In the business of music assets’ acquisition, there’s a new player in town with deep pockets. Iconoclast announced itself with a bang a couple of weeks ago with the news that it had acquired the catalogue of The Band‘s principal songwriter, Robbie Robertson.
But if the company’s brand new, the person at the helm, Olivier Chastan, is a seasoned executive with ample experience in acquisition. Right before launching his own acquisition and music management vehicle, Chastan was co-founder & CEO of Iconic Artists Group, the music asset management firm set up by artist manager Irving Azoff and The Azoff Company.
At Iconic, Chastan led the acquisition of catalogues from the likes of The Beach Boys, David Crosby and Linda Ronstadt.
Chastan also acted as strategic consultant to independent music publisher Big Deal Music, and its founder Kenny MacPherson, on operational, financial and strategic issues, until the company was sold to Hipgnosis in 2020. He also served as Senior Vice-President, Corporate Development & Rights Services at independent distribution and services company INgrooves Music Group, until it was sold to Universal Music Group, and was President of VP Records, home to artists like Sean Paul.
The day Creative Industries News connected on Zoom with Chastan, he had been up all night, not because he was in studio with an artist but because his dog got sick and kept him awake most of the night. “I’m not at my best,” he said, but for an hour he was as dynamic as one can be, and answered all the questions asked, well, almost.
Here’s an edited version of the conversation (which took place in English, even though the two participants are both French).
You’ve had quite a career so far, haven’t you?
Olivier Chastan: I started as session player, playing bass, when I was 19 up until 25, and then, at that point on, I followed a different path and moved on to the record label side. I had a failed label deal with Warner and worked with [Atlantic founder] Ahmet Ertegun. In 2009, I was running VP Records, one of the largest independent labels in the US, and started acquiring some of our competitors and small catalogues — that’s how I got into acquisitions and managing legacy catalogs. I was at VP for 10 years and then did some consulting work for BMG when it relaunched with Laurent [Hubert, then COO, US]. I then moved to INgrooves where I helped set up the rights management division and did some work with Shamrock Capital which owned Ingrooves and had just started their first music IP fund. I then went on to advise Big Deal and Kenny MacPherson until it was sold to Hipgnosis. I then started Iconic Artist Group with Irving Azoff and bought catalogues from The Beach boys, David Crosby, or Linda Ronstadt.
Which led you to Iconoclast.
Olivier Chastan: I started the current incarnation of the company last year. We are funded by a large investment company, but we are not really structured like a fund in that we do not have a cap on the amount of money we can invest. We are starting with a large funding base though.
Who’s backing you?
Olivier Chastan: Our backer would prefer to remain unnamed, but let’s say that it is one of the biggest asset management company in the world. [Music Business Worldwide identified the company as Pimco, which manages over $2.2 trillion in assets.]
How do you operate?
Olivier Chastan: We have an allocation of funds that is significant and as high as any funds raised in the past. Because we have a single investor with a large capital base, if we run into deals that are, say, over $800 million, we do not have to go raise additional capital.
Aren’t you coming a bit late to the party when it comes to acquisitions?
Olivier Chastan: No, there are plenty of assets still available. First, the very expensive assets — the likes of Elton John, Led Zeppelin, The Beatles, Pink Floyd, The Rolling Stones have not done anything yet [with their catalogues] — and below the very expensive deals, there are many artists and catalogues that have amazing songs and recordings and yet most of the market is not looking at them or servicing them. I am thinking of bands or artists that had three or four hits. Most of the new entrants are focused on large acquisitions, deploying capital and putting as much money at work as fast as possible via as few transactions as possible. You can build a catalogue quickly with this kind of strategy but based on where the market is at in terms of prices, you’d be hard pressed to justify these investments at this scale. We are in a weird phase where the bigger the catalogue, the more competition there is, and with the smaller the catalogues, the less competition there is. If you look at companies like Reservoir, Downtown, Concord or Iconoclast, we are primarily labels, music publishers, and do not consider ourselves to be investors. We build catalogues. Finally, I do not consider myself a new entrant since I’ve being doing this for a long time. Building a catalogue is not new for me.
It seems that there is a lot of money out there, ready to be invested.
Olivier Chastan: Yes, there is a lot of money and everybody likes to talk about the amount that they raised. I personally don’t care. What matters is what you do with the catalogues that you acquire. Some investors do not have a creative team, so they are in a different business in my view. The question is whether you are in the business of pro-actively managing assets like Iconoclast or you are in the business of investing in assets that will grow passively with streaming growth — these are two different approaches.
What’s included in the Robbie Robertson deal?
Olivier Chastan: We have acquired his publishing, the royalty stream in his record interests, and some recordings that he owns, as well as name, image, likeness, including trademarks, and then some memorabilia and archives. It is a very comprehensive deal.
What attracted you to this particular catalogue?
Olivier Chastan: The story of The Band is the story of half a century of American music and draws from all of the American musical traditions. ‘Music From Big Pink’ feels incredibly familiar – it sounds like music that you have heard all of your life — country, blues, etc — yet it blends into something that sounds like nothing you’ve heard before. It is unique and very special. The music is very cinematic, which is a trademark of Robbie’s compositions. For me, it was more than just buying catchy songs. These are songs with depth and sophistication.
How much did you pay for the catalogue?
Olivier Chastan: Any idiot with a cheque book can buy anything and be an owner of assets! The price does not matter. Just know that it was a relatively competitive deal and we got it not just by being priced competitively, but primarily won based on qualitative reasons that resonated with Robbie.
Are you looking at other assets?
Olivier Chastan: I look at everything because you never know. I looked at Springsteen and Sting alongside other bigger deals and came to the conclusion that, when majors want something, it is nearly impossible to compete with them. They all have such large catalogues that taking a huge bet [on one transaction] can be justified. In our case, every investment will be judged on its own merit. If they want to buy a catalogue for X amount of money, the Beatles or some other large catalogue will support their risks. They also have a market share strategy which we do not have. What’s interesting is that they are not involved on 80% of the deals we work on, but when they are involved, they tend to pre-empt any competition.
You recently said that a lot of the prices of catalogues that were mentioned in the press were just PR spins. Do you stand by these comments?
