This week In the Hot Seat with Larry LeBlanc: Mark Meharry, CEO, Music Glue.
As the music industry has struggled to keep music sales up while seeing revenues dwindle, year-end death knells of the music industry have sounded frequently over the years.
With digital music now showing robust growth, and with inherent ways to monetize musical content continuing to grow, the music industry is on a firmer footing following years of decline.
Online music outlets, including download stores, on-demand and cloud-based streaming services, video-sharing sites, and Internet radio, all revolutionized consumer choice for music while on-demand subscription services expanding and linking with new partners continues to lead to greater fan interaction.
As the number of devices and delivery methods for digital music continues to evolve, artists have found that they must increasingly adapt to this convoluted digital world, and figure out how to sustain themselves.
Taking central stage may be Music Glue which seeks to empower those artists on a global level in all sectors of their careers.
Founded in 2007 by former New Zealand musician Mark Meharry, Music Glue was created as a means for musicians, promoters and venues to maximize revenue.
With an innovative re-boot in 2013 in which Music Glue introduced an e-commerce direct fan servicing platform, the company now allows artists, promoters and venues worldwide to sell music, tickets and merchandise directly to fans.
To date, headquartered in London, with offices in New York City, and Sydney Australia, Music Glue has some 15,000 users worldwide, and has been praised by the likes of Mumford and Sons, one of the first bands to use its services.
With a degree in architecture from Auckland University in New Zealand, and a background in management consultancy specializing in telecoms, Meharry emigrated to London, England in 1999 to manage Y2K projects.
Meharry first stepped into the music retail marketplace after launching \Barking Spiders, a technology consultancy company which worked with the likes of The Great Escape, The Barfly, Passport back to the Bars & Blueprint Media including the Robbie Williams store.
He received funding for Music Glue in 2007.
It seems that 2015 may be a watershed year for the music industry, if not for artists, due to continuing changing technology, fluctuating revenues from digital music, and on-going sliding physical sales.
I fully agree. I donít know how CD sales are over there (in North America) but, if they are like in the UK, I imagine that they are about to fall off the edge of the cliff. As soon as the last cars that have CD players disappear, then I suspect that the CD will be completely over as a format.
[While many have predicted that car CD players would be extinct by 2015, according to Drew Winter, Editor-in-Chief of WardsAuto World magazine thatís not going to happen in the U.S. Instead, says Winter, after more than two decades of dominating vehicle center stacks, CD players look only mildly endangered.
Installation rates dipped to 90.9% for the 2010 model year, 86.6% for 2012 models, 86.3% in 2013 models, and 83.4% for last yearís models.
Argues Winter, ďThe ability of the CD player, and the cassette player before it to live long past their expected departure date, should be a lesson to all technology forecasters. They are pretty good at predicting when new technologies will be available for early adopters, but not so good at determining when mainstream buyers will let go of an old technology they still like.Ē]
While the music industryís global digital revenues grew by 6.9% in 2014 to $6.9 billion (US), they are only now on par with the physical sector according to The International Federation of the Phonographic Industry (IFPI). Despite the continued transition to digital, CD sales are still an important revenue source in such markets as Germany, and part of South America.
I have seen those stats from the IFPI (Digital Music) Report that came out (in April, 2015). I am always amazed by it (CD sales). I donít know who these people are who are buying these CDs.
Michael Bublťís fans for sure.
They still have CDs in supermarkets here (in the UK) but in the far corner of the supermarket where nobody goes to. They donít even have anything that is in the charts. It all seems to be compilation CDs. We are hearing now that this year (UK) supermarkets will be pulling CDs out. I guess itís then Amazon. The music stores here are not really stocking that much here either. The Top 20.
Many so-called music stores now stock a greater volume of video games, and DVDs.
Yeah, and chewing gum and other confectionary goods.
For a few years I think that if you want to buy or listen to music you will be able to have it as a stream on subscription, buy it as a download or as a physical good as well.
But how do you play a CD? This is the increasingly problem. You cannot buy the device anymore.
You can in North America.
You can? Wow. I have not seen a CD player for a very long time.
You founded Music Glue in 2006?
