is as a format. Some quarters of the dance sector saw MP3 as the kiss of death whereas others felt that it opened up immense opportunities for smaller labels to reach an audience that was previously denied to them.

Dance has, for the most part, been a niche interest genre and much of its subcultural capital resides in the fact that it is on the periphery of the mainstream. From the late-1990s, however, it was felt that the old model was no longer working and so the sector was left with a choice; embrace new platforms and survive or cling to the old formats and die. But does online mean that labels and artists should go it alone and release and sell their music directly? The feeling was it was best to leave core aspects of the chain to the specialists. Labels sign acts, retailers sell the music and developers develop the software that makes it all possible digitally.
The issue and role of the manager also formed the spine of several of the panels. The manager has to – in order to be successful – become more directly involved in the marketing and branding of their acts, finding new ways to build their profile and, in so doing, open new revenue streams such as through live work and merchandise. What was the most interesting point in the discussions about managers was that in dance music, few managers and artists have a formal contract. Contracts tend to force parties to work together through immense tension that was seen to seriously damage the creative process.

Music & Media: new revenue streams and understanding the Japanese music market
The Music & Media conference in Tampere (Finland) looked at how new revenue streams can be opened up for the music industry as well as how Finnish acts and companies can work internationally. How the music industry in Finland is tapping into other markets will form the basis of a separate article in a forthcoming issue of Five Eight.

With record sales struggling globally, exploitation of content online and to mobiles is of growing importance. The feeling was that, while we can talk about these as growing markets in hypothetical terms, the major challenges for all players in the industry is in both attracting consumers to these new ways of consuming music and having the technology in place to make digital consumption effective and attractive. While a number of download services are pushing subscription-based packages as the future, the feeling was that it represented a major shift in the way consumers acquire music and how they value ownership of tracks as opposed to access to them. It was suggested that à la carte downloading would win out over subscription – certainly in the short-term - as both services and consumers got to grips with the new ways of selling and accessing music online.

As revenue opportunities open up, the types of contracts artists sign will naturally have to change. The much-talked-about Robbie Williams/EMI deal was seen as one way forward for new acts, although there was uncertainty as to how revenues would be carved up and how ownership of all rights (musical, digital, visual etc.) would be shared. Increasingly, labels are collecting behind-the-scenes footage of acts on tour or in the studio with an eye to using it in a DVD further down the line. Labels had sporadically collected content such as this but, until DVD, there wasn’t really a way of making this commercially available for consumers.
The panel on Japan gave a fascinating insight into the world’s second-biggest music market and how domestic and international repertoire sit together and how consumers behave. 12-22-year-olds are the major consumers of music in Japan but it was pointed out that the music industry needs to fully tap into the adult market if it is to create more opportunities in the future.

The Japanese market was described as a difficult one for foreign acts to break due to its sheer scale and lack of any specialised radio stations. Once broken, however, fans displayed immense loyalty to acts indicating that the ‘big in Japan’ cliché actually works well for many foreign acts who have fallen out of favour in their home markets.

As we covered in issue Thirty Three, CD burning is a major issue in Japan. Of the estimated 6,000 music retailers in Japan, some 3,500 of them offer CD rental services meaning that consumers can rent and burn albums for a fraction of their retail price. Under Japanese law, there is a fixed retail price for all CDs released domestically. This, however, does not apply to import versions of albums that are often sold at a significantly lower price. The challenge, then, for the Japanese music industry is in creating added-value for consumers by bundling in extras (video, access to exclusive web content, extra tracks etc.) and investing in attractive packaging to make locally-released albums stand out above their import equivalents.  

MusicWorks: the new outlets
MusicWorks in Glasgow considered new ways for the music industry to make money. Naturally, downloading was covered in many panels, as was tie-ups with video games companies and advertisers. Also considered was the role that radio played, with the late John Peel’s name cropping up as an example of what could be done on radio.

Radio 1 was criticised for having its playlists dominated by major label content. Pressure from the Government and the tabloids was seen as pushing the station away from its core remit, emphasising populist entertainment over a commitment to new acts and genres. The XM Satellite model in the US was named as one way for radio to develop in the future, with niche stations spiralling out from the mainstream/centre, although the growing importance of digital radio was seeing this happen – albeit on a small scale – in the UK. Radio Scotland and BBC 6Music were both singled out as being highly supportive of new acts and the rise of online and digital was seeing us move away from the ‘postcode lottery’ that previously meant consumers in regional pockets were either presented with immense diversity or little diversity in output.

The download market was seen as an area that was receiving a level of hype far outstripping its actual financial reality. It was estimated that legal downloading makes up 1-3% of the current market and still has immense distance to go before it will really make a difference. It was felt that it would take at least three years to see a significant impact, although the fact that Westlife and Blazin’ Squad managed to marshal their fanbases to be, respectively, number 1 and number 2 in the first download chart was taken as indicative of the new ways of marketing music directly through official band sites.

This also overlapped with the panel on the future of the majors, with indies being urged to embrace the direct marketing and retailing potential of online. If they are not concerned about chart placings, they can sidestep aggregators, selling their music online directly to their consumer bases. The majors are undoubtedly in a stronger position structurally and economically, but small acts now have the chance to form JVs with their managers or labels to be able to share in all revenue flows. Acts, however, were warned to take control of all IP at the start of the rights value chain and this could see a fundamental revision of the standard contract from now on. Bands also have the opportunity to seek a publishing advance first and, if they think strategically, they can use this money to set up their own labels, although it was felt they need to employ outside specialists to run the label side of their activities.

While download services offer broad catalogue, the user is somewhat confused by the variety of tracks on offer and needs help navigating through everything. (This is something David Jennings considers on pp. 14-15.) Acts currently do not pay to have their tracks promoted on the homepage of legal services (as they do for front-of-store presence in high street retailers) but this may change as the market grows.

The panels focussing on downloading stressed the importance of an industry standard DRM system and the panel focusing on international rights argued DRM and watermarking were key for tracking sales and royalty payments. There is a massive tension here between the controls rights holders wish to impose on their content and how users want to access and use their music digitally. This – rather than P2P piracy – could ultimately prove to be the industry’s greatest undoing unless it is sorted out and made easy for consumers to understand. The industry is getting excited about what new technologies could mean, but too often the audience (and how they will embrace it) is merely presumed rather than fully understood.

As digital allows new ways to broadcast and sell music, understanding what the consumer wants and listening to them will be key to how this opens up in the next few years. Is the industry too caught up with controlling and restricting music digitally? More importantly, will a fundamental lack of understanding of its consumers make the technological and licensing advances of recent years redundant if the changes in consumption are not properly factored in?

Eamonn Forde