Olivier Chastan: There’s a lot of hype out there. There are certain publishers or buyers who specifically report higher figures than what they paid for with the belief — which I don’t subscribe to — that showing that they can spend money will attract greedy lawyers and business managers and get them more deal flow. I can tell you about a deal where I was the second highest bidder and the price was 25% of what was announced. Another recent deal was announced at a price that was easily 30% higher than it was. That was part of the strategy from the buyer — to hype it up. There’s a lot of “propaganda” and miscalculation involuntarily relayed by the press.
Similarly, you are not fond of the concept of multiples.
Olivier Chastan: Everyday I am asked will you pay this multiple, like 25 times, and I always answer, ‘On what basis?’ Is it based on normalised income, excluding syncs, settlements? Adjusted for release cycles? Is it on last year’s earning or 3 year average? Multiples do not mean anything most of the time.
What is good deal for you?
Olivier Chastan: Good question! Number one, I guess it’s creatively something that I can develop over time and for which I have a clear path or vision. If I can see 5, 10, 20 projects to develop and have a plan for the legacy then the first criteria is fulfilled. The music has to be amazing but we all deal with rarefied and amazing music so that’s not really a factor. For example, when I looked at Robbie’s deal, my focus was primarily about what can I come up with creatively. Can we do a show, an exhibit, etc? It’s only in the second phase that I look at the economics, and based on the creative plan, determine if I can make an offer that is competitive. They work hand-in-hand. You need to invest in something that makes both economic sense and for which you have a creative plan.
What kind of structure do you have?
Olivier Chastan: At the moment, there’s 11 of us. We started last June and announced the Robbie deal a few weeks ago so this is all new. We have made five other deals since then. We have an equal number of people working on the acquisition side than in the creative/exploitation part of the company. I put a lot of value in brand and tech partnerships. We have three people doing content production all day. Nothing revolutionary here but we spend an inordinate amount of time and resources strategising on how to define the place of legacy artists in the future of entertainment tech. We look at new platforms — and I’m not talking about TikTok here — and what kind of content to develop for these. I think a lot of people are underestimating the importance of how to engage with these new platforms.
How do you deal with royalty management and administration?
Olivier Chastan: We pick partners on a case-by-case basis — publishers, labels, etc. It depends on the catalogue and the interest of the party that wants to administer the catalogue. We have two catalogues with Warner Chappell, one with Universal Music Publishing Group, a catalogue we just acquired is with Sony Music Publishing, and we will probably move one to Kobalt. Nothing that would come as a surprise.
So what’s next for you?
Olivier Chastan: First of all, continuing to grow our catalogue. We are having very exciting conversations on a lot of deals. We are looking into expanding into artist management, and also looking at other entertainment verticals where there is real potential to grow. We are also looking at a lot of exciting new technologies. I am convinced that name, image and likeness will be as important as music rights. You have all these emerging technologies, which are much broader than just VR, and entertainment will be revolutionised by the ability to create content that was not possible in the past. In a way, we will be able to bring to life a past that was never captured on film or video. That is extremely exciting for me, and it’s a way to give legacy artists an equal footing with contemporary artists. Imagine organising a prog-rock tour five years from now with Yes, ELP, Genesis and King Crimson while being faithful to their image and their music. That’s where we spend a lot of energy. What does the future of entertainment look for artists whose foundational works are mostly behind them and how do you make it fresh at regular intervals? On a personal level, I am going to be spending a huge amount of time outside the US and I’m looking at markets that have not been very active in terms of transactions. So far, all the M&A activity has been concentrated on Anglo-American repertoire, but there are markets out there that I believe have been ignored for a long time.
Would you invest in new talent?
Olivier Chastan: No. I did it for 20 years and have no interest anymore. I made a conscious choice with Iconoclast to look in the rear-view mirror. Moreover, there is so much noise and clutter today that it is very challenging to break new talent. I am now interested in how I can contribute to perpetuating the music I love and worship, and how I can bring something new to these catalogues. That said, my definition of catalogue has changed compared to a few years ago and I do invest on a regular basis in songs that are sometimes just five to seven years old.
How do you see the market of music assets evolve?
Olivier Chastan: We have done a lot of deals but it’s quite challenging because the volume of new deals is relentless. You can ask all of my competitors. We have never seen anything like that — we can get up to three to six deals a day landing on our desk. We are bombarded and now have to pick and choose. I used to look at everything, but we can’t anymore. But I can’t complain because I prefer an active market. However, the next 6-10 months will be critical in terms of seeing where the whole industry is going. The marketplace is so overheated that maybe there will be a reckoning that some of these deals are not the wisest. We also need look at where interest rates are going and the impact on valuations. I’ve noticed that the valuations have plateaued. Some deals are even going down, so we may be approaching a correction of the market, and if that’s the case, we will have to assess what the long-term consequences will be.
Finally, why that name, Iconoclast?
Olivier Chastan: Because that’s what artists are — quite simply. They break the rules of art and question the rules of our societies, and in doing so, allow all of us to think about our lives and our world in completely different ways.
Bruno Guez (Revelator): ‘NFTs will become a commodity so we expect to see more platforms using them as utilities’
Revelator has been building a data and asset management infrastructure for the past decade, to help rights holders navigate the new digital paradigm, and it is now moving into the NFT sphere.
Jerusalem-based Revelator was founded in 2012 by Bruno Guez, who had been in the music industry for the past three decades, working alongside such industry legends as Chris Blackwell or Guy Laliberté‘s Cirque du Soleil. He is a musician, an industry executive, a tech buff and a data obsessive.
After a life as an international commuter, Guez settled in Isreal after an accident that left him paralysed. There, he built the Revelator team, tapping into his country’s vast pool of experienced IT executives.
The first incarnation of Revelator was more of a rights management company. But in the past three to four years, Guez’s focus has switched on cloud-based blockchain-powered tools, and he is now turning his attention to NFTs and other digital assets.
Eight months ago, Revelator has launched an Artist Wallet, a new web app for music distribution and royalties, powered by its new decentralised Original Works platform. The Wallet allows for direct payout between creators and right holders, and the benefits for artists are multiple, according to Guez: daily payments; control and transparency; income tracking with an estimated pipeline; and assets and royalties management.