Yes. We registered the company in 2006. Got seed money in 2007. All of our funding has come from individuals so far. People who love what we are doing and who say, ďHow much money will it take?Ē The last round of funding we are still surviving on now. Unfortunately (we are) another one of these tech companies that is far from profitable, but thatís not a problem.
Do you have partners?
We have high net worth shareholders. They would prefer not to be mentioned. They have nothing to do with the music industry, and are silent in the day-to-day operation. They love the idea of extreme disruption
How many staff?
There are only 14 of us. Small is good. We will be growing and expanding on the sales and marketing side, but thereís only so much that myself and my right hand man Joe Vesayaporn, known as Joe Porn, can do.
You have deliberately built Music Glue slowly. Today, you have about 15,000 users?
Yes. We have 15,000 and we are now growing quickly. We have seen a lot of other companies come and go that were doing the same thing, Top Spin Media, being the obvious one.
Music Glue currently has offices in London, New York, and Sydney. Over the next 12 months you want to open two further offices as well as have more than 150,000 users.
Thatís the goal.
Why such aggressive expansion?
Because thereís the demand for what we are doing. We are seeing those numbers coming in just organically. If we start putting a little pressure behind it, we will grow. We are starting to do some marketing. Most people have not heard of Music Glue. Itís been all word-of-mouth. We already know that the platform works, and that it can scale, and we have all of the business processes and suppliers in place. So we are going to start doing a bit of marketing. Within the next three months, you will hear more about Music Glue.
Since its launch Music Glues has gone through a transition. In essence, your core belief is the band is a brand, and its music is the hub for selling music itself, tickets, merchandise and so on? Do I have it right?
To a degree. The band being the brand, thatís absolutely right. They have enormous reach in the market now through all of the social media channels. They can reach a global marketplace, and what that marketplace is interested in is connecting with the artist directly. Our very original model was using an artistís music to locate its fans, and building up a data base by exchanging its music for data. For email addresses and locations.
Like Marillion giving away their music through controlled file sharing in exchange for that type of information?
Correct. Then how you commercialize the relationship is by planning tours based on where fans are as opposed to the traditional hand on heart, ďIíve got a good feeling. Letís go to the next city, and play in front of nobody.Ē Then you go and play shows in front of fans, and you sell tickets directly to them.
If I give my music away to 100 people in Manchester, I probably can get at least 50 people or more to my gig there.
Yes. Exactly, and donít do the Liverpool show where you have no fans. Do the Manchester show instead. Itís not rocket science what we came up with originally. Then we adapted it from there. Originally, we were more of a consultancy firm with an e-commerce website attached.
You were a technology consultancy company called Barking Spiders?
Yeah. That was the very early stages (of Music Glue). That was me trying to figure out how the music industry operated because Iím not typically from the music industry.
You launched Music Glueís e-commerce direct fan servicing platform in 2013 at The Great Escape.
The e-commerce platform was launched in 2013. Prior to that we were doing it (e-commerce) but it was a managed service, not self-service. We were operating as sort of a direct-to-fan ticketing agency.
You developed a specific marketing strategy for selling tickets and merchandise using music as the hub. Thatís the gist of it.
Yeah, it is. The problem that was solved was that artists were able to draw a large audience toward their online presence, and then were incapable of commercializing that audience. They would send their fans for tickets to Ticketmaster; and anyone who wanted to buy music to Amazon, and to iTunes. They would have a merch deal in various places around the world, and they would send their fans to those merch companies for merchandise.
All very fragmented.
Thatís not what the audience wants. The audience wants to go to one place, the artistís (platform), and buy everything. So we have put that platform together so that they (artists) can run that themselves. Everything is set up. They also now have a much better understanding of what they are trying to sell. They may have deals in places, of course. A problem is that they may have a record company, and they have just become another retailer working for that record company buying wholesale product from the record company. So itís not about completely destroying and dismantling the traditional (music) industry. Itís about working with the traditional industry. However, the net result that we are now finding is that the artists are taking more control, and are starting to question what the traditional industry is doing within the supply chain.
(With Music Glue) a band can set up an MP3 (online), and reach an audience worldwide. They can sell their T-shirts around the world without any stock risk. They can set up tickets (online), and sell their tickets directly to fans. And off they go. They can get in a van, and start playing, and raise money in order to do that. Instead of trying to get advances from the music industry, they can get advances from their fans.
