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European Independent Record Sector Rejects MTV Divide and Rule Approach
By Mi2N
(more articles from this author)
2004-03-25
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A Little Space

European independents respond to MTV, support collective licensing and demand the right to be able to sell their products at a fair market value

The UK and European independent record sectors have defiantly responded to MTV's threats to pull their videos from the network if they don't agree to a reduction in royalty payments of over 55%, to broadcast over more channels, now and in the future.

Music from independent record labels across Europe such as Beggars Banquet, Telstar, Ministry of Sound, PIAS, Epitaph, Rough Trade, Naļve, Wagram, !K7, Domino, XL Recordings, Independiente, Ninja Tune, Edel Music, Wall of Sound and Warp could soon become a thing of the past on MTV, as the company tries to halve the money it pays to play their videos.

Artists signed to these record companies include: Travis, Craig David, Prodigy, Dizzee Rascal, Basement Jaxx, Franz Ferdinand, Carla Bruni, Mis-Teeq, So Solid Crew, Feeder, Lemon Jelly, The Rasmus, Corneille, The White Stripes, The Strokes, Badly Drawn Boy, The Libertines, Moloko, Coldcut, Mr Scruff and many other artists across Europe.

For the past year MTV and the labels' collection society Video Performance Ltd have been renegotiating a previous four year blanket license, that expired at the end of 2002, to broadcast European independent videos across MTV Europe's channels. MTV offered VPL less than half the fees payable under the previous deal, to cover an increased number of TV channels. The new deal would see the pot of money paid to independent labels for broadcast royalties across Europe reduced by over 55%, to £840,000, with no uplift for retail price index (RPI).

When VPL found MTV's offer unacceptable, MTV attempted to deal directly with individual labels, in what some fear is a cherry-picking exercise. The direct deals offered were no more palatable to the independents and included mobile rights, no term or termination provision (although MTV have since withdrawn these demands). Basic terms, however, remain the same - a flat annual fee with no uplift for RPI, no increase for EC accession countries, no payments for any other MTV broadcast territory, including the USA and Asia, nor for increased use on new channels or any other services to be acquired in the future.

MTV has told the labels that if they do not sign by 31st March, their videos may be withdrawn from MTV's programming.

In an open letter signed by hundreds of labels and delivered to MTV, the European independent sector has squarely rejected MTV's approaches to obtain videos of their artists at a rate far less than their economic and cultural value and less than half the previous rate.

Since the previous deal, MTV has started broadcasting on new channels - MTV Base, MTV Dance, MTV Hits/MTV Extra, VH1 Classic and VH2 - as well as having bought Dutch music channel TMF (The Music Factory) which itself used to have a separate deal with VPL for use of independent-signed repertoire.

All this adds up to more programming for less money, at a time when parent company Viacom's figures show that MTV enjoyed double-digit growth in advertising revenues. MTV was also clearly hoping this deal would secure more rights to use repertoire as multimedia content, but have since backed down.

MTV argues that it helps labels to promote their repertoire by playing their videos. While the promotional benefits of TV plays may be valuable, some would argue that music channels have reached saturation point. This is now impacting negatively on sales, particularly in the singles market.

MTV claim that it was paying independents more than twice as much for rights for European broadcast than it pays major labels - who have global deals. However MTV has repeatedly rejected calls from the independents for a worldwide deal on the same terms as the majors.

Collective Licensing

The independent labels firmly believe that MTV has pursued a divide and rule tactic in these negotiations.

The independents are firm on the need for collective licensing as an efficient one-stop-shop for new and existing licensees of their rights. This is becoming increasingly important as services seek to license music both for broadcast, mobiles and the proliferating Internet market.

Value of Music

The recording industry has for too long chased the Holy Grail of promotion, which has resulted in a lowering of the perception and realised value of music.

News stands are littered with free CD covermounts in an attempt to boost newspaper and magazine circulations, while a recent report* highlighted 60% of labels saw no increase in CD sales from covermounts, and 35% saw sales increases of 5% or less. (*Helen Doyle, University of Westminster/Frukt)

It was quoted, meanwhile, in Billboard Magazine (22/11/03) that 2003s MTV Europe awards in Edinburgh, which MTV believes were watched by a billion people, produced no significant uplift in sales for any of the artists involved.

The European independent record sector collectively accounts for 21% of the European music market and 7% of the world music market, worth $2.5 bn in 2002 (IFPI).

Source: Association of Independent Music

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