Unite, Stand Up and be Counted

February 14, 2005 at 9:24 am | Posted in digital downloads, emusu, music | Leave a comment

Online Music Evolutions…
As a recent entrant into the independent music sector as an online label, artists Digital Animal, now D A Recordings Ltd headed by ex Hardcore Uproar producer, Chris Thompson, have been able to capitalise on their deal with Lucky 7’s, a subsidiary of established London electro/breakbeat label 10 Kilo.

The terms of DA’s contract are perhaps symptomatic of last years love/hate – having progressed from plain hate – relationship between the music industry and audio downloads. DA’s groundbreaking contract with Lucky 7’s waives the record company’s exclusivity to distribute Digital Animal repertoire in ‘The Digital Domain’. Surprisingly this was negotiated after the label funded DA’s website by way of an advance. L7’s let the digital rights go after the artists, being web based producer types, offered to take over the site. Both parties recognised that DA could do more to drive the sale of physical product if they were allowed to grow their online following themselves, a potentially costly and time consuming diversion from the business of selling cd’s and vinyl.

Having integrated MCPS/PRS accounting and the BT click&buy payment system into their web site Digital Animal proclaim that this unprecedented shift in the record company/artist relationship back towards the true 50/50 partnership philosophy of the early indies of the eighties is the first commercial realisation of the power of online music distribution, not only to revise the majors licensing endeavours but to address the activity of the independent music industry as a whole, legally! Since we’ve lost John Peel, probably the greatest champion the independent music industry ever had, it is perhaps a shame that the download charts, another of this years most significant industry developments is populated exclusively by the great and the good (or not so good). After all, is the Internet not meant to be a place free for all to explore and exploit, a place where consumer trends can evolve uninhibited? If so, then why do we only measure the sales of a select few… because technology is in its infancy or because the numbers are bigger? Of course the numbers are bigger, at the moment, but something hot on the net can explode over night, remember Friends Reunited? As it becomes accessible to indies and accepted by consumers, online music distribution with local and world wide reach in equal measure, combined with download chart recognition presents massive potential opportunity for the independent music industry, so log as it manages to unite, stand up and be counted.

D A Recordings has taken the online opportunity one step further joining the British Stand at MIDEM 2005 to launch ‘emusu.com’ to producers, managers, agents, labels, distributors and publishers. The production combo won investment for emusu.com after featuring on BBC2’s Dragons’ Den programme where they pitched their proposition to a panel of millionaire investors. Whilst they didn’t win on the show (which airs Jan 05), they subsequently sold equity to UK hi-tech investment group ‘LITE Technologies’ in order to co-fund development. The web based application provides everything required to set up a fully customised and branded website for managing and selling music online. Developed in partnership with BT click&buy, emusu.com will account to royalty collection agencies, includes Digital Rights Management (DRM) and delivers real time user stats & sales figures. For the first time labels can track exactly who is buying their end product, when and where and establish direct contact. emusu.com automatically directs net revenues into a designated bank account – no chasing distributor invoices or stumbling over cash flow for royalty payments. DA are currently producing US an EU versions of the application with ‘lite’ and ‘pro’ variants promised to be priced within reach of independent artists and labels. David Roberts of Creative Launchpad recognises, “With the increasing reliance on the growth of the Creative Industries to provide economic wealth to local communities, the emusu.com platform will not only open up advancements in technology to those that might not have had access to it previously, but also at a cost that is not insurmountable to the enterprising music business that comes from back bedrooms and a G4s across the world. By working with D A Recordings in the UK and championing emusu.com, Creative Launchpad (www.creativelaunchpad.co.uk) is an initiative that will open up the possibilities to these people right from the outset of starting their music business.” Whilst emusu.com presents no immediate threat to the super-majors it certainly levels some of the bumps that obscure the international music industry astro-turf, a terrain where burgeoning niche markets now sit exposed to the shimmer of the superhighway that weaves between skyscrapers and the corporate headquarters of Sony BMG. Their niche, after all, is usually the defining factor that enables indies to compete… Richard Bloor who spotted and signed DA as an act recently celebrated 10 years of success of his electro, breaks and psy-trance labels, “Independents can compete and sometimes better big companies if the niche is a strong international scene and you are at the centre of it. The following surrounding niche markets demands comparatively little advertising expense so profit margins are very good. If we sell 10,000 cd’s and break even is only 2,000 cd’s…..it is good business. I bet many majors would like a constant stream of products with those kinds of margins.” As a digital content and retail management platform D A Recordings’ ‘emusu.comis of course not genre or niche specific.

As such the application opens up the online marketplace to owners of specialised repertoire. D A are already beta testing bespoke versions with educational, classical and folk music institutions.

D A Recordings has also teamed up with Pipex, one of the UK’s largest Internet Service Providers in order to deliver its ‘emusu.com’ application as a monthly subscription product bundle including a broadband connection and email as well as its dedicated digital content distribution and retail services. Martin Anderson, Head of Partner Operations at Pipex explains, “Pipex is excited about offering emusu.com to its existing consumer customers – we’re conducting a survey to find out how many of them actually create as well as buy music. emusu.com capitalises on the potential of the Internet to empower independent artists and labels and will help us differentiate from our competitors by offering a unique and compelling online music proposition with end consumer reach.”

In creating its ‘emusu.com’ online service D A Recordings has discovered an irony in the Joint Online License (JOL) created by The Music Alliance, seemingly designed as a one size fits all solution for online music retailers to operate legally. The issue lies in that DA pays a percentage of net sales direct to the artist, label or publisher who owns the repertoire, there is no middleman. The MCPS/PRS charge D A Recordings 8% of the gross sale (and associated revenue generating services, i.e. streaming etc), reducing the payment to their member – the same end beneficiary! Of course the Alliances services are still required. With non-exclusive and online licensing agreements becoming ever more popular, few music retailers pay the owner of the repertoire directly. DA’s Chris Thompson suggests that this could be addressed with an exclusion clause in the JOL where the owner of repertoire in registering the work agrees that a distributor need not account to the Alliance sales for which they have agreed a direct deal with the distributor.

10 Kilo/TIP World MD, Richard Bloor, comments, “In the last year there has been a definite shift. A year ago it was all talk but in reality (from my perspective) nothing much had happened. Now, an ever increasing part of the job is to sift through digital distribution proposals and researching to make sure your products are available on the most suitable sites. Or with companies you feel confident with. Or applying to get your catalogue available and supported on the big sites… And the logistics are all different of course to physical distribution. It’s all about managing audio files and uploading or constantly preparing digital copies of your catalogue. It has meant changes and new systems need to be put into place. File storage and despatch systems need to be efficient and like clockwork. Not quite there yet but with the advent of systems like emusu.com, getting there…..”

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