A2IM's Indie Week Day One: U.S.'s Shrinking World Market Share, YouTube Helps Indies, Playing China
A2IM's Indie Week Day One: U.S.'s Shrinking World Market Share, YouTube Helps Indies, Playing China

A2IM's Exporting to the Emerging Music Market in China Panel: Moderator Robert Singerman, on the far right with (from left), Laura Devine Attorney's lawyer Anastasia Tonello, China Audio-Video Assn. Secretary general Ju Wang; Shanghai Synergy Culture and Entertainment Group's international chief executive Jean Hslao Wernheim and executive VP Bill Yanbin Zang. (Photo: Supplied by A2IM/Sheryl Cohen)

In the opening day of A2IM's indie week, the organization tackled how to get music into China; the complexity of Pan-European licensing; and how YouTube is working to grow revenue for the indie sector.

Prior to the panel on exporting to the emerging market in China, A2IM president Rich Bengloff noted that according to the IFPI, U.S. share of the music market in 2009 was 34% but for the last two years that has dropped down to 26%. "That doesn't sound so good for our community, where imports are essential," he noted.

A2IM To Produce First Ever Independent Music Awards

While piracy continues to be a problem in China, consultant Robert Singerman noted that with a population of 1.35 billion, China represents vital opportunities for the music industry. However, gaining access to the market is a very time consuming and costly process. Each song coming into China needs to have the lyrics translated so that those songs that are approved can have their lyrics shown on websites.

Likewise getting access to tour China is also a time consuming and can be a costly process, according to Laura Devine Attorney's LLC managing partner Anastasia Tonello.

In order to set up an official tour of China, artists need a sponsor. Once you get a sponsor, the paperwork takes about a week. But getting the sponsor can be the time absorbing part. The government is proud to sponsor classical artists and big name artists, but it's hard for smaller and mid-level artists to get sponsors, she said.

Victoria Espinel, 'I.P. Czar,' Set For A2IM's Indie Week Keynote

A small band can look at shelling out about $10,000 to get a permit and the timing can take months, while the ministry of culture must approve every song, which has to be translated, that will be played in China, she added.

The takeaway for labels and their artist is that to enter the market you need to do your homework and be able to spend time and money to get in with sponsors.

More often than not, small indie artist instead go as visitors and book shows on the side, but as a lawyer, she said she didn't endorse the approach of ignoring China's regulations for coming into their country and playing there.

In coming into the market, it helps to know what music is popular. According to the China Audio-Video Assn. administrative VP and secretary general, pop, hip-hop, R&B and rock are the most popular genres, followed by dance, classical, jazz, electronic, alternative, heavy metal, folk, country, new age, blues and reggae."

Beggars Group's Martin Mills To Be Honored At A2IM's Inaugural Libera Awards

Later in the panel, one of the panelists noted that the Chinese music industry itself hates two things, piracy and Baidu, the largest search engine in China. That's because while Baidu may cut deals with the four major labels and send some revenue to the majors, they do nothing about piracy and they refuse to talk to the Chinese and international indie labels.

On the monetization panel, YouTube's Scott Sellwood (right), makes a point while the Orchard's Maggie Argyros and YouTube's Isaac Bess listen. (Photo: Supplied by A2IM/Sheryl Cohen)

In a session on video monetization, panelists discussed how YouTube is improving the experience for both listeners and advertisers, which ultimately should mean more revenue for rights owners.

Among the changes, YouTube has introduced a pre-roll advertisement before the music video that can be skipped which results in the advertiser getting bigger bang for their bucks when viewers stick around for the whole ad, according to panelists. Moreover, YouTube is making sure that viewers don't get the same pre-roll advertisement if they play a video again so that viewers don't get annoyed and leave the upcoming video play.

While YouTube has adopted a conservative process in monetizing videos only when both the publishing and master rights have been cleared, YouTube's strategic partner development manager Scott Sellwood said that the site hopes to get more indie songwriters and artists on board so it can more easily clear rights in the indie label sector. One possible way to increase indie coverage would be for indie labels to become aggregators for the publishers who have shares in songs on the label's albums.

Indie Labels Win 34 Grammys, Says A2IM

Sellwood added that having labels serve as an aggregator is still new having just started in the current quarter. So far about 20 labels are performing that function.

The Orchard's partner account manager said that approach is useful because otherwise the video will not be monetized at all and nobody will make revenue, not YouTube, the labels, the publishers, songwriters or artists.

In a question from the audience, Sellwood acknowledged that the YouTube contract for licensing music doesn't include a clause that would allow for indie labels and publishers to audit YouTube.

"Our content management system provides more metrics and details than you can handle; it's the most transparent tracking system," Sellwood said. "With the amount of information provided and the scale of YouTube, we can't allow every indie label and publisher to audit us. We scan 100 years of video every day. The thoroughness and transparency serves as a substitute for an audit."

At the end of the formal panels, lawyer Christian Castle, who is managing partner of Christian L. Castle, which has an office in Austin, TX, launched the panel he was moderating on Pan-European licensing by noting that it is in the interest of all rights owners to have as many digital retailers and service providers as possible, which is why it is important to make licensing easier.

Yet, BMG Chrysalis senior VP of business and legal affairs Stan Schneider noted that with 340-370 DSPs in Europe and about 70-80 in the U.K., licensing is a lot easier than it used to be. "A lot of people are saying it is too difficult [for DSPs] to get licensed but with that many services [operating], they would have a hard time proving it."

Trying to license the music is just one component DSPs face in launching a business. 7 Digital, which licenses music in between the rights holders and the digital music service providers, says that each service has to have a compelling offer that will scale and have success in the market. "If we can't adequately collect money, we wont do a deal. In the early stage, one of the biggest red flags is when they say they have something that no one else is doing."

Yet, the organization must be on the lookout to do deals where innovation risk is involved, she said noting that it has to straddle two mindsets. "How do we insure that [rights holders] get paid and yet help foster innovation so such companies don't move on to some other industry beyond music," she noted.