Further thoughts on Broadband TV and Music

The irony of the current parallel engagements of the UK ISPs with both the film and TV industries and the music industries is that their conversations are coming from completely different directions. The ISPs are running to the broadcasters and complaining about the BBC’s iPlayer and the imminent Kangaroo player which will have ITV and Channel 4 content on it as well. The complaint is very clear - you are soaking up all our bandwidth and gaining revenue at our expense. In the case of the BBC - the argument is uniquely British - you are fulfilling your Public Service Charter by reaching more people in the community at the expense of commercial service providers who are having to “subsidise” the additional bandwidth usages. In the case of the commercial broadcasters, the argument could be even simpler, but equally difficult to resolve: you are raising ad revenue through programs transmitted not on your broadcast network but on our broadband network - we want a piece of that.

In the case of the music companies the argument is the exact opposite. The music folk are going to the ISPs and saying - you are making money out of our content. All this p2p activity on your networks is illegal and it’s not yielding us rights owners a penny, while you continue to compete with each other on better bandwidth for your buck packages. We want some of your money.

Seems to me, given the size and health of the respective industry sectors and the general balance of power in the cultural stakes, that the music companies might be a lot better served trying to persuade the p2p folk to go legal and share the ad revenues accordingly - or to try to persuade the ISPs that only legal, ad revenue or subscription revenue bearing schemes should be allowed on their networks and illegal p2p should be closed down - and then negotiating for the right splits.

That would of course require that the music companies be prepared to license a few services to show the ISPs that they mean business. At the moment, they seem very concerned about doing that. Let’s hope that the majors don’t go try to down the usual control and command route and offer some home-brewed service of their own, but act on some of their words and collaborate with some of the new businesses out there that might just add value to the whole sector  - given the right licensing terms.

Perhaps for the first time, the Music industry could be unified enough and easy enough to deal with so that it might make common cause with film and tv - rather than lagging behind them in the commercial stakes. But even so, it will need to back some players - wether they be last.fm or playlouder in the UK - to be the added value providers on top of the network capabilities of the ISPs. That means new players in a new value-chain and margins that might be not end up being all that different from the old distributor and retail cuts…

Another source of optimism

A whiff of digital optimism?

There seems to be a whiff of optimism in the air, a little hint that somehow progress is being made. Is it in the effort to bring all the music industry’s constituent parts under the single banner of British Music Rights? Is it in the coy first blushes of a dalliance between the recorded music companies and UK Internet Service Providers? Is it in the notion that new models and new experimentation might just yield meaningful financial returns?

When I read back some of my earlier callings for radical change and the appealling but somewhat simplistic view of technology being 100% disruptive of past models, they seem a little naive in the light of what may be beginning to emerge.

A new pluralism? A multivalency of co-existence? Certainly no-one feels comfortable enough in the shoes they’re wearing today in the digital media business as a whole to believe that ongoing change will not be the norm for several years to come.

But, there seems to be a suggestion of a new springyness in the steps of those companies who are creating some of these many new ways of doing music-business.   The persistence of companies like Last.FM or their clone IMeem, the steadfast promotional/transactional evolution of companies like Seven Digital into brand relationship building linking artists and products, the quiet persistence of Playlouder in its music/internet service provider model, chasing the monetising of p2p. All of these are exploring and surviving. It is really hard work to do this. The level of commitment and passion involved is pretty high. And the kicker of the occasional big-cash blip, such as Last.FM enjoyed, certainly adds a frisson to the task, but it doesn’t make it any easier.

Of course, several degrees of murkiness do continue to cloud our little enlightenments.

Even as we all started to feel that the live scene might just be sustaining everything, major rows at Live Nation between Michael Kohl and his aptly named colleague Michael Rapino - which seem to have ended with Kohl’s departure albeit glossed over - would suggest that there is no simple cohesive view of the world going forward in that sector either.

