Les Bider is chairman/CEO of Warner/Chappell Music. He delivered the keynote address at Consect’s MobileMusiCon Nov. 18 in Miami Beach.
The mobile music space has created enormous opportunities for the music industry — for artists, record labels and music publishers. But it’s the pubberies that seem to have gotten a bad rap in the rush to transform the cell phone into a virtual ATM for the music industry, wireless operators and content aggregators.
Passions run high because many people agree with my view that mobile music-whether through cell phones, PDAs, iPods, laptops or devices not yet invented — will lead the recovery of the music business.
With all that is at stake, it’s not surprising that music publishers have been accused of impeding progress, slowing down access to content and in general being risk-averse, resistant-to-change cave dwellers who excel at clinging to outdated business models.
I’ll be the first to admit that there’s probably truth to some of these accusations, and the first to say that others are just plain unfair.
If you accept the received wisdom that says there will be 2 billion or so wireless subscribers by the end of this decade, nearly all of whom will have phones that can use music and multimedia content and nearly 60% of whom will have access to high-speed wireless networks, that will make for a broadband entertainment market twice as large as the PC computer broadband market.
Then you factor in the new ringback tone services, which have been launched widely in Europe and Asia and which, according to some analysts, will generate another $1 billion globally by 2008. Add in that the wireless market is a more secure environment than the Internet and less prone to piracy. Then you can imagine the not-too-distant day when every cell phone is a music retail outlet, because that’s where we’re headed.
It’s easy then to understand why Warner/Chappell — and all music publishers — has every interest in giving cellular customers the music they want, when they want it.
That’s not to say there aren’t hurdles to overcome. One song, for example, often involves multiple rights. If there are several songwriters on one track, each may have a different publisher. And that’s one of the issues that can sometimes block bringing ringtones from a hit song quickly to market. It is lost revenue for everyone, because those promotional windows can close quickly.
The consumer can get confused, too, because of the array of places that sell mobile music content, most of which require that the consumer determine which handset is compatible with which offering. Factor in the differing royalty rates and collection societies, depending on where you live in the world, and the fact that there are gray-market operators selling ringtones and other content without the appropriate licenses, and you can begin to understand some of the issues we all face. And I haven’t even mentioned that publishers and record labels are still at odds over what is an equitable revenue split for ringtones, master ringtones and ringbacks.
To demonstrate that we are serious about resolving some of these issues, Warner Music Group is announcing that it will become the first music company to put in place an agreement for master ringtones and ringbacks between its recorded music division and its publishing division. This means that the hundreds of artists who record for WMG’s labels and whose publishing is with Warner/Chappell will be able to tap instantly into the rapidly growing revenue stream for master ringtones and ringbacks. This agreement will instantly provide thousands of songs for mobile operators and third parties to make available to consumers.
This bold step is a giant one toward resolving the issues between recorded music and publishing. And it puts the challenge squarely in front of the three other music companies. It’s my hope that they will come to a similar speedy resolution of this issue. Then we can begin to present the mobile industry with a simplified method for licensing our content.
We must also enable technology companies to find ways to engage consumers. I would argue there is a simple way to do this that will overcome our innate fear of “setting precedents.” The answer is short-term agreements that give technology companies the latitude they need to test drive a variety of economic models and consumer offerings. Such agreements also enable us to protect our artists from contracts that could negatively impact them in the long term.
This plan gives publishers and labels the time they need to establish legitimate valuations on music content and artist brands and strategically position ourselves to take advantage of the wireless distribution channel in the future.
Warner/Chappell and WMG are committed to finding resolution to the mobile music issues that dog all of us. It should be abundantly clear the entire industry has an interest in doing so, and I firmly believe you’ll see that we mean what we say in the weeks and months ahead.
We envision a future built around a seamless mobile music infrastructure in which our customers have easy access to all the music they want, when they want it. With this first step toward resolving the key issues, we can build just such a future.