You are seeking to move artists from being wholesalers to being retailers.
Absolutely. Thatís the fundamental model. To get artists and managers that have been at the wrong end of a very long supply chain to move to the top of that supply chain. Instead of being the last guys to receive the money, if you are the guys receiving the majority of the cash coming through because you are a retailer. It also provides a lot of transparency for what is happening with all that money because thereís a lot of money pouring into the music industry, Larry.
Does Music Glue work on a percentage or a fee basis?
On a percentage basis. Just 10% of the gross. If the customer pays $10, the artist gets $9.
I understand festivals and some managers quickly embracing Music Glue, but there are artists that might not want to understand determining VAT (Value Added Tax) and things like that
There are thresholds that you have to go before they have to worry about things like VAT at which point they are probably going to have an accountant anyway. So thereís a whole educational process going on here. We adjust the service to allow an artist to be a retailer. What that means is that there are a number of pieces that are involved in that. The big one being FX, foreign exchange.
You handle 26 different currencies?
Correct, and we hold currency in all of those accounts. We have vendors and artists all over the world that we have to pay in those currency accounts. When you set up an account you can decide if you want to be paid in Filipino peso currency, we can pay you that.
How do artists sell music using Music Glue?
They can upload their musical content. They can sell their CDs--we categorize CDs as merchandise--and then they can have digital content. Itís up to do them to do the fulfillment unless they want us to take care of fulfillment.
Artists set their own pricing?
They set all of the pricing. This is global e-commerce which means you set the pricing. You have to make sure that product is sent to the customers. If an artist doesnít want to take care of the customer parts, we have fulfillment centers worldwide that can take care of that. Thatís part of why it has taken us so long to build this because itís really, really complicated. Itís a logistics company with a thin veneer of a user interface that allows artists to easily use it. There just is no quick way of doing it (building this). You see the other companies coming in saying that they can do it, and then they fail.
Music Glue is also involved with merch, including T-shirts?
We know a lot of the merch companies here. We have close relationships with them, and send business their way. But itís still completely up to artists to arrange it all. A big part of our business right now is direct to garment (printing) which is all about eliminating stock risks.
We just launched in the U.S. It has been going on in the UK for awhile.
So if you are a small band, stop printing T-shirts, and getting 1,000 T-shirts printed at whatever price, and then having them sitting in a warehouse or home collecting dust. Uplift a picture that you want for your shirts, and we will take care of the rest. Put in your margin. If you want to make $5 per shirt great, and then they get printed to order. That is the future of merchandising.
Direct to garment printing can be used elsewhere too.
Itís everything. Tote bags, hats, the lot.
Where are the T-shirts manufactured?
We use third-party companies which use standard shirts, Continental or American Apparel. One of the companies is TOT Shirts, which does about 30% of all of the music merchandise in the UK. They have recently invested in their direct to garment printer which we are interfaced into to provide this service. We have been doing wash testing and making sure that the inks stays on. That they look exactly like printed shirts. It has taken years to get the technology right. But, for me, this is another game changer.
As I said, Music Glue has evolved from its Barking Spiders days when you did the Passport Back To The Bars charity event in 2003 having 22 artists performing throughout the UK, and also working closely with The Great Escape. It seemed like you were targeting venues and promoters when you started out.
Yeah, we were.
Thatís where the money is.
Yeah, thatís where the money is, and thatís where my friends were. I made a decision in 2004 when I finally quit my pop consultancy (job), and started in music (marketing). I knew that there was an opportunity. I was working with a couple of bands, and there was nothing similar to what we were doing in the industry at the time. I went to a few friends that ran The Barfly (in Camden Town, London) and said, ďIím happy to come here and work for free for a bit.Ē I took on all of these projects, and I then started generating revenue. I knew that I had to build a network if I was going to launch any kind of service, particularly if it was going to be artist-focused, and artist friendly. I had to work out how this industry works. So thatís what I did. So Barking Spiders was born, and I became a technology and music consultant of sorts.
Largely on the live side of the business at first.
