The Hot Seat: Brett Oaten, Brett Oaten Solicitors

Published in The Music Network

 

Brett Oaten has a deadpan opinion on his profession’s place in the music biz. “People don’t join a band to hang out with lawyers,” he quips. Whether musos like it or not, the more successful they become the more time they’ll spend with their lawyer. Since establishing his legal practice in 1992, Oaten has worked with some of the best in the business, a list which includes Angus & Julia Stone, Art vs. Science, Cold Chisel, Emma-Louise, Empire Of The Sun, Eskimo Joe, Lanie Lane and Powderfinger. Oaten is also a founding board member and life member of FBI Radio, where each week he presents Fire Up: an “alleged comedy show,” in Oaten’s words, which has little to do with music or law.

How is a music lawyer’s role evolving?
I’ve always been very happy to be a lawyer and to try to stick to that. I don’t really have ambitions to fulfill another role in the industry. It’s a really interesting, stimulating time. Artists have more opportunities than ever to do different things and conduct their careers in different ways. The conversation you used to have about an artist’s career used to be very defined. Whereas the conversations you have now have much broader boundaries. Our job has stayed pretty much the same over the years, but the issues we face have changed dramatically. We have to adapt and continue to ensure that our knowledge is up-to-date so that we can play an advisory role even as the landscape changes.

Typically in law, that would mean you’ve got your head in the books? Is that the case for you?
It’s not really what a law student would call “black letter law.” We’re not reading cases, we’re not reading judgments. It’s a very commercially, pragmatic-based profession. So the education that we need to do is to understand the technologies and the changes in the marketplace. And understand what’s happening in the industry overseas so we know what will be happening here, what the market looks like and what it’s going to look like. It’s a much more practical educational exercise rather than an academic one.

What are the changes in the deals you’re seeing over time?
The deals are probably the greatest change. And it’s something that has been developing over a number of years. Because sales have declined– and in addition to the 360-deals– you’re typically seeing large record companies investing less, but wanting more rights in return for that lesser investment. I understand why that would be their imperative, but that’s a very different landscape from how deals looked when I started doing this and for a large part of the time that I have been doing it. They’ve got all types of names for it: 360-deals, multi-rights deals, non-recording. Whatever you call it, it all means the same thing.

When reading the fine print on a contract, what are you looking out for?
Before you even get to the fine print, it’s about making sure that the band or the artist and their manager understands the deal that they’re doing and understands what they’re giving and what they’re getting. You certainly have the ability to negotiate those deals based on the client’s bargaining position, and the record company’s bargaining position. You’re trying to put your client in a position to work out whether this is a good thing for them to do or not.

Do you still see deals which bind an artist forever more?
You didn’t ever see deals where someone was signed forever. What you saw were deals where people made records that were owned forever by the record company, even if the record company had recouped all the money they’d invested. That’s basically how the vast majority of record deals work today. Publishing deals don’t work like that. Artists tend to end up getting their publishing copyrights back after a period of time.

Do you ever see dangerous, rip-off contracts?
Yes. You see contracts that are absolutely appalling. And if it’s a terrible deal, you’vegot to wonder about the motives of the person who offered you that agreement and whether you want to be in business with them even if they made it not-terrible. Sometimes clients just want to hear what they want to hear. They want to be told that it’s a really good opportunity, and they don’t want it to be dashed. That’s one of the difficult parts of the job. A lot of people think any deal is better than no deal. Actually, a bad deal is far more damaging to your career than no deal. Because if you’ve got no deal and you believe in what you’re doing, you can keep doing it until someone who is honourable and also believes in you comes along.

At what stage does an artist or small company need a music lawyer?
That’s always hard to answer without sounding really self- interested. Because what else would a lawyer say than, “as early as possible.” But that’s the truth. Sometimes when people don’t use a lawyer because they want to “save money,” it’s a completely false economy. Because the damage that they do trying to do it themselves costs a lot more to fix than it probably would have cost in the first place. Most of the time, a lawyer won’t charge you to sit down with them and talk to you about whether you should be their lawyer or not.