Original Works, in turn, is a decentralised protocol for music IP offering a full suite of Web3 products to distributors, record labels, publishers, platforms and brands.
As he reveals in this interview, Revelator’s new pet project is Creator Studio, an all-in-one solution that enables creators to mint, manage and sell NFTs across marketplaces, and easily create custom storefronts to power Web3 commerce to fans and collectors. Powered by Revelator, the Creator Studio web application and the Artist Wallet mobile application are connected through Original Works.
The day Creative Industries News caught up with Bruno Guez to talk about Creator Studio, it was Israel’s national day and Guez was relaxing playing some music with his ProTools software. “I doing some sort of reggaeton dancehall with a Latin twist,” he explained.
For an hour, he left ProTools and took us through his latest project. Here’s an edited version of the Zoom conversation.
Revelator has always been at the intersection of technology and rights management. So what new development are you working on?
Bruno Guez: We’re working on the Creator Studio web3 app, enabling the easy creation of NFTs and the ability to list and distribute them on marketplaces. But more importantly, its function is to manage digital assets. The evolution of the marketplace means that digital assets are becoming a commodity but there are no tools to manage a roster or a catalog of digital assets. What’s missing is the B2B aspect. Companies like The Orchard or FUGA or lack the tooling for digital assets management. So we’re adding this new layer to Revelator to manage digital IP in the form of NFTs. We are really trying to follow the music business playbook in ways royalties are managed and that’s something no one is doing at the moment. When an NFT is sold, money is paid into somebody’s wallet but all existing solutions don’t take into account the splits between band members, the label, the designer, etc. It’s not easy to do that. We enable the splits of assets through smart contracts — we’ve been doing that for three to four years — and then split the money on the blockchain between all the parties. We’ve built a music business management layer for digital assets. In fact, we are even more advanced than that: we power storefronts to create marketplaces and enable rights holders to sell digital assets to fans, and facilitate the buyer experience. People can pay with credit cards and don’t need to know anything about crypto. The more we democratise this, the more the music market will adopt new types of formats. We look at NFTs like we looked at MP3 music files: it’s a new format with new distribution channels.
When are you launching Creator Studio?
Bruno Guez: We are launching it at the end of June. We have it working on the wallet. You can easily create and mint NFTs, and distribute them across the ecosystem. The market needs simple solutions. First, there’s a lack of digital assets accounting tools. If Warner or Believe want to sell NFTs across the marketplace, they have no infrastructure for any accounting for crypto assets; they cannot support crypto in their accounting system. And that’s something unique we are providing with the consolidation in any type of currency, Ethereum or other cryptocurrencies. It’s not easy for music companies to hold 2,000 Ethereum on their balance sheet, and create an entry in their ledger to keep track of their digital asset transactions. Second, in the same way we provide other B2B services, we can enable a label or distributor to offer NFTs to their artists and get into the marketplace without developing anything..
Have you started presenting the service to potential users?
Bruno Guez: We have started speaking to independent distributors and aggregators and everyone is interested at this stage. It is still early days with NFTs, so they are experimenting and trying to learn how things work, what are the challenges, how do you manage the assets, and what do you do with crypto assets on your balance sheet when you are a public company. They don’t want to have exposure to crypto asset volatility, they don’t know how to manage these financial assets in their systems, which were not built for web3, and don’t understand how digital assets can coexist side by side with traditional music releases.
How will you monetise the service?
Bruno Guez: Our business model is to be a SaaS company. For us, it’s about selling subscriptions and different tiers of subscription, depending on the needs of our customers, and also to have a transaction fee on primary market transactions.
How does the new service work?
Bruno Guez: The first application is our digital wallet. It shows users their balance and the pipeline of royalties coming into the wallet. Rights holders can see how much revenue is coming, easily request an advance and also see which song they want to request an advance for. They then submit a request for an advance. It creates a smart contract that will repay itself from the royalty flow. So first you have the wallet for music and media assets. You can also create NFTs and manage your assets on different blockchains. Additionally with the platform, you can manage registration of music IP on the blockchain, mint NFTs and distribute to marketplaces. Both applications have incredible user experience and design for creators and rights holders to easily onboard to web3.
How do you create an asset?
Bruno Guez: It’s basically a five step process. First, you choose a digital file and upload it. Second, give it a title and a description. Third, define the creator’s info. Fourth, choose if it’s a limited or single edition. Finally, define the selling price, say $25, and the royalties you want to receive from secondary sales. That’s it; you mint it from the phone or web application in three minutes. Once that’s done you put it up for sale on a custom storefront, making it available to whomever you want. That’s the marketplace layer. The simplicity allows artists to fully own and sell their digital assets. Our applications support 20 languages from English, Spanish, Chinese to Arabic or Hebrew. For Original Works, anyone can manage assets straight from the Wallet. Assets are recorded on the Ethereum blockchain. An artist today can’t monetise music on blockchain with existing distributors, but they can do it now with our web3 application. You don’t need to worry about who owns which shares because the agreement splits are kept on the ledger.
How do artists advertise that they have put out a series of NFTs?
Bruno Guez: In the same way that you send people to your music on DSPs. I look at it like digital commerce; digital assets are no different from other assets. There is still the element of marketing. You have to create a campaign, like when you have a new track coming out.
What about people who think NFTs are just a fad?
Bruno Guez: There is a future for digital assets. We believe the main value will come from the utility and not a collectible. A utility NFT unlocks a digital experience.
How do you know that the IP you are using is not someone else’s?
Bruno Guez: That’s why we work with businesses, not individuals. We know the record labels and distributors we work with are mindful of contractual relationships with rights holders. We also provide metadata inspection mechanisms for labels or distributors to review an NFT before the artist mints it. They have obligations not to mint fraudulent assets. Another protection against fraud is content identification. If an audio fingerprint is unique or matches pre-existing copyrights, it will get flagged. There is no way to totally eradicate fraud but we can put quality control measures in place within the chain. If it is part of the process, you can make sure it is part of the assets you own. This is what we don’t see in systems today: the ability to transfer shares and access data to access micro financing. This is facilitated by embedded information in smart contracts.
What do you think of platforms that sell digital assets without having the IP?
