PRS tariff talks stall amid direct licensing dispute
The implementation of PRS for Music’s proposed new live music tariff has ground to a halt, following an objection over the lack of any provision for direct licensing, IQ has learnt.
The British performance rights organisation (PRO) announced last September it had the support of all “major relevant industry bodies”, including the Concerts Promoters’ Association, the National Arenas Association, Music Venue Trust and the Association of Independent Festivals, to push ahead with overhauling the 30-year-old popular music concerts (LP) tariff for shows and festivals, and had submitted plans for a new fee structure to the UK’s Copyright Tribunal for consideration.
However, “any organisation or person wishing to object” to PRS’s application was given until 27 October 2017 (later extended to 3 November) to do so, and PACE Rights Management – the company set up by manager Paul Crockford and agent Adam Elfin to assist public performance licensing directly on behalf of writers and publishers – made an official ‘request for permission to intervene’ over concerns that the new-look LP tariff failed to account for the growth of direct licensing.
The Copyright Tribunal agreed that PACE had a substantial interest, and granted it permission.
As revealed by IQ in July 2016, a growing number of major artists are choosing to bypass traditional blanket licences from PROs in favour of having their public performance royalties paid directly. The rise of direct licensing means many festivals are being forced to pay multiple licensees, as no PRO yet offers an ‘opt-out’ for artists who are not members and are licensing directly.
PACE made an official request for permission to intervene over concerns the new LP tariff failed to account for the growth of direct licensing
European festival association Yourope, for example, has advised against booking direct-licensing acts until a solution can be found.
On 22 February, PACE and lawyers for PRS appeared at the Copyright Tribunal hearing, which a person in attendance tells IQ went in favour of PACE, who sought non-ratification of PRS’s application and that all parties be asked to discuss a tariff that takes in to account direct licensing.
The parties are now in those discussions, ahead of a second hearing currently pencilled for 2 May. Any agreement reached by the parties, however, will only serve as assistance for the Copyright Tribunal to understand the various positions, as it has full authority to ratify or impose whatever tariff it deems reasonable and compliant with the law.
A spokesperson for PRS for Music declined to comment pending the tribunal’s decision.
Tariff LP has been levied at a flat rate of 3% of gross box-office receipts since 1988.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
‘PROs have no idea what’s played’: Vnue pushes into rights
Vnue, a New York-based tech start-up that aims to “revolutionise the live music business” by recording shows and releasing experiential content to fans, is to acquire Soundstr, a music rights company that pays rightsholders based on the actual usage of their works.
“For years, the performance rights organisations have utilised blanket licensing agreements to charge businesses, such as the 62,000-plus bars and taverns in the US, large fees for music they are likely never going to play, due mainly [to the fact] the PROs have no idea what music is actually being played,” says Vnue CEO Zach Bair.
“Because of this, many rightsholders don’t see a dime from performances of their work in blanket licensed businesses. Our technology aims to solve this issue and make it fair for everyone.”
The acquisition of Soundstr will, says Vnue, speed up the development of its own music-identification technology, MiC (Music Indentification Center). With MiC, instead of paying blanket fees to license music, bars would only pay for music they actually use, eliminating costly lawsuits from collection societies that target unlicensed venues.
“The current performing rights system discourages venues from having music”
“The vision for Soundstr is to create transparency on real-world music use, ensure accurate songwriter payments when their works are used and simultaneously help licensees pay fees in accordance with their music use,” says company founder Eron Bucciarelli-Tieger. “Vnue is the natural home for Soundstr as the company seeks to carry on with that vision. I look forward to the day when general performance royalties show up on my performing rights statements.”
“The current performing rights system discourages venues from having music, and does not fairly compensate the musicians even if the venues do pay into the PRO system,” adds Bair.
“With the joining of the MiC system and Soundstr technology, we will better align the fees the venues pay with the music that’s actually played there – and by making this fee fair and transparent, increase the number of licensed venues and ultimately increase royalty payments to the actual rightsholders for the songs.”
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
PRS launches overseas tariff calculator
British performance rights organisation (PRO) PRS for Music launched an online tool aimed at helping members performing overseas to negotiate fair royalty payments.
The new ‘live concert tool’ automatically calculates a country’s local live tariff, ensuring the correct tariff is applied and providing users with estimates of royalty value per concert. It can also be used post-performance, enabling PRS members to review the progress of a royalty payment and see the royalties they will receive after discounts have been applied.
Karen Buse (pictured), PRS for Music’s executive director of membership and international, comments: “With our expert knowledge we have managed to develop this technology before anyone else and create a real solution to a complicated issue.
“This tool could help bands of a certain size save potentially hundreds of thousands of pounds on a large tour”
“We have created something that our touring members will greatly benefit from; it could help bands of a certain size save potentially hundreds of thousands of pounds on a large European or even world tour.”
Artists and managers interested in gaining access to the tool should email firstname.lastname@example.org.
