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Publishers
A
t the UK Music PublishersAssociation’s AGM in Londonin July, members of theorganisation were exposed to asimple message: “Adapt to, andmake the best of the new digitalenvironment, or else!”
Amid the usual business of anAGM, the MPA’s management
brought in two luminaries – industry
veteran turned mobile entertainment
expert Ralph Simon and self-titledmedia futurist Gerd Leonhard – toshare their visions about thefuture of the music industry. Bothechoed MPA chief executiveStephen Navin who claimed(almost as a mantra) during hisopening speech that it was “agreat time to be a publisher.”The vast majority of publishershave begun adjusting their business
practices to the new digital paradigm,
but both Simon and Leonhardinsisted that more must be done,especially in foreseeing the changesto come. Both were equallybuoyant about the future of musicpublishers who, in the newecosystem, are well positioned toharness their repertoire for amultitude of uses.To give a sense of the revolution
in the making, Leonhard
presented some statistics, outlining
the magnitude of the changes
taking place:
•
In the past 12 months, over300 million people in theworld joined onlinecommunities that use music.
•
In 12 -18 months, digitalbroadcasting with‘drag-and-drop’ TV andradio stations will bewidely available.
•
About 75,000 differentdevices can play MP3 files.
•
In the next 12 months,high-capacity wirelessdevices such as the iPhonewill be widely available.
“The wireless broadbandexplosion will dwarf anything wehave seen to date in terms of auser’s activity with media,”Leonhard warned the audience.This process will be sped up by theaccelerating convergence betweendifferent devices: an iPhone hasthe capabilities of a computer, aPDA can be a music player, mobilephones play music, and videogames consoles can now accessthe internet.Ralph Simon, chairman emeritusof the Mobile EntertainmentForum, concurs. “Mobile phonesare now mini-PCs,” he says,stating that the real convergenceof media will occur in the mobilespace, which boasts 3 billionmobile phone users compared to just 1 billion internet users.
User power
Leonhard claimed that consumersare running the show and theirbehaviour is evolving from an“ownership” model to an “access”model. “Wireless broadband iskilling the ‘selling copies’paradigm,” he said. “Sellingcopies has become secondary –selling access comes first.“New technologies alwaysdisrupt, but always make themarket bigger,” he continued,adding that one consequence ofnew technologies is that the webhas become “a gigantic machineto copy content,” which is onebusiness aspect that publishershave been familiar with from theearly days of sheet music. “Theinternet is a publishing machine,”he declared.Leonhard forecasted that in afew years from now, 75% of amusic publisher’s business will belocated in emerging territories inSE Asia or Latin America, regionswith a high rate of economicgrowth, a young population and arapid mobile phone penetration.But, for the business to grow, itwill have to morph from a
M
usic publishers are in a good position to make thebest of the digital revolution, argue mobileentertainment guru Ralph Simon and media futuristGerd Leonhard.
 And many publishers agree.
13
Gerd Leonhard
Q4/ 07
“The internet is a publishing machine.”
Gerd Leonhard
 
Q4/ 07
‘unit sales’ and ‘$ per copy’ model tonew models. He warned againstturning users into pirates andinstead, invited the music communityto “participate, not prevent” inorder to benefit from potentiallylarge revenue opportunities. Butsuch active engagement requires adifferent mindset.Leonhard urged the audienceto become “digital natives” andstart thinking and acting digitally.“The world is rapidly becoming adifferent place but most of thebusiness rules and traditions ofmusic publishing have notfundamentally changed,” he said,explaining that with the rapidpace of change, rights ownersmust be flexible and able to adjusttheir business practices fast.And as much as themarketplace is changing at speed,so too must publishers be able tooffer a speedy solution. “Recordedmusic and publishing are mergingin terms of licensing,” Leonhardsaid. “Going forward, music rightsmust be marketed and licensedtogether.” If not for ease for theconsumer, then because bothusers and service providers don’thave the luxury of time.Gazing into his crystal ball, hepredicted a sharp drop inmechanical revenues (albeit withthe potential to regain strengthwith the advent of new formats)in the mid- to long term, in synchwith the decline in sales ofphysical goods. But it’s notentirely negative news, as heforesees a rise in revenues fromseveral business sectors: on-demand services; flat ratesrevenue sharing; public, internetand live music performances; alltypes of synchronisation;background music; sheet music (inprint or digital scores); lyricsservices and ringtones.
Flatlining
Leonhard is a major proponent offlat rates applied to any servicewhich gives consumers access tocontent, the proceeds of whichcan be shared among rightsholders. “It is more about revenuesharing,” he claimed. “The digitalecosystem is broken, so we mustlook at music as a service…freeand flat rates [with users] could bea solution.”The concepts of music as aservice, revenue sharing andrevenues based on usage ratherthan acquisition are the way tothe future, he claimed. ButLeonhard admitted that successwould only be possible if licensingis simplified – in particular bytearing up territorial deals –
JEREMY LASCELLESCEO, Chrysalis Group
If you look at the sector, it’sclear that recorded music is hurting,whereas music publishing is robustand has a healthier future becausewe can tap into so many differentrevenue streams. Our businessstarted over 100 years ago sellingpublished music. One century downthe line, it’s still a thriving business,because along the process we haveadded many new revenue streams,such as performance andsynchronisation. Obviously,revenues from mechanicals aredeclining, but as long as we’reable to grow in other areas, we’llhave a healthy business.
NIGEL ELDERTONManaging director, peermusic UK
The internet has been a sort of
cultural revolution in the way we got
our heads around licensing. Because
we have always been in the business
of licensing, we have been quickto license to the new players. Therecent deal the Alliance made withYouTube is systematic of the waywe license to new models. We only
want to make sure it gets monitored
and that we get remuneration outof it.
NICHOLAS RIDDLEManaging director, Edition PetersVice-president, MPA UK
Anybody involved in music ought
to be optimistic. Music probablypre-dates speech, and is a very
important part of human expression
.If music continues to exist then the
question for us publishers is to figure
out our role. We have to change
and we have to go with the change.
There is going to be a role for people
who look after those who create the
music. I see lots of opportunitiesfor publishers. The fact that atechnology can be misused is not agood reason for not using it. Theinternet forces commercialchanges upon us, and like GerdLeonhard, I believe we cannotbase our future model on usage; ithas to be on access. As publishers,we have to figure out what to doto contribute to the food chain.
FABRICE NATAFManaging director, EMI MusicPublishing France
Our job is to continue to findways to exploit music and keepour authors satisfied. I think ofpublishers as solution finders andproblem solvers. We do not havedirect access to markets to reachconsumers, but our role is to thinkabout the ways to get there. Andfor each track or for each author,there must be something that youcan find and that can be done.
“Going forward, music rights must bemarketed and licensed together.”
Gerd Leonhard
What publishers sayabout the future...
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