Bruno Guez: There should be more regulation. Those sales are usually marketing stunts to get people to sign on and ultimately, they do not have a lasting quality as a business. Digital assets are here to stay, so more controls will be put in place, either by regulators or through compliance from companies. There are lots of questions from a regulatory perspective: are NFTs a security? The problem is not the NFT but what you do with it. If you create a digital collectible with a concert ticket, it is not a security. NFTs will become a commodity so we expect to see more platforms that will be using them as utilities. That’s also why the platform we build is useful.
What would you advise to labels that are interested in digital assets but don’t know what approach to take?
Bruno Guez: First, you have to understand what you want to get out of it. What are you offering to the fans? Is it a collectible or a way to unlock premium content? You can also use it to do community activation and build a community around the artist. Then it is less about the sale and more about the engagement. It is not just about buying an expensive jpeg but using it to unlock the artist-fan relationship. You have to have a clear sense of what you are offering.
Is the audience ready for that?
Bruno Guez: If it’s easy to purchase, yes. If it involves a crypto wallet, it will take time. Most people still purchase things online with credit cards, so you have to make it available this way. And if an NFT gets you something like tickets, or new music before anyone else, then it creates this direct fan engagement.
Are NFTs going to last as speculation tools?
Bruno Guez: The market will correct as it always does, and it is already flatlining. Prices will find market value, such as $20 for a NFT, and those that ask $600 for NFT will be few and far between.
There’s also the issue of scale and the inability for blockchain-powered systems to deal with large volumes of data. Is this going to be an issue?
Bruno Guez: It depends on which blockchain. The first layer, like Ethereum can at times be a bottleneck on the network, which makes it hard to scale, but new L2 networks are getting easier to scale, like Polygon. If you look at the wallet as a multi chain tool, you can mint on Polygon where scale and speed is not an issue.
What will the next generation of tools for digital assets look like?
Bruno Guez: It is still a problem to pay people faster. For us, increasing the speed of estimating royalty value and the delivery of money is our main focus. For that, we need a full data infrastructure that can look at your song and say how much you make at any given time, and speed up payments. We can deliver payment to the wallet every day. Seeing how much money you have and getting it to you almost in real time is our goal. What I want to create is a system that delivers something faster and directly to people’s phones.
Andrea C Martin (PRS for Music): ‘In 2022, we will have higher revenues and we will pay out more royalties to our members’
PRS for Music CEO Andrea Czapary Martin is in a buoyant mood. PRS for Music — one of the biggest music rights societies in the world — has announced last week good financial figures and the company is on track with its modernisation plans, despite of the pandemic.
In 2021, PRS collected £777.1 million (€925.7m), up 22.4% year-on-year, which is an achievement when performance royalties for the use of music in a public space have gone down significantly due to the pandemic. The upside is that digital collections grew by 46%, which almost compensated the drop in revenues from other sources.
Throughout the pandemic, and despite multiple lockdowns in the UK, PRS managed to maintain a strong level of business and engaged in some of the most radical changes in the history of the company. The society implemented new governance rules, which introduced a Members’ Council alongside the Board.
The society also made the necessary adjustments to a business becoming increasingly driven by digital use of music. This meant adapting processes to deal with trillions lines of usage, shifting documentation and usage data into the cloud, and ensuring that it really delivered a better system to members.
The society has also moved to new and smaller offices, new London Bridge, and they no longer called an office but a “hub.” The move took into account the fact that less people wanted to go back to the office post-pandemic, and will save one million pounds a year in expenses.
The new location will consolidate PRS’ two working sites in London, the main offices in King’s Cross, at the heart of London, and the membership processing offices in Streatham.
“We have downgraded but also reduced our footprint by 45% less than the two locations combined,” said Martin, about the new headquarters.
“King’s Cross is gone and people have relocated to the new place, and by the end of the year, the rest of the company’s staff from Streatham will join us in the hub,” said Martin. “We have new ways of working which is really exciting. And its a great location.”
Martin had also to deal, from the outset, with the shortcomings of ICE, the digital licensing hub created by PRS, Germany’s GEMA and Sweden’s STIM. This led to the appointment of a new CEO and CTO at ICE, and an upgrade in the systems and tools used by ICE.
For Martin, who took on her new job a few months before the pandemic started, the highlight of the year so far is that business is resuming is a sort of normal way. “I can finally go out!” she enthused. “I started this job and went straight into lockdown.”
Creative Industries News had a zoom conversation with Martin from her new London offices. Here’s an edited conversation of Andrea Martin with Creative Industries News’s Emmanuel Legrand.
The figures for 2021 are quite impressive, especially the 45.6% year-on-year growth in digital revenue. How do you analyse that?
Andrea Czapary Martin: We had a really good year. What it shows is the resilience of the music industry in the last two years. It shows the power of music that allowed us to get through our life. It also shows how quick the industry can bounce back and we can see the optimism. We had an overall 22% increase in revenue and a 50% increase from online revenues. The online growth was really great because it compensated the downfall we had in international, live and performances in public space. And if you take into account what we know about 2022, the first three month show that it further bounces back in the sectors that were down like international and places where music is played in public. These are very encouraging results in 2021 and I am very optimistic about the future.
With live music, you were impacted not only in the UK, but internationally since you collect international live music royalties on behalf of many songwriters. How do you see the situation shaping up in 2022?
Andrea Czapary Martin: We’ve seen it bouncing back as many countries are opening up, and we’ve seen it in the UK too. We were in lockdown quite a lot in the UK and live was not really happening. Our revenues from live in 2021 were 8 million pounds, which is nothing compared to what we had in 2019. It represents an 85% decrease from pre-pandemic years. What we are seeing now is that there are many tours that have been booked — over 240 tours — and big festivals like Glastonbury are happening. If we look at just the first three months of the year, we are seeing that live is bouncing back in 2022.
Are public performance collections from businesses that use music bouncing back too?
Andrea Czapary Martin: Absolutely.
Don’t you feel that compared to US societies for example, the over-reliance of European societies on public performances has been really exposed during the pandemic and that there was a need to find new streams of revenues and accelerate digital?