The UK live business is still awaiting the results of a review of the tariff for live music events, which has been set at 3% of gross box-office receipts since 1988. Among those who have voiced their concern about any future increase is the Association of Independent Festivals, which has warned that any rise in the 3% popular music concerts (LP) tariff would be “catastrophic” for grassroots music festivals.
Get more stories like this in your inbox by signing up for IQ Index, IQ’s free email digest of essential live music industry news.
Gema collections top €1bn for the first time
Gema, Germany’s performance rights organisation (PRO) and collection society, last year collected more than €1 billion for the first time, its annual accounts reveal.
A total of €1.02bn was collected in 2016 on behalf of rightsholders, with the 15% year-on-year increase mainly attributable to a deal struck in November between Gema and YouTube, which largely ended the Gema-backed blocking of YouTube videos featuring major-label music.
However, royalty collections from public performances also remained “consistently high”, growing to €371.1m (up slightly from €365.5m in 2015) and once again delivering the lion’s share of collections. “Live music,” reads the 2016 report, “has continued to develop very strongly.”
So stable, in fact, that its continued eclipsing of the recorded market risks putting the future of recorded music in jeopardy, says the PRO, unless recording artists can secure “sustainable compensation from online streaming”. Also important is cracking down “on online piracy, which will deliver a permanent increase in related revenue”.
“Gema has never been as successful in financial terms as it was in 2016”
“Gema has never been as successful in financial terms as it was in 2016,” comments CEO Harald Heker. “An increase of nearly 15% compared to the previous year led to the one-billion mark being crossed for the first time. Such levels of licence collections ensure that composers and lyricists, as well as their publishers, receive a fair remuneration for the analogue and digital exploitation of creative performances.”
Heker warns, however, that government has a part to play if rightsholders ever expect to be remunerated fairly by streaming platforms. “In the fast-growing streaming sector, authors still do not participate adequately in the economic gains and successes of the providers,” he says.
“With the distribution of works protected by copyright, [streaming services] yield a high turnover, yet without adequately remunerating authors. Politicians are more than ever called upon to create a fair legal framework.”
Gema (Gesellschaft für musikalische Aufführungs- und mechanische Vervielfältigungsrechte, Society for Musical Performing and Mechanical Reproduction Rights) is one of the world’s largest collection societies, representing 70,000 members in Germany and more than two million globally. It is one of several PROs known to be offering controversial tariff ‘rebates’ to promoters, which have been criticised by many rightsholders and arguably contributed to the growth of direct licensing.
4 ways blockchain can disrupt the live industry
While much has been made of the potential for blockchain – the technology behind cryptocurrencies such as Bitcoin – to revolutionise the recorded music industry, the same isn’t true in the live sector.
Articles by the major tech and business publications (Forbes, Fortune, TechCrunch et al.) have largely focused on implications for the online streaming of recorded music, citing the benefits of ‘smart contracts’ wherein the owner(s) of songs will be paid automatically for their usage. However, while wider adoption of blockchain may, as Imogen Heap suggests, throw a much-needed lifeline to musicians struggling with paltry Spotify pay-outs, it could also radically transform the (comparatively more lucrative) live industry…
In the same way blockchain databases monitor where a music recording has been used, the technology can be used to track the ownership of a paperless concert ticket.
Chris Carey, founder of Media Insight Consulting and the recent FastForward conference (at which IQ news editor Jon Chapple chaired a ticketing panel), suggests blockchain can facilitate the “legitimate resale of tickets by having a clear chain”. Speaking to IQ’s Eamonn Forde, Carey says by tracking secondary sales, ticket agencies could provide artists and promoters with a cut of each resale: “Tracking the ticket through its journey could actually create revenue at different steps. There is an argument to say that if you can monitor transactions through technology, the artist could get a share of the upside at every step of the way.”
Several yet-to-launch start-ups, including Amsterdam-based GUTS and the UK’s Lava, are already using the technology to bolster the both the data-gathering and anti-touting capabilities of paperless tickets.
GUTS Tickets founder Maarten Bloemers echoes Carey’s suggestion that blockchain can be used by artists to track ownership of a ticket, saying the technology “makes it possible to follow the lifecycle of a ticket from A to Z”. He tells Dutch paper De Telegraaf he had the idea for the company after hearing a discussion about black-market tickets on a radio programme. “Someone [on the show] said no one can guarantee the authenticity of tickets,” he explains, “and I immediately thought of blockchain.”
“We’re looking at a world where knowing the complete provenance of the ticket is a good thing,” adds Benji Rogers, co-founder and CEO of dotBlockchain Music (dotBC). “Unless, of course, you’re trying to hide something…”
Levelling the PROing field
Perhaps the most important live application of blockchain could be to give PROs a shot in the arm at a time when an increasing number of rightsholders are choosing to bypass collective licensing altogether in favour of collecting public performance royalties directly.
Rogers – unlike, for example, Mark Knopfler – believes there is “still a place for PROs to make large deals on behalf of artists”, but says they face the challenge of “not [being] competitive today”. (Little surprise, perhaps, when many are more than a century old: the UK’s Performing Right Society was founded in 1914.)
