The document summarizes a presentation given at the Music 4.5 conference on practical issues in digital music licensing. It discusses setting licensing parameters, how to obtain licenses from record labels, performing rights organizations, and publishers. It provides advice on a practical approach to licensing, including focusing negotiations on generating revenue for rightsholders. The document also includes a hypothetical pitch presentation for an event listing and ticketing platform called eventbox.
7. 7
Level of Spend
High
Low
Low High
Digital Music
Engagement
ADCS
P 11% / £ 23%
Generation
Free
P 9% / £ 1%
Traditional Physical
23% / £ 4%
Physical
Fanatics
P 11% /
£ 11%
Budget
Conscious
P 8% / £1%
MOs
P 11% /
£26%
Going Digital
P 15% / £ 31%
Digital
Dabblers
P12% / £2%
8. 8
Olly Murs - UK
Amoroso Alessandra - Italy
Script - Ireland
Yolanda Be Cool – GermanyTaio Cruz - Spain
Collectif Metisse - France
12. Gregor Pryor, Reed Smith
Practical issues to consider: licensing, different
jurisdictions, glocal routes to market
13. Music 4.5 Goes Practical
Practical issues to consider
Gregor Pryor
Reed Smith LLP
16 September 2010
14. About Reed Smith LLP
Top 15 law firm in the world, over 1,800 lawyers
Dedicated Media and Technology practice
consisting of over 80 lawyers globally
Ranked Tier 1 in Chambers 2010 and Legal 500 for
Media and Entertainment and acknowledged
expertise in Digital Music
Featured ‘Wired 100’ most influential people in
digital media
Disproportionate number of lawyers who were
previously in-house counsel
15. Practical issues to consider
Why we are qualified to talk about this
Advise digital music services that represent well
over 90% of the market
Involved in a large number of key cases concerning
digital music, including Tribunals, CISAC and
copyright reform initiatives
Rated top-tier by directories based on industry
expertise
“Unrivalled experience in the [digital music] market”
– Legal 500
16. Orientation
1. Setting the scene
2. Establishing licensing parameters
3. How to obtain licences
4. Practical approach to licensing
5. Helpdesk
17. Setting the Scene
GLOBAL
Entire music industry worth £3.9bn in 2009, up 5%
on 2008.
Recorded music industry, including physical and
digital sales, was £1.36bn in 2009, same as in
2008.
Live music revenues – including direct ticket sales,
secondary ticketing and 'on the night' spend – have
increased by 9.4% to £1.5bn, but have slowed from
2008's outstanding growth of 13%.
Business-to-consumer revenues – including live
concerts and recorded music sales, grew 4.8% to
£2.9bn – 75% of the total industry.
18. Setting the Scene
UK
PRS for Music collected £511m in 2009, up 4.1%.
Business-to-business revenues including
businesses using music, direct licensing of music
services and sponsorship totalled £967m, up 4.4%
on 2008.
Recorded music revenues in the UK are larger than
the US per head, $26.52 per head in Britain
compared to $15.08 in the US.
“Flat is the new up” – Will Page, PRS Economist.
20. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months
Majors were set to invest in the business but could not agree terms
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings
Chuck D submitted a declaration in support of Napster in the
infringement proceedings
Bertelsmann lost $45m trying to buy the company
21. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months
Majors were set to invest in the business but could not agree terms
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings
Chuck D submitted a declaration in support of Napster in the
infringement proceedings
Bertelsmann lost $45m trying to buy the company
22. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months FALSE
Majors were set to invest in the business but could not agree terms
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings
Chuck D submitted a declaration in support of Napster in the
infringement proceedings
Bertelsmann lost $45m trying to buy the company
23. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months FALSE
Majors were set to invest in the business but could not agree terms
TRUE
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings
Chuck D submitted a declaration in support of Napster in the
infringement proceedings
Bertelsmann lost $45m trying to buy the company
24. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months FALSE
Majors were set to invest in the business but could not agree terms
TRUE
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
TRUE
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings
Chuck D submitted a declaration in support of Napster in the
infringement proceedings
Bertelsmann lost $45m trying to buy the company
25. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months FALSE
Majors were set to invest in the business but could not agree terms
TRUE
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
TRUE
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings TRUE
Chuck D submitted a declaration in support of Napster in the
infringement proceedings
Bertelsmann lost $45m trying to buy the company
26. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months FALSE
Majors were set to invest in the business but could not agree terms
TRUE
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
TRUE
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings TRUE
Chuck D submitted a declaration in support of Napster in the
infringement proceedings TRUE
Bertelsmann lost $45m trying to buy the company
27. Napster - True or false?
The company was majority-owned by Shawn Fanning’s uncle TRUE
Napster attracted 16.4 million users in less than 12 months and had
40 million users at the time of the injunction after 18 months FALSE
Majors were set to invest in the business but could not agree terms
TRUE
At the height of the legal controversy, Shawn Fanning introduced
Britney Spears at the MTV VMA’s while wearing a Metallica t-shirt
TRUE
The head of ‘new media’ at Universal Music wore a Napster t-shirt to
staff meetings TRUE
Chuck D submitted a declaration in support of Napster in the
infringement proceedings TRUE
Bertelsmann lost $45m trying to buy the company FALSE
31. Establishing licensing parameters
Is a licence needed?
