Edwin Schroter, PIAS Group Managing Director explained how PIAS Nordic's localized expertise in marketing, promotion and sales is one way to combat the decreased label services distributors can provide.
Independent labels are increasingly targeting opportunities in the Nordic countries as areas for potential expansion. Last year, London-based independent label group Cooperative Music opened new businesses in Sweden, Norway, Denmark and Finland, and concluded a new physical and digital distribution arrangement with Universal Music in the Nordics.
PIAS Entertainment Group is now also ramping up its operations in the region by partnering with Swedish independent distributor Border Music to form PIAS Nordic - a new enterprise based in Gothenburg, Sweden, which PIAS describes as "a one-stop solution for independent labels and artists looking for physical and digital distribution, and marketing and promotion services in Scandinavia." Pelle Eriksson, General Manager of Border Music, will be overseeing the new venture as PIAS Nordic General Manager.
According to the IFPI's Recording Industry in Numbers 2012 report, Sweden, the number one market in the Nordic countries is the fourteenth largest music market in the world, generating $155.3 million in recorded music revenue in 2011, a 3% rise from 2010. The country was the original launch pad for Spotify (founded by Swedish-born Daniel Ek and Martin Lorentzon, it debuted in 2008), with digital accounting for 44% of all of its 2011 recorded music sales. When the IFPI numbers for the largest Nordic countries -- Sweden, Norway, Denmark and Finland -- are added together, the region becomes the world's sixth largest music market in the world.
Speaking exclusively to Billboard.biz ahead of PIAS Nordic's May 1 launch, PIAS Group managing director Edwin Schroter discussed targets, growing local repertoire and what impact the proposed Universal-EMI merger could have on the independent sector.
Billboard.biz: Why launch PIAS Nordic now?
PIAS Group managing director Edwin Schroter: Over the last few years obviously digital has grown rapidly - far faster in Sweden, Denmark and Norway, than in other European territories, predominantly through the growth of services like Spotify... Last year we had a big success with Agnes Obel's "Philharmonics" (Play It Again Sam), which was at No.1 in Denmark for eight weeks. Locally, she had an 'Adele' effect. And then, at the start of this year, we sold a lot of records in Sweden by a Swedish band called First Aid Kit (Wichita) who also went to No.1 in the album charts. So it felt like the right time to invest in the market and set up a new operation that would allow us to have an ownership and be able to ship and administrate centrally, but handle and invest in marketing and promotion on a localized level.
What are your targets for the enterprise?
We hope for a number of things: One is to have a stronger presence and control of the marketing and promotion on the ground, and the only way to do that is to not go through a third party, but have your own people there who can speak the local language. Shipments, stock control, statements, accounting and administration will, meanwhile, be centralized. We want to be a service provider, administration and logistics company across Europe - with localized expertise in A&R, marketing, promotion and sales.
That's the overall strategy, not just for Scandinavia, but in general. In practical terms, having your own marketing and promotional staff everywhere means you can position the artists and labels you represent in the local language and with a specific local strategy aimed at local media and other partners.
Does this mark an increased commitment to supporting local repertoire?
Local repertoire is definitely a key focus point for us. The other longterm strategy is that we want to keep a roster of strong independent labels that we can provide with an efficient and secure pan-European network, without them having to account and deal with 17 different territories across Europe regarding stock movement and statements. The problem for local distribution companies who often work on small margins, is that it's unfeasible to continue supplying full marketing and promotion services to the labels they represent. I think that's a problem of the digital market; everybody can offer to supply on a global basis. What they can't supply is the local marketing and promotional services on the ground.
What does Border Music stand to gain from partnering with PIAS?
At the moment the credit risk [for distributors] is huge. The physical marketplace is under a lot of pressure, especially in these territories where digital is doing well, and a lot of smaller distributors - who predominantly have physical distribution rights - are struggling to survive. Experience has shown, over the last six months, that when smaller distributors go into administration [bankruptcy], labels lose out. Obviously having a company like Border be part of a bigger group makes it better protected than being on its own in one market.
Do you think there is still a future for physical product?
This year First Aid Kit has already sold over 20,000 physical albums in Sweden alone. Agnes Obel has sold 100,000 copies in Denmark, of which probably 65,000 units were physical and 35,000 digital. So I do believe that there is a future for physical. But it's going to be more niche. You will have the natural filter of top line, well-promoted and marketed big releases with a lot of exposure widely available. Things that are niche you will have to look for and find through specialist outlets that I believe certainly have a future. The only way forward is going to be where you build a profile and the bigger the profile gets, the broader you make the physical side available.
What impact do you think the proposed Universal-EMI merger will have on the independent sector?
The impact is impossible to tell. I think the risk is huge. One of the things that we need to do as an independent -- and as the independent community in general -- is to make sure we continue to have access to the market in the same way that a major or any competitor has. You can't stop how successful or big a company gets, but there should be control of the level of access everyone has to the market place. It needs to be fair and I think a dominant player, that will, in some territories own more than 50% of the market, would be able to influence and control supply to certain retail and media outlets.
The four majors splitting 80% of the market is an acceptable balance. One major having 50% of the market could stop people having access to an outlet. ¨The success of British independent XL Recordings [home to Adele] shows everybody that if you really want that global success, you don't need a major label. So there are huge opportunities out there, but if access to the marketplace is being restricted, or at risk of being restricted, there is certainly a risk. It could have huge implications.