“They’re using tech not built for the size and scale of what’s coming at them,” he explains.
The Society of Composers, Authors and Music Publishers of Canada (Socan) recently became the first PRO to partner with dotBC. Eric Baptiste, the CEO of Socan – which represents more than 135,000 rightsholders and recently saw collections from live performances grow to a record high – said last month: “We are convinced that it is possible to address payment and rights inefficiencies […] that have been a drag on the entire ecosystem for far too long.” He added: “The encouraging work of dotBC has the potential to unlock enormous value for our members”.
Rogers says PROs making use of blockchain technology will be able to compete more effectively by offering a better service to their membership. Comparing PROs to trains running on different gauges of track, he prophesies that in future collection societies will “need to work on a common rail”: “If we build the perfect sound format [.bc], we build the rail and everyone can ride on same track.”
DotBlockchain Music, then, “allows [PROs] to work together while remaining competitive,” says Rogers. “They can then compete based on how good their accounting is, how good their data side is…
“We’re looking at a world where knowing the complete provenance of the ticket is a good thing”
Another potential application of blockchain in the live space is to enable artists and promoters to broadcast their shows live safe in the knowledge copyright owners are being paid.
Writing in IQ last year, Sziget Festival’s András Berta was enthusiastic about live streaming as a way to reach more fans, but said there are concerns about the complexities involved in licensing live streams. “In 2016, I think we still face a grey [area] when it comes to clearing streaming rights,” he wrote, “simply because the industry is far from being homogeneous. Different players hold different cards, and this can result in a losing hand in many cases.”
By using dotBC’s codec (.bc), which binds writer metadata to the track, for music files, Rogers explains festivals like Sziget will be free to live-stream on sites such as Facebook and YouTube – and artists able to sell recordings straight after the show – with the writers receiving owed royalties automatically.
Rogers, also a musician, relates an anecdote about his experience licensing live recordings. Following a concert in which his band played two covers (The Cars and Gram Parsons), he paid the Harry Fox Agency to purchase the rights to distribute a recording of the show. “We said we’d sell maybe 1,000,” he explains. “We gave them $2,500 and never heard anything else.”
There was, he says, “no itemisation or monetisation” on the bill – theoretically, the band could have sold 10,000 copies and Harry Fox might never have known. With blockchain, conversely, there is a “bulletproof digital asset” that ensures ownership of songs is always “anchored back to the writers”.
A new rights reality
Like live streaming, filming and distributing shows in virtual reality (VR) is being tipped as a new revenue stream for the promoters of the future, with recent research finding early VR adopters outspend the average American 2:1 on live events.
However, Rogers says VR is also currently a licensing nightmare, with a traditional sync licence – which grants the licensee the rights to synchronise music with visual media – insufficient for a live VR gig, where the setlist is liable to change.
“How do I license a VR concert,” asks Rogers, “if I don’t know what songs are going to be played?”
Rogers says that, “right now, sound recordings” – master recordings, typically owned by labels, as opposed to the copyrights to the compositions themselves, usually administered by a publisher – “hold supremacy”, but in future “PROs [performance rights organisations] are going to have to do a deal with the publishing side of things” to offer more flexible licences for new experiences like VR shows.
One company leveraging the blockchain to do just that – again backed by Imogen Heap – is Ujo Music, which aims to provide a “shared infrastructure for all music services”, independent of the traditional label/publisher/licensing axis.
“If we build a common language for music, we can scale the business infinitely”
While blockchain offers tremendous opportunities for promoters, artists, ticketing companies and PROs, Gregor Pryor, co-chair of the global entertainment and media industry group at legal firm Reed Smith, told IQ in issue 62 its actual take-up in live may stymied by the fact most people at the top end the top end of the concert business are actually making money.
“Live has probably been the place that artists have been running to when their digital revenues have been dropping,” he said in late 2015. “The live industry has been nowhere near as disrupted by digital as the record industry has – in fact, it has probably benefited. There has to be a reason for them to adopt it [blockchain].
“In the world of streaming royalty payments,” Pryor suggests, “there is much more of an incentive and impetus to adopt change. There is not any driving force behind change in live.”
However, as underlined above, much has changed since then. With growing unease around the state of the secondary ticket market, and the emergence of direct licensing and new, non-traditional PROs – such as Germany’s GWVR, which gives concert promoters a cut of the royalties from recordings – technology, as in so many other walks of life, may indeed provide the answer.
As it stands, music has “no common language,” concludes Rogers. “Email has POP3, Skype runs on VoIP [voice over IP]… If we build a common language for music – the perfect sound format – we can scale the business infinitely.”
Legal victory for direct licensing in Spain
In what the winning party is calling a landmark victory for advocates of direct licensing, a Spanish court has ruled against SGAE in favour of a venue which had negotiated to pay performance royalties directly to artists.
