Artist managers and entertainment lawyers voiced their concerns about digital music revenue — how much their acts deserve and how much they’re owed — during the opening day of the MIDEM international music market and conference in Cannes.
The debate, moderated by Billboard international bureau chief Mark Sutherland, was appropriately titled “So Where Is the Money?” According to Terry McBride, CEO of Nettwerk Music Group, it’s usually sitting in major labels waiting to be claimed.
McBride said he had to personally track down royalties from digital services such as YouTube at major labels. “The labels held on to that money for the best part of three years,” he said. “A lot of money has been generated. Certain players have done a very good job of holding on to it, as a manager I do a very good job of finding it.”
Ken Hertz, a lawyer at Goldring, Hertz and Lichtenstein, who represents Beyonce and Britney Spears, said big numbers were being thrown around when digital track sales were discussed, but that hadn’t turned into huge revenue.
“Artists aren’t seeing big money,” he said. “Individual songwriters aren’t seeing big money.”
He also said that labels had been “very clever in structuring” lot of up front digital music deals, citing the example of the $1 a unit he said Universal Music Group earns from Microsoft on sales of the Zune. None of the money is treated as royalties, Hertz said, and is classified as “access fees or service charges” which won’t get fed through to the artists.
“Make sure that if you have rights, or own a catalog, that you are figuring out a way of shortening the distance between you and the money,” advised Hertz. However, he said it would be difficult for some artists to justify the expense of a full audit.
Paul Brown, European managing director, Pandora and commercial director, Slice The Pie, expressed concern about how the economic climate could affect smaller digital services and start-ups. “We know what’s going on out there, so there will be a lot less venture capital money around,” he said. “If it just becomes one, two or three big digital services, it’s going to be a very difficult future.”
McBride was optimistic about the combination of smart phones and music apps driving music sales in the digital space, though. He predicted that the panelists would “not even recognize” the biz in two years’ time.
Despite the strength of the live sector, another debate examined the issues facing ticketing, although for once there was no whipping boy from the secondary ticketing industry among the panelists.
Nick Blackburn, managing director at See Tickets, spoke about the barcode scanners and paperless ticketing that had helped tackle forgeries. He also criticized the U.K. government for not preventing the setting up of fraudulent Web sites, which take orders for tickets they don’t intend to supply.
Blackburn was also critical of ticketing companies getting into the secondary market, following Ticketmaster’s acquisition of TicketsNow. He said the often inflated prices on such services meant fans would buy fewer tickets to concerts.
“Money is going out of the business,” said Blackburn. “See has not bought into the secondary market. I just don’t believe it’s right”
Ticketmaster also came under discussion during the Q&A session with Jay Marciano, president of Madison Square Garden Entertainment, who commented on Irving Azoff’s move to CEO at Ticketmaster in October.
“You never underestimate Irving Azoff,” Marciano told interviewer Harvey Goldsmith. “He will out-work you. He is smarter. He knows the business from all sides.”
The 2,800-capacity Beacon Theater was acquired by MSGE last year and Marciano said it would re-open next month after a $15 million renovation. Recent acquisitions include the Chicago Theatre and the company has entered into a joint venture to take over the booking of the Wang Theatre in Boston.
“We have a couple of other new theatres that we’re looking at, to build in other major markets in North America,” said Marciano.
Marciano also predicted a healthy future for the live biz, describing how he increased the annual number of shows at Madison Square Garden from 49 to around 80.