Wednesday, October 3, 2018

Rob Stringer talks Spotify, A&R, YouTube… and the possibility of a major label-owned streaming service | Music Business Worldwide

Could Sony Music one day launch its own streaming service to rival Spotify?

Right now, it seems unlikely, says the major label’s CEO Rob Stringer – particularly because, as we stand, Sony’s relationship with Daniel Ek’s company is “an arrangement which is working for the both of us”.

But, notes Stringer, nothing is impossible – a gentle reminder, perhaps, that as Spotify begins striking direct licensing and distribution deals with independent artists, there remain revolutionary options for major labels, sitting within that particular thought-receptacle marked: In case of emergency, break glass.

Stringer explored the topic of the increasing convergence between entertainment rights-holders and their distribution partners during an interesting new audio interview on BBC Radio 4’s The Media Show (which you can listen to in full through here).

As he’s done previously, Stringer discussed the changing nature of A&R in the music business, and the increasing role that data plays in artist discovery.

“There’s a lot of data, research and algorithms now, but the fact is that taste, for the most part, will always be subjective,” said Stringer, noting the freedom his label heads are granted to sign what they wish.

He added: “We have teams who are literally looking at data and stats all day long; various touch-points of whether something looks like it’s got an audience. But the fact is, there has to be some degree of personality injected into the process… The data is dramatic now because of the streaming services but sometimes [an artist’s success] can appear in a different way later on, and that can [show] more longevity than an act that has good [immediate] stats.”

Stringer’s mention of streaming brought the topic to Google, Apple and Spotify. Does the modern blockbuster music business, Stringer was asked, have these tech giants roughly where it wants them?

“I don’t think it will ever be the case with companies of that size that we have them ‘where we want them’ and I don’t think it would be very healthy if we did,” replied Stringer.

“[Major labels] used to own physical distribution and that wasn’t always beneficial to the artists or the consumers. We would like healthy competition amongst distribution.”

Stringer also answered questions on Sony’s Spotify share sales. As previously reported by MBW, the firm has so far sold around 50% of its shareholding in Spotify, banking approximately $750m.

In a surprise move, Sony has paid out a proportion of this money to artists while ignoring their unrecouped balances – meaning that every penny allocated to Sony acts has ended up in their bank accounts.

“We have only sold half our Spotify shares, so, if you like, we’ve hedged our bets.”

Warner, for one, has done the opposite: allocating its Spotify share profit payout against individual unrecouped artist accounts. (Universal is yet to sell a slice of its holding in Spotify.)

“We [have only] sold half our shares, so, if you like, [we’ve] hedged our bets,” said Stringer of Sony’s Spotify stakeholding. “We gave back to the artists which was a deliberate strategy because we wanted to say to them, [you’re] the reason we have most of these shares – although we did buy [more] at market value at a later date.”

He noted that Sony hadn’t “made any firm decision what we’ll do” with the company’s remaining shares in Spotify.

As for the music business topic du jour – Spotify’s direct agreements with artists – Stringer noted that Spotify could “probably” find ways to sign more established artists directly, outside of contractual wrangling with the major labels.

But, he countered, the majors, for their part, could “probably… find ways of dealing with that”.

“I don’t think Spotify wants to be funding the entire artist development process – we have thousands of people, literally, that we can get to face in the same direction on a global basis,” said Stringer.

“Spotify doesn’t claim to have those thousands of people globally [working in artist development], they are a digital distribution platform… sometimes the lines can become blurred and, quite frankly, we’re both learning as we go along.”

Could that in turn mean that Sony might one day launch its own streaming service – or club together with other large rights-holders to do the same?

Stringer initially referenced the music industry’s failed attempts to challenge iTunes with its own digital download platforms at the turn of the Millennium.

Then he added : “From our point of view, it’s all about timing, and maybe we will do something that will give us more control over distribution.

“But you can’t argue with the fact that at this particular chapter, with Spotify leading the way, they have built a robust and futuristic distribution model.”

“Something that will give us more control over distribution.”

Big picture: is it possible that such an exploratory thought could one day become a strategy – and lead to the launch of a Sony Music-owned streaming service?

“Nothing is impossible,” replied Stringer, whose company turned over $3.8bn in 2017. “It’s possibly now about the next chapter [of streaming and the music industry], not just this chapter.

“We’re aware of that, and obviously we have control of a huge amount of content and talent, and hundreds of thousands of tracks going back 100 years, so we have quite a lot of leverage. We monitor the situation in how to shift our business the same as the streaming platforms.”

“Nothing is impossible… we have quite a lot of leverage.”

Making clear this wasn’t any kind of grand plan (more of a subtle reminder of Sony’s in-case-of-emergency options), Stringer said: “Do we want to take all our stuff off a major streaming platform? No – we have an arrangement that is working for both of us.

“But the next chapter might be in five years. Who knows?”

As for that other occasional bête noire of the major labels in recent years, YouTube royalties, Stringer was asked about payments to artists from the Google/Alphabet platform.

“[YouTube] built a very robust platform and they’re based on an advertising model,” said the Sony exec. “At the end of the day, it’s a different model [to subscription]; it’s certainly a different [audience] reach to [other] streaming platforms in some ways… we monitor the amount of economic [return] we can get from our key titles.”

Stringer said that Sony was “very supportive” of YouTube’s new subscription platform, before adding: “There are pletny of territories around the world where YouTube is the No.1 music provider and we can’t ignore that.”Music Business Worldwide


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