The ruling – by Judge Pedro Macías, of the commercial court of Badajoz in Extremadura – centres on two shows by veteran Spanish rock group Asfalto and comedian Pablo Carbonell at Badajoz’s 325-cap. Sala Mercantil in 2010.
When SGAE (Sociedad General de Autores y Editores), the Spanish collection society and performance rights organisation (PRO), realised the venue had not paid its fees, it announced its intention to collect – only to be told in an email that “the artists had reached a private agreement between them” and the Mercantil, according to Juantxu Manzan of the venue’s lawyer, OpenLaw.
OpenLaw believes Macías’s ruling – in which he affirmed artists’ “exclusive rights to the exploitation of the work, without any limitations other than those established by law” – has the potential to set a precedent for other composers and performers wishing to follow Asfalto and and Carbonell’s lead.
“The owners of these rights are the authors, so they are the ones who should be able decide what to do with them,” comments OpenLaw’s Andrés Marín. “If a composer and performer negotiate directly with a third party and agree to give away or even collect their copyrights directly, the SGAE has no right to try to collect, or recover, the rights the artist has not claimed.
“This ruling, therefore, opens a door that, until now, was closed to artists represented by SGAE: to be able to decide whether to collect their own royalties.”
“The owners of these rights are the authors, so they are the ones who should be able decide what to do with them”
The growth of direct licensing – in which an increasing number of artists are choosing to bypass their local PROs in favour of collecting performance royalties directly – was one of the live music industry’s biggest stories of 2016. Most affected are festival promoters – the vast majority of which have one-stop, blanket licences – with many facing the prospect of paying multiple licensees: the PRO and the artist directly.
While reports in some Spanish papers, such as El País, appear to suggest SGAE’s dispute was with the artists themselves, Asfalto frontman Julio Castejón tells IQ that isn’t the case. “It is not Asfalto who had a lawsuit against SGAE,” he explains. The information that has circulated is wrong.”
While explaining that he has his “own ideas of how copyright [should be] collected at concerts”, he adds that “in no case did we want to act as copyright collectors to replace SGAE. That information has been manipulated.”
A legal spokeswoman for SGAE clarifies that the PRO’s lawsuit was aimed at the Mercantil, not the performers – and says Macías displayed a “clear misunderstanding” of copyright law by failing to distinguish between the rights of performers, composers and publishers.
“The performers said to the court that they’d received their royalties, and the court understood that to mean the composers had, too,” she tells IQ. “It was a clear misunderstanding of Spanish copyright law, which distinguishes between the rights of composers and artists.” (In both cases, it should be noted, the composers and performers were one and the same.)
“It was a clear misunderstanding of Spanish copyright law, which distinguishes between the rights of composers and artists”
She insists Spanish creators can, if they wish, opt out of SGAE’s collective licensing – but that in the case of the two disputed shows, neither performer had done so. “If any of our members want to withdraw certain rights, there’s a procedure for it,” she explains. “But what we can’t do is have both systems: If they have a blanket licence, they can’t then administer their rights directly as well – it would be chaos for us.”
Matters are complicated by a pending supreme court case over whether SGAE must abolish its 10% box-office tariff on major shows – dubbed “abusive” by promoters’ association APM – with the PRO provisionally adopting a lower 8.5% while it awaits the final decision.
Adam Elfin, of leading direct-licensing agency PACE Rights Management, says it’s important those wishing to collect their performance royalties directly go through the proper channels. “PACE’s position has always been that if you want to directly license, you first need to reassign the rights from your PRO,” he comments. “If rights-owners are directly licensing without first engaging with their PRO, I can see that causing unnecessary confusion for all stakeholders.”
While Castejón says Macías’s ruling is the first time a court has agreed that “the author can collect their own royalties if they want to”, SGAE doubts whether the case – which concerned the non-payment of less than €1,000 – was a “landmark decision”, and says the story has been “exaggerated” by the Spanish press.
Victorious law firm OpenLaw, however, says the decision shows traditional collection societies are ultimately subordinate to the wishes of copyright holders – and demonstrates a “clear victory over the unjustified position of dominance that SGAE exerts over many of Spain’s music venues and artists”.
16 in 2016: The year in review
With 2016 drawing to a close, in many aspects, it’s been a banner year for the live music business. So in case you miss our regular Index email updates, or recently emerged from a time capsule, here’s 16 key 2016 takeaways (in no particular order) from the year that nearly was…
1. Seconds out, round…?
As IQ wrote last week in our investigation into take-up of dynamic ticket pricing, “if 2016 will be remembered in the live music business for any one thing, it will be as the 12 months in which the pitchforks well and truly came out against secondary ticketing”.
While the UK, as it often tends to, hogged the lion’s share of the headlines, the backlash against what the FanFair Alliance calls “industrial-scale” ticket touting was a truly global phenomenon, with American congressmen, Belgian ministers and promoters in Switzerland, Japan and, most successfully, Italy also all getting in on the action.
Look for continued action in this area in 2017 as the boundaries between primary and secondary continue to blur, calls for greater transparency continue, and more income is driven back to the industry, out of the hands of those who contribute nothing to it.
