Michael Simon, the new president/CEO of the Harry Fox Agency, says he has a simple goal for HFA: combine his deep love of music with his desire to build the industry's digital infrastructure to help young people discover musicians like Hal Blaine, a legendary session drummer and a personal favorite.
"I got into the music industry to ensure that there was an infrastructure in place to ensure musicians get paid a fair royalty when a digital service uses their music so that they can keep creating music that I want to listen to," Simon says.
"Michael is the right guy to lead HFA," says an executive who has worked with him in the past. "He has the industry knowledge, he has the digital vision, and he is a music guy."
Simon, who joined HFA in 2001, replaced Gary Churgan, who left the organization on Oct. 15. Simon previously served the agency as senior VP of business affairs, general counsel and chief strategist.
The plan going forward isn't "shocking or complicated," Simon says. He intends to continue leading the charge in building HFA's infrastructure so it can be a major service provider to companies engaging in digital music commerce.
For example, HFA, which is owned by the National Music Publishers' Assn. (NMPA), has been concentrating on what it now refers to as its "Slingshot" operation-a rights management service that helps digital music providers manage their licenses. That's in contrast to its core business serving as an intermediary licensing music firm for about 48,000 music publishers to record labels, and collecting mechanical royalties from those licenses, a process that it has done for close to 90 years.
While the agency began Slingshot in 2008, it became aggressive in marketing that operation to digital music services, labels and distributors in 2010 when it saw potential clients slipping away to RightsFlow, Music Reports Inc. and RoyaltyShare.
Subsequently, RightsFlow was more or less eliminated as a competitor when Google acquired it almost a year ago. Since Google operates Play, which includes a music download store, other digital services aren't too keen for the search giant to have access to their business data through RightsFlow, which has to collect it in order to pay publishers.
In fact, RightsFlow, as part of Google, and HFA now collaborate in getting the word out about the NMPA's settlement with Google's YouTube, which allows music publishers to enjoy a share in advertising revenue generated by ads placed against music videos.
Simon says he has charged HFA with seeking ways to deliver his three goals going forward: enhance the custom services offered by Slingshot, improve customer service and find more business opportunities from the organization's databases.
Overall, Simon predicts Slingshot will enjoy aggressive growth because he says its market plan is now "rocket-fueled."
One reason HFA has to make Slingshot work is because its traditional model of licensing songs for records and collecting mechanical royalties has been in decline as CD sales decrease.
With reduced revenue coming from its core business, HFA has to grow other business and must do so efficiently. "We will try to improve margin through the goal of reducing costs of providing services, but still improve service," Simon says, adding, "Now that sounds like a politician talking."
But he notes that if the agency improves its processes and increases automation of its core business, HFA can accomplish that goal.
Would he ever consider merging HFA with another collection society? While Simon recognizes that such a move could produce operating efficiencies and would be open to exploring any opportunities that would improve the business, a merger "isn't a current mandate," he says. "HFA has stood alone for almost 90 years, and could stand alone for another 90."••••