Indies agency Merlin: More transparency in growing streaming business
It is about time the music industry bucked up its ideas on what constitutes a label’s market share, argues Charles Caldas, CEO of independent labels’ global digital-rights agency Merlin, in a hard-hitting op-ed in Billboard magazine.
A fairer and more transparent system would see the share of independent labels, now dubbed the “fourth major,” match those of the three multinational major labels on a competitive level.
In the piece, http://bit.ly/MbRITf, Caldas (photo)faults the “distribution” criteria used by market-research giant Nielsen to calculate the different labels’ share of the US business. Instead, he points out, it made more sense to base the market share on the ownership of master-recordings.
As reported recently in Rockol.com, when market-share calculations are based on the rights to the master recordings, the independents had the biggest share in US album sales in 2013 http://www.rockol.com/uk/news-568621/us-indie-labels-command-no1-market-share-for-masterrecording-sales.
Caldas points out that when the mathematics are based on distribution rights, and considering the major labels have temporary distribution rights to several indie recordings, independents’ US albums market share plummets to 12.3%.
“If these figures are being used to negotiate equity stakes, guarantees and other non-royalty benefits from new services, as we believe they are, it’s no wonder UMG (Universal Music Group) and the other majors have been so quick to launch or acquire independent distribution businesses over recent years,” he declares.
Caldas, recently voted one of Billboard’s 2014 International Power Players, has understandably waded into a sensitive but serious topic affecting the whole industry.
This comes at a time when Merlin continues its fight to ensure digital-music services, especially the fast-growing streaming platforms like Spotify, Deezer, Rdio and the new Beats Music, license the use of international indie recordings featured on their services.
The fight appears to be a winning one. In 2013, Merlin collected $70 million in royalties from streaming-music services alone for its indie-label members. It predicts the amount will shoot up to $100 million this year.
Such positive financial outcomes should benefit from streaming music, if the stakeholders are open about how deals are reached.
That issue has been the subject of much criticism from major artists such as Radiohead’s Thom Yorke, who attacked Spotify last year for the low amount it pays in royalties and removed some of his recordings from the service in protest.
Spotify responded by declaring that artists earn $0.007 every time a track is streamed and that it ultimately collects 30% of its revenues from subscription and advertising. Spotify added it paid out $1 billion in royalties in 2013 alone.
But that then raises the question about how the remaining 70% is divided among the remaining rights holders, including the acts, labels, publishers and songwriters.
Charles Caldas believes that, as the streaming market grows (especially as it evolves into an effective counter to pirate sales), it is only fair and makes business sense for the way royalties are earned and divvied be negotiated openly.
Get rid of the smoke and mirrors, and the independents and majors’ true share of the market place will become visible.