Michael Kohl of course is the doyen of the finely sliced IP right. It was he, in the early nineties with the Rolling Stones, who devised the most sophisticated, regionally segmented, windowed parcelling-out of broadcast, cable, satellite TV, radio, streaming and downloading rights for the Stones’ infamously spectacular tours. And for the Stones, even then, album sales meant very little compared to the value of promotion and marketing that Kohl could “persuade” the label to provide which in turn clearly supported the tour.

Who knows what caused this latest rift, it’s as likely to be personality clash as much as divergence of business strategy. But the notion that, aside from publishing, performance and licensing revenues, ticket sales alone should be an artist’s primary source of revenue still seems a diminished result whichever way you look at it. None of us, it seems, is simply prepared to give up on the value of a recording and walk away from it completely.

This is how LiveNation presented the picture to GoldmanSachs earlier this year:

It’s a great multivalent graphic - but just a tad curious when you come to examine it. Broadcasting appears to have replaced publishing and there’s no mention of the internet at all although digital is a huge part of their business. I wonder when the THEN was and when the NOW is supposed to be?

I had the good fortune earlier this week to chair a public panel of some amazing expertise on the occasion of the Music Publisher’s Association’s Annual General Meeting. Gathered together were Kip Meek of Ingenious Consulting (previously at OfCom and now of the Broadband Stakerholders Group), Conservative MP and media specialist John Whittingdale, Spencer Hyman of Last.FM, Andrew Connell of Nokia as well as Andy Heath - the newly elected chair of British Music Rights and Gary Maclarnan who manages Mr Scruff. Joining us as experts were also Will Page Chief Economist of the MCPS, Andrew Orlovski Editor at Large of the Register and Paul Sanders - philosopher in chief of Playlouder, Consolidated Independent and State51. An august and impressive crew to the last. And it was no coincidence, dare I say more, that Andrew Orlovski’s intriguing article on music industry discussions with the ISPs appeared only two days after this illustrious event?

But none of them was prepared to say the CD is dead completely or that it will ever die. I think that is not collective blindness to technology’s inevitable disruptive power, but a much more sophisticated understanding of how complex our new world is and how pluralistic the models are going to be.

And despite the optimism, there was much more divergence of opinion about how rapidly ISPs and network providers might find common cause with the media and content companies. Kip Meek seemed to suggest that the issues and concerns that the broadband providers have with the broadcasters and film industry are so much more severe than anything that they have to deal with in the music sector (because of the sheer size of film and video files), that the debate will really focus there. As the BBC’s IPlayer mutates into the imminent Kangaroo player - the issues of who pays for bandwidth and how content gets monetised will fly in a very different direction. The extent to which the music folk think a tax on the ISPs fits in with the broadcasters’ ad revenue model remains to be seen. To me, they certainly look like very different directions, but perhaps in one scenario, simple ad-revenue sharing is not completely unattractive. But it was interesting to note how keen both Last.FM and Nokia seem to be on subscription services which so far consumers have consistently ranked as their least favourite option.

The convergence of focus on ISPs is being driven by television in the UK and what we do here may or may not prove a model for other parts of the world.  One thing that is clear is that if it is to compete to be heard and to have a place at the table with the Broadband community, the music industry needs to be more articulate, more subtle and flexible, and more coherent than it has ever managed to be before.

As Andy Heath tries to pull it all together here under the British Music Rights banner, his challenges look steep but the prize looks impressive.

Extremes

ThinkingDigital conference, Newcastle

My good friend Herb Kim has just put on a great event in Newcastle this last week called ThinkingDigital - a slightly eclectic event that wrapped its arms around many issues associated with digital technology and innovation, but also many of the social, cultural, economic and environmental issues that we’re all confronting today as well - and influenced a bit by the TED events where we met

I had the privilege of speaking at this event and gave a kind of broad summary of the main issues facing the different aspects of the music industry today - which you can watch (without my slides, sadly) here.