What is a licence needed for?
Who gives the licence?
What kind of licence is needed?
Is there a licence that fits my business
model? If not, can I create one?
32. Establishing licensing parameters
In context of digital music distribution, some
relevant factors to decide who needs a
licence include:
Who is undertaking what restricted act?
On whose server does the music sit?
How is the music delivered?
Who contracts with customers?
33. Establishing licensing parameters
Whether for downloads or streaming, a
licence will be needed for these rights:
Reproduction (“mechanical”)
Communication to the public (“performing”)
Adaptation?
Synchronisation?
Separate licences will be needed for both the
musical composition and the sound
recording (including performers’ rights).
34. How to obtain licences
Record Label – for certain uses of sound
recordings, such as on-demand, downloads
and synch rights.
PPL – for certain uses of sound recordings,
such as interactive streaming and
webcasting.
PRS for Music – for mechanical and
performing rights in musical compositions.
Publisher – for adaptation and synch rights
in musical compositions.
35. How to obtain licences
Record label licences – subject to individual
negotiation.
PPL licences – PPL offers various online and
mobile music licences and these are subject to
individual negotiation.
PRS licences – PRS offers various online and
mobile music licences and these can be negotiated
– see hand out for details.
Publisher licences – subject to individual
negotiation.
Artist direct licences – increasingly prevalent.
36. How to obtain licences
The traditional model of collective management:
Performing right societies represented the global
music repertoire exclusively in their territory
This resulted from their networks of reciprocal
representation agreements…
…and in particular it resulted from the membership
and territoriality exclusivity clauses
37. How to obtain licences
Any multi-territory online music service
provider in Europe had to obtain licences
from the collecting society in each country
No pan-European single licence available
from a collecting society
38. How to obtain licences
The desired outcome for music service providers of
obtaining a pan-European licence for the global
repertoire from a single collecting society has not
been achieved.
Pan-European licences for major publishers’
repertoire can be obtained from some societies.
So now, instead of having to deal with societies in
each territory to obtain a licence for the global
repertoire, a provider needs to do that for some of
the repertoire, but for major publishers’ catalogues
some of the societies can grant pan-European
licences.
39. Practical approach to licensing
But first, do you need to?
PPL offers licences for:
Non-interactive radio (streamed online radio)
Customised radio (allows user to stream content
and skip, pause, rate and influence the content they
receive)
On-demand programme streaming
This leaves some gaps: what about downloads? Or
truly on-demand services (like MOG or we7)?
40. Practical approach to licensing
Answer: go straight to the labels.
Approach each major and aggregators (for
indies)
Be prepared for what they will ask for in
return for a licence: per stream rate, equity,
advance, guarantee, MFN
Majors (+ Merlin) are reported to own stock in
41. Practical approach to licensing
Understand the label’s repertoire and latest strategy
Network and approach the right person and identify
who makes the decisions
Focus on how you will make money for the
rightsholder
Use simple, catchy presentations that outline
commercial objectives for the discussions
Be prepared to talk about technological
implementation
Be sensitive to label’s objectives
42. Practical approach to licensing
Core terms for licence agreement:
Sufficiently wide grant of rights
Assurances concerning catalogue availability
and exclusive content
Competitive royalty rate and terms
Timely and accurate delivery of assets
Comfort concerning rights clearances
Fair termination provisions
43. Things to do
Seek a licence when one is required
Set a clear timetable and be persistent
Ask questions and more questions
Focus on positive, revenue-generating opportunities
for the label
Entertain them
Prepare for robust negotiation and be empathetic to
label’s objectives
Seek solutions and make suggestions
44. Things not to do
Seek a licence when one isn’t required
Confuse which label owns which repertoire
Be aggressive or score points
Fail to understand your technology or underestimate
rightsholders’ understanding of it
Escalate without notice and consultation
Use the words “promotional”, “anti-competitive”,
“royalty-free” or “P2P”
Be unprepared, vague or defensive
Wear ‘cool’ clothing or try to act ‘cool’
46. Music 4.5 Goes Practical
16th September 2010
Adam Street Private Members Club
Event partners
Music 4.5 is organised by
47. Panel discussion: which strategies for what
service/product/situation
Moderated by: Grant Murgatroyd, Corporate Financier
Magazine
Scott Cohen, The Orchard
Patrik Larsson, Headlock Management
Helienne Lindvall, singer, songwriter, journalist with The
Guardian
Gregor Pryor, Reed Smith
62. for you
for everyone
Gigaboxx, keeping it live
Information in this document is subject to change without notice and does not represent a commitment on the part of the vendor or its representatives.