Yeah, the live side in the UK is quite a bit different to the live side in North America. Itís a huge industry here. Thereís a culture in the UK with everybody going out to gigs. One night at least in a month, pretty much everybody will go and see live music, and they want to see original live music. It is ingrained in the culture of the UK which is probably why I love it so much being here.
There are more festivals in the UK per capita than anywhere in the world.
I can only imagine. Through the summer period starting a couple of weekends ago, and it just goes forever. It will pretty much go right into September. There are just hundreds of festivals. Itís a difficult congested market.
[The UK festival season kicked off this month with The Great Escape (May 19-21st) with hundreds bands from around the world taking over Brightonís bars, nightclubs and concert halls for three high-flying days. Scores of festival events will now take place over the summer before the party finally winds up Sept. 10-13 with Bestival on the Isle of Wight.]
Over time, your relationship with The Great Escape has grown.
We started it (the relationship) at the very beginning even before it was called The Great Escape with ďJon MacĒ (Jon McIldowie), now the booker of Reading and Leeds Festival in the UK), and with Martin Elbourne off of the back of a number of events in Canada. They said we should do something similar in the UK. The websites, the branding, and all of the ticketing of the original Great Escape was done through Barking Spiders. We did the whole lot. We have been engaged with them all along. These are our friends.
This year artists applying to play The Great Escape 2015 had to create a Music Glue profile in order for their application to be accepted.
Thatís the relationship that we had with them this year. The directors of the event firmly believe in what we are trying to promote: Empowerment of the artist. So we came to an arrangement that letís get bands to start an account. Letís get this change started. If The Great Escape appears to get behind it, then thatís fantastic. We keep it as simple as that. We now have a party every year, and invite a few bands to talk about what they are doing, and show the world that thereís a different way. That thereís a better way. We are very happy that The Great Escape lets us do that.
With so much information in the marketplace artist websites no longer attract fans as they once did. Artists now have to utilize social media to interact with fans.
Absolutely. I see that within two to three years that artists wonít have websites anymore. The reality is that most (music) activity is on mobile. That trend will continue. Browsing an artistís website on a mobile phone is quite a horrible experience.
I see that in two years or so a band will have a Twitter account, a Facebook account, and will have YouTube, Instagram, and a Music Glue account. (As an artist) youíve got the whole street covered there. You are reaching out to an audience. You are engaging with them. When you finally get them to a point where they want to buy something, you draw them in, and you sell them everything globally. Then the deals start becoming quite interesting of what negotiations that you have with the local promoters, and with the local record companies because the artist becomes the retailer.
While Napster oversaw the birth of music on the internet, it failed to monetize its activities. But who really missed the big opportunity in monetizing music was MySpace.
Ahhh, we talk about this on a daily basis. How they dropped the ball. They had every band on the planet signed up to their service. It happened within a two year period. It was the only global marketplace for artists on the planet. Then they completely dropped the ball because they didnít understand the value of what they had. All they had to do was to lock in a musical e-commerce system. Build it themselves, have all the e-commerce in one place, and they would have had the largest music marketplace the world had ever seen. Instead, it (music fan activity) all shifted to Facebook, and to Twitter. Everyone left, and nobody is there anymore.
Then iTunes and Spotify together presented universality, and a template for other digital businesses offering music, but with very stiff trading terms for labels, music publishers, and artists.
If you look at the music business which has been around for centuries the (contemporary) recorded music industry has only been around since the 1950s. It was always going to be a difficult industry to continue bringing in the revenues that they were bringing in because they are 100% linked to technology. And since RCA and Columbia bought out the original records, and record players, yes it seemed like a fantastic business to be in. But as the technology continues to evolve consumers will continue to evolve with that technology, and the technology guys have control of it. The content part of the industry becomes increasingly difficult. That said, have you seen the Sony contract with Spotify that has been circulating?
They seem to be doing all right.
[The Verge recently leaked the 2011 license between Spotify and Sony Music. The total advances for three years that Spotify committed paying to Sony was $42.5 million (U.S.). The leaked contract immediately drew flak from artists, managers and others who question the deal's fairness, and how much revenue is trickling down to creators. According to Verge editor Nilay Patel, Sony Music used the threat of legal action to force The Verge to pull down the contract by claiming copyright infringement.]
