A Marketplace Like No Other: Allen Bargrfrede on Midem

Over the years, the MIDEM Music Convention in Cannes, France, has been looked upon as a staple for emerging trends and new business deals within the music industry. It is now in its 43rd cycle and this year, between January 23-27, industry professionals from seventy-eight countries discussed the business and networked together. Among the attendees was Allen Bargfrede, a professor at Berklee’s Music Business/Management program. We were able to get some insights from him and gain perspective on the event.

MIDEM, often at the forefront of new activity within the music industry, has suffered a drop in attendance. According to Bargfrede, “it was less crowded this year; this is the fourth time I’ve been, and numbers were down about 13% and as much as 20% from two years ago.” Bargfrede wondered if the explanation was the state of the industry, or the decline in the economy, with its resulting travel cutbacks.

MIDEM is also in danger of losing relevance. Says Bargfrede: “MIDEM started in the 1970’s as a way for people to license their music across borders, so if you were a US label who wanted to license your music into Europe, Asia and South America, you had to get on a plane and fly there…[The MIDEM organization] created an event where everyone descended on Cannes to meet with people from around the world and knock out deals all at once; now, however, with MP3’s and technology, the need to sit down and play music for someone face-to-face has diminished.” For Bargfrede, current shows seem to be more about learning digital technologies and less about actual business deals–although many do take place. The keynote addresses have also transformed the venue into a forum for exposing and exploiting new technologies.

The show had a few changes this year, and for Bargfrede an interesting point was the merger of Midem and MidemNet. “For years there had been just Midem, and when the digital stuff started getting big they started MidemNet [a special conference on digital music]. MidemNet used to be added on to the main show, and you had to pay an extra 350 € to get in. To compensate for the drop in attendance last year they combined them. They realized it doesn’t make sense to have a regular music conference and a separate digital music conference, because music is digital. This year we could get into everything, and discussions about digital were not segregated.” Mobile music, downloads, and streams are of course becoming the lifeline of the business, and MIDEM did well to integrate expert presentations of new media into the full program.

Throughout the conference, three main themes emerged in panels and discussions: (i) branding, (ii) social networking, and (iii) international publishing/licensing. Says Bargfrede: “there were several panels on branding and music–and not just for the sake of the music but for the brand itself.” Executives of Converse, NASCAR, Carhartt, Nokia, and PepsiCo discussed their strategies for integrating music into their products. The sense was that the music business has not yet fully capitalized the potential of the market and that the branding of music is still in its early stages.

Branding in sports, for example, is going to be big business at the World Cup this year. But in America, the Dallas Cowboys, NASCAR, Bristol Motor Speedway, and the Kentucky Derby already have their own “official” sound tracks. Most of these recordings are done as joint ventures, with shared ownership of the copyright, creating a possible source of steady revenues for both parties. Loyal music fans can make good corporate customers and vice-versa. NASCAR’s website, for instance, apparently averages nearly seven million unique users a month—a boon for music sales.

Converse and PepsiCo were especially engaged with music and had significant budgets to spend. For Bargfrede, though, this is but one of many ways forward. “There is just so much use of music now [in TV commercials, TV shows, and movies] and the discussion was also about music being ‘spent out’.” Another key topic at MIDEM, perhaps predictable, was the dwindling monetization of recorded music, although little was apparently offered at the show as a palliative.

Digital and streaming media companies featured prominently in various presentations, and these included YouTube and Sweden’s Spotify. Bargfrede reported that “there was a lot of discussion about the licensing difficulties that Spotify is having in the US. I had breakfast with its General Counsel, and she seemed to act like they were going to have a New York office opened by the summer. Then I read other things about Warner Music not wanting to do an ad-supported service, so I don’t know how this will play.” Spotify does not have deals with the majors yet, so there is indeed little traction in the US. Nevertheless, Spotify CEO Daniel Ek was intent on communicating the business profile of the company to his international audience, while making it clear that he is setting his sights high here. There was speculation too that Spotify’s ad-supported streaming would not be profitable, just like YouTube. Bargefrede observed that “the problem is that [Spotify] isn’t making making that much money; they are paying the labels 10% of their revenue, but their ad sales are still relatively small.” Bargfrede wonders if advertising revenue is at all viable as an alternative model to traditional recorded music sales “No one”, he says, “has figured that out yet.”

There was as well a sense of dejá vu at MIDEM. Social networking and media are part and parcel of modern direct-to-fan communication, but talk about Facebook, E-Mail, and Twitter was not significantly different a year ago. Better cross-platform integration (one click updates all) was discussed, and artists like Pete Wentz, of Fall Out Boy, and Pharrell Williams discussed their own experiences with promotional aggregation. An integrated package for all social and networking media could help musicians a lot.

Interestingly, MIDEM 2010 seemed to take on an educational tinge, especially targeting aspiring managers. The MidemNet Digital Academy hosted four daily one-hour sessions on building artist websites for under 100 €, and establishing a presence online. However, what separates Midem from other industry events is the almost exclusive focus on the business side of music. MIDEM is not artist centric. Bargefrede notes that “there are not a lot of artists who attend, nor many are on panels. It is mostly business people, and access [to them] is easy.” This year, special focus was given to the various uses and benefits of mobile technology, the monetization of cellular phone applications, and the use of geographically specific promotional strategies (not just for the music industry). Trends in multiple rights deals were also considered and attention was paid to the entirety of an artist’s value chain for purposes of revenue maximization.

The complexity of the moment was captured, in Bargfrede’s view, by an exchange he had with an Orchard executive who, after working exclusively on digital distribution, was now contemplating a backwards expansion towards physical product releases. In reality, this convergence of the various trading domains appears to be less paradoxical to industry practitioners than to futurologists.

Bargfrede, who has just published, with Cecily Mak, Music Law in the Digital Age (Berklee Press, 2009), is mainly interested in legal issues, so his take in this regard is more than informative. He says that at MIDEM there was much discussion on Pan-European licensing and how to roll out music across Europe. “The big deal now is how to license music in all EU territories at once, rather than going to twenty seven different countries.” iTunes in France, for example, has a different IP address than iTunes in Spain, and access is by national license only. Says Bargfrede, “despite a directive by the European commission in 2008 meant to standardize licensing for music across Europe, no one has really yet figured out how to properly implement it.” Neither is there anything out there to bridge the different licensing requirements between Europe and the US.

There are other international legal issues that need resolution. Many US based companies are dealing with a different set of issues when compared to European start-ups. “Business is often different because the law is different….Europe is much more progressive about piracy, and much more progressive about new business models—and consumers are much more receptive to new ideas over there too.” Therefore, in Bargfrede’s view, Europe can be viewed as a prime testing ground for new business models. Ringtones, for instance, were popular in Europe before they took off over here.

Copyright protection, as discussed at MIDEM, is also more effective. Bargfrede himself believes artists “are a lot more protected in the EU as far as what they can restrict labels from doing; the recognition of ‘moral rights’ makes a real difference and creators have more overall control over their works.”

Such comparisons with the US are sobering, and MIDEM continues to provide a valuable forum to air such differences and seek a more ideal and supranational integration for all music sellers, regardless of their nationality. While music rights are likely to be traded more and not less in the international music marketplace, social and networking media can never substitute a gathering of music elders. This bodes well for MIDEM. If it stays profitable, the business of music will always be better off.

By Kerry Fee

The MBJ wishes to acknowledge professor Allen Bargfrede for giving his time generously for this interview.

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