63. Live and direct
Gigaboxx is a revolutionary new mobile music
download service which allows artists and
record companies to quickly and easily build
their own mobile music stores. This then
enables them to sell direct to their audience
(using a suite of marketing tools), by delivering
their site URL (web address) direct to the live
audience’s mobile phones – at the point when
they are most likely to make an impulse
purchase.
64. Mobile stores, which were designed specifically
with the music industry in mind, are quickly
produced and managed, via a user-friendly online
wizard.
The artist or record companies can then add
tracks, videos, gig lists and much more.
This is all achieved without incurring the expense
of an application, which might only work on a
specific make and model of smart phone.
Gigaboxx believe that in order for bands to
effectively reach an audience and sell product,
they must cater for the majority of all phone
users, rather than targeting a specific group
though just applications. So the Gigaboxx system
works across all mobile platforms, delivering the
best user experience possible.
The system also empowers bands to deliver
unique content and control how that content is
delivered. Changing content is now in the hands
of the record company or artist.
•
•
•
•
•
Benefits
65. Included in the standard package is a direct-2-
audience marketing tool set. This includes QR
codes and a SMS reply service. An artist can
print both the QR code and short code numbers
on all their promotional material, plus post them
to all their favourite social network communities
and blogs, dragging an audience back into their
Gigaboxx mobile site.
Gigaboxx also supplies and sells local Wifi and
Bluetooth solutions, which detect a fan’s phone
with their Bluetooth or Wifi enabled, and then
transmit the site URL.
Fans can make a purchase there and then
through an all new one click micro payment
system called Payforit, which is compatible with
all mobile phones and is supported by all the
major phone networks. Downloads are billed
direct to a fans mobile phone bill, or deducted
from their pay-as-you-go credit.
Gigaboxx is also able to give artists/record
companies a valuable insight into their fan base
via the data and analytics collected from
download sales.
•
•
•
•
Benefits
66. Benefits
You can change content on the fly - it’s
immediate. Meaning artists/record labels can now
upload different videos and remixes, depending
on the historic geographic data build up using the
system. For example a re-mixes EP for
Manchester or a unique video for Bristol. They
can also sell single tracks, albums, images and
merchandise – and of course it’s fully sync-able
with platforms like Facebook and Twitter.”
Sign up to the service will be free from next
week.
•
•
67. Information in this document is subject to change without notice and does not represent a commitment on the part of the vendor or its representatives.
For more information, go to http://www.gigaboxx.net or contact the following:
Ian Pickard, MD Gigaboxx, Co-founder
ian@gigaboxx.com
07774 216650
Hugh Stanley-Clarke, Co-founder
hugh@gigaboxx.com
07956 342682
70. Introduction
• Kat Jackman, Founder, UBR
• UBR is a unique web based music industry
service, and media platform
• I am looking for investment to develop user
generated content features,
ecommerce/subscriptions, and sales staff to
sell advertising online.
71. Problem
• Major label deals diminishing
• DIY approach is the way forward for artists
• There are over 800,000 bands on Myspace
• The majority of these bands are looking for
feedback to know how to improve and
‘industry’ access
72. Solution
• www.unsignedbandreview.com
• Online feedback from top music industry experts
• A panel of credible experts
• Currently have Warner Bros, Sony, Universal,
NME, Radio One, Kerrang!, Ministry of Sound,
and many other big players in the music industry
who give feedback to artists
• Other useful information, editorials, tips and links
for artists
73. Revenue
• Display advertising and sponsorship - online,
events and through apps
• Subscriptions
• Classified advertising sales
• Affiliates
• Downloads (phase 2)
74. History
• We have 5K bands on UBR database
• Get over 1 million ad impressions per month
• I have already sold advertising to Xbox,
Smirnoff, Levi, Quiksilver, Sony
• I have put my time and money into UBR for
the past two years
• I recently won the Daily Mail Enterprising
Young Brit awards and received an award from
Peter Mandelson for UBR
75. Investment
• £200K investment
• To develop user generated content features
online
• To build technology so that the review service
is managed on a CMS and I don’t have to
manage it
• To build the phone app. and facebook app.
• Sales, marketing and PR
76. Summary
• Millions of bands worldwide seeking access to
the music industry
• We are a unique service where bands can get
industry access
• Proven advertising and subscriptions revenue
• Need investment to launch new online
features to generate more ad inventory for
brands and ecommerce for subscriptions
service