Andrea Czapary Martin: That’s why we focused mostly on growing online revenues. Without the increase in online revenue of 46% in one year, we would have never had the great results that we had. We made investments in ICE and investment in new licenses — we signed a lot of new deals in 2020 and 2021 such Disney+, Apple TV, Netflix and many more. We made close to 50 deals last year compared to 9 in 2019. That focus on online, that focus on new deals, on becoming more commercial, has contributed to these great results.
From an international perspective, which parts of the world were the most affected by the pandemic?
Andrea Czapary Martin: The area that was the most hit was Latin America, especially Peru and Brazil, and that was the biggest downfall for us. Of course, some countries in Europe were more affected than others. Asia too.
Do you expect all the streams of revenues to be back in order in 2022 or are there still some dark spots?
Andrea Czapary Martin: There are still some dark spots. When we look at our budget for 2022, international will still be a little bit down, because, as you know, there is a lag between the moment royalties are collected locally and the moment we get paid — some societies keep on paying us once a year! On average it takes societies 10 months to distribute — we are much better than that as we only take five months. The lag in international will impact 2022 results, but not as bad as in 2021. And then of course, live will still be impacted and will not go back yet to 2019 figures. We’ll see that happen in 2023. Overall, we will have higher revenues in 2022 and we will have more royalties paid out in 2022 to our members versus 2021.
Going back to licensing, what type of businesses are you licensing that were not around two or three years ago?
Andrea Czapary Martin: Well, Disney+ and Apple TV, obviously, but we are also seeing more video game companies that we did not have as licensees, and that will contribute even more to the growth in 2022 than in 2021. The online live concerts business that started in 2020 is not going away. This will help. And at the same time we just renewed the BBC deal and we have signed with Sky, which was behind schedule. These are old deals but they are also better deals than before. Those will contribute to the growth.
Is there any business yet in all these new catch-words such as NFTs, metaverse…
Andrea Czapary Martin: I think this is a massive opportunity in whatever form it’s going to be. What is not clear yet is what the business model of the metaverse and web3.0 is going to be. There needs to be further development and how we do define the business model. These license deals are going to be expected to be worldwide and that’s going to be the biggest challenge. We follow these new potential businesses very closely but there is going to be a lot of development before we can define the business model on that.
You made quite a few significant changes at ICE in the past few months. Are you satisfied with the way things are?
Andrea Czapary Martin: I have been very involved with ICE. I would say that I spent about half of my time last year on ICE in doing the job description for the new CEO, in hiring the new CEO and a new CTO. I was also involved in CUBE [a could-based copyright platform] and also the project we call Apollo, which is a new processing system, and move it from IBM and bring it into the cloud. I was also involved in understanding how, in the CUBE project, did we go wrong, and learning from that and not repeating the past. I’m very hands on. Of course, it plays to my strength, because my background is big data, tech, digital transformation and change. It is still early days because the new CEO started on the 1st of March and the CTO at the beginning of April. There’s already a lot of changes and I am very encouraged. We are very much focused on CUBE — more than half of it has been built and we brought it in house so we are building the team and the capability for CUBE, but also for Apollo. The next six to nine month will see how that plays out in the long term.
Are there improvements in the way you operate with your sister societies on the data side — and not simply among ICE partners?
Andrea Czapary Martin: I think we still have a long way to go on that. With CUBE, which is going to be a copyright multi-territory system, I hope that we can collaborate more on data. There needs to be more collaboration on data with other societies. I am in contact with Cécile [Rap-Veber, the new CEO of France’s SACEM] and I am going to meet with her in May. We are also working quite closely with BMI, ASCAP and GMR [Global Music Rights]. As you know, BMI are testing out ICE. Of course, we are partners with STIM and GEMA on ICE and last year we collaborated as shareholders much more than before to really put ICE and CUBE back on track.
Do you see the role of collective management organisations like yours growing or fading in the future? Why would songwriters or publishers still need you?
Andrea Czapary Martin: They will still need us to do these multi-territory online negotiations, processing and provide a global copyright picture. One of the big advantages that we have is that we are neutral and our members trust us — they trust that we protect and grow their rights. We have to continue to build on that trust and continue to deliver great results to them. At the end of the day, what are they looking for? They are looking for a big pay-check that arrives every quarter — and we are trying to improve on that — and continue to deliver on our services, be transparent and as accurate as possible. We need to be an efficient society — our goal is not simply to distribute a billion pounds by 2026, but also to have a cost to income ratio below 10%. The more efficient we are the more we can pay out to our members. If we can do that I think they will continue to be with us. We just have to make sure we stay relevant!
You also made last year significant changes to your governance rules. Almost a year later, what are the effects of these changes?
Andrea Czapary Martin: It’s working very well. It really has helped the company to be more flexible and quicker in decision making. We had so many meeting with the board, the executive board, the different committees, so that has been reduced. Just with the board and the executive board, we had 13 meeting a year, which required a lot of paperwork to prepare. And doing so we were not really running the business and delivering results. Now, it’s much more simplified, and it’s working very well. There’s still things we need to put in place to make it even better, but I am quite happy with the outcome of that. Not only does it allow us more flexibility, but as the world is accelerating, we need to be quicker in decision making, and it allows us to do so. We can also bring more diversity into the council and the members’ board. Before, we had four male independent directors, we now have two women and two males. We now have a woman, Michelle Escoffery, who is President of the PRS Members’ Council and who is from the black community. So we are bringing much more diversity around the table, and not just in gender. We are also making sure there is more diversity among our employees — we have more women in executive roles, we have more staff from diverse ethnic background, so the PRS of today is getting much more diverse. We are not there and there’s still more to do. And when you have diversity around the table, the results are there.
Last time we spoke you said you’d let part of the staff continue to work from home. Is that still an option?
Andrea Czapary Martin: Yes, absolutely, we have new ways of working so people come here to collaborate and work together. That’s why we call it a hub and not an office. People don’t have to come to the office as often as before. We saw in the last two years how productive people were by working from home. It’s been working really well for us.
You’ve now been in the job for three years. You are Canadian, you came from a background that had nothing to do with music. So what are the best and the worst parts of the job?