 

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The Hot Seat: Brian Chladil, CEO, Oztix

Published in The Music Network

 

Brian Chladil is a music industry “lifer”, his reputation cast in events and artist management. To his friends and associates, he’s simply known as “Smash” – a nickname which has stuck since his roadie days. “When I was young,” he explains, “I had seven motorcycle accidents in one year. I didn’t’ break anything.”

Perhaps “Lucky” would be just as appropriate. One of Chladil’s ventures, Oztix, has become Australia’s largest independent ticketing business. In less than ten years, Oztix has grown from an idea into one which shifts more than a million tickets each year. It started with four staff, and now it employs 40. Oztix’ clients include Big Day Out, Soundwave, Harvest, Falls Festival and Peats Ridge. Chladil is at the helm of the Ticket Solutions group, which owns and operates Oztix incorporating Heatseeker and NZTix, plus the affiliated event management firm Media Rare and the online tourism booking platforms BookConfirm.com and Bookconfirm.Thailand.

How did Oztix come about?

Oztix started because I was running events like Livid and BDO and I could see that ticketing was moving online. On the suggestion of my partner Alex (Bamber), we looked at it and thought maybe there’s a market not being serviced. The big companies go after the big fish. If you’re a little fish you don’t get looked after. We were first to market with the “white label” idea. Thanks to technology, venues were able to ticket themselves. They made a revenue stream out of it, and they got to build their own database. And they didn’t have to invest in building the whole infrastructure in their back end; that’s what we provided for our clip. We don’t have a traditional corporate structure within the group. We’re structured to our staff’s strengths and abilities. We’re not a traditional hierarchical top-down system.

Technology must be one of your greatest challenges.
We’ve seen a massive move from online to mobile devices. I’d guess 50% of all our tickets are now sold from a mobile device. We’ve got some markets which are 80% mobile devices, 19% Internet and 1% retail. We’ve got this legacy business where we’ve got to service all these different markets with all this different technology. That’s a big challenge. Right now if we have to roll out a new feature, there’s probably 200 different versions of web browsers we have to test it on. That’s really tough if you want to roll out a new feature quickly. All up, about 85-90% of our sales are digital. Running the ticket business is bloody hard and complicated.

What lessons are you learning from the metrics?
It’s all about the genres. When you give people the option to get a free digital ticket or pay to get a hard copy mailed out, the rock ‘n roll fans will pay for it. They want a memento of the experience. Anything to do with beats or dance music has a really high level of Internet or mobile-device enabled customers. We’re selling more tickets than ever before. In Australia, there’s only so many dollars to be spent on tickets. There used to be less shows and bigger numbers. Now there’s more shows with less numbers. But it’s still the same amount of money.

The ticketing space has traditionally been about Ticketek, Ticketmaster and the rest. What does the biz look like now?

Going back nine years, those two dominant players basically had a box and you had to fit into it. If you didn’t, it was bad luck. Our view was, we don’t have a box. We’ll work with you in whatever our clients want. Foxtix is taking on Ticketek and Ticketmaster on a corporate level. There’s also a whole bunch of entry-level players. It’s difficult because those guys think they can do it cheaper, and they promise the world. But they can’t deliver and go bust. For us, ticketing is all about holding the consumers’ money. You’re not holding the promoter’s money. Under the law, we have to give it back to the consumer if the promoter doesn’t give the customer what they paid for. The problem with these independent players is that they give promoters access to the money, which belongs to the consumers. That’s the structural weakness in the business. Because once somebody really messes up with that, the government will come in and change the laws and then unfortunately there will only be a number of companies standing. And that’s no good for competition.

What’s your take on the live biz at the moment?

There was a structural adjustment in the festival landscape. There was too many festivals, but it’s cyclical. We’re at the bottom of a cycle, and it’s going to come back around and come back up. Last year was the bottom of the cycle. Next year you’ll probably find another drop in prices too, because promoters are being more market conscious. The other thing is the strong Aussie dollar; that keeps ticket prices down.

Where do you see the ticketing business heading?

Paperless ticketing is here. And its here to stay. There will always be a market for good, old-fashioned tickets. Because music-loving people love having that ticket in their hand. The Internet is changing everything. The whole concept of capitalism is being threatened in a way, because the people can find out what everything is worth. Everything is becoming more transparent.

