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Digital Music Forum East: The State Of Your Digital Union
The music industry is basically treading water against a mighty current and progressively being swept away
By Eric de Fontenay (Founder & Publisher)
(more articles from this author)
2009-03-02
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I recently had the opportunity to attend a portion of the Digital Music Forum East event last week, which was sort of a brainstorming pow-wow for music industry honchos who debated the best way to orchestrate a return to the industry's heyday (or at the very least stop the hemorrhaging they are currently experiencing).


SoundCloud Founder Alexander Ljung
In addition to the usual luminaries and speakers I'm sure you've all heard from at some conference podium, there were several notable German delegates at the conference, including SoundCloud Founder Alexander Ljung, Musicload's Joachim Franz, and Songbeat Founder Marco Rydmann who has been entangled in a lawsuit with Warner Music. Look for more information these gentlemen in upcoming issues...

Plus ca change, plus c'est la meme chose (The more things change, the more they stay the same)

Much of the talk today is the 'perceived' growing dominance of the internet in developing artists and selling music, whether it be the indie download-only album or a belated embrace by major labels. So the acknowledgment of the continuing and very 'real world' dominance by traditional media was perhaps one of the most surprising fact shared during the conference.

NDP Group's Russ Crupnick provided some statistics that would probably raise a few eyebrows, such as:
* 66% of music purchasers only buy CDs
* There are 20 million fewer CD buyers today than in 2006; and the majority of them have not shifted to digital alternatives such as downloads or subscriptions
* Broadcast radio is still the leading music discovery source, second only to TV

Though digital sales have been increasing in recent years, it's simply not enough to plug the hole left by declining CD sales. The music industry is basically treading water against a mighty current and progressively being swept away. Unfortunately, there are no indications that digital music will start picking up the slack anytime soon.

Initially, the problem was that there were no legal retail solutions. Then, it was the lack of broadband impeding the industry's growth potential, followed by the proclamation of all things mobile being the holy grail. But despite iTunes/Amazon/Napster/..., near-ubiquitous broadband wireless access through easy-to-use devices (iPod/iPhone), widespread adoption of DRM-free offerings and lots of apparent fan enthusiasm, the truth is that there hasn't been that much progress in recent years.

Forget 360 deal, Demand the "365 deal"

No conference these days would be complete without the '360 Deal' panel and Digital Music Forum was no exception. And largely due to the audience, the talk revolved around Bacardi & Groove Armada, Live Nation and deals around other established artists/brands. Not much on the emerging/indie artists, which should be of no surprise.

Of course, nearly any deal today is referred to as a 360 deal. So for the sake of this article, let's call it a deal where the label acquires control of the artist's work as well as a share in all revenue channels in exchange for all-in-one artist support under one roof.

Kelli Richards
So while Live Nation's deals with Madonna, Shakira, Jay-Z and Nickleback would be considered 360 deals, the Bacardi & Groove Armada is actually an example of the opposite -- what Kelli Richards of The All Access Group referred to as 'collapsed copyright.'

"Collapsed copyright means artists finance their own recordings, then license them for distribution, something that's been going on for years," notes Christopher Taylor Jones in SOCAN's Words & Music, referring to Nettwerk Music Group adoption of the model. "What's new about the formula is that if the artist/writer also owns the copyrights of the songs, the management company - in this case, Nettwerk - is then free to direct all aspects of music sales, licensing, marketing, promotion, even royalty administration."

Taking the Bacardi & Groove Armada case, while Bacardi would underwrite and release Groove Armada's EP, the duo will retain all rights to the works, with Bacardi having the option of licensing any tracks for their global ad campaigns. In a new twist, Groove Armada is paid a salary during the one year partnership. As such, the deal should really be called a marketing partnership of equals as opposed to a 360 deal. And by retaining complete control of their music, they are likely to benefit mightily from the exposure provided by Bacardi and opportunities for subsequent deals.

The fact is that it's pretty ridiculous to even speak of '360 deals.' The consensus among all of the panelists of "The Pros and Cons of 360 Deals" was that there is no template 360 deal. Each deal is taken on a case-by-case basis, thus the reference to 90, 180 or 270 degree deals. In the end, it depends on both what the artist and label can bring to the table.

Having said that, listening to Syd Schwartz (EMI) and Jeremy Welt (Warner Bros. Records) give their views in "The State of the Digital Union" should give one some hope as to changing attitudes within the major labels. I mean, these guys actually get it. To hear Syd speak of EMI as a music service company, disaggregating the 360 deal into an a-la-carte offering where artist/management could choose the areas in which the label is involved, is almost inspiring!

But perhaps the best quip came from Jeremy who explained that a 360 deal really meant a 365 deal... working closely with artist/management 365 days of the year, utilizing any and all available means to do what's necessary to achieve success.

Related News from Mi2N:
» Progressive Digital Music Start Ups Featured At Digital Music Forum East


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