2. The Ticketing Gold Rush
One of the key topics tackled in this year’s International Ticketing Yearbook was the increasing appetite for ticketing by the world’s biggest online players. After Alibaba Group, the $14bn Chinese ecommerce giant, launched event ticketing operation Tao Piao Piao in May, Amazon caught the industry’s attention with several hires in the UK for the new Amazon Tickets, the start of a bid to become “Earth’s most customer-centric ticketing company”.
“From an artist or sports franchise point of view, any channel that will allow [major ecommerce companies] direct access to the end consumer is powerful and attractive,”
Slightly closer to home, Spotify unveiled a tie-up with Ticketmaster in November, Songkick is settled into its dual role as concert recommendation and ticketing app and Apple Music is dabbling the live space on the current Drake tour. Initial hiccups in some areas aside, 2016 could well be remembered as the moment the ticket started to go where the fans are.
“From an artist or sports franchise point of view, any channel that will allow [major ecommerce companies] direct access to the end consumer is powerful and attractive,” comments ticketing consultant Tim Chambers.
3. Live domi-Nation
The world’s leading live entertainment group showed no signs of bringing its ten-year buying spree to an end in 2016, making no less than eight major acquisitions.
Bonnaroo/AC Entertainment, French promoter Nous Productions, Greek ticketing company TicketHour, Australia’s Secret Sounds (Splendour in the Grass/Falls Festival), Canadian festival promoter Union Events, Sweden Rock festival, Big Concerts in South Africa and YouTube multi-channel network InDMusic were amongst those becoming part of the Live Nation family this year, to the tune of more than US$113 million.
“As we look forward, we see tremendous opportunities to continue global consolidation of our concerts and ticketing businesses, with further growth in advertising and ticketing from the concerts flywheel,” said CEO Michael Rapino in a Q3 statement.
4. Splendid isolation?
On 23 June, in the first major political upset of the year (bet you can’t guess no.2!), the UK voted to leave the European Union (EU), ending more than 40 years of political and economic union with continental Europe.
Thanks to a two-year exit process – which won’t even begin until next March – we’re still no closer to discovering the effect Brexit has on the international live music industry, although a common sentiment in the UK has been to stress the importance of prioritising the creative industries in any future divorce settlement.
“There is a very real risk that skills shortages in the UK will be made worse – at least in the short to medium term”
Industry body Creative Industries Federation called last month for the UK to retain freedom of movement with the rest of bloc – something especially important for touring artists and crew, many of whom have spoken of their opposition to the return of border visas. “There is a very real risk that skills shortages in the UK will be made worse – at least in the short to medium term – by any restriction on freedom of movement that comes with tightening immigration laws and the UK leaving the European Union,” said the federation.
5. Pollsters Trumped
Despite a majority of analysts predicting a victory for Hillary Clinton in last month’s US presidential election, it was not to be: the Republican nominee, Donald Trump, was victorious in 30 of 50 states, and will be inaugurated as president in January.
Like Brexit, the implications for the touring business of a Trump presidency are still unclear, but Nederlander Concerts CEO Alex Hodges seemed to sum up the mood in the Americas when he told IQ the day after the elections: “The show must go on”.
6. Good times
While Q4 and end of year figures are yet to be published, there are few who’d believe that 2016 was a slow year for live music. Billboard puts the value of the US live music business at a staggering $25billion in 2016, with performance show averages up 25% worldwide (43% in the US) and average per-show attendance up 30% globally (29% in the US).
“The top two global tours grossed more than a half-billion dollars in what has been a great year for the concert business.”
Pollstar, which traditionally offers a more accurate barometer of US market health, has yet to reveal annual numbers, but reports: “the top two global tours [Bruce Springsteen and Beyoncé] grossed more than a half-billion dollars in what has been a great year for the concert business.” Pollstar’s Q3 results pegged the top 100 tours up a more modest 3% year-on-year on combined grosses, with average tickets up 7.6%.
7. Rebates under debate
In terms of page views, IQ’s biggest story of 2016 was the revelation that an increasing number of artists are choosing to bypass their local PROs (for example, PRS) in favour of collecting performance royalties directly.
Direct licensing, as it’s known, presents a headache for festival promoters – the vast majority of which have one-stop, blanket licences – with many facing the prospect of paying multiple licensees: the PRO (performance rights organisation) and the artist directly.
Adam Elfin, who runs direct-licensing agency PACE Rights Management, said leaving promoters out of pocket “is not something we want or that should happen”, but added that it’s “beneficial that we’re having this conversation now, because if they weren’t aware of this [direct licensing] and they proceeded with their deals for next year with local PROs, the impact will be massively different.”
No PRO has yet declared they are willing to offer promoters a discount on fees if they have acts directly licensing bands on their line-up, but it’s not a stretch to imagine that might be a possibility for 2017.