TED 2008 - Quotes from speakers

“The cave drawings at Lascaux are postcards of nostalgia”

“All peoples are cultural options - simply differing visions of life”

“Western life is a major response to minor needs”

“Tibetan monks say: we don’t believe that you went to the moon, but you did. You don’t believe we can achieve enlightenment in one lifetime - but we do”

- Wade Davis

“The first thing we do in life is breathe and then cry. The last thing we do in life is breathe and make other people cry.” - Sri Sri Ravi Shankar

“I follow people because they look interesting. Once I was accused of cruising someone, but I was just following him because he was wearing great shoes.”

“Style is great because it takes your mind off the fact that you’re going to die.”

“Do many things in order not to feel bad about just one thing.” - Isaac Mizrahi

“Advertising is the price companies pay for being unoriginal” - Yves Behar

“All science is either physics or stamp collecting” - Ernest Rutherford (quoted by Brian Cox of CERN)

“50% of the US lies beneath the sea and we have better maps of Mars than of that 50%” - Bob Ballard

“Children have a great delight and skill at climbing trees and they don’t seem to share the same fear of heights that humans do.” - Richard Preston

“What’s a surprise for the turkey is not a surprise for the butcher - so don’t be a turkey.” - Nassim Nicholas Taleb

“The future isn’t what it used to be” - Paul Valery (quoted by Peter Schwartz)
“Getting in touch with … the reptillian core of the brain” - Helen Fisher

“Anything a man can do - I can fix.” - Chris Abani’s mother

“In Rwanda, before the genocide, the words for marriage and rape were the same.” - Chris Abani

“There’s an old African proverb: If you want to go quickly - go alone. If you want to go far - go together. We have to go far quickly.” - Al Gore

“Go to the place of the person that you are becoming - not just what you have become.” - John Francis

“Sport is to war as pornography is to sex.” - Jonathan Haidt

Coda: Passionate about Obscurity

So I was writing my previous post and searching for the thing that linked the beginning of it to the end, I did finally realise something. In this new model of keeping things obscure and of only letting a few friends in under your own personal velvet rope - we are becoming patrons again. That is to say that each of us becomes the personal patron for our selection of music - we choose and enjoy it for what it says about us - how it reflects on our individuality and what we want it to say about us to other people. We don’t commission the work itself like the Popes and Kings of the Renaissance but we do commission our own selections and make our own collections. And of course where we are friends with bands or in bands ourselves then maybe we influence what is recorded too. It is a natural return to the authentic response to the virus of music. It has tremendous power because by nature, the connection that you have with the music in this model is one of passionate involvement. In His Dark Materials, by Philip Pullman, he characterises the people of one of his worlds as living with their daemons publicly visible. Their daemons are like their alter egos, their true personalities. Children’s daemons continually change shape until adolescence when they settle on one particular form. As a metaphor for our musical allegiances this is powerful. Perhaps for some people once they become adult their musical tastes ossify, become stuck in one place, become only one daemon. But the kind of involvement in music I’m describing here as a Patron, your musical daemon changes continually throughout life - but the key thing is that you have one. The traditional recorded music industry of the last 30 years produced music that had been severed from their daemons and made appealing to mass markets by sheer weight of media exposure. In the model of obscurity, the knowledge of what your music is and how it is part of you - is precisely why you only want to share it with a few close friends. And of course, the more you prevent people from gaining access - the more attractive that access becomes to more people. So at some point that boils over into popularity, mass access - at which you move on to new tastes. But the work of creating value by creating scarcity has been done.