 

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The Hot Seat: Charles Caldas, CEO, Merlin

Published in The Music Network

 

Charles Caldas is something of an indie magician. Back in 2007, the one-time Shock Records CEO pulled Merlin out of thin air, creating what was described at the time as the world’s “virtual fifth major.” More than five years on, Merlin seemingly has some new tricks to show off. The global rights body for independent labels has negotiated a range of deals, including licensing arrangements with Spotify, YouTube and Rdio. In recent months, Merlin sued and settled on behalf of its members with the likes of XM Satellite Radio, Grooveshark and LimeWire, recouping “millions and millions of dollars that were not going to be in the hands of our members,” Caldas says.

We’re expecting European regulatory news any day now on the Universal and EMI merger. What effect do you expect the deal to have on the digital biz?

Merlin has been very vocal about the negative impact we think the transaction will have on the digital markets, specifically. We think Universal is the only company likely to try and shape new music services to its own advantage, and replicate the advantage it holds in the physical world. We think that holds back innovation and investment and certainly holds back the ability of the independents to compete in those environments.

We maintain the position that the best thing for the market overall is that this be blocked outright. Clearly the regulatory authorities are looking at the levels of divestments that would be acceptable. It would have to be a global set of divestments, that made sure that nowhere was Universal able to increase its influence in the digital sphere.

Are there any standouts among the “problem” digital services?

The “red flags” to us are services where the major labels have equity stakes and the independents don’t. And we’re always conscious of services that are using music without licenses to build their businesses or services that are looking to suck that value back out. In the broadest possible terms, that seems to be the biggest challenge ahead of us. We’re certainly looking commercially at where we can protect our members’ rights and deliver them revenues back where their rights have been infringed. That was the important thing with cases like Limewire, XM, Sirius and Grooveshare, where the majors had sued and successfully extracted large payments.

One of the reasons for the formation of Merlin was because that kind of activity had gone from the auspices of the IFPI and RIAA into the hands of largest labels themselves, and the independents were effectively excluded from being protected in those instances. Kazaa is probably the worst example of that, where a settlement that was painted as an industry settlement. It was actually a victory on behalf of four companies. And the independents got zero out of that, even though their rights had been infringed.

There was a lean spell when Merlin was formed, but now the organization is getting loads of traction. What was the turning point?

The starting phase was really about shaping the organisation and making sure that we constructed it in a way that presented maximum benefit to our members. The second part is about positioning ourselves so we’re at the centre of these services, not at the periphery. By bringing global efficiencies to these digital music services, we actually become an integral part of their business and we’re able to negotiate deals which reflect that efficiency and hopefully everyone benefits.

Membership continues to grow. The revenues continue to grow. The number of deals continue to grow. It certainly feels like Merlin’s arrived as a stable presence within the independent community.

Australia’s digital market is literally exploding at the moment. Are we past that tipping point where digital revenue outweighs physical?

Australia is unique in that no market has had so many services come in so quickly. Australia is an economically stable, technologically developed and music conscious culture. These kinds of services make sense in the broadest sense. Globally we can say we’ve reached the tipping point in that the digital market in terms of value is showing only signs of increasing and growth. The best part of that is its not just one model that’s emerging.

Part of the reason I’m coming down to Bigsound is to get a sense of how this is playing out. And maybe share some of what we’ve seen with our independent label members down there in terms of how these markets develop and what the keys are for how to maximise revenues under these new models, the differences we see from the access models and download models. It’s all positive news this time. Which is not something we’ve seen for a while.

Australia is also unique in that most of the majors here host their own bespoke digital music retailers. Is that problematic?

It’s certainly problematic for us. While we are in business with JB Hi-Fi, Rdio and Spotify and Deezer and Rara, we’re not in business with those major-label ventures. For us, the real sticking point is we don’t want to be in a situation where our competitors are not only our competitors but are also our retailers. These kinds of services go back to the issues we had with MySpace Music, when it launched.

Any services where our competitors stand to benefit from the value of our repertoire without us having equal access to that benefit is not something that we think is healthy. And it’s not something that we would support.

On a personal level, are there any plans for you to relocate back to Australia?

I’d never rule it out. I feel really close and strongly about the market where I had another amazing ride with a company (Shock) which started with six of us in a little room and became an incredibly successful independent label. But it’s a question that will hang around until the time is right.