For decades, there were similar deals between the major labels and record clubs in which artists had to live with some Draconian terms in their label contracts. Thatís what it looks like today as well
Absolutely, but I suspect that they are doing it completely legally.
It is legal.
Yeah. We have a model here which is based on advances being paid by corporations to encourage artists to assign their copyrights to those large corporations who are now doing deals with other corporations and the artists are being screwed. Itís like, ďWow. Never saw that coming.Ē
And if it wasnít for Merlin representing some 120,000 independent labels the independent sector would be left out on the ledge in negotiations as well.
Absolutely. It has always been the way and it will always be the way. We have a model here that it based on the ownership and trading of copyrights.
And distribution as well.
Yeah. And the artist, unfortunately, is not the most commercially-minded person on the planet, and has been subjected to ridiculous deals.
At the same time, most independent labels have returned to a management, music publishing and recording model in order to survive. As well, the majors have fewer acts on their rosters than ever.
Yes, because they arenít making money from the new acts. They can see from their Spotify payments what the top 2000 bands on the planet are. What the Top 2000 tracks on the planet are, which are the only tracks that are making any money through subscription. There canít be much more of a democratic vote for what the favorite music on the planet is than for the entire planet to vote and then see what they listen to and the rest of the tracks donít make any money.
What do you foresee as being the impact if, as expected, Apple this month introduces an all-new streaming service from its buy-out of Beats based on a paid music subscription model with iTunes integration?
Hmmm, it depends on how aggressively they shift and move to switch off the current MP3 purchasing a la carte model. If I was in their shoes, I would just do it all one night and go with one big hit, ďBoom. We have gone to subscription. iTunes is over. Finished.Ē Make a massive headline through that. The industry will be in furor, but people will be talking about it. Then MP3 retail is effectively over, and we are 100% on the subscription model which is a race to the bottom between the technology companies.
Whatís stopping Spotify or Apple or whoever from being both a supplier and distributor like Netflix with its exclusive film content.
You are right. Thereís nothing stopping them.
[It was recently announced that Spotify Originals will exclusively host radio-styled programming by artists such as Icona Pop, Jungle, and Tyler The Creator. There will also be original music commissioned by Spotify, designed for runners. One track ďBurnĒ was created for Spotify by DJ Tiesto.]
Spotify and Apple can sign major and emerging bands, and record them for exclusive use.
If they want to. If thatís an interesting part of their business. We are talking about revenues that are so small compared to what they make on their handsets, certainly on the Apple side of things from what they make on their electronics. Do they care? I am surprised if it had any interest to them.
Iíd say that Spotify would be interested in becoming a major label player.
With Spotify that is slightly more interesting. I would not be at all surprised if they started offering those sort of deals. That said it all depends on what deals that they have in mind with the record companies which we now get to see online because Sonyís is out there. Iím sure that there are some restrictions for them to do that.
You maintain that Music Glue can practically eliminate secondary ticketing. How?
We force people to bring ID at point access. If we control the access control, then we can get people to bring ID along.
When they purchase a ticket they are giving you their ID on the original sale?
It depends on how far we want to push it. But, on the basic level thatís what we do, certainly with the Mumford and Son scale of events. Fans just have to bring ID that matches the name on the ticket. If they no longer want the ticket then, as long as the show is sold out, we will refund them the ticket. We will sell the ticket ourselves to a waiting list. So it pretty much eliminates secondary ticketing. When we have 100% allocation of shows we do not see our tickets on StubHub!, Get Me In! or any other of those sites.
If Madonna can declare StubHub! and Viagogo as her official premium and secondary ticketing partners as she did in 2008 whatís your beef with secondary ticketing traders, including Viagogo, Seatwave, and Get Me In!, that operate in the UK?
All of the arguments that the secondary tickets sites want to put around that they help with distressed inventory; that they provide an open marketplace for people who donít want to go to shows so they can save their ticket is all bollocks. They make their money from ticket touting. From industrial-scale ticket touting which they are fully engaged in themselves. They all do it, and they have nowhere to hide. On the artist side of the business, this is a billion dollar issue that is damaging the business.
But then Madonna and other top music stars say itís okay if they get a cut.