The New Value of Obscurity

Culture and commerce have always had an ambiguous relationship. Not quite as nerve-wracking as the Church and the Stage, but almost as difficult. Creating a great piece of music or a magnificent painting or a grand theatrical presentation has always been supported by patronage that messed with the “integrity” of the “work”; whether it was the patronage of the Church that produced the great music and art of the Renaissance and Baroque periods or the patronage of royalty that created the great theatrical works such as the plays of Shakespeare. There was a degree of political influence and propaganda clearly visible in the output of the artist. As history has evolved and the contemporary context of the work has fallen away, these great works of art have endured - whether they be the Brandenberg Concertos or Shakespeare’s History plays or the roof of the Sistine chapel. It now requires us to research and recover the historical context in order to discover the distortions that patronage brought to bear on the “integrity” of the work. But of course, in the period of patronage the value of the work was in what it said about its patron. It was not a commercial good to be traded or sold, the work of art was a mirror on the world of the patron as the patron would like it to be seen. The success or failure of work was most likely reflected in whether it found favour in its patron’s eyes and whether it sufficiently magnified their desired messages to the populace who beheld it. The relationship between the artist and the fan that we have today was really completely irrelevant, the real relationship that mattered was between artist and patron. Once that faded away over time, different values crept into the work - particularly if it had a physical form in the world.

Historically, we have looked back and seen a kind of integrity in the work due to the scarcity of its availability. The value of artworks increased and persisted as physical objects. But although Shakespeare’s plays in his day were only performed by his own troupe of actors (the scripts were varied by them according to circumstance and never published in Shakespeare’s lifetime.) it was Ben Jonson who was the first playwright to seek to still his work and protect the integrity of his intellectual property by publishing it. In so doing, he established the basis for a business that has remained remarkably unchanged for a couple of hundred years until the digital era.

In the age of mechanical reproduction and purely “commercial” or “consumer driven” work, the nature of influence, distortion and tension has changed. Artists were not commissioned for their ability to reflect well on RCA or CBS, they were there to make recordings to sell in the highest numbers. We can argue endlessly about the vagaries of popular versus artistic success. And, of course the stories of the crass A&R man’s failure to recognise greatness is legion - no one knows for sure how many people passed on the Beatles before they were signed. But while on the one hand, any work could be made commonly available through mechanical reproduction, on the other hand only some works are successful enough to return value to the effort.

Strangely, people in major culture businesses (like major record labels or Hollywood studios) often fell into the trap of believing that something was of great value simply by dint of the fact that they had produced it.

So, in more recent years a new tension has arisen within the very business model of mass cultural production that reveals a titanic struggle at the heart of the entertainment industry between the pure commercial, legalistic desire to exploit and protect the value in a piece of intellectual property come what may - regardless of its cultural status - and the more evangelical, marketing-led desire to promote a work like crazy in the sure knowledge that only then will it achieve the real popular acclaim that will yield a return on the investment. So value, even in massively mechanically reproduced culture is not a given until some kind of cultural blessing has been generated for it. The role and function of MTV, particularly once it was established as a global force in the early to mid nineties, is quite well known in highlighting that inbuilt contradiction. For many in the music industry, MTV was a commercial disaster that befell the labels; an entirely parasitic business making money from advertisers out of the music industry’s desire to promote its music and therefore to give it to them freely. MTV was after all only taking advantage of the music industry’s myopic view of music videos as purely promotional - and the labels still largely believed that a video was a small investment to make compared to the enormous profits the album sales generated. Or perhaps, put differently, they were making so much money from the old rope - that they were not motivated to think about any new models. And it was only when MTV started to look more powerful and profitable than radio - because they were national in the US and expanding globally, that anyone began to get concerned.

The blanket deals that the majors eventually got to sign with MTV in order to guarantee some share of the advertising revenue were the source of great controversy. Hailed as a significant victory when the deals were first signed, as the digital era overtook them - these deals with their all-inclusive grant of rights became more and more difficult for the majors to figure out. By the late nineties when the shape and impact of the internet was beginning to come into some still hazy perspective, the majors suddenly got terribly anxious that even as they’d felt like they’d started to regain some of their ground with MTV, they’d lost it again because their blanket deals included digital rights. Of course, no one in 1995 had any idea which digital rights they had signed over or indeed how to parse them into separate rights - let alone which ones they might want to retain and which to license or how to.

