Charles Caldas, CEO of Merlin, the global digital-rights champion for indie labels, received the prestigious IMPALA Outstanding Contribution Award this week, in recognition of his relentless work chasing royalties due to indie companies and artists worldwide from the increasingly growing number of digital-music services.
As well as being surprised and honored at the accolade from Brussels-based IMPALA, the Australia-born, London-based Caldas spoke with Billboard.biz about how licensing the new digital-music services has boosted independents’ share of the global market. He also discloses the amount of money streaming music could bring indies this year, explains why illegal services will only hurt themselves and the music business they cheat and why Universal chief Lucian Grainge needs to be careful about how he describes his empire’s future strategy.
Billboard.biz: What does the IMPALA award mean to you?
Charles Caldas: The award came as a genuine surprise. I respect and admire the companies and executives that comprise the IMPALA board very much, so it was incredibly humbling to hear that they had chosen to give the award to me. On a professional level, I am sincerely happy that the work we do at Merlin has been recognized by those on whose behalf I work. And this would not have happened without the efforts of the Merlin staff, who work incredibly hard and have done an amazing job in making sure that our organization has achieved what it has to date.
In what context do Merlin and IMPALA work together and what have the two achieved together Merlin’s five years in existence?
Whilst we don’t work together in any operational sense, many of the companies that are IMPALA members are also Merlin members, so we serve broadly the same constituency; we, in the commercial world; Impala, in the political world. Obviously, both organizations work to improve the market for the independent community, so our interests are closely aligned, as in our vocal opposition to the UMG/EMI acquisition, and in the subsequent agreement with Warner which ensures that our members have the opportunity to strengthen their businesses in a post-merger world.
But Merlin works globally in the commercial sphere, and most of our commercial activity is outside of Europe, whereas Impala is a purely European body.
After Spotify, YouTube, Deezer etc., which services is Merlin currently negotiating with? And is that side of the music sector getting the message of Merlin's mission?
The market is very active at the moment. And while we can’t obviously share details of the negotiations we are in, we are in various stages of contact with all of the new services that have been in the media this year and are looking very closely at how the market will evolve globally in the coming year. With regards to the message, I think it has become increasingly clear that the services that have properly understood the value of our repertoire to their customers, and have struck appropriate terms with us, and the broader independent sector, are the ones that are succeeding. Disappointingly, we still see services that fundamentally misunderstand the nature of the new digital consumer and their needs. And that’s not to mention those that openly infringe our rights.
We hear about the big digital-music services that Merlin offers licenses to -- do smaller services around the world understand the need for licensing?
Merlin has deals with companies large and small. We have deals in Russia, in Ireland, in Australia, in Germany, in Canada, in Brazil, and are working to do deals in many more territories. I am very excited at the fact that by increasing the number of legitimate music consumption opportunities available to consumers, it seems we also increase revenues. I think we are entering into an age of great opportunity with regards to how music is distributed and consumed. But again, times of opportunity also mean that a lot of land-grabbing is going on, as can be seen with the major-label acquisition of distribution companies over the past year or two. On the retail side, there is land-grabbing too. The fact that UMG is a proprietor in recently launched streaming services in Africa and Australia means that they are not only competitors, but potentially also our retailers, benefiting incrementally every time our music is used. That is a dangerous dynamic, it’s anti-competitive and disproportionate. And it was chilling to read Lucian Grainge recently state that "Power is the ability to stop new services. Power is the ability to create new services." I expect we will see many examples of this hubris at play in the year to come. Wielding power to block or control new services is no way to build the digital-music market of the future. And the real losers will be music fans. I hope the competition authorities pay close attention to the evolution of our market. The key hope we have is that the major labels have historically been notoriously unsuccessful in creating successful digital retail ventures.
In multi-lingual, -cultural Europe, what are the challenges that an organization like yours face within and outside the EU?
We are a global organization with members in 35 countries and board members from the USA, Canada, Brazil, South Africa, Australia, the United Kingdom, Belgium, Norway, Germany and Spain; so we’re pretty well-equipped to do global business.
How about indie artists? Do they understand their rights or do they feel they should be a with a major label before they can expect decent
I think there is a definite need to educate artists better on the digital music economy, and on how they should protect and enhance the value of the music they create. The wildly varying nature of the way in which artists are paid by labels, the wildly varying nature and cost of distribution deals, and the amount of disinformation in the press makes this an important time to be as educated as possible about your career as an artist. The success of independent labels globally in the mainstream charts has highlighted that signing to a major label deal is not the only option -- but this is an increasingly complex market, one that needs time to develop and grow, and that needs a lot of analysis and review. Much of what we do for the labels we represent is fostering that understanding and providing analysis of how we see the market evolving.
Have you been able to assess how much royalties/income Merlin has helped collect since it was launched?
On the litigation side, Merlin has returned millions and millions of dollars to the independent community that they would not otherwise have received. Also, we expect the streaming revenues alone for Merlin in 2013 to be somewhere around $60 million-$65 million. The encouraging thing for me is that independents have been very dynamic and forward-thinking in the digital market, and as a result are performing incredibly well on digital platforms. The nature of the new-generation services has put a lot of control back into the hands of rights owners. Labels can now utilize the tools available to them via Facebook, Twitter, their artist mailing lists, the tools available on streaming platforms, the app environment, limited only by the creativity and expertise within the company, to get their music in front of a lot of people very quickly and directly. I predict that despite the challenges, we will see independents continue to perform incredibly well in the digital space.