After more than 12 years as the first CEO of indie rights nonprofit Merlin, Charles Caldas will step down on Dec. 31. During his tenure, Merlin distributed over $2 billion to its almost 900 members, including more than 20,000 labels and distributors in over 60 countries that make up 12% of the global digital recorded-music market. Caldas made early licensing deals with Spotify, YouTube, Deezer, SoundCloud, Pandora, Facebook and Tencent. He also pursued copyright infringement actions against a number of digital services and played an important role in the Warner Music/Parlophone divestment.
The 2018 sale of its equity shares in Spotify netted Merlin’s members a reported further $130 million. “When you are running this hard for so long, you don’t tend to pause and look back at what you achieved,” says the executive. “You’re always looking ahead at what’s around the corner.”
What do you consider to be your biggest achievement as CEO of Merlin?
If our starting position was: indies are in peril of being pushed down the value chain and pushed to the periphery of the market, the fact that I can sit here now and see the labels we represent front and centre on [digital] services and thriving commercially is pretty satisfying to look back on. Independents are now in a position of optimism rather than fear and dread, which was very much the case in the late 2000s. We’ve changed that narrative.
One of the first deals you made as CEO was a licensing agreement with Spotify that gave Merlin an equity stake in what was then a startup. Was that a difficult decision at the time?
Doing an early deal with Spotify wasn’t necessarily the most popular move in some parts of the independent sector. There were a number of independents around the world that felt that the emergence of streaming services was going to take more value out of the market rather than add [it]. Some of my toughest discussions in the early days were justifying why we felt these platforms were worth licensing and why we weren’t trying to shut them down. But the value proved tangible, and the huge amount of money we injected into our community via the successful sale of our Spotify shares makes me proud that we built this engine.
Merlin is one of a number of major rights holder organizations that are negotiating new licensing deals with TikTok. Do you think you will reach an agreement?
I’m confident that we’ll get there. We are trying to harness what has been built there into a licensing model. It’s a good sign that there are people who are thinking of compelling ways to get people in the wider market engaged with music again. Five years ago, no one would have predicted kids doing 15-second bedroom videos of their favorite songs would become this global phenomenon.
Under your leadership, Merlin successfully fought copyright infringement actions against LimeWire and Grooveshark, and battled YouTube over the value of independent music. What has been the most trying battle during the past 12 years?
All fights are unpleasant, and they are all — from our perspective — avoidable. From a consumer’s perspective, they don’t care if an artist is signed to [Universal-owned] Republic or Ninja Tune. If it’s a great song, it’s a great song, and [independent music] shouldn’t be worth any less to the end user than something funded and recorded by a multinational corporation. We always knew that ultimately the story we were telling would prevail. There’s been lots of challenging companies, people and moments, but none of them that were ever strong enough to take the wind out of my sails.
Merlin’s members represent around 12% of the global digital music market. Can you envisage independents’ market share continuing to grow?
I’m certainly confident that we’re not going to lose a lot of value. The main risk for losing value in the independent sector is through acquisitions and consolidation. And in a market this valuable, I have no doubt that we’ll see some of that. The thing that gives me confidence is that as streaming spreads across Latin America, Southeast Asia, Eastern Europe, Africa — all of these markets that are still nascent in the streaming revolution — there are a lot of rights sitting within major labels. Those companies will start to take more control of their own digital business and take a much more independent path to market. So while there will be consolidation on one hand, there will be expansion on the other.
Merlin opened offices in New York in 2014 and Tokyo two years later. How important have they been to the organization’s global growth?
Hugely important. The fact that we now have staff members solely responsible for looking after our members’ business in Latin America is a sign that there is enough value for us to invest resources and put people on the ground to deal with those cultures. We’re not opening those offices as client acquisition strategies. They are very much being done to meet the demand of how the market is evolving. Brazil and Mexico are now in our top 10 earning markets. Argentina and Chile are in our top 20. That’s a very, very different music industry to what it was in 2008 when Merlin started.
What’s the main challenge for indies in 2020?
The ongoing challenge is establishing parity in emerging markets. The value conversation in China, for example, is a difficult conversation to have. As we get into other markets like India that aren’t quite as evolved down the digital chain, we’re having to fight some of those battles again. So I would be very wary of saying the battle is won. The fact that the music industry’s biggest clients now are also massive technology companies with their own view of [the value of music] rights means there is always going to be that tension.
What advice would you give your yet-to-be-named successor?
Remember Merlin’s founding ethos. Remember the fact that this was an organization created to uphold the value of what these independent rightsholders around the world do on a day-to-day basis. If that’s at the heart of what you do, and you are carrying that in your core, then I don’t think you’re going to go too far wrong.