Andrea Czapary Martin: What I really like about the job is learning about a new industry and at the same time applying my experience from other industries in big data, digital and tech transformation, and also changing a culture and having a high-performing team. That’s something I am proud of. I am a big believer that if people are happy and ready to engage they will create great results. When I came in, every year they were doing these engagement surveys with all the employees. The engagement rate when I came in was at 63% and last year, after the September 2021 survey, we had an engagement score of 83% and that transpired in the great results we had. We delivered huge technical projects that PRS could not deliver in the past, and why? Because we had people involved. We moved into the cloud with Oracle and it was such a huge project that we had direct access to the Oracle board because they had never moved 22 trillion data points into the cloud. And we delivered that on time and on budget. That was a two and a half year project and we had 200 employees involved in that project. It was not just an IT project. All aspect of the business had to be involved. We delivered CRM, a new customer delivery system, because ours was so old, and it was on time and on budget. I am very proud of what the team has done and how they worked as a team with a positive mindset, despite the challenges of working from home. For me that is worth gold. Now, our board, our members and our customers are happy with the new systems. The biggest challenge was to get a company together through Covid. I never did that. I’ve been through crisis before but Covid was of a different kind and we were in an industry that had been severely impacted. Bringing a company through Covid in a virtual world was quite hard. The governance changes were also a big challenge for me. I had experienced changes in governance but that was of a different kind too. I learned a lot. There were times last year when I had to breathe in and breathe out but we got through it. I had a lot of support from my chairmen, the executive team and the staff and it gave me the energy to get through these challenging times.
Cécile Rap-Veber (SACEM): ‘We are a solutions provider to create value, a tech company, and we are less and less seen as some sort of cultural institution’
When Cécile Rap-Veber was appointed CEO of SACEM last October, replacing Jean-Noel Tronc who had been in the job for ten years, she became the first woman to run the French rights society since its creation in 1851.
Rap-Veber was not a newcomer to the society — she had been working there for the past nine years. She was hired by Tronc to as Director of Licensing. The shrewd negotiator was in charge of securing licenses for media (TV/radio) phono and video mechanicals, private copying levies, and digital. She was also handling digital mandates with US/UK publishers, such as Universal Music Publishing Group.
Two years later she added to her stripes international development, looking after reciprocal agreement, foreign collection and development. She was also Chairman of the Licensing Committee at Armonia, the digital licensing hub regrouping several European societies. Her new position allowed her to develop a significant international network.
In January 2019, she became Executive Director of Licensing, International & Operations, adding to her responsibilities documentation and distribution for members, mandates, and foreign societies. She also took charge of the development and implementation of the digital processing platform URights.
A trained lawyer, she started her career at law firm Cabinet Sylvain Jaraud where she was in charge of IP issues in the audiovisual and music sectors, working with dozens of France’s most prominent artists and filmmakers.
After almost five years she was hired in 2000 by Pascal Nègre, then CEO of Universal Music Group France, the country’s largest record company, to be Director of Legal and Business Affairs. Rap-Veber likes to share that Nègre told her he was tired of seeing her every time there was a negotiation with one of Universal’s artists and offered her to instead come and do the same job but from the other side of the table, which she accepted.
In 2009, she was promoted to Managing Director Universal Music Consulting & Content, Universal Music new business development division dedicated to brands and artists/music partnerships. “We did a lot of fun things,” she said.
In 2013, she joined SACEM and became a pivotal member of the executive board, with a reputation for being result-driven and a problem solver. These two attributes were crucial for her ascending to the top job at the society, as the board was looking for someone who would spend more time looking after the operations of the society and less with political action, which Tronc excelled at.
Six months ago, SACEM’s Board of Directors informed Tronc that they had decided to end his mandate and named Rap-Veber and Secretary General David El Sayegh as joint interim CEOs.
Six weeks later Rap-Veber was appointed Chief Executive officer, with El Sayegh as Deputy Chief Executive Officer. The Board gave her the brief to “reinvent” SACEM and “create the collective management of tomorrow.”
SACEM is one of the largest societies in the world. In 2020, it collected directly for its members €988.5 million in revenue, down 12% compared to 2019, and overall, collected €1.4 billion with the mandates it received from other rights holders (figures for 2021 have not yet been released).
Creative Industries News‘ Emmanuel Legrand had a long video discussion with Rap-Veber to talk about the performances of the society since she took over in September and the challenges facing the society. (The interview was done in English)
How was 2021 for SACEM?
Cécile Rap-Veber: Better than expected, but unfortunately we suffered from a big decrease in revenues from live and public performance, something in the region of 200 million euros compared to a normal year. It was even worse than 2020, but when it comes to digital, we’ve seen a very big uptake. Digital collections will be better this year, but will not benefit all the rights owners in the same way. When it comes to digital, there is a large part that will be sent to our partners representing Anglo-American repertoire. Usually, live revenues tend to benefit our direct members, so digital will not offset the losses from live for them. We are still feeling the effects of the crisis, but we can also see some improvements. In the first quarter of 2022, there was a rebirth of live activity, focusing mainly on established acts. When it comes to newcomers, it is very difficult to make ends meet. That’s why we are going to launch mid-May a campaign with all the live music producers, the CNM [National Music Center], SACD [rights society for drama repertoire], and private theatres. The #RetrouvonsNous campaign was initiated by SACEM to explain to the public that artists are missing their public but also that we missed to be all together. We have scheduled it in May because at the moment it is too soon, as Covid is still here. When all the restrictions were removed a few weeks ago, cases have been going up so it is difficult to convince people right now to come back to concert venues. On top of that we have the economic crisis and inflation coming from the Ukrainian crisis, so it all these factors may prevent people to buy tickets when they focus on their rent, food, electricity and gas bills. It has an impact on the way people consume culture in France and also probably in Europe. To summarise, we had a better year than expected, but our direct members are still affected by the impact of the pandemic.
You’ve been in the job since September of last year. What are your plans with SACEM?
