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Behind the music: Will record labels and streaming services ever agree?

Former BPI chariman Tony Wadsworth discusses the difficulties involved in securing streaming rights from major labels

In a recent report for Music Tank, Tony Wadsworth challenged the myth that record labels are dinosaurs. At the Great Escape conference in Brighton, the BPI chairman and former CEO of EMI made the case for labels, pointing out that they are now leaner, more diversified and still, by far, the biggest investors in new music.

“They haven’t been displaced by other entrants,” he says. “Many have tried and many have failed. Investing in artists is empty unless it comes bundled with skills. Live Nation, for example, [struck a 0m deal with Jay-Z] – yet they didn’t manage to establish a new business model.” The managers Wadsworth spoke to said they appreciate the work a record-company team does, and that it gives them much more momentum and increases the likelihood of success.

Even Radiohead licensed their In Rainbows album, noted for its pay-what-you-like release, to a number of record labels around the world. Maybe this explains why, in a recent survey by ReverbNation, over 75% of independent artists (including 81% of hip-hop artists and 63% of alternative artists) still aspire to get signed to a record label. The survey also showed that major labels made up the top 10 on the wish lists for artists in every music category.

But how do record labels fare when it comes to licensing new music services? UK labels fare better than labels anywhere else in the world, as they’ve so far licensed 72 digital music services, according to the BPI. Yet a source involved in many digital music licensing negotiations complained of labels raising their rates in recent negotiations. He also asked what new music services have been launched in the UK in the past two years, apart from mflow. I put the question to Wadsworth. “You’ve put me on the spot there,” he replied. “I’m sure there must have been [some].” He adds that his perception is that rates have actually declined. “I don’t want to call [the source] a liar – maybe it was just the deals he was involved in. There was a time when labels wanted equity in almost every service they licensed. That, I’m assured, has moved on and is less the case now. The labels know that it’s in their interest to enable new services, and they do – but without putting everything on the table and saying ‘take what you want’.”

A publisher recently told me they had a deal in place with Google’s cloud service, which subsequently launched without licenses in place, but suggested that record labels posed a problem. “So what Google are saying is that everybody was fine apart from the people who own the recordings – that they were being really awkward?” Wadsworth retorts. “What’s the alternative [to putting up a fight]? Do you just say: ‘Whatever you want to do is great, because you do no evil, we believe.’ Nobody’s telling me that Google can’t afford to pay for music at the right rate, and I don’t believe that the record labels are asking for an unreasonable rate from Google. What we can tell by the way it’s often articulated by Google, and the way it’s sometimes articulated by people in government who are close to Google, is that Google see licensing of creative content – and I include books in that – as being an inconvenience. So of course Google thinks the labels are being difficult. You can actually say the same, winding the clock back, about Napster – they just didn’t want to pay.”

Wadsworth believes the reason negotiations for Virgin Media’s proposed music service have stalled is not due to the amount of money the record labels asked for, but the anti-piracy measures the labels wanted the ISP to implement. This brings us to the Digital Economy Act (DEA). “A lot of people in our industry have been saying that the DEA is a lame duck, and I wish they wouldn’t. That’s one of the reasons I did this report, because a lot of people are talking our industry down.”

Among the people “talking the music industry down” and criticising the DEA are Featured Artist Coalition members Billy Bragg and Radiohead’s Ed O’Brien (though, after a meeting at Air studios in 2009, the coalition voted to support what was then the Digital Economy Bill, with the added provision that consumers who were proven to repeatedly download illegally would have their internet connection temporarily throttled instead of temporarily suspended). Wadsworth calls them selfish. “These are people who are right in the glory days of their careers, where they have all the cream. They obviously seem unwilling to share it with anybody. It’s wrong. They should be thinking about younger artists and writers. Where do writers stand in all this? They aren’t selling T-shirts, are they? These people need to grow up a little bit, because it’s not standing up and showing leadership – it’s playing to the gallery, still. If you call an organisation a coalition, you can be strong enough to not have to play to the gallery.” © Guardian News & Media Limited 2011 | Use of this content is subject to our Terms & Conditions | More Feeds