MidemNet Day 2: Biz Looks To Licensing ISPs

"Change is coming" was the message at day two of the MidemNet conference in Cannes, although there was still plenty of lively debate about how ISPs can work with the record labels.

MidemNet is a conference focusing on music in the digital age and is staged prior to the MIDEM international music market and conference.

The opening session at day two was a debate on how music and ISPs can partner on music services, but there were still some concerns among the music industry representatives, including U.K. Music chief executive Feargal Sharkey and the BPI's chief executive Geoff Taylor. The ISPs were represented by Nicholas Lansman, secretary general of trade body ISPA.

"If all of the ISPs in the U.K. were interested in taking licenses, we would be in a very interesting licensing discussion," said Taylor. "We wouldn't face many of the problems we face today."

However, despite the Memorandum of Understanding in the U.K. between ISPs and the biz to cooperate on tackling web piracy, Taylor was concerned that some Internet providers are still reluctant to control such behavior among their customers.

"Some of them take a very different view of the world [to the MOU], which is all of their customers can download music, they don't necessarily think they have any responsibility to deal with that," said Taylor. He did not specify if had concerns about ISPs that had signed up to the MOU following through on the measures.

Taylor added that there will be licensed services in place before long, because ISPs need to provide services that "differentiate themselves" in a competitive market with shrinking margins.

"We are in discussions and the record labels are in discussions with a number of U.K. ISPs for licenses, we firmly believe that is the future," said Taylor. Sky and Universal Music already announced an agreement last year.

However, he also noted that competition between ISPs for customers may make some of them resist any restriction on file-sharing and that "rules" are needed to make that happen.

Sharkey said new services could roll out within months, but Lansman was cautious on the time frame and said ISPs were desperate for a "simple license" that was pan-European. "It would be nice if the ISPs came to Midem and had this conversation with you," he said. "It will take time, we are talking about several years here." He explained that while deals can be done now, it may take that long to come up with a compelling offering at the right price.

Peter Jenner, emeritus president of the International Music Managers' Forum, hit angrily hit out at the labels, though, when Sharkey tried to defend the industry.

Jenner said he "couldn't see anything going on in the record business that will solve what is going on in the market" and said that it was a "nightmare" to license a digital service.

Taylor told Jenner he was trying to "nationalize" the music industry on the Internet and that a single collective deal for online services would be "more complicated" than a market solution.

In another session, the "China model" was discussed by A8 Digital Music's CFO and executive director Betty Yip Ho and Angela Xiong, director of marketing at Tencent Technology, which operates the ad-funded QQ.com music streaming Web site.

As well as licensing music from all the majors for ringtones and ring-back tones, A8 also has a user-generated platform to source content and works at promoting its content online.

"We do a lot of Internet promotion to monetize the songs, we have partnerships with over 1,000 Web sites," said Ho. A8 also presents concerts featuring signed artists and those acts that take off from the user-generated platform.

The company partnered with China Mobile to provide the telco's subscribers with access to music from Chinese pop artist Jackie Cheung, resulting in 3 million downloads during the promotion as part of his tour.

Xiong spoke about the young audience accessing its service and said that was bringing in advertising from brands such as Nike and Adidas.

Elsewhere in Asia, former major label exec John Possman, said that Japan remains a strong market for international acts. However, the president and co-founder of Two Four Seven added that "the artists and labels have to do more one-off deals, there are less label deals available."

Elsewhere at MidemNet, the Music Ally/MidemNet New Business Showcase was a chance for start-ups to each talk about their unique offering, followed by an audience vote on the most promising new business. The winner was Germany's SoundCloud, an online community aimed at musicians and labels described as "the Flickr for music."

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