In a new series on Synchtank, we speak to key figures in and around the music publishing world about the issues shaping their part of the business.
Here we speak to Ben Katovsky, COO of BMG, about where growth lies for music publishers, what the DCMS got right in its assessment of the streaming economy, why wiping of unrecouped balances has become an “arms race of fairness” and why publishers should “chase the big money here today rather than daydreaming about the future”.
Where are you seeing real growth in income and opportunities outside of the traditional areas? What platforms (be they social, UGC or even broadcast) are you most excited about in terms of their (and your) growth potential?
There’s no getting away from the fact that the past year has been a shock to the system with the impact of Covid on live revenues in particular. But even amidst that we are seeing good growth from UGC and social and have recently struck a host of new deals with a range of services from short video to fitness.
We’re certainly seeing the growing impact of SVOD [subscription video on demand] services in our work administering the Netflix catalogue. In the wake of the pandemic, it’s important to focus on the big-ticket items. The temptation for companies seeking to impress investors is always to divert attention to the latest exotic new revenue stream.
Realistically, when songwriters are hurting the way they have been, it is important for publishers to chase the big money here today rather than daydreaming about the future.
Where do you think publishers are still leaving money on the table when it comes to new platforms and music uses?
Across the industry countless millions are still left on the table because of poor or non-existent registration or income tracking. Just last week we pitched our YouTube optimisation service to one writer and found that, of his top 30 videos on the platform, just three were properly claimed. This is not unusual.
For us, a really exciting area is deploying the expertise we have gained in our recordings business in publishing. In a digital world publishers can now influence the fortunes of songs more directly and cost-effectively than ever before.
Increasingly these kinds of services will be seen by writers not as an add-on but a must-have from their publisher.
“In a digital world publishers can now influence the fortunes of songs more directly and cost-effectively than ever before.”
BMG was one of the few music companies to explicitly come out in support of many of the recommendations of the DCMS inquiry into streaming economics. What specifically do you think they got right?
The MPs on the Select Committee should be congratulated on getting to the nub of the matter – the fact that the biggest problem with streaming is nothing to do with the services: it’s a music industry problem, the industry’s failure to modernise its practices to take account of streaming.
That’s not to say there aren’t things that couldn’t be improved on the services’ side – that’s a piece in itself – but the biggest single issue is the distribution of the near 70% of the proceeds which goes to the music.
Sunlight really is the best disinfectant and by airing these issues publicly we are hopeful the debate can move on.
What did they miss or underestimate here?
Overall, their analysis was spot-on. Naturally, as politicians, their conclusion was that the answer is to have legislation or regulatory intervention. Equally naturally, as a business, we would rather that did not happen.
Ultimately that is in the hands of the bigger companies. If they do not blink, they run the risk of bringing legislation down on everyone: who knows where that might end?
There is growing artist activism around streaming income (#BrokenRecord and Justice At Spotify to name just two campaigns). How should (or even will) the industry respond to this and make things more equitable?
There are two fundamental principles which govern our view of the streaming world: first, that there needs to be re-evaluation of the value we put on songs as opposed to recordings (songs deserve better); and second that there needs to be re-evaluation of share of revenue from recordings that goes to artists as opposed to labels (i.e. artists deserve better).
The first step on the road to progress is that music companies recognise that artists and songwriters are increasingly unhappy about being shoehorned into an early 20th century business model.
“The first step on the road to progress is that music companies recognise that artists and songwriters are increasingly unhappy about being shoehorned into an early 20th century business model.”
BMG said in its statement: “The committee has called for regulatory action. We hope that will not be necessary, but executives and shareholders alike need to accept that they cannot continue as before.” Is the threat (or reality) of regulatory action really the only way to achieve this?
You would hope not, but on the evidence of recent history, yes.
The traditional music industry view is that “what’s mine is mine and what’s yours is mine” – and clearly there’s a strong financial incentive for them to stick to their guns.
BMG also said: “The world has changed and, as in so many areas, exploitative behaviour is no longer acceptable.” What specifically is it doing to erase these old exploitative approaches and attitudes?
In a whole series of measures over the past years we have demonstrated our commitment to being part of the solution, pioneering revenue share deals which give artists the lion’s share of income, abandoning packaging deductions, getting rid of the controlled composition deduction, examining historic catalogues for signs of racial disadvantage, accelerating payments to songwriters.
All of these measures come at a cost, but we believe it is the right thing to do. Sometimes people say we do these things for competitive advantage, and to a degree that’s true; but we see the empowerment of artists and songwriters to be an inevitable side effect of the switch to streaming and, if so, better to be ahead of the curve than behind it.
As the fourth biggest player in the market, there is a limit to what we can do unilaterally, but we’re going to keep at it.
What impact could the DCMS’s recommendations have beyond the UK?
Right now there are at least seven different campaigns for artists and songwriter justice across our three biggest territories – the US, the UK and Germany. This is definitely not just a UK phenomenon. The issues are exactly the same and we do not believe they are going away.
The DCMS said writers (via publishers) need to get a bigger share of the streaming pie. Just how willing will labels (or DSPs) be to reduce their share in order to make it happen?
It’s an inevitable fact of life that turkeys do not vote for Christmas.
Sony Music Publishing has preemptively moved to “no longer apply existing unrecouped balances to earnings for eligible songwriters signed prior to the year 2000 who have not received advances since”. Is this likely to be adopted by the other major publishers?
It would be easy to be cynical about Sony’s move and the impact it will have, but it is an important step.
If the response to the genuine hurt felt by artists and songwriters to their treatment by the music industry is some kind of arms race of fairness among the established players, then that can only be a good thing.
“If the response to the genuine hurt felt by artists and songwriters to their treatment by the music industry is some kind of arms race of fairness among the established players, then that can only be a good thing.”
The DCMS also called for the establishment of a “comprehensive works database”. We have been here before with the failed GRD several years ago. Are we in a better position to realise this now?
There has been significant technological and data progress since the failed GRD, both by incumbents and new entrants to the music ecosystem. While on a smaller geographic scale, the successful launch of the MLC is certainly an encouraging indicator of potential success.
Today the technology exists, the data is improving and that really only leaves the potential blocker to be the will of the stakeholders, which unfortunately has been an issue in the past.