8. Beyond music: eSports/YouTube
More than ever before, 2016 saw a raft of new content being introduced to venues, with the likes of eSports events and YouTube stars regularly selling out shows.
The scale of the eSports business was highlighted in October when Reed Midem, the organiser of the Midem music industry conference, announced plans for a similar event for the eSports market, on the back of new data revealing that global revenues in the sector for 2016 are estimated at US$493 million. That news came on the back of the Electronic Sports League (ESL), the world’s largest eSports promoter, agreeing a strategic partnership with AEG, giving it access to 120 AEG-operated venues for qualifying events, tournaments and world championships.
“2016 saw a raft of new content being introduced to venues, with the likes of eSports events and YouTube stars regularly selling out shows.”
Meanwhile, the power of social media continued to grow, posing opportunities for enterprising promoters to take YouTube stars on tour with agencies including WME, CAA and UTA making a big play for online talent. This rapidly growing sector is engaging young fans the world over – underlined by events like Summer in the City, in London’s ExCel centre, where more than 10,000 people bought tickets to meet their favourite YouTubers, watch them live, and listen to panel discussions.
The threat of terrorist acts around the world did not diminish during 2016, forcing promoters and venues to increase the amount of investment they are spending to guard their premises, artists, crews and fans from those intent to inflict death and injury.
Atrocities at the likes of the Pulse nightclub in Orlando, as well as attacks on festival sites and, of course the mass murder at Le Bataclan in Paris in late 2015, have brought about stricter security measures, with clubs throughout France now using airport style checks for patrons.
As a so-called soft target, concerts and festivals have found themselves under the microscope, especially in certain countries where terrorist cells are known to operate. At the IFF in September, Rock Werchter promoter Herman Schueremans stated his belief that “We’re more safe now” thanks to some of the efforts that he and fellow promoters around the world have implemented.
Elsewhere, Live Aid promoter Harvey Goldsmith lent his support to a new anti-terror training course, but such measures haven’t appeased everyone, with British peer, Baroness Henig, making moves to force staff at UK music venues to undergo such intensive training.
10. Social media integration
Having a Facebook, Twitter or Snapchat account for your event or venue is hardly rocket science these days, but the past 12 months have seen a number of deals forged to better exploit the audience who uses these and other social media platforms.
In April, Ticketmaster and Eventbrite both agreed deals to sell tickets through Facebook, while later in the year, Live Nation tied up with with Snapchat, initially to create ‘Live Stories’ at V Festival, Way Out West, Creamfields and Reading and Leeds, before taking it to the next level by using links for adverts on Snapchat to sell tickets to their shows.
The past 12 months have seen a number of deals forged to better exploit the audience who uses these and other social media platforms.
Not to be outdone, AEG entered into a multi-year agreement with Snapchat to promote its festivals via the video-sharing app.
Hinting at more deals to come, a survey by Nielsen found that Instagram is used by more US concertgoers than any of its rivals, with an astonishing 83% of those active on social media at shows making use of the photo-sharing app.
11. The SFX/LiveStyle saga
The year ended on a brighter note for those working for beleaguered dance music conglomerate SFX – although a number of creditors might take issue with that statement.
In November, Former Global Group and AEG Live chief, Randy Phillips, was appointed as the company’s new CEO and then, just days later, the SFX reorganisation plan was finally given a green light, following nine months of official administration, but at a cost of nearly US$400million of debt being written off.
The company managed to exit its bankruptcy situation earlier than planned and, moving swiftly to distance the group from its former self, Randy Phillips rebranded the entity as LiveStyle.
Quite whether the saga is truly at an end remains to be seen, with at least one shareholder still asking the courts to look at an alleged undervaluation of the company that accelerated its emergence from debt.
12. Goggle Boxes
The influence of new technology on the live experience continued to break new ground in 2016, with Virtual Reality (VR) a popular talking point. In May, music streaming service Rhapsody launched the Rhapsody VR app which promises, “free, immersive 360-degree videos of great artists from the best seat in the house”. May also saw Live Nation announce a partnership with NextVR to film and stream concerts in the format.
Festival including Wacken Open Air in Germany have begun filming their events for VR headsets, and other players in the space include Warner Music (partnered with MelodyVR and Digital Domain) and Universal Music and iHeartMedia, both recording concerts in VR.
The influence of new technology on the live experience continued to break new ground in 2016, with Virtual Reality a popular talking point.
But is it a genuine source of new revenue streams or a short term fad? Time will tell, but research company Nielsen found that early VR adopters are outspending the average American by 2:1 on live events.
13. Weathering the storm
In Europe, the 2016 festival season was one of the most turbulent in living memory, with FKP Scorpio’s Hurricane and Southside, Marek Lieberberg/CTS Eventim’s Rock am Ring, Ultra Europe, Live Nation’s Rock Werchter and Broadwick Live’s Festival №6 all badly affected by severe weather.
Responses ranged from a government-backed €500k bad-weather fund in the Netherlands to FOLD Festival cheekily giving away tickets to Glastonbury-goers who couldn’t face the mud, while panellists at Reeperbahn Festival’s Epic Production session called for collaboration between festivals and a unified code of conduct for dealing with inclement weather.
