Midem Music Congress: The Two Universes Of The Music Business

CANNES – More help from governments, a hope for new cloud music services and new markets in emerging countries like Brazil. India and China were on the wish list of the big music labels and publishers at this week’s annual industry bash in Cannes, France. Technology companies and the newly invited hackers were more concerned with new ways to better access music and connecting artists and fans.

Two very different worlds of the music business presented themselves at the 45th edition of the Music Fair Midem/Midemnet in Cannes this week. One is the world of Imogen Heap. The British independent singer and songwriter described in a panel how she interacts with her fans online using photos or personal cello recordings sent by her fans to feed into her composition and creation of a music video. This is also the world of the hackers at the first-ever official Music Hack Day at a Midem who after 24 hours of coding presented new tools like a record function for an iPad allowing users to listen to their rehearsals while looking at the sheets on the iPad.

The other world is the one of Jean-Bernard Lévy, president of Vivendi, owner of the big music label Universal Music Group, who called on governments to protect the music industry from online piracy and the world of the Haute Autorité pour la diffusion des oevres et la protection des droits sur iunternet (Hadopi), the new anti-piracy agency in France that shall according to French Culture Minister Frédéric Mitterand re-educate young people so used to the gratis culture.

“In some countries we have legislation and are working with ISPs,” said Lévy, referring to Hadopi’s graduated response system, which allows internet cut-offs for repeated and finally convicted infringers. Hadopi was “a big breakthrough,” he said.

But Lévy is not satisfied, because “in other countries we had nice words, but no acts” and from some countries like Germany “we do not even hear nice words.” Germany’s coalition government, in a third review of its copyright law, has so far decided against cut-off of internet access as an answer to copyright infringement.

“I do not know if everything about Hadopi is so crystal clear,” said Ansgar Heveling, a German Parliament member attending the Midem, in reaction to Lévy. Yet Heveling said more liability for internet service providers should be considered in Germany.

At the European Union level, Michel Barnier, Commissioner for Internal Market and Services, re-iterated the announcement of the EU IPR strategy to be published in the coming weeks.

He said the EU package will include a legal instrument on orphaned works, a strengthening of the EU IP Observatory, and a regulation or directive on collective rights management in the Union. With regard to new anti-piracy legislation he said he is monitoring what happens in the member states and is prepared to react with new EU legislation. The IP Enforcement Directive is under review and criminal sanctions had been addressed in a draft new directive still on hold.

For the French Hadopi law, there has been “no shortage of technical and legal problems,” acknowledged Mitterand. A special closed unit, the Commission for the Protection of Rights (CPD) had to be built inside Hadopi to grant data privacy, said a Hadopi employee. Technically, the linking of the systems of five ISPs, rightsholders and Hadopi had been challenging. Yet, despite the rumours a year ago that Hadopi would never come, the agency today is on track, Mitterand said.

The second of the planned three rounds of warnings by the Hadopi agency to alleged infringers would go out in just days, said the agency, which presented its work in a little booth at the Midem Fair.

In the first round, Hadopi sent out 70,000 warnings (after 100,000 reports from rightsholders), in round two, some 1,800 of the first bunch of users will soon receive another warning. By June Hadopi would meanwhile target to send out 10.000 warnings a day, and later in the year it would be able to send out even more, if necessary.

Not everybody, not even everybody who could be expected to dwell in the world of rightsholders, is convinced that Hadopi will help artists. IFPI (the International Federation of the Phonographic Industry) in its annual report on digital distribution strongly underlined that piracy has led to declines in domestic sales (minus 45 percent), investment in new artists (minus 69 percent) and units sold (minus 56 percent) in a market like Mexico. But the French Collective Management Society for Performers, Spedidam, warned in a press conference at the Midem that what the government tended to refer to as “legal online offer” – which will be labelled with a Hadopi Label – is “under the control of major music distributors and multinational music companies,” while “the vast majority of performers were actually prevented from being compensated.”

