MIDEM and the music industry in 2011

MIDEM is now over for another year and representatives from all sectors of the music industry are busy digesting the comings and goings of the event. Some conference themes followed on from where they left off last year, whilst others debated new business models that rose to prominence during 2010. There were numerous cases of the traditional music industry bumping heads with supporters of these new business models. But at a number of conferences and panel sessions, there seemed to be a better understanding of some of the issues and concerns on all sides as well as a greater willingness from most of the participants to go that bit further to get their heads around each other’s issues, which in previous years, had been a source of major division. There were of course still plenty of areas of disagreement but on the whole all parties exchanged handshakes rather than insults.

There were of course the usual headline grabbers. Forrester’s Mark Mulligan introduced the conference to the acronym SPARC (social, participative, accessible, relevant and connected), suggesting that new digital music services should contain all these features. He was critical of the fact that current licensing structures actually disadvantaged legal services and current digital music services still did not meet consumer demand, a theme echoed by a number of speakers. There were also a few ‘surprising’ forecasts, most notably by CatchMedia’s CEO Harry Maloney, who said at a cloud music panel that a-la-carte downloads would soon go the same way as the audiocassette.

A new feature for this year was the Twitter feed that ran on the main screen in the larger auditoriums. It made for interesting reading for most of the time if a little distracting. Most memorable for all the wrong reasons was the Tweet “F**k You David” during David Guetta’s ‘conversation’ with Gilles Babinet of Eyeka. Despite this, most of those listening to the discussion (both male and female) would like to have taken Guetta home to meet their mother.

The event had a few critics, with Digital Music News’s founder Paul Resnikoff questioning whether MIDEM still had a place in today’s music industry. He said that during a panel discussion it became evident that most of the companies taking part did not exist just a few years ago. It could be argued that he has a point as the most well-attended events were not those taking part in the larger auditoriums but the discussions and presentations that targeted niche industry sectors held in some of the smaller halls dotted around the conference center. In fact, the interest in some of the keynote speakers’ presentations could best be described as disappointing. The new idea of speakers and panelists drifting on and offstage unannounced didn’t work and should be reviewed before next year.

Arguably the most interesting sight this year was the press conference for the rollout of Sony’s Music Unlimited subscription service in France, Germany, Italy and Spain, adding to the UK and Ireland which saw the service soft launched in December. The panel of speakers included very high-ranking representatives from all of the major record companies, something that only a few years ago would have been unthinkable, if not impossible. There is of course a distinction between Sony Music Entertainment and Sony Network Services, which is the division responsible for the Music Unlimited service, but listening to representatives of Universal Music, Warner Music and EMI singing the praises of Sony was a very unusual experience to say the least.

It also became very apparent that not only were the majors giving their backing to Sony, they were also presenting a very united front in what has become a battle for survival in an industry that is having its life blood drained away by file sharing. Each of the four majors openly admitted that the main competition for Music Unlimited is not other subscription services but the file sharing networks and the free illegal services.

During this year’s MIDEM there were a number of very positive announcements regarding subscription services that suggest the business model may just be starting to show signs of growth. For example, Rhapsody has added 100,000 new subscribers to its service since it was restructured last April, taking the total number of subscribers to 750,000. Rhapsody is now running neck and neck with Spotify, which confirmed it too has 750,000 paying subscribers. However, the most positive subscription-based news came from the French service Deezer, which said it ended last year with 500,000 paying subscribers. By the end of January this figure is expected to have grown by a further 100,000. The sharp rise is due to the service’s promotion deal with Orange. The result of the growth was evident in the French recorded-music sales results presented by SNEP, which said that revenues from subscription services were up by 60.5% last year compared with 2009.

There was though an unanswered question at the Sony press conference – just what happens if Music Unlimited doesn’t work? Sony doesn’t have a very good track record in launching and sustaining digital music services and there was a very firm refusal to give any indication of how the Music Unlimited service was doing in the UK and Ireland. In support of Sony it is unreasonable to judge a service after it has been running for just one month but Sony will need to provide some figures, perhaps after six months, to support the heavyweight backing of its service launch. The problem for Sony and its supporters is that if it doesn’t present some numbers everyone will assume that Music Unlimited isn’t working. This was the case for Nokia and Comes With Music (now Ovi Music Unlimited). Nokia said that things were fine for a while without backing the statements up with firm details. This service has now been pulled in most markets with the exception of China, India, Indonesia, Brazil, Turkey and South Africa.

Two glaring omissions from all of the conferences and panel sessions this year was any representation by Apple or Google. Regardless of the optimism surrounding the new subscription services, the iTunes Music Store is still the most important digital music service in the world today. It seems almost unthinkable that the biggest music retailer in the world’s biggest music market would not offer some insight into its success, or at least just publically rub shoulders with an industry that has played such a major part in its success over the last few years. Like Apple, Google is thought to be on the verge of launching some sort of music subscription service and the views of the world’s biggest search engine on how it sees the industry at the moment would have been extremely interesting to hear. Perhaps things will be different next year.

Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.