Cécile Rap-Veber: We have started a major reorganisation of the society because, as you may know, we had to put together a departure plan, mostly retirements, affecting over 150 people in the organisation. In the meantime we really want to transform the company to be more agile and more focused on members, services and innovation, as well as better collect and distribute. In addition, we want to develop new sources of revenues so we are setting up a department of development, under the responsibility of Julien Dumon, who is already in charge of phono mechanical and digital. We have set up a new entity called SACEMLab, under the responsibility of Adeline Beving and Julien Lefevre, which is focused on doing partnerships with start-ups, and developing agile tools for our members and see how we can improve our processes. The first deal in place is with La Plaine Images, based in Lille that will favour the interconnection with start-ups and delivery of new tools. And on top of that, to show how much focused we are on innovation and development, we have set up with the board a specific committee based on strategy and innovation with Jean-Michel Jarre as the “godfather” of the initiative. This committee is involved in NFTs, metaverse, all the new solutions that we hope will help us create new value for our members.
You have also restructured your international department, haven’t you?
Cécile Rap-Veber: Yes, pursuant to the retirement of Jean-Claude Chamoux, we have decided to regroup all our international activities, the relations with our sister societies and the development in foreign countries, under the responsibility of Caroline Champarnaud. We are going to be more strategic about the relationship with our sister societies, and also push for a better interaction between some societies. Caroline has been instrumental in building with me relationships with [Canada’s PRO] SOCAN or [South Korea’s rights society] KOMCA recently, for online digital collections. That’s also part of her remit because I think this is key and strategic for all of us to pool our resources when it comes to processing because we all receive, mainly for Europe, the same data and for me it makes sense to pool the processing. This will also allow us to decrease the commission for the digital exploitation for our members.
Can we go back very quickly to what happened in September and what led you to become the new CEO of SACEM?
Cécile Rap-Veber: In September, the board and Jean-Noël have decided to stop their collaboration and they asked me to take on the role of CEO.
You make it sound like it just happened like that, easy and simple. But it seems it was something that had been brewing for some time and I was wondering if that was a reflection of strategic disagreements or personal disagreements?
Cécile Rap-Veber: No, it was strategic. If you read what our chairman told the media at the time, there was a strong wish from the board — which had been renewed in June — that we should focus on operations and innovations. Because digital is key to our future, and since the deals with DSPs and GAFAs were important, it was a strategic move to ensure the future of SACEM. I think that after ten years, they were happy with what Jean-Noël had achieved, but they wanted to accelerate the transformation.
One of your board members summed it up for me as “less politics, more focus on money.”
Cécile Rap-Veber: It’s not only about money if I may say so, because our focus is also on operational issues and services so that in the end we have better collections, better distributions. We also want to consider members as the centre of society. Recently I discovered through a video I made with Fianso, a rapper, that it got a lot of reactions, more than 200,000 views. The urban music community used to say that they were not welcomed at SACEM. So I think there is on our side a transformation of the society to also show that this is their home, this is the home of creators and publishers. But we are still seen as an institutional organisation, which is not true. We are a private company, we are non-profit and we belong to our members. I come from a family of creators, 17 generations… In my family, I am the only one who’s made studies, when the others focused on creating, and from my early days as a lawyer, I have always been surrounded by creators and artists. They are my family and I think this relationship is important in the new way we want to see SACEM evolving in the coming years.
How would you describe your management style versus your predecessor’s?
Cécile Rap-Veber: The thing that makes the difference, for me, is that I am super operational, and I am still involved in deals — for example there is an important negotiation with a major broadcaster, and I am directly involved. I am personally involved to attract new mandates and building new partnerships. My chance is that I have been working with the team for nine years so they already know me, they know my management style and they know that they can rely on me for operational matters and not simply for management issues. I am close to them but when you become CEO, you are sometimes seen differently by your team. I think we still have a close relationship and I must admit that we have unbelievable exchanges at the executive board every two weeks — it is enriching and fun at the same time. I think we are creating a new mood. I really have trust in collective intelligence, with the board, with David [El Sayegh] my deputy, with my executive team and all the rest of the employees. I love to manage in sharing advices/strategy or gathering innovative ideas from the team to the point that I have implemented a new “shadow executive board”, formed by young employees who are 25 to 33 years old. This shadow executive board have submitted specific topics they’ve analysed as been instrumental for our future in the next years and will work on solutions and answers to implement. From the youngest to the most experienced ones, everybody is involved in the strategy and participate in its elaboration and execution. In a way, like web3, we are more decentralised and collective.
Your predecessor was a political animal, both in Paris and Brussels. How are you going to be dealing with the policy issues that come with the job?
Cécile Rap-Veber: I’ve already started. I want to highlight the fact that I was a lawyer, and when you see how many politicians and Presidents in France were former lawyers, I think I am able to talk to people at that levelI have a team with David, Blaise [Mistler, Director of institutional relations] and Héloïse [Fontanel, Head of European and International Public Affairs], and they have been introducing me to a number of deputies, senators, the ministry of culture. These people need real information to make good decisions when it comes to legislation. We have a lot of good meaningful exchanges about the cultural aspect of our activities. We do have concerns about presidential candidates like [Emmanuel] Macron who wants to put an end to the television license, which will create funding problems. We are really focused on that. Despite my new experience in that field, we already had concrete result in the way people listen to us.
If you were to do a SWOT analysis of SACEM — strength, weaknesses, opportunities, and threats — what you you list?
Cécile Rap-Veber: First, that we are in a better position this year than last year. You could really see that during the pandemic, we were very dependent on the economic activity, but you can also see that other businesses have not suffered from the crisis. On our side, it was really tough, but we are now more agile, we are investing in tech, we have people that are really committed to make it happen, meaning that we are committed to collect more, and provide better services. We have threats that I would identify as coming from GAFAs. Compared to the United States or China, Europe is lagging behind when it comes to the new digital revolution. That’s why with others I am fighting to have a real European metaverse because this where creation and creators will be better protected compared to the metaverse in China.. But we have to secure that environment. We have to be cautious every day. As long as we protect our environment, I mean, we are in a better situation. If you look at what happened last year about the private copying levies, with refurbished mobile phones [which ended up paying 40% less than new phones], we are constantly under threat. We are trying to better communicate. We are trying to enlarge the scope of clients and partners, to better welcome our members coming from all around the world, and try to improve collective management in other countries where we can help them. This is the case with some local societies in Africa or in the Middle East where governments have asked us to provide some information and analysis about the implementation of CMOs. When I see what we have been able to achieve in a short period of time, the SWOT I would have made last year would have been very different.
Molly Neuman from Songtrust told us a few weeks ago, “We can talk about web3 but we are still trying to fix web1 problems.” Do you agree?
