Merlin Primed to Reach $500 Million in Annual Collections for Indie Label Members

Courtesy of Merlin


CEO Charles Caldas points to helping labels break into International markets. "They are seeing revenue from way more territories," he says of members. "Brazil is now our No. 6 market."

Merlin, the organization that uses the collective clout of indie labels to gain a strong hand in negotiations with digital music providers, is about to reach $500 million in annual collections; and is now looking toward the day when it will hit $1 billion annually.

"Ten years ago, when we sat down and we were considering that Merlin would look like one day, I would have been happy if we could get to $10 million one day," says Merlin CEO Charles Caldas. Today, the organization boasts 800 members, with 20,000 labels and imprints in 55 countries around the globe. In the first nine years of its existence, it distributed $1 billion to its member companies. This year, alone, it will reach half that amount.

Merlin is the agency created to negotiate with digital service providers like Spotify, Apple, and Pandora on behalf of indie labels so that they can use their collective might to extract better terms than if the labels worked on their own. A good example of how that clout worked, when Spotify went public recently, Merlin sold an undisclosed amount of stock that it had received when negotiating licensing deals years ago with the then-fledgling service.

In addition to negotiating contracts with digital music service providers around the globe, Merlin also takes the music play data from the services and prepares reports so that the labels can see what they are being paid for; and in turn can pay royalties to their artists. It also provides market overviews and the maximum amount of data so that indie labels can assess how they are performing in any given market; and respond to any opportunities.

But beyond that, indie labels themselves are responsible for interacting with the services, whether that be to supply the music directly to the platform, or using a third party digital pipeline. "We create the framework and try to provide them with the best possible opportunities, so we are adding value without getting in the way," says Caldas. "That way the labels can do what they do best and bring their artists to the market. The companies that we represent are controlling their own digital business."

One way that Merlin has grown to being a half a billion dollar business is to help its labels compete in foreign markets that they never had before; or if they did, it was often through licensing their titles to labels in those countries. Now, thanks to the digital business model, labels are seeing revenue flow from territories that they never even competed in before, says Caldas. "They are seeing revenue from way more territories," he explains. "Brazil is now our No. 6 market."

Caldas foresees big things for his labels in Asia, too. In March, Merlin helped open up the  China market for its members, having negotiated deals five digital music services: NetEase Cloud Music (NetEase Cloud Music), Xiami (Ali Music Group), QQ Music, Kugou and Kuwo (all Tencent Music Entertainment).

While opening up new territories and helping the labels to grow revenue in foreign territories is important, Merlin also has to stay on top of all the data flowing from those territories. In order to deal with that, Merlin now has a staff of 21, with offices in Amsterdam, London, New York and Nashville. Included in the 21 staffers are new hires brought aboard in May; with Marta de la Hoz joining as head of reporting; Chaida Kapfunde as head of technology & development; and Quentin Martins as member operations manager. 

"The next big challenge is how do you harness all the information out there, all the data we are collecting" from the different digital services," Caldas says. "It's very important to have speed and efficiency in reporting what is happening with their music. If we can provide informational insights that helps them make better decision, we are adding value." 

While Merlin provides members access to their data through a portal, Merlin will never compete by supplying an artist dashboard. "We don't want to compete with our members, but we need our members to compete against each other because that keeps the indie sector healthy," says Caldas. "If we can add value up and down the chain from the members to the artists to the consumer, that is our goal."