Music Business Research Daniel Nordgård The Music Business and Digital Impacts Innovations and Disruptions in the Music Industries Music Business Research Serieseditors PeterTschmuck,InstituteofCultureManagementandCultureSciences,University ofMusicandPerformingArts,Vienna,Austria Dennis Collopy, School of Creative Arts, University of Hertfordshire, Hatfield, Herts,UnitedKingdom BeateFlath,DepartmentofArt,PaderbornUniversity,Paderborn,Germany Guy Morrow, Department of Media, Music, Communication and Cultural Studies, MacquarieUniversity,Sydney,NSW,Australia Sarita Stewart, Mike CurbCollegeof EntertainmentandMusicBusiness,Belmont University,Nashville,Tennessee,USA CarstenWinter,DepartmentofJournalismandCommunicationResearch,Hanover UniversityofMusic,DramaandMedia,Hanover,Germany Music business research is a new multidisciplinary field that puts a number of differentanalyticalapproachesintomutualdialogue.Itislocatedattheintersection ofeconomic,artistic, musical,cultural,social,legal,andtechnological understand- ings of this cultural industry and it aims to generate a better understanding of the creation, distribution and consumption of music as a cultural good. As a field it is therefore characterised by methodological diversity and involves linking academic researchwithmusicbusinesspractices.Thebookserieswelcomesmonographsand editedvolumesthatfeaturegroundbreakingresearchintothisdynamicandexciting field. Moreinformationaboutthisseriesathttp://www.springer.com/series/15800 Daniel Nordgård The Music Business and Digital Impacts Innovations and Disruptions in the Music Industries DanielNordgård DepartmentofPopularMusic UniversityofAgder Kristiansand,Norway ISSN2522-0829 ISSN2522-0837 (electronic) MusicBusinessResearch ISBN978-3-319-91886-0 ISBN978-3-319-91887-7 (eBook) https://doi.org/10.1007/978-3-319-91887-7 LibraryofCongressControlNumber:2018952647 ©SpringerNatureSwitzerlandAG2018 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartofthe materialisconcerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation, broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionorinformation storageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilarmethodology nowknownorhereafterdeveloped. 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ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland Foreword In this insightful study, Daniel Nordgård draws on exclusive access to private industry dialogues to provide an invaluable contribution to the still small area of scholarshipthatdetailshowpeopleworkingwithinthemusicindustriesexperience and understand their occupational roles and corporate worlds. In analysing and explaininghowmusicbusinesspersonneljugglecompetingdemandsastheymedi- atebetweenmusicians,companies,governmentofficialsandindustrystakeholders, he also makes a novel intervention into the wider field of study that examines the workofculturalintermediariesinthebroadercreativeindustries. TheMusicBusinessandDigitalImpactsoffersacriticalrouteintounderstanding the perceptions, experiences and strategic intentions of music business insiders during a significant moment of disruptive change in the recording industry. By being able to observe (and listen back to recordings of) exchanges at meetings of the Kristiansand Round Table between 2007 and 2011, Nordgård has managed to captureandcommentonheatedexchanges,reasoneddebatesandirrationalanxieties at a moment when music industry personnel were attempting to comprehend the impact of digital change on the recording sector and music publishing business specifically and music industries more generally. Clearly delineating various responsestothesechanges,thebookprovidesavividaccountofhowdigitalization has resulted in acute occupational dilemmas and commercial fears. It emphasizes, with compelling evidence and examples, the divergent goals and contrasting agendas of participants in the music business—a characteristic often neglected when scholars and critics assume that the corporate worlds of music production are unified by shared intentions, agreed-upon strategies and common ideological values. Interrogatingtheseempiricalinteractionsthroughthetheoreticalprismofstrate- gic action fields, Nordgård sheds new light on the fraught relationships between recording/publishing companies and various digital platforms, infomediaries and service providers. By critically assessing discussions at the Kristiansand confer- ences, this detailed study adds to our understanding of how and why the music industries had difficulties adapting to digitalization. It illuminates the tensions and v vi Foreword outright conflicts among various stakeholders and directs attention to the very real problemsgeneratedwhenarights-basedmodel(informingtheworkofrecordingand publishingcompanies)isfoundtobeinflexibleandundulycomplextoadministerin lightoftherequirementsandimperativesofstreameddigitalmusiccirculation. A pivotal section of The Music Business and Digital Impacts evocatively dem- onstrates how a system of collecting monies for individual tracks according to copyrightsisincompatiblewithadigitalenvironment,inwhichinexcessof40mil- lion