Brian Message, director of the UK’s Music Managers Forum and partner at Radiohead and Laura Mvula’s management firm ATC, has attacked rights owners for making music licensing an almost impossible hurdle for digital retailers to negotiate.
During today’s (24 February) keynote speech at Shaping the Future of Entertainment, an industry conference for the Entertainment Retailers Association’s (ERA) members, he criticised the non-disclosure agreements enforced by music labels licensing content.
He said labels’ terms and conditions lacked transparency and engendered mistrust. “The lack of transparency and erosion of trust are issues that the MMF (Music Managers Forum) and ERA need to address,” he stated. “It is the labels that drive this agenda. They feel their catalogues are assets to leverage as they wish. But it is becoming a problem for us. The price for getting a licence is to give them a share of the digital services for less than the actual value. They are prepared to drop litigation for a stake (in the digital service), but that distorts the market and stops it from developing.”
That explains why he started his speech, which was aimed at an industry that also sold games and videos, by pointing out: “Music is less than 20% of (the UK entertainment) retail sales, but may be giving the industry 80% of the headaches.”
In what is positioned as its manifesto for growth, ERA also disclosed some industry figures to illustrate that all is not lost. Growth in digital entertainment sales has not annihilated physical sales and brick-and mortar stores. Physical sales still account for 50.1% of the retail market, which generated £5.7 billion in revenues from music, videos and video games.
Kim Bayley, ERA’s CEO, noted that more than 60% of UK entertainment sales come “from retailers and digital services that didn’t exist 16 years ago. There are more than 100 new players in the digital space alone”.
Other ERA data showed digital technology accounts for a significant share of retailers’ investments. Netflix, the video-streaming giant, invests about £100 million annually in online recommendation engines. Amazon.co.uk offers its British customers 1.3 million CD titles, 250,000 DVDs and 40,000 video games. “Consumers have more cultural choice today than any time in history,” Bayley added.
Raoul Chatterjee, ERA’s chairman and 7digital’s senior vice president music, explained that growth in legitimate digital services (123 of them in the UK) countered the harm caused by pirate websites.
Additionally, he declared, physical stores continue to support artists and creators in the entertainment industry. The UK can boast some 2 million sq ft of retail space with a market value of £60 million that is being used to sell entertainment goods and services.
ERA’s conference took place at London’s Ham Yard Hotel. It coincides with the publication of the political manifesto recently published by UK Music, the umbrella body for the UK music sectors. That campaign aims to tackle urgent music-industry issues to be dealt with by whichever government comes into power after Britain’s next general election on 7 May.
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