Last week’s Billboard Music and Money Symposium, held under the backdrop of the global market downturn, was a day devoted to the continued pursuit of an answer to the question that has bedeviled both music and finance people for the better part of a decade: How do we make money with music in a fragmented and technologically transformed marketplace? The symposium was a study in contrasts; between music people and venture capitalists, between ground up entrepreneurs and employees, and between corporate speak and plain talk. And while immensely informative and interesting at times, it highlighted the fact that the silver bullet solution that the music business has been waiting for is, most likely, not ever going to come, and solutions for businesses will be pieced together by the almost infinite array of choices of how to market to consumers.
Opening the day was a Keynote Q&A with AEG President and CEO, Tim Leiweke. Leiweke used the forum to announce that AEG had secured Michael Jackson to perform a 20–25-night stand at London’s O2 Arena, which generated little enthusiasm. And the Q&A was not much better – Leiweke answered most of Billboard’s Ray Waddell’s questions with a combination of vagueness and corporate speak, only generating real energy when speaking out against the proposed Live Nation/Ticketmaster merger. More often then not, Leiweke spoke with all of the authenticity of a walking pamphlet – the CEO as billboard, speaking banalities like, “the artist is an entrepreneur,” while the room sagged around him.
The following panel, “Investing In Online Music Start-Ups,” seemed to have a simple message for the audience – don’t invest in online music start-ups. David Pakman, a Partner in Venrock, a digital media investment company, and former CEO of eMusic, noted that there are probably over 100 VC (venture capital) backed digital music companies, and none have been very successful, mainly because there is little to no margin in sales of digital music. Dave Goldberg, a partner in residence at Benchmark Capital, expressed continuing exasperation with the difficulty in getting major labels to license their catalogs to digital music startups, as well as finding a digital music business model that can generate enough revenue to substantiate continued VC investment.
Rather spirited was the Working With Consumer Brands panel, which showed to what extent music and advertising has become entwined, with some artists doing deals with advertisers to the extent that the advertiser actually does the A&R. Island Def Jam’s Jeff Straughn noted Island/Mercury band Parachute’s sponsorship deal with Nivea – one where the label actually handed in the finished album to Nivea, had Nivea pick a song they loved and then the band reworked the song to Nivea’s satisfaction.
During the same panel, Cornerstone’s Jon Cohen spoke bluntly about how in many cases, the sponsor and the artist are cutting the label out of the process, not wanting to work under the same constraints that the record company works under. PepsiCo’s Frank Cooper spoke bluntly about this, discussing the singles only label that they’ve launched, Green Label Sound, with artists like the Cool Kids – one in which PepsiCo can create deals with artists while cutting out record companies, which earned him the friendly but passionate wrath of Atlantic’s Camille Hackney. Former Elektra A&R man John Kirkpatrick, now Chief Music Officer at Hot Topic, noted that CD sales in his stores are up, and that by knowing who his customer is and super-serving them through branded touring and other custom elements, his company is enjoying more success in music than ever.
A lackluster Keynote Q&A with Daniel Scheinman, SVP and GM of Cisco Media Solutions and Michael Nash, EVP of Digital Strategy and Business Development followed. There to announce a partnership where Cisco will provide the backend functionality to Warner Music Groups artist’s websites, integrating social networking, content management and site administration in a single operating environment, Nash failed to explain how or why this will have a significant impact on his artists’ careers and instead, spoke in vague generalities of “web synergy.”
The absolute low point of the day was the “Trends In Venture Capital And Private Equity” panel, featuring various partners and managers of venture capital firms. This was an absolutely bloodless affair – “titans” of finance speaking without any love or even particular knowledge of the music marketplace – and regurgitating predictions of financial shakeouts that could have been provided by anyone who reads the Wall Street Journal on a daily basis.
The day rebounded with the afternoon panels. The panelists on the “Mobile Music” spoke informatively and intelligently about how mobile is a nascent business continuing to grow by leaps and bounds – and about music’s role in furthering that growth. Tero Ojanpero, Executive VP at Nokia and Jeff McDowell, VP at R.I.M. made it clear that they really don’t know or even care much about music – but that music is an important driver in the sale of their handsets. Ojanpero spoke of Nokia’s “Comes With Music” initiative, where the customer buys a handset and gets access to 5 or 6 million songs. Along with McDowell, they spoke fascinatingly of the evolving role of the mobile device – one in which cell location will affect how content is delivered, and one in which the mobile device will be central to how people experience entertainment.
A case study followed, that of Superfly Productions, the New York City-based production marketing and music management company that created and runs the Bonnaroo festival as well as Outside Lands and Vegoose. The two partners, Jonathan Mayers and Richard Goodstone, gave a presentation about the genesis and evolution of their company, and the passion, intelligence and vision with which they spoke was in stark contrast to several of the day’s other panelists. Creating their business out of a deep love, appreciation and knowledge of music, as well as knowing their customer, the Superfly partners put on the day’s most impressive performance.
The subject of music publishing was the topic of the symposium’s final panel. Featuring a roundtable of music publishing veterans, it was a conversation that brought everything back home – men who have dedicated their careers to a business they love, and who have weathered its storms because it’s what they do. They gently debunked fashionable theories like the Long Tail; Bill Gorjance, the CFO of Peer Music, noted that of the 13 million songs available online, 10 million of them have never sold anything. Bandier noted that as much as things have changed, the importance of the song is more paramount than ever, and that while 70% of private equity funds could be out of business in 3 years, the income streams of music publishing companies continue to grow. “The opportunity to make money is still there,” Bandier declared, “but it’s a 20-year plan, and not a 3-year plan.”
Billboard editor Bill Werde noted that the music and financial worlds had historically been wary of one another. The Billboard Music and Money Symposium offered several clear reasons why that has been so. The finance and technology companies that have entered the music sector care not at all about music and artists – they are just interested in how music can drive their projects. It is clear that if the music business is going to be “saved,” it is going to come from music people with an unreasonable love and passion for music and the music business, not technologists or the financiers of Wall Street.