Google, Merlin, Amazon, Universal Reps Explore the Future of Digital Music @MIDEM, Ted Cohen Referees

Google, Merlin, Amazon, Universal Reps Explore the Future of Digital Music @MIDEM, Ted Cohen Referees

Google, Merlin, Amazon, Universal Reps Explore the Future of Digital Music @MIDEM, Ted Cohen Referees


TAG Strategic managing partner Ted Cohen (far left) moderated an engaging panel discussion Monday about the digital music market. Participating in the discussion were four influential executives; from second-from-left: Merlin CEO Charles Caldas, Google director of content partnerships for Android Zahavah Levine, Amazon director of music content acquisition Craig Pape and Universal Music Group global digital business president Rob Wells. (Photo: Louis Hau)

Read's Complete MIDEM Coverage Here

What follows are excerpts from their remarks:

The changing shape of the market
Wells: There is more than enough room...for new entrants, I don't think we've yet seen the critical mass of services that we really should enjoy. That goes against what some the pundits and commentators say. I think it is incorrect and inaccurate to assume that there is too much choice for consumers in the marketplace. How can there be too much choice for consumers in the marketplace when still a majority of consumers use illegal services to consume music?

Caldas: I think we will see more diversification both territorially and in terms of specialization. Unlike the physical market where we've come from a world of neighborhood and mom-and-pop stores to megastores, I think the digital evolution is happening in reverse. We started with the megastores and we're just seeing increased specialization around genre, around territory, around local repertoire.

Levine: We have partnerships with three of the four majors and over a thousand independent labels. We've got 250 million activated Android devices with 700,000 new devices being activated every day. This is a population that has been underserved, there hasn't been an integrated, easy, convenient music solution for Android users. And as a result, Android users, according to NPD data, purchased less in the past than iTunes users and we're going to change that.

The potential for cloud services
Caldas: We'd love to see these cloud services be smarter, be more intuitive, more user-friendly, more recommendation-based. … At the moment, it's a box. You put things in the box. I've love to see the box come to life. It should become a box that talks back at you and looks at what you're doing and engages more and I hope that's where the world leads. These are revenue and value-adding models for the consumers because it makes it easier, less painful and more interactive.

Levine: Our users that have uploaded their collections to the cloud...a much higher percentage of those people are purchasing. and when they do purchase, they purchase a lot more. Part of the reason for that is because not only do we have their locker as a marketing platform, we know what they own, we know what they're listening to. Not only do we make recommendations as they're listening to their own collection, we make smart recommendations based on their selections and their listening behavior.

Levine: When you're sitting on the service side, one of the biggest challenges is that we have a great product vision and then we have to convince a lot of other players to buy into that same exact vision. And if you can't, you're dealing with the lowest common denominator, whatever you can convince everyone across the board. Unfortunately, I think that process ends up compromising products sometimes because not everyone has the same product vision and not everyone has the same view of what's the best strategy. And that can be hard.

Pape: We very much start from the perspective of having a transactional business...If we can get them back to our service regularly playing their music in an environment where we can make smarter recommendations to them, we're going to sell more music.

Relations between labels and digital services
Levine: We've made incredible progress. I've been doing digital music licensing for 10 years, I worked for Rhapsody doing the first round of subscription deals then YouTube working on their music licensing model. I think about how far we've come...At the same time, I do think it's still harder than it should be.

Wells: The fact that [Google] are in a licensed legitimate music service is great. It's probably inaccurate to call it a Google music service, it's actually an Android music service and the fact that it hasn't yet infected other parts of Google is disappointing at this stage, but I haven't given up hope. I'd like to think that the entire Google machine will slowly realize that having a licensed legitimate music service is a benefit to everything from search, Chrome, every other aspect that they control. At the moment, it's a good start. We'll see how it evolves.

Wells: We have a very pragmatic view about licensing any and all new services. The delay is inevitably if the new service is something brand new, because we have to go into our Universal caves and work out how this is going to work, whether it's engaging in new market research or analytics or commercial analysis, it just takes a bit of time to get our heads around it and then engage in a debate. This isn't about, "how much money do you have, write me a check." What we do insist on, is that from our learnings which are very extensive around the world from existing partnerships...All of this, we ask the partner to fold into their new service. They may not like what we're telling them...If they come from the tech space, it's harder to convince them we know what we're talking about when it comes to digital retail.

Music curation
Pape: Getting all the content and understanding what it is is first and foremost. And coming up with the right mix of technology to make really smart recommendations and then having the right editorial voice...finding that balance is key. The great thing about cloud services is we now have a lot more information from customers about what they already own and what they're really engaged with the most at this minute. You might right now be in your 1980s metal phase -- Iron Maiden and stuff like that. Coming up with a smart recommendation there where the majority of my catalog may be standards I think matters a lot.

Wells: In a world of infinite choice, where do you start? I think what a lot of the streaming services have done with their Facebook integration is very important. I think we've only scratched the surface of curation. No one has yet built a platform for which you can gamify that. That, I think, is the next step.