So how can the two worlds of music be connected, if at all? Midem organising company Reed Midem has been trying to help connect the worlds by putting them side by side in the fair, and by making the more technically oriented Midemnet a core part of the Midem, said Anne de Kerckhove, director of the Entertainment Division of the Midem. Another positive trend, she said: “Two years ago we had 50 applications for the technology start-up award, now we have 155.” A growth welcomed certainly in times of declining numbers in Midem and Midemnet participation.

The three start-ups awarded in the mobile apps, b2b and b2c categories, the Discovr-Service from Australian Jammbox, a personalised iPhone music magazine, the artist popularity tracking tool “Next Big Sound,” a US start-up and the music blog feed radio “shuffler.fm” all grabbed data out there on music, artists and songs to provide fancy new tools for the industry and the fans.

“Music companies,” said David McKinney from Jammbox in applauding the Music Hack Day, “have all that data they can expose to hackers. Hackers can make great apps out of it which users will love.” In the end “money will change hands,” the young Australian entrepreneur predicted, and would go back to music companies.

The need for collaboration was also underlined by Ted Cohen, former EMI manager and now consultant to the music industry. Cohen said regarding the “digital revolution”: “We have been in that revolution for 17 years,” yet the combatants – with many already fallen like Napster, Kazaa or Limewire – still are unable to get to a compromise. Cohen said what is necessary was to build long term partnerships, take a look at the pie and say “how can we divide.”

Hartmut Masuch from BMG Music Publishing in Germany stressed the fact that the young generation had the technology to express themselves creatively, they could not be stopped by a label or publisher saying “no” and they did not want guidance with regard to their creative work, but rather a partner who would be a a partner for the administrative part of the business.

Some also look to “Cloud music” services to get to a breakthrough in digital music distribution, with Sony Music announcing its “Music Unlimited” service combining a fully licensed subscription streaming service – big deals have been done with European collecting rights societies like GEMA and all majors for that to be able to provide 6 million songs – with a digital locker that allows users to store what they own online in order to listen to it from anywhere.

Yet lockers have been out there for some time like simfy in German or eMusic, mSpot, Thumbplay Music or MP3tunes in the US and the latter currently has to defend its service in US courts against EMI which claims that the service was offering a platform for pirates.

Big players like Google, which is interested in offering a Cloud music service, themselves are looking to what the court will decide in this matter. In an amicus brief to the Southern District Court of New York Google recently argued that “adopting the plaintiffs’ positions would create uncertainty for service providers regarding their legal exposure for alleged copyright infringements committed by users or unrelated third parties.”

And it would inhibit growth and development of user-centric online models – another delay for the revolution.

WIPO, Industry Each Propose Global Music Registry

Cooperation and coordination may become crucial to avoid a clash between two initiatives to establish a central and unique database for music rights.

The secretary general of the World Intellectual Property Organization (WIPO), Francis Gurry, promoted WIPO as the best place for an International Music Registry, a follow-up to an existing database for several African countries (named WIPOCOS).

Gurry said the registry would be “a place where you can go to know who owns a piece of music.” Such a registry in his opinion is “central to the future of the music industry and its capacity to thrive, if not to survive.” WIPO would be the natural place for the registry because of the organisation’s experience with large registry databases and dispute resolution. Gurry said he envisaged a governance structure by data owners and expected the music registry to be a public-private partnership.

The hint of a public-private partnership possibly was an invitation to the other group that is fiercely working to set up a Global Repertoire database. Pushed by the European Commission, a group of industry partners including Amazon, Nokia, EMI and also collecting societies have started to work on a “Global Repertoire Database” and have commissioned a stakeholder survey with the International Copyright Enterprise (ICE), a commercial rights management provider set up by several collecting society, and Deloitte.

Both projects are ambitious given the fragmented and highly competitive marketplace. Still, in the long run, everybody accepts that it would help the industry. Both groups will meet and discuss cooperation, according to Neil Gaffney, EVP & head of European Society Relations, EMI Music Publishing (UK).