M meets the chief executives of PRS for Music, GEMA and STIM who are coming together to revolutionise the way their collecting societies handle online music licensing and digital royalty payments. They reveal how the partnership, which is based around the creation of a processing and a licensing ‘hub’, will keep pace with the digital music explosion and deliver universal benefits for members.
What is the current view from your society?
Robert Ashcroft (PRS for Music):
Here at PRS for Music, recorded music remains an important part of our business, even though it’s in sharp decline. We have to consolidate our systems to find the economies of scale needed to continue to provide this important royalty source to members. Meanwhile, the world of online is a growing part of our business. We processed 126 billion online music usages last year and are going to be dealing with trillions of usages before too long. We are working with STIM and GEMA to form a consolidated back office hub to be able to deal with these kinds of volumes.
Dr Harald Heker (GEMA):
I would agree with Robert. The driving force at GEMA is online music use and its exploding volumes. We need convincing technical solutions that allow for the processing of higher volumes and we trust that we can build them better by using the expertise and experience of three like-minded partners.
Kenth Muldin (STIM):
Music is one of the most consumed digital cultural expressions in the world. Here at STIM we are excited about the fantastic potential that advanced technology brings to music distribution – in a way that ensures that creators get paid for the music they make, thus balancing out the digital age music economy. Our ambition is to create a more modern and cost-efficient management of music rights in Europe, to the benefit of rightsholders, businesses and music fans.
Why are you partnering on the hubs project?
KM: I am very proud of this innovative partnership with two of the largest collecting societies in Europe and we can’t wait to launch it. I think we share two commonalities: firstly, a commitment to ensure all digital use of our members’ music is identified based on accurate authoritative data. Secondly, we strongly believe in the development of modern copyright processing systems that are able to match complex consumer behaviour with the continual evolution of new digital music services.
HH: I believe there are two different sides to the hubs co-operation: the front office and the back office. Looking at these two parts together, I think that the hubs will create a rather unique combination of all partners’ particular individual strengths.
RA: We know that, at present, music users may have to go to over 30 places to assemble all the licences they need to launch a pan-European digital music service. There is therefore a benefit for the user community in consolidating rights into a number of competing hubs – to have half a dozen as opposed to 30 would clearly make their lives easier. From our side, we understand it is a competitive market and negotiating rights through a hub serves the interests of all our members as well as those of music users.
What are the benefits of this strategy?
RA: If you have a large block of rights you are more likely to be at the front of the queue when the deals are done, and that means you have the chance to be a price influencer as opposed to simply a price taker. It’s our responsibility in representing our members to seek to shape the deals and business models of the future and not just be price takers.
HH: Through front office co-operation, there will be one point of contact for the repertoire block that all partners represent. That will clearly help us ensure our members receive their adequate share of remuneration. On the back office side, we will be able to develop new systems and processes together with PRS for Music and STIM which will reduce all our costs and extend the possible scope of such joint solutions.
KM: Our hubs will provide access to millions of works for download, subscription and streaming services. The combined repertoire will be among the largest of its kind in Europe. Our joint aim is to make music licensing and royalty payments more efficient, encouraging market entry for legal services and allowing music lovers to enjoy music. But most of all, we strive to obtain a more transparent and efficient remuneration system that will result in more money when the music they create gets played.
What are the next steps?
RA: We are seeking competition clearance for the hubs we have proposed in partnership with GEMA and STIM and, subject to the outcome, plan to launch next year.
HH: Subject to this clearance, GEMA is ready to move on with the project in 2014.
KM: Another step is to continuously explain the importance of copyright to the creators’ ability to make a living. Clearly defined, easy-to-apply and predictable legal rules enable rightsholders get paid for their work. I hope these hubs will have an impact on business provisions for online music across Europe, and perhaps also inspire other collecting societies to tag on to this development.