Wacken Open Air – which avoided the worst of 2016 – has, meanwhile, embarked on a major overhaul of its festival site for 2017, with a new drainage system and gravel-based ground covering.
14. Bot-tomming Out
The controversial use of bots to harvest primary tickets during an onsale saw inbound legislation in 2016, both in the US and UK. The state of New York made using ticket-buying software on offence in June, while plans for a new anti-both bill were introduced in Ontario, Canada, in October.
By November, the UK’s digital minister, Matt Hancock, had launched his Computer Misuse Act, but the strongest move yet came last week when outbound US President Barrack Obama signed the Better Online Ticket Sales (Bots) Act, which proscribes their use.
15. Desert Trip
Hailed as one of the greatest rock events of all time, Desert Trip, didn’t just smash records – it took dynamite to the entire jukebox.
The concept of putting together three headline acts across three days might not have been rocket science, but when the dream ticket was the Stones, the Beatles and Pink Floyd, the complexities kicked in. But promoters Goldenvoice pulled off the improbable, lining up the Rolling Stones, Paul McCartney and Roger Waters across successive nights and adding in support acts Bob Dylan, Neil Young and The Who for good measure, while using the site of California’s uber cool festival, Coachella, to stage the show – and lending to its popular nickname, Oldchella.
Hailed as one of the greatest rock events of all time, Desert Trip, didn’t just smash records – it took dynamite to the entire jukebox.
Not so fortunate were some of the ticket touts who gambled on scooping up as many of the weekend and day passes as they could get their hands on. Despite issuing a ‘sold out’ notice, Desert Trip organisers held back a number of tickets, which were released a month before the shows, prompting a collapse in the value of the secondary market to the extent that, in the days running up to the concerts, many tickets were listed at lower than original face value.
16. In Memoriam
Already considered an annus horribilis due to the number of fallen musical heroes (with Prince, David Bowie, Leonard Cohen among them), the business lost more than its fair share of heroes in 2016. Dan Panaitescu, head of international booking at Sziget festival was killed in a car crash in July, the same month that veteran concert promoter James Nederlander passed at the age of 94.
July also claimed the life of Baloise Session founder Matthias Müller, when the longtime Swiss festival promoter lost his battle with cancer. Meanwhile, other tragic losses to the business included Brazilian promoter and youth project champion Bianca Freitas, who died in October after contracting the rare Guillain-Barré syndrome.
Trying to squeeze 12 months of news, views and innovation into this short feature is always going to be tricky, so what did we miss? Please feel free to comment below. We may even publish the best bits…
Buma to drop controversial tariff discounts
Dutch performing rights organisation (PRO) Buma, one of several PROs known to be offering controversial live tariff rebates to promoters, is to abolish the practice from 1 January 2017.
Rates will remain unchanged from 2016 – a maximum of 7% for events with more than two-thirds Buma repertoire; 5% for between one and two thirds; and 3% for less than a third – but the practice of granting ‘volume discounts’, under which promoters receive up to 25% of money earmarked for songwriters and composers, will cease.
Buma – the PRO component of Buma/Stemra, with Stemra overseeing mechanical rights – currently offers rebates ranging from 10% (for license-fee invoices of between €75,000 and €250,000) to 25% (€1m+). Other PROs offering discounts to promoters include Sabam in Belgium, SIAE in Italy, Gema in Germany, Suisa in Switzerland and Sacem in France, with most justifying the practice by saying promoters are helping to administer public performance rights.
A spokesman for Buma tells IQ the plan to drop the current rebates took into consideration the views of “all market players, including authors and performers”, and has been approved by the Supervisory Board of Collection Societies (College van Toezicht Auteursrechten, CvTA).
While the volume discount will end, there will be a smaller discount of 5% available to promoters that organise more than 25 shows per year and pay more than €100,000 in annual Buma fees.
“The new tariff is completely transparent, and creates a level playing field for all promoters, venues and festivals”
To qualify for the discount, promoters will also, the PRO explains, need to “pay monthly advance invoices to Buma, provide financial security in the form of bank guarantees, report repertoire in a way that allows Buma to digitally fingerprint any songs played [and] provide backstage access to Buma to events for inspection purposes”. (The 5% deduction will therefore, says the spokesman, be a “fee for services rendered”.)
The PRO will also introduce a ‘special event’ tariff for festivals “with a significant share of the cost in an overnight stay: hotel, campsite, bungalow, etc.” The tariff – designed for events lasting at least two days and with minimum turnover of €1m minus VAT – will allow festivals to deduct 45% from tickets that include an overnight stay.
The new system, says Buma, is “completely transparent, and creates a level playing field for all promoters, venues and festivals”.
The practice of awarding rebates to promoters is among the factors contributing to the rise of direct licensing, in which performers cut out PROs to license their performance rights directly from festivals.