Artists at that levelóthis is the argument I use- that itís .0001% of the artists out there. What about the rest? And if you are Madonna what do you care if your tickets are being traded for big amounts, and you are scalping off extra profits from it? Sheís more of a commodity. Sheís positioning herself then if she is doing that. Sheís positioning herself like a local theatre. She doesnít give a shit whoís sitting in the seats as long, as sheís making the most money from the seat, and the seat is always full.
But if a ticket has a face value of £30, and then sells for £60, whatís the true value of that ticket?
Why? Maybe, the original ticket was undervalued.
If itís undervalued thereís a reason why itís undervalued. When you are an emerging artist, even when you are an established artist, the price of the ticket is part of the (overall) income, and part of what you are trying to achieve in putting on a live show. You want a room full of music fans. Music fans, genuine fans, early adopters, tastemakers, usually donít have a lot of cash. If you want to play in front of a room of rich people then you are going to have a very short career. You are not going to build up your fan base. Another thing with rich people is that they are standing at the back of the room talking. They are not even really engaged with the artist. Probably their mates just got them a ticket through StubHub! They are coming along for a bit of a laugh. They are not going to go to the merch desk either. They are not going to.....
Bullshit! You are just generalizing. As well, we are in an era where artists are offering front-of-the-house seating; meet-and-greets; access to soundchecks; backstage tours; Q&A sessions; as well as exclusive merchandise. Many managers and artists view these as revenue sitting on the table.
Again you are talking about the .0001% of bands. Thatís the reality. The rest of the bands are struggling to make money. The superstars can continue doing that. It looks corporate and the entire VIP experience if you want to engage with your fans thatís perfectly fine but that is not what the hard-working genuine artist is doing.
There are emerging acts involved with premium ticket packages or VIP type strategies.
We have bands that do that through Music Glue as well.
Iím uncomfortable with some VIP perks. I feel that the punter who pays for the bandís early shows shouldnít be shut out later on. They should always be able to get into a show by a band they supported.
Correct. And that is part of why you find you need to use a service like Music Glue for selling your tickets is that you know who your fans are. So when you turn up in that town well in advance, your contact is your biggest fan who has gone to all of those shows, and he can feed you the information. You can then say, ďHey mate bring a friend. You are coming, and you are part of our VIP experience.Ē We have a band called Enter Shikari here that does that. They do not charge for the VIP experience. Itís a place where they are able to get their uber fans involved.
Your parents must be proud. You are working in the music industry after receiving a Bachelor of Architecture degree from the University of Auckland. A 5 year program?
When I went through it had just moved into a 6 year course. A three year undergrad. Then I got to the end I realized that I didnít want to be an architect anymore which was more depressing.
You then went into the construction industry.
I did indeed. Thereís a stadium called Eden Park (in Auckland) if you are into rugby. They were going through quite a few changes so I just went into project management which I had specialized in the last few years of my degree as well.
You moved to the UK in 1999?
Yeah, and I started working in project management in ICT (Information and communications technology). There was a cable being laid across the Atlantic at the time. So I was working on the AC-1 connection, mostly on the Netherland side of things. I was working with companies like Lucent and Alcatel who were putting in all of the finances and billing systems for all of the fiber optic networks that were being laid out across the world. Going to interesting meetings at EMI trying to explain the sort of speeds we were experiencing, and the change that was going to happen. There was a bit of confusion there.
You also played in several bands?
I am a very unsuccessful musician, yes. I was the bass player going through university in a little band called the Trouser Weasels. The ridiculous part is that is that there was an Irish pub near the university that for four nights a week needed an Irish band so we got two Pogues' albumsóďThe Best of The Pogues,Ē and ďThe Best of the RestĒóand we played (Irish-based music) four nights a week. We were the richest guys at our architecture school. We started playing original music as well. When I left, they became Goodshirt and got signed almost instantly by EMI, and didnít even replace me.
Then I was playing in bands here (in London). When you are working for a company like PwC (PricewaterhouseCoopers) putting fiber optic finance and billing interconnect systems and then playing in a band, thatís an interesting mix of vocations. It certainly allowed me to get a good understanding of technology, business, and then the music business. The music business is what horrified me the most. The lack of understanding of the technology world.