Further down the road the old contradiction of property vs promotion returned in a new guise in the digital era as the DRM / Unprotected argument raged. Once again, at first, it was simply a question of a fear of not accidentally giving away rights to clips or streaming rights in the process of deals being made in the interests of the old model with, for example, broadcasters or retailers. The corporate strategists tried terribly hard to prevent the promotions boys and the channel managers from doing any deals with their partners, and the broadcasters and the retailers for their part were understandably pushing to say give us some clips or streams if you want us to expose or promote your hot new acts. The near term pressure to sustain the old model always out-swayed the longer term strategic goals whose objectives remained unclear and whose revenues could not even be detected.

The same showdown has continually re-appeared around whether there is any value to be had in a paid download compared with the enormous benefit of free publicity. It became acute as research demonstrated over and again that the “evil” downloaders from the original Napster or the still current Limewire were among the highest spending kinds of consumer. So essentially the argument is again over whether to control and “protect” the IP or whether to give it away for free for promotional purposes. And of course, suing your customers is still a part of the controllers’ position and argument. Online, of course, the technology has been sufficiently disruptive to mean that payment today is entirely optional - and the kinds of argument we see raging around the problem are still rooted in that same contradictions and tensions that lie at the heart of the business. What can you do when this stuff called art or music has no innate value compared with the premium of cultural capital we acquire for it?

The question is standing out today even more prominently than ever - can we make people pay for music at all in its recorded form - or must we recognise that the longstanding value of mass reproduction has now only become a promotional tool and that the real value has reverted to the scarcity model of the live performance?

Curiously, there are some emerging arguments and thoughts that may reveal some new possibilities and suggestions that the obviousness of disruptiveness technology and its steely logic of unstoppability may not be quite so straightforward - because people are weird. The trust model is clearly one place where surfacing payment as optional and then leaving the consumer to respond is effective - particularly for an established act like Radiohead. This may work for a big name act but how might it work for a new young band?

I’m hoping for a value in obscurity model to break through. I think we may be approaching a period when staying obscure is the best thing you can do to attract value if not scale. Trying to get as many friends as possible on MySpace has now become a deadening and dead-end activity. Too many bots out there can fake the experience and undermine the cultural credibility. No all of us wants to be in the know, but actually we’re quite picky about who we want to share stuff with. The velvet rope of exclusivity and the club tactic of turning people away at the door may just start to hint at a different way of making people spend money on music online. And it is deeply linked with a relationship that needs to be built online and that already exists between cogniscenti. Not the fake friendships of Facebook let alone MySpace, this requires the narrowest but longest of long tails to work and depends on knowledgeable insiders. The more obscure the music the more value I think we might place on being let in on the inside track about it. Maybe the track itself is not what I pay for, but gaining access to a guide- an “obscuritician” is what I’d value - not some chi-chi concierge service - but a lunatic fan, a nut-case about whatever, an eclectician who could wire me up weirdly but brilliantly from the breadth of the fragmented diaspora of music - half DJ - half-curator.

Hands On

I did not intend that this blog should only be about EMI. I do think about other things and I promise I will write about them. Love, death and the future of the planet spring to mind.

Meanwhile though, a few current thoughts about where optimism has gone. The takeover of EMI by Terra Firma caused me some optimism last year. Their pronouncements about their strategic direction, their desire to completely rebuild the model and to adopt a clearly digital approach, connect artists directly with fans, work closely with social networks, expand participation into other areas of musical activity, all seem to be essential elements in the creation of a new paradigm (sorry about that word - but it is sometimes justifiable) for an entire industry. Who knows, they might even begin to consider the clear need for blanket licensing of ISPs in order to monetise all that P2P - certainly telling the BPI and RIAA to stop suing the customers on their behalf seemed like positive moves.