Cécile Rap-Veber: I am not going to say that I disagree with Molly. However, I would have a different view. I think we are already ready for web3, and I can tell you that we are going to release a solution for protecting works with blockchain, and we are also working on a solution for NFTs. I understand that everything is not fixed yet in web2 — because web1 was a long time ago —, and we have a lot of things to fix and improve. You can jump to the new environment even if you also still need to fix the old one. Trains are still late and yet we can go to the moon, but we can work on trying to get the trains to arrive on time.
You referred to an increase of revenues from digital but do you believe that digital revenues are where they should be?
Cécile Rap-Veber: The short answer is no. I still have a lot of concern about freemium exploitation; I still have concern about the level of monetisation for these free services; I have concern about very big tech companies that can sell very expensive devices, but they don’t increase the price for their subscriptions. So yes, I think there is still value to be created and extracted for the benefit of all rights holders. I am not saying that the sharing of the value should be split differently because there is a lot to say about that, but I would rather focus on how we can increase the overall value. When you see that subscription rates have not increased in over ten years, despite the inflation, it’s a concern. Netflix has been able to achieve great things and regularly increase their subscription rates. I agree that they have exclusive content but take music streaming services. When they started they were able to provide access to, say, five million tracks. And now they provide access to over 70 million tracks, podcasts, and other content, and they still charge the same amount! It’s a joke! So something needs to happen here. If we were able to implement a minimum per stream for all platforms, it would force them to seek better monetisation and value. In addition, it would make it easier for our members and artists to better understand the value of their works.
Switching to the US, what do you think of the creation of the MLC?
Cécile Rap-Veber: Well, we can already see revenue coming from the MLC, so that’s good news. Compared to the situation before, without any proper and systematic management of mechanical rights in the United States, it’s a vast improvement. We have participated in the analysis of the unclaimed royalties — we work with Muserk in that field — so we saw revenue from the unclaimed pot coming from YouTube, and our relationship with Muserk will also help us with the unclaimed royalties from pure players. The only thing that should be fixed — in particular in the context of web3 that Molly was talking about — is the quality of the documentation. There is still room for improvement.
And why is that? 20 years ago it was already the case. Why are we still talking about these issues?
Cécile Rap-Veber: If I understand correctly, the basis for the documentation was coming from HFA and HFA apparently had not been updated for a while. And, in the meantime, there was a massive increase in catalogues. Even in the 90s, HFA were not known for the quality of their documentation, so today we are dealing with that. I don’t blame the MLC because they have been able to achieve in two years something that we were not expecting. As a foreign society, it is a good starting point. I am more concerned by the CRB [Copyright Royalty Board] discussions. I mean, if we have been able to increase the rates in Europe, it is important that the rates are at the same level elsewhere. It is really weird for me to see that platforms in the United States would pay rates that are lower than what they pay in the rest of the world. I also saw that the CRB judges have decided to dismiss the settlement that would have frozen mechanicals on physical products and downloads. When you see the amount of money that some companies invest in music publishing rights, it shows that there is a real value attached to musical works. I am talking about compositions. So that should be reflected worldwide in how much songwriters and publishers get paid.
What are your views about making the music industry more diverse? After all, there are not that many like you who are CEO of big music organisations.
Cécile Rap-Veber: There are more and more women at the executive level, but not enough. I think that for us, at SACEM, it is vital to promote more women right now, at the level of the executive board, because the more you expose women with responsibilities, the more you recognise their value. On my executive board we have 45% of women, so we are getting close to parity. My role is also to have SACEM perceive as more than just a CEO, and therefore expose more the diversity and the profiles of our leaders. And if I were to leave the company, there would be already within the company a number of women who could potentially replace me as CEO. Diversity is key for me. Going back to that conversation I had with Fianso on YouTube, I said that my priority was to implement more diversity at SACEM , and you know why: How can you claim to represent one of the most diverse repertoire in the world if all the employees look the same? We must reflect the diversity of our members. We have hired a company that will do an audit and help us identify where there is a lack of diversity and by diversity I mean everything from gender to race, background or origin, and more generally CSR [Corporate Social Responsibility] topics. We need to reflect our cultural environment. Why do we have the second most exported repertoire after the Anglo-American repertoire? It’s because of all the foreign creators that have joined SACEM. This is our force. We represent the first Arabic repertoire in the world, the first African repertoire in the world, we have a very strong representation of Brazilian creators, and so on. This is our chance. For me, diversity is one of the pillars of democracy.
What’s the rest of the year going to be like for SACEM?
Cécile Rap-Veber: As for the business, we are going to see more concerts, the digital growth will continue and we will announce soon an important partnership with a very big repertoire. We have a lot of partnerships already in place, with Universal Music Group, Warner Chappell, or IMPEL. IMPEL keeps growing, which is great. Overall, we now have mandates from over 50 different publishers. We are going to continue to improve our data platform. At the moment, we process more than 170 trillion lines of data, so we have to keep pace with the continuous growth of data. We are going to bring new tools to our members such as Musicstart, a 100% digital work protection service in the blockchain for our members and creators all around the world. We have a lot of expectations with our new development department under Julien [Dumon] to help grow our business. We have new sources of collections — for example we are trying to implement licenses to capture revenue from addressable advertising. We have also implemented a new CMO in France for the neighbouring rights for press publishers to collect their rights from Google, Facebook and Microsoft. Also, thanks to the implementation of the SMA Directive in France, we expect a rise in the local production of audiovisual products on SVoD platforms, which is good for our members. There are also uncertainties about what will be the policies of the next President of France, so we have to be cautious. There are some indications that innovation and creating value could be central to the policy in the future political landscape and we will be part of it. We are a solutions provider to create value, we are a tech company, and we are less and less seen as some sort of cultural institution but rather a real partner bringing value to creators and publishers and help the development of France’s cultural sovereignty in the world. Collective management will be one of the pillars of the new, decentralised and collaborative web3.0 environment. We need to be there to help our creators to be in a better place in this new environment, and create value directly with the audience, without having to be in a centralised GAFA solution. SACEM will be a key player in the coming years in that environment.
(Credit picture: Jean-Baptiste Millot)
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