The recording industry missed years of opportunity to bulk sell music on the internet because of fears over the conversion of music to files. It tried to discourage consumers from copying music across the internet by suing alleged infringers; and trying to implement a secure digital watermarking scheme.
Absolutely. When we first started the concept of exchanging music for data was completely foreign to them. ďYou will devalue music.Ē Well, guys itís already out there.Ē
Continued technology advances, and the emergence of the smart phone were game changers. Also, when the record industry was making so much money back in the Ď90s, it could say to the technology guys, ďWe donít need you.Ē When the record industry became a punching bag, label executives and managers had to start looking to the technology sector for a rope.
I fully agree. Here we are now that we have had the Spotify/Sony deal online for everyone to read. What artists once suspected is now proven. What I couldnít see in there was anything about the equity they (Sony) have in Spotify. Iíd argue that whatever millions that they are talking about in upfront payments is nothing in comparison to the equity of Spotifyís (impending) IPO. It could potentially eclipse all of the money that they have made to date. If you think the money was pouring in the Ď90s. With Spotifyís IPO, itís a whole different world and that doesnít have to be accounted to the artist. Thereís no way that thereís anything in any kind of any artistís contract that says anything about equity stakes in technology companies should be paid pro rata in some kind of royalty scheme. That is never going to happen. I think thatís why they (major labels) are moving away from signing up the bands. They know where it (future income) is coming from. From the catalog. And the back catalog is worth a fortune.
It remains difficult to launch a global artist without going through the major label systems.
What do you mean by global artist? A global superstar?
If you want to be a global superstar today, we are in a different economic time. Superstars are born out of the economics of scarcity. When itís now the economics of abundance, itís very difficult to have a star come through. Thatís fine.
The last global stars created through the labelís international system were probably Justin Bieber, Kate Perry, Miley Cyrus, and Lady Gaga.
One Direction is doing alright. I wouldnít mind 10% of that.
Well, American repertoire doesnít have the same global impact it once had.
Absolutely. Thereís a multitude of reasons of why I am in London, but that is certainly one of them. The talent pool is just enormous here. Again, it is because itís part of the culture. You say global artist. We have 10,000 global artists on Music Glue. They are not huge in towns all around the world, but they are do have a global fan base that is buying product off them. Thatís the difference now. If you can sell one or two T-shirts in your local town, and sell out a show to 100 people locally, and then you can now do that globally and control all of the relationships and pay all of the money directly, youíve got a career
If you want to chance superstardom then you are going to have to go on ďX-FactorĒ or ďThe VoiceĒ or one of those superstar TV shows because thatís the new channel into that market. But if you are interested in being an artist on the road, having a career, making a living from creating, fantastic because there are ways of doing that today You canít get on MTV anymore because they donít play music. But you can get a half-million people on your YouTube channel. I know what Iíd rather be doing.
As the traditional gatekeepers in the music industry began to be swept away, DIY--artists reaching out directly to consumers--became a part of the music food chain. However, artists may talk up DIY, but most have not been effective with DIY. Now, they must increasingly adapt to this evolving digital world or perish.
Exactly, the big changes that are finally happening in 2015 and this comes down to the role of the artist manager. What is the role of the artist manager? It used to be to broker deals, and take 20% of advances. That was their business model. The deals are gone. So now what does the manager do? A big part of it is running the e-commerce as well and engaging online with a global audience, and commercializing wares, and understanding what a global audience looks like.
People donít like change.
But change is here, and they are going to have to change. This is a big cultural shift that is driven by technology. The technology has to exist first before the culture shift. So with music now available, they (artists) are making that change. We have so many examples of bands that have embraced it straight away. Baby bands who have no concept of what a manager is or who a booking agent or promoter or a record company are. They are not even part of their vocabulary. They are out on the road and they have 10,000 fans who want to buy product off them. They are making a perfect living building and growing and not engaging with the existing industry at all. Thatís the way it should be. Bands that have YouTube channels that 300,000 subscribers on, thatís more than enough money for a band to survive on.
Larry LeBlanc is widely recognized as one of the leading music industry journalists in the world. Before joining CelebrityAccess in 2008 as senior editor, he was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record.
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