tracks are potentially available to access. The “screen of death” is a phrase Nordgård borrows from a music business practitioner explaining, with a spread sheet,thedifficultyofadministeringa system wherebyeach track requires permis- sion from theownerofthesoundrecordingand thecomposition, and how eachof thesepermissionsmayrequiretheconsentofmultiplelabelinterestsandpublishers representingeachcomposercreditedonatrack.Thesituationiscompoundedbythe factthatthereisnosinglesourcethatcanbeconsultedtofindoutwhoownswhat.In many cases, tracking down rights owners requires dedicated detective work. Any mistakes in not obtaining the correct permission can resultin costly litigation. It is therefore perhaps not surprising that digital conglomerates prefer a system of allocatingrevenueaccordingtoadvertisingtraffic. Thisbookisavaluableadditiontoourunderstandingoftheeverydayrealitiesof the music and cultural industries. It shows how conflicts in the music business are informed by potentially profound philosophical disagreements about the nature of digital music, andtheethicalprinciplesbywhichmusiciansshouldbelegitimately recognizedandrewarded.Yet,itsimultaneouslyrevealshowworkinglifeiswrought bythemostprosaicaspectsofeverydayinteraction,asevidencedinreferencestothe repetitivecharacterofmusicindustrymeetings,theinabilityofparticipantstomake progress and reach agreement on resolving issues and the way actors are narrowly focused on their own interests and seemingly incapable of achieving a wider perspective on proceedings. The book provides compelling evidence to illustrate the non-unified character of the music industries and to substantiate Nordgård’s more provocative claim that the music business is “dysfunctional”—a proposition ripeforelaboration,furtherresearchandextendeddebate. Finally, Nordgård cautions against accepting recent claims about patterns of convergence, arguing that these are misleading. The digital conglomerates and tech companies (Apple, YouTube, Spotify, etc.) are driven to engage with music companiesinordertogainaccesstorecordedcontent,ratherthantointegratewith labels and publishers in the manner suggested by claims about convergence and (horizontalorvertical)integration.Musicisofimportanceasdigitalartefactbutnot asindustrialpossibility,afindingimplyingthatthemusicindustriesconfrontfurther challenges and dilemmas in the brave new world of digital data and commercial content. Goldsmiths,UniversityofLondon, KeithNegus London,UK February2018 Preface Ihavealwayslovedmusic.Ilovedperformingit,IlovedlisteningtoitandIloved workingwithit,watchingitonstageandbeingsurroundedbyit,andbyotherfans and friends. And not least have I enjoyed taking part in creating, producing, supporting and arranging music and music events for my own band and others. For various reasons, my band never reached an international audience or achieved widespread acclaim (beyond a modest impact in the French market), but I have nevertheless had the pleasure of touring, recording and releasing albums for a numberofyears,whichmeansIhaveexperiencedsomeoftheexcitementofseeing acrowdrespondtoourmusic,ofreadingagoodreviewandoflisteningtothefirst mixofarecording. Equally,Ihaveexperiencedthedisappointmentsof(closeto)emptyvenuesand mediocrereviewsofmusicIhaveputmyheartandsoulintocreating.AndIknow thetedious procedures of loading in andout, waitingfor thedrummer to finish his sound check and, right before the doors open, consuming a contractual “one hot meal”thatmayormaynotmeetexpectations,orevenhopes. Inparallelwithtryingtoestablishamusiccareer,Iwasalsoinvolvedinthelive musicsceneinKristiansand,Norway,firstandforemostthroughDJ-ing,arranging concerts and later through managing Quart—at that time one of Norway’s largest music festivals—where, as Director, I ended up trying to reorganize and refinance it.1 This short and cumbersome career as a festival manager culminated with the bankruptcy and cancellation of the event in the summer of 2008, which in many ways terminated any ambitions for a professional career in the music industries. However,it also opened thedoortoopportunities for myacademicambitions,and furtheramplifiedaninterestinthedynamicsandpowersinthemusicindustries,in particular the impacts and effects of the digitalization processes within and aroundthem. 1ForabriefoverviewoftheQuartFestival,see:https://en.wikipedia.org/wiki/Quart_Festival(last visited01.12.2016). vii viii Preface And so, in 2009, when I was offered a PhD scholarship at the University of Agder, I considered it a tremendous opportunity to understand more thoroughly which factors determine the developments in the field and immerse myself in its complexities. Over the following pages, I present the results of these efforts and some of the theoreticalcontributionstothefieldofstudy.ThisbookbuildsonwhatIdidovera number of years as part of my Ph.D. project. However, the most important part of thisbookliesinmydata,whichbuildsonanopportunitythatappeared2yearsprior tomyadmissiontotheUniversityofAgder’sdoctorateprogramme.Insomeways,it maybridgeagapbetweenmycurrentacademicambitionsandformerexperiencesin