And, although it’s painful, the need to let a lot of people go from the organisation seems almost inevitable. It’s very hard to turn a super-tanker when it’s fully laden. It may even be momentarily justifiable to scare a few artists off to lighten the load. What’s being done at EMI is only what is required at each of the major labels if they are to be transformed and survive - and although they are hated in their current form - and are never likely to be perceived as benign - major industries probably need some very big, major players as well as a healthy indie crowd too.

But things don’t seem to be turning out so well at NEW EMI and it’s interesting to observe.

Rumours circulating at Midem last week suggested that the new management team may have started to discover some royalty and accounting issues in the precious publishing side of the business which may lead to assets being written down by as much as 30%. A certain naivety in due dilligence about the significance of royalty structures or a certain obscurity to contracts that are only now becoming more clear? No doubt time will tell - my lips are sealed.

More apparent however, is the inevitable culture clash that’s taking place between the private equity, pure rationality approach and the music business, the people are the business approach. This does not have to be unproductive. But unfortunately it seems to be damagingly the case with Terra Firma and EMI currently.

You can probably discount the defection of a few major artists - Radiohead I’ve already talked about - The Rolling Stones never sell any records and haven’t done for years. Coldplay and Robbie Williams are rather more significant - although many say the latter is nearing the end - I suspect he is a world-class entertainer who will continue to carry a major audience for a very long time to come - and Coldplay continue to straddle the line between mainstream accessiblity and some vestigial, credibility among the more musically literate. If EMI can’t retain acts of that stature not only is it damaging to their bottom line and revenue projections, but it sends a massive message to the rest of the artist community.

The tone and stance of Terra Firma to the artists of EMI has not been well received. At a meeting of some 200 managers, the atmosphere was allegedly chilly to say the least. Critical comments by Tim Clark (Williams’ manager) in the FT have led to threats of litigation from Hands. According to Clark, “he’s gone rock’n'roll - he’s got blacked out limo’s, body guards, the lot”. There is a history of top level execs in a similar position going “native” in some way and making themselves embarrassing and absurd in the process. It doesn’t usually happen this fast though!

Meanwhile, an idea of centralised marketing seems to be emerging from the company which is also worrying. It seems to display a lack of understanding of the value of cultural positioning and the uniqueness of individual artist’s fanbases that require to be addressed in different ways - not with a single voice emerging from a single marketing team.

The degree to which marketing music is an inexact art is hard to underestimate. Of course some would argue that it’s therefore some kind of law of probability that if you throw enough of it at the wall then some of it will stick. But in this day of individuated artists and differentiated fans, the law of the long tail says “talk to me with an individual voice and treat me as an individual”. Commercially, you might say that to all the girls but culturally you’ve got to be smart and sensitive to artists’ needs and what fans are in to, to hope to get this right. The grass roots is where it’s at now - online the great levelling is happening - and some very finely honed tools are needed to reap what you sow here, dedicated applications which are currently not in the hands of the majors at all.

At the heart of this is a question which is almost about the cultural credibility of the organisation. Now, as we know, this has little or nothing to do with commercial success - on the face of it. There is a big area of music that doesn’t worry about cultural credibility at all - the reality TV, X Factor swathe of MOR pop does reach big audiences. BMG in particular has been pretty successful in this area. If that’s what Mr Hands is thinking of in the transformation of EMI, then perhaps he is doing the right thing.

It’s hard to read though. Certainly the legacy of catalogue (which presumably is what he invested in) is not about that area of music at all. EMI, Virgin, Parlophone, Capitol, Blue Note - these are labels who grew up with particular flavours, tastes, and acquired significance. Although they may have dabbled in the ephemeral pop tastes of the moment, they also had a sense of quality, a sense of responsibility to their artists to nurture their careers - but also to steer them - sometimes meaningfully sometimes misguidedly in some musical direction. Lots of artists famously complain about the labels’ A&R folk not understanding them and not trusting their directions, but as many great records made it out into the world with the help of the label as despite them.

