Phonofile Insights – Alison Wenham

September 11, 2015 7:55 am
FullSizeRender Major consolidation makes industry slow, dull and defensive

AIM’s Alison Wenham on lack of competition, expectation to streaming returns, transparency, fair revenue distribution and charts ossification.
Interview by Eamonn Forde, reports editor at Music Ally and freelance music business writer.

When AIM (the Association of Independent Music) was founded in 1999, there were five major record labels, the record business was feasting heartily on the CD explosion and Napster was something only a tech-savvy few knew about. Sixteen years later, there are three majors, the CD is now in serious decline as a secondary (or even tertiary) format in most markets and many consumers now carry a smartphone that can access any music ever recorded in a few taps and swipes.

AIM was set up to represent independent labels in the UK at the most seismic time for music companies since the development of recorded sound a century earlier. Its arrival triggered the establishment of trade associations around the world, including Impala in Europe, A2IM in the US and WIN (Worldwide Independent Network) on a global level. With increased consolidation among the majors and with digital throwing out all the old certainties (and creating amazing new opportunities for the bold and canny), the need for the independents to march in lockstep has never been greater.

Alison Wenham has been CEO of AIM since its inception and also serves as chair of WIN. She was recently honoured with the Appleseed Award at A2IM’s fourth Libera Awards in the US. On behalf of the independents, she went toe to toe with Apple over its proposed plans to not pay rightsholders during the current free three-month trial of its new Apple Music service, forcing a climb-down by the company. It is during moments like this that the collective power of independents is best displayed.

Here she talks about the continuing importance of the independent community on both a business and an artistic level, how adding streaming to the charts and synchronising the global release date to Fridays will be bad for independents and why critics of freemium in digital music have got it all wrong.
AIM is 16. Is it still in its awkward teenage years?
I would hope AIM remains forever in its awkward teenage years. The day that AIM becomes institutionalised is the day it may well be out of touch with the independent sector it was set up to represent. It is a volatile market and the independents are inherently volatile. AIM needs to stay very light on its feet and close to the needs of its members in order to reflect and do well by their concerns, needs, challenges and opportunities.
How have the core ambitions of AIM had to change in those 16 years?
Napster [in 1999] personified the changes that were already underway – which were much bigger in scale. The two changes that we anticipated in the 1990s that led to the birth of AIM were consolidation in the sector and the growth of the internet and, subsequently, mobile – and all the changes that would bring. Most of those changes have been pretty beneficial to independents and will continue to drive the independent sector back to the 40% market share they had before all the consolidation started. AIM’s role, then and now, is to ensure that the market conditions are the best possible for the independents to thrive – fighting control and consolidation on every level.
What are the best and worst things to happen to the indies in AIM’s lifetime? 
The best thing is the ability to engage directly with fans anywhere in the world and build a business by looking after the interests of the fans and the artists. The independent sector is brilliant at making those connections between the fans and artists. There is a genuine love and respect for what independent artists do that is reflected through the labels and reflected through the fanbases. Because the reach is now worldwide, there are no constraints on finite space and getting promotion in-store; all those things that were very much defined by the old, physical world. The independents are doing very well in what remains of the physical world – notably the vinyl market. That is another expression of love for and devotion to the artists and the music. Vinyl is, in and of itself, not a big profit centre, but it is meeting the needs and desires of the fans and artists. And respecting them, too.