 

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The Hot Seat: Drew Larner, CEO, Rdio

Published in The Music Network

 

Much has happened since Rdio opened for business here in January. For starters, Spotify has happened. Deezer has happened. Songl and MOG has happened. And – according to various industry insiders – the digital-overtakes-physical milestone has happened. For Rdio, the action hasn’t all been happening elsewhere. When the digital music service arrived here, it was Rdio’s fourth market. It’s now operating in 13 territories.

Recently, Rdio struck deals with DMG Radio Australia, and with independent aggregators TuneCore and CD Baby. Through those two licensing pacts, Rdio’s library has grown by an extra three million tracks, bringing its catalogue to some 18 million works. San Francisco-based Rdio was founded by Skype co-creator Janus Friis. It originally launched August 2010 in the US, Rdio’s top dealmaker is its Chief Executive Drew Larner, a former banker and motion picture executive. TMN caught up with Larner for an update on all things Rdio.

Why did it take so long to do these deals with TuneCore and CD Baby?

It’s not for lack of trying. Without going into specifics, every deal has its own momentum and its own issues. We had some things we needed to resolve. It’s now opened-up the platform through the self-service option that these aggregators have, which means people have access to a lot of compelling content they otherwise might not have heard. We’re about delivering the best music subscription experience, and part and parcel of that is building the catalogue. It’s a constant process to keep adding new music to the catalogue and this is a big chunk for us.

You now boast 18 million tracks. That’s a lot.
British digital music analyst Mark Mulligan has said the big catalogues contain too many covers. And he’s suggested whittling those back. Maybe it’s a case of sorting out the chaff from the wheat. But I would disagree. Having more music on there is a better thing. Yes, there might be covers or karaoke versions. But that’s what subscription is about, having the deepest and richest experience, in terms of having as much music on there as possible. I get it and it goes back to that issue of filtering. And to distinguish ourselves from Spotify and other services, I believe most of them are predominantly search-and-play, which means you need to search for what you want to listen to. Sure there are a lot of social elements (out there), but we had social built-in from the beginning, and services built around social discovery. It addresses that issue of a massive catalogue.

You’re quietly working on a program which rewards artists who bring in new subscribers?

We’re moving forward with all speed. Beyond just confirming that it’s something we’re working on, I don’t have a lot of details. But it’s something we’re planning on rolling out imminently. The idea behind it, well, a lot of it plays into these (TuneCore and CD Baby) deals. Artist compensation is the issue of the moment. People have been talking about it for the last year, in terms of do artists get paid enough. My answer to that is, if you look at the scale of what we’re doing, it hasn’t reached the tipping point yet. I think it’s coming. I wouldn’t be in this business if I wasn’t. Once that point happens and we reach a level of scale I believe we can reach, artists will be compensated at a level they deserve. We’ve started to see real significant dollars. Streaming is starting to account for a bigger and bigger percentage of the digital pie. We hit upon this idea that, if artists bring us users, they’d be more qualified to subscribe to the service. And it works out better for everybody. If we get more subscribers, the artists get more money. If the artists bring us those subscribers, why not pay them more for it.

Is Australia in your big plan?

We want to do it in Australia, and there are lots of artists we believe would be interested in it. That’s about all I can share at the moment. Australia is a market which we’re very focused on. Obviously what we just did with DMG, we think is going to be a great thing for us. Cathy O’Connor (CEO of DMG) and her team are very forward-thinking, and they really embrace new technologies and marry it to their existing platform. [Rdio’s joint venture with DMG covers cross-editorial and promotion. DMG’s eight FM stations, one AM station and digital Koffee and NovaNation, will promote Rdio’s 15 million-track service and curate playlists]

What next for Rdio?

Territorial expansion is something we’re very focused on. We’re in 13 territories now. We’re pretty much in every region in the world. We’re in Brazil, we’re looking to expand to the rest of Latin America. We have a foothold into the Asia-Pacific region with Australia, but we’re definitely going to expand into Asia. We’re looking at more partnerships.

You’ve had six months in the Australian market. What have you learned?

Australians are very technology savvy and forward-thinking in terms of new technologies and new methods of consumption. We’ve seen that in the user growth and the enthusiasm we’ve got from people who are using the service.

 

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