MIDEMNet Blog: A Delicate Balancing Act

The following appears courtesy of MIDEMNet’s Blogs. See all of Ted Cohen’s blogs for MIDEMNet at MIDEM.com.

Nobody is probably going to like everything I say here today, maybe anything!

I have been and remain totally conflicted as to how to deal with the mounting digital business crisis. The rights of the services, the rights of the copyright holders and the rights of the public seem to be in an escalating conflict. Each side claims the other is disingenuous, unreasonable andor greedy. There’s seems to be a total disturbance in the Force, we can’t just seem to strike a reasonable balance. We are witnessing a very real death spiral.

Since the late ’90’s, I have tried to believe in the free market solution to the launch of digital enterprises. New ventures would be able to sit down with the relevant rightsholders and stakeholders and strike a sustainable business arrangement, one that allows that entity to come to market with the promise of success. This is proving to be more and more difficult to believe in.

Many legitimate offerings have not been able to secure terms that support longevity, let alone short-term survival. Even Spotify, the current industry darling, is beset with rumors of financial doom. “Do the math!” is the war cry. “The CPM’s are not achievable”, another oft-heard refrain. So if Spotify isn’t the answer, what is?

Last year, we thought it was Nokia’s ‘Comes With Music’, before that we held out hope that iMeem, Last FM and iLike were going to provide the solution with robust ad-supported music buffets. It hasn’t worked out so far.

Having been on the label side, I understand the desire AND need to extract value from assets. In my current ongoing work with start-ups, I appreciate their passionate desire to do something innovative with music. These two goals shouldn’t be at odds with each other, and yet they are. The ‘asks’ by the rightsholders are frequently substantial, the expectations from the start-ups are often unrealistic. Neither side is really listening to each other, they are each focused on their own immediate concerns. Understandable, but not very productive.

Would compulsory license constructs solve the problem? Does the ISP-based access fee fix things? Do transparent revenue sharing models offer hope?

The only way we’re going to find out is experiment with all of them. At a Grammy-sponsored Tech Summit two years ago at Skywalker Ranch, it was proposed that the labels, publishers and PRO’s support an experimental license. This would have allowed nascent entrepreneurs the opportunity to prove their model without writing “the big check”. The concept was to incubate new models & platforms, let them get some traction and then enter into meaningful negotiations with the appropriate parties. At the time, the idea was rejected. I humbly submit that, based on the increasing revenue declines suffered by the music industry, it’s now time to revisit the proposal.

As I’ve stated many times, here and in other forums, I believe the future of music is service-based, not product based. Ubiquitous access with robust curation obviates the need for ownership. But this is truly a bright future, one where everyone experiences the music they love while artists, composers and rightsholders receive a just return on the labors. Is this a bit optimistic? Yes, and why not?

We need to find the balance quickly, the alternative isn’t pretty.

What do you think is the answer?

Posted by Ted • Wednesday, September 16, 2009 .