It’s not clear where this kind of sensibility is on Mr Hands’ agenda. But, no matter which part of the market you target - and as a major - presumably these days you’re targeting all of it - having some credibility among the artist community and their quixotic managers is a primary ingredient - that seems to be missing from the new EMI. It’s nowhere near a lost cause yet - but the question that needs asking now is how will Electro-Magnetic Industries - get their magnetism back?

The Slow Spark of Low Heeled Boys - recorded music industry slowly implodes

Radiohead’s recent price promotion set lots of people talking about the new model but, behind it, really becoming visible are the sharp edges of the old recorded music industry factions - sizing  each other up for the power-play. Major bands and their management companies (like Radiohead’s Courtyard) are exploring on a daily basis the opportunity that their established bands’ brands have to take control of the business model in an unprecedented fashion. For Radiohead, the In Rainbows promotion was just that - a great vehicle for publicity for their new album. The web has played this role very well for over ten years now and there are plenty of great little online promotions businesses set up to help artists achieve exactly the kind of mass outcry and coverage that Radiohead achieved. But in fact while everyone was busy talking about how much money they may or may not have made from this, the management company and the band were undoubtedly exploring their longer term position and what kinds of partnerships are going to make the most sense to them.

With which of the warring factions hoping to become the Man in the Industry will they plight their troth - or will they themselves seek, in some metrosexual kind of way of course, the Man status?

Will they go the Live route as Madonna has done with Live Nation and throw their lot in with that side of the business or will they find a finance house like Ingenious and have them fund future recording/performance/A&R/merchandising/creative fantasy activities?

This is all part of the breakdown of the business into increasingly acrimonious factions - each of whom hopes and needs to gain more control. On the one hand the majors are trying to find ways of endearing themselves to artists who they have historically had a power-hold over. And increasingly, they’re wondering how to create a relationship with the fans themselves - even while they task their “trade associations” with suing the same consumers to teach them a lesson the majors themselves are finding it hard to learn.

On the other hand, collecting societies and agencies - the encrusted old institutions of the industry are watching the developing debate over the need to license (and thereby monetise) the massive amount of p2p filesharing activities that continue on ISPs and other providers’ data networks. The notion is pretty widely held now amongst the brains in the industry (and the others too) that a new business model will be born out of full blown and automatic licensing of access to new content (and catalogue) across digital networks. Millions of transactions daily are not returning a penny to the artists or the labels or the publishers who own the rights - and the only people profiting are the network operators. Clearly there is a deal to be done - and once that happens - it’s the current collecting societies - the BMIs, ASCAPs, MCPS/PRS’s and PPL’s of this world who believe that they will be the new gatekeepers, the controllers of the switch at the heart of the industry. Unless of course someone new enters the game to do that whole thing more efficiently and economically.

On top of the flat rate revenues that may accrue from such a licensing scenario, new business opportunities are emerging and it is here that the start-ups, the new technology companies are now looking as much as to the old chestnuts of DRM and Digital distribution.

In fact, the irony is that while the warring factions shoulder-barge each other around the rights issues and control of digital distribution, the consumer reality has moved on. The flat fee will come to be in some shape or form and the place where the real focus should be is now on how to make money when distribution has been commoditised. Where are the real value adds that consumers will pay for and which yield the kind of returns the recording companies are used to?

The time for experimentation and shrewd bet placing is now upon us again. Only trouble is - that volatile community of investors, less risk-averse than the recording companies for so long - the Venture Capital community - are now looking at the huge levels of decline and flux in the music industry and preferring to place their bets elsewhere.

So the few folk who have made some very big bets, have got some really interesting opportunities to re-architect the business. But trying to build the new while hanging on to the still, significant revenues from the old model is a tough call on anyone’s business acumen.

Watch this space - the implosion is in slow motion - and if you can bear to look that closely you can see each of the individual sparks flying - quite spectacular!