themusicindustries.ButitalsorepresentswhatIconsidermostimportanttomyown academicwork,namelytostriveforsomedegreeofparticipationorinvolvementin thefieldofstudy.Greatacademicworkhasbeencontributedfromadistance,butI believe that fields as complex as the music industries demand a thorough under- standingoftheoften-confusingandopaquestructuresanddynamicsconstitutingit, andIbelievethesecanbestbeunderstoodandappreciatedthroughsomedegreeof involvement. And although I come to this through my own experiences, the real opportunity to gain a significant understanding of the field was presented to me in2007. An Opportunity to Sit In: The Kristiansand Roundtable Conferences In June 2007, I was invited by Peter Jenner and Bendik Hofseth to take part in a closed event for invited stakeholders within and around the international music industries: the Kristiansand Roundtable Conferences. This was the first of what became a series of exclusive, invite-only meetings taking place in my hometown ofKristiansandattheUniversityofAgder.Themeetingswereconductedunderthe Chatham House Rule, which dictates that no statements can be attributed to any singleparticipant,encouragingfree-flowingdebatewhileprotectinganonymity. At that time, I was just getting involved with the Quart Festival, attempting to reorganizeandmanageit,andalthoughIhadsomeexperienceinthebusiness asa musician,myposition,knowledgeandinsightwerenothingcomparedtotherestof the delegates of the Roundtable Conferences. The overall objective was to gather international stakeholders within and outside the traditional music industries to discussandinfluencethecomplexprocessesofadaptingtoadigitalera—processes thatinmany waysseemedgridlocked. The goal wastoidentify andagree onwhat obstacleslayahead,whichstakeholderswereinvolved,whichactionsneededtobe takenand,notleast,whoshouldactontheseissues. WhenIwasinvitedtotakepart,Iwasassurprisedbytheveryinvitationasmuch as by the impressive list of delegates set to meet in my hometown. It included an exclusive but broad gathering of stakeholders, ranging from management, record Preface ix companies,publishersandcollectingsocietiestostreamingservices,ISPs(Internet Service Providers) and many of the digital giants that have become household names. For the most part, the delegates were at the executive level, working with some of the world’s most acclaimed artists. Over the next couple of years, the Roundtable Conferences in Kristiansand became an event that spawned initiatives and discussions on such a level that it attracted policy- and decision-makers from internationalorganizationswithinandoutsidethemusicindustries.AlthoughIwas partlyinvolvedinmusicatthattime,itwasobviousthatmyinvitationtotheevent wastheresultofregionalfundingmorethananysubstantialcontributionIwaslikely tomaketothetalks.Inanycase,Iwashappyandexcitedtobeallowedtoobserve andfollowtheconversationanddebate. Providing a Trusted Forum for Talks A central feature of the Kristiansand Roundtable Conferences, and a critical com- ponentofhowtheeventswereabletoattractsucharangeofhigh-levelparticipants to discuss such difficult topics, was the use of theChatham House Rule. Although thereneverseemedtobeanyclearreferencetowhattheChathamHouseRulereally implied,theoriginoftheruleoritspurpose,therewereconstantreferencestoit,both duringthetalksandintheinvitations fromPeterJenner,asthisexcerpt from2012 shows: IssuessuchasDRM,blanketorstatutorylicensing,databases,developmentsintechnology, thefairtreatmentofcreators,andthequestionofhowtodealwithrebuildingarecorded musicbusinessthatisprofitableandhasaviablefuturehaveallbeentopicsfordiscussion. TheeventhasalwaysbeenheldundertheChathamHouseRule,whichensuresthatpeople canspeakfranklywithoutfearofbeingquotedandhavingtheirexpressedviewssubjectto the harsh glare of publicity. So far, no attributed statements have been leaked from the conference.(...)Therearefewproductpresentationsandnotalotofselling,thoughmany haveviewsthatarereflectedintheirbusinessplansorfantasies.Aboveallitisaneventthat stimulates thought and discussion by people who are extremely well informed about the subject.Thediscussionstakeplacenotonlyformallybutalsoatmealtimes,inthebarandat ourtraditionalseafooddinner.Inasmalltown,withmostofusstayingatthesamehotel, thereislittlechanceofescapefromfellowattendees!Thelistofparticipantsovertheyears hasinvolvedrecordcompanies,publishingcompanies,collectingsocieties,musicmanagers, musicresearchers,Internetserviceprovidersandotherusers,aswellaspublicofficials. (ExcerptsfromPeterJenner’sinvitationin2012) Theimportanceofimposingtheruleseemsobvious,anditisevidentlyimportant to the participants, as several inquire about how the rule is maintained at the beginningofalmosteveryconference,inorderthattheirstatementsandarguments cannotbeattributedtoonepersonorcompany.Nonetheless,whiletheconferences refer to the Chatham House Rule, there is no clear definition of the rule itself, meaningthatPeterJennerisnotreferringtoaspecificsiteortext.Infact,quitethe opposite—on some occasions Mr. Jenner states that the importance is not the rule itself, but the shared understanding that these conferences provide the safety of a