There have, however, already been signs of a pushback by festivals faced with the prospect of paying twice, with festival association Yourope advising its members against booking bands who choose to collect their royalties directly.
Global live royalties up 8.5% YoY in 2015
Global royalty payments for public performance rights grew 9.1% to €6.8 billion last year, accounting for 78.8% of all collections, Cisac’s 2016 annual report has revealed.
As in 2014, TV and radio made up the biggest chunk of those collections, with over half (53.7%) of all performing rights-royalties generated from traditional broadcast, although live had another strong year, growing 8.5% to maintain its position as the second-largest source in revenue in music.
The biggest growth for live and ‘background’ music (such at that played in nightclubs, bars restaurants) was in Africa (33.2% on a fixed-currency basis) and Latin America (20.2%).
Total royalty collections for all sectors in 2015 totalled more than €8.6bn, up 8.9% from 2014.
The biggest growth for live music was in Africa and Latin America
“Cisac members’ collections in 2015 experienced unprecedented growth of close to 9% year-on-year and, for the first time, broke the €8bn mark,” comments Cisac director-general Gadi Oron (pictured). “This is testament to the continued development of the global collective management network and the increased efforts of our members on improving their operations, adjusting their licensing solutions and responding to market demands.
“The strong growth experienced in all regions of the world in which Cisac members are active is particularly encouraging. It reflects the grassroots work undertaken in many countries by Cisac and its members to promote favourable laws, support societies’ operations and further improve their services to affiliated creators and publishers.”
Cisac (International Confederation of Societies of Authors and Composers) represents 239 collection societies and performing rights organisations in 123 countries.
The complexities of direct licensing
My initial thoughts in regard to direct licensing were What a good idea! But looking into it and working out the mechanics casts a rather different light on the matter.
At face value, the prospect looks simple: an artist, who writes their own material, serves notice on the PRS to exclude the works on their set list. This could be for any number of songs and territories. The artist then directly licenses the concert to the promoter of the day. Seems easy enough, but being involved at a detailed level in the process, I quickly realised how much more complex it was in practice. Additionally, applying this to festivals fragments the process even further, with multiple bands over multiple stages where most will be licensed through the usual established channels.
Direct licensing encounters so many questions and ‘What ifs.’ Firstly, the set list needs to be disclosed in order to exclude the titles, or a subset of songs that might cover all sets in all dates in territories. (The artists I worked with did not want to disclose tour dates ahead of their announcement to their fan base, nor did they wish to disclose their intended set list). A writer’s music publisher needs to reassign their publisher’s share as well, however in some cases, publishing agreements actually stipulate any writer reassignment reverts to them and not back to the writer, so a further step has to happen to allow a writer to directly license.
Then you have questions like: What if there is an outstanding advance with the publisher? Who is going to make the royalty calculations back to them? Will they even want to participate in the process? What is the local performance royalty rate applied in each territory and will a discount apply? What is the main versus support split? What does pro rata really mean? What if the support acts do not want to directly license? What if they cannot (or would not be released to do so)? What if the artist wants to perform a cover? (Exclusion needs to be total and not partial, and who is going to tell them they can’t?) What if the artist wants to change their set list during the tour?
Once on the road, it is too late to change documentation, since the process to directly license is a legal one that is governed by a writer’s society membership agreement.
“Promoters need to earn their crust, much like any of us – but this really needs to happen with less opacity and this effective tax, of either artist or writer/publisher, needs to stop”
I work closely with the management of a major touring artist (who writes their own songs). Having worked with the PRS to ‘audit’ past tours and now the current tour, we can see the varied picture of the real-time licensing in territories around the world. Interestingly, the industry debate so far seems to have focused very much on the copyright societies, whereas sights should be set on the promoter and then the local societies.
Not all promoters fall into the same boat, but let’s not forget: the live performance income flow starts with them. The promoter licenses the show and pays the local society. It is a promoter that receives the discount on the tariff applied to the relevant show box office. Why do some not disclose these discounts to the artist? Why is it that some are still allocating full published tariffs in a settlement, knowing full well that the local society will license to them at a reduced tariff? Why are some under-declaring box office figures to local societies – thus reducing payments to local societies/writers/publishers?
There should not be an issue with promoters receiving a discounted tariff as long as this is declared to the artist and the correct box office figures declared to the local society.
Promoters need to earn their crust, much like any of us – but this really needs to happen with less opacity and this effective tax (of either artist or writer/publisher) needs to stop.
What can we do to mitigate these issues? We need to reinforce the marketplace with greater transparency, with all parties engaging in this process. Riders need to include the requirement that any discounts applied must be passed through to the artist. Promoters should supply invoices received from the local society to the artists’ managements, in this way there can be certainty that the correct box office figure and % tariff has been applied. Territory rates need to be shared between societies and their memberships. Box office settlement information needs to be shared with the PRS to give them the data they need to reconcile. There needs to be a more cohesive working relationship in this area between artists’ managements, promoters, publishers and societies to create much better efficiencies.