We don’t inherently dislike the majors; we’d just like more of them! It is not healthy for an industry to have so much control in the hands of two or three companies. It doesn’t nurture a healthy, open market environment or support diversity. It makes an industry slow, dull and probably defensive rather than sharp, competitive and progressive.
Is there any sort of strategic plan [by the majors] here?
I don’t think there is. I think the pressure to produce global superstars that sell as many units as you can in as short a time as you can is the main driver for the majors. They do have vast catalogues, which gives them tremendous leverage and power with digital service providers. That said, I think we have done a fantastic job of making sure the independents are not left out of those market opportunities, ignored or paid less. One thing is for sure – a digital service provider without the independent sector will fail. A digital service provider that tries to shortchange the independents – maybe through ignorance, maybe through determination – is doomed to fail. Either way, it doesn’t happen now. The independent sector’s fights, personified through YouTube, MTV, Apple and others serve as a very strong reminder of the growing importance of the diversity that the independent sector brings globally. But it also brings new music, by which I mean new artists and new genres; not just a new artist who sounds a lot like the last one you had a success with.
Are you annoyed that the media is pushing that it was Taylor Swift who made Apple back down on its plans to not pay during the free trial of Apple Music?
On the contrary, I am very grateful for any artist who speaks out for fairness towards their fellow artists. We are all about fairness and transparency. We have made a statement through the Fair Digital Deals Declaration [in July 2014] that, as signatories of that, we would not only work to improve the understanding of the statements themselves because they are quite complicated, but we would also pay through non-attributable income such as equity and breakages. I think we are the only sector that has made a clear and unequivocal statement about unattributable income being paid to the artists signed to those companies. When Taylor Swift, who commands a great deal more column inches than I ever will, feels passionately enough about the unfairness that would appear to have been Apple’s stance in relation to the first three months [on Apple Music], that is to be commended. But you also have to look at the three majors here. Why did they agree those deals knowing full well that their artists and writers would not be paid? I think the majors have dreadfully wrong-footed themselves in this and I think it will hurt them over time.
Had they just decided to bite the bullet and go with the free trial? 
When you bite the bullet, you do so on behalf of not just your own business but also the artists and writers who are signed to you. I don’t think any artists had said they wanted to share the biting of the bullet on that one. The concerns were around cannibalisation of both downloads and other paid streaming services – a real and valid business survival issue.
Streaming now counts towards the singles and albums charts in the UK. Is this better or worse for the indies?
I think, generally, it is worse for the indies. We have managed in the UK to get a formula in place so that the damage is not as great as it seems to be in the US where there is no formula to ameliorate the effect of a runaway single. Personally I think that to try and come up with a formula to project a virtual album sale is taking the wrong approach.
If you could create the perfect formula to include streaming, how would it work?
I think streaming is streaming and sales are sales – and they should be kept separate. There is nothing to invalidate either if you just keep them separate. But to try and bring them together to express the activity of an artist? Is that the truth? It isn’t the truth. The OCC [Official Charts Company] has done a good job of trying to find a balance but it still isn’t the truth. Streams are not sales.
What about markets like Sweden and Norway where streaming is by far the bulk of the business now?
When streaming is overwhelmingly the dominant choice for consumers [in the UK], it will be more of a truthful reflection of what is happening in the marketplace; but, for the moment, it isn’t. In this country, we are nowhere near 85% market share for streaming.
What is your view on the move to global release date and New Music Friday?
We put out a statement [in November 2014] opposing it in advance of it happening. Our reasons for opposing it were that we believe it will hurt local diversity at the expense of global priorities. It’s very simple. An independent is a local company, locally based and dealing with artists who may have tremendous popularity and following in that market; but what we are now seeing is global marketing budgets being rolled out that may draw the attention away from those artists as far as the chart as concerned. It fits a global strategy. We are going towards globalisation, but the independents are much more local-to-global rather than being global and trying to make the local markets fit their global agenda.
How involved were you in IFPI’s consultation on this?
WIN [the Worldwide Independent Network] was formally involved in the IFPI discussion. We were very clear about our sector’s stance on this; but, from the word go, we knew this was going to come into being. The reasons given were not illogical: it might help combat piracy; it might help social media; it might bring freshness and excitement back into the music industry. With my WIN hat on, there were several countries that were always on a Friday [like Germany and Australia], so we didn’t have enough consensus and neither did Impala to be robustly against the position of a New Music Friday globally. But at a local level there was quite a lot of resistance – including from AIM when we released our press release on it last year stating very clearly why we thought it was detrimental to local artists and, therefore, diversity.
Are there any early indications of your fears being proven right?
I think we will start to see if our fears are right about the changes that have been introduced to incorporate streaming into the sales chart. You can see negative effects for independent companies already. I think that, come the autumn, it will be very interesting to see how the majors operate across New Music Friday to establish more global awareness of a very small handful of artists. How long have Sam Smith, Hozier, James Bay and Ed Sheeran been in the charts now? Is that what we all wanted from the charts? I doubt this suits the majors either. The charts are supposed to be dynamic, fast moving and a reflection of ever-changing popularity. What they now are is a snapshot of an industry that is quite complacent and narrow. Tracks are hanging around the top 40 forever. It has ossified the charts.
Some indies are still sceptical about streaming. What do you say to them?
I say that streaming is a very young business with a very long way to go. Ultimately it will return very rich rewards to those who understand it and work with it – and work with the fans that use it across the world. We have persuaded a few companies that it is worth looking at it again, taking it seriously and experimenting with one or two artists. They have come back and said we were right. I don’t now feel any resistance to streaming anyway, at least not from the majority of companies; in fact, I never have done. There might be a few companies that think it might cannibalise other areas of their business; but, in the main, streaming has been enthusiastically adopted by the independent sector.
At the AIM Connected event in London in April this year, it felt like the indies had really turned, as one, on SoundCloud. Why?
I think that SoundCloud has a responsibility to acknowledge who provided them with the means to build a platform attracting 175m users worldwide each month and create remuneration programmes that share the benefits. They have done this in the US [with On SoundCloud] and I believe they will do it across the rest of the world. You can only run a service for free for so long before you need to find ways to monetise. The minute you do that, you need to put licences in place otherwise you are just essentially a pirate.
Universal, Sony and Ministry Of Sound all attacked free at the start of this year…
Who else attacked the freemium model? No one. And plenty of voices from our sector supported the blending of free ad-supported with paid subscription services. We believe it is an ideal playground to try before you buy – or try before you become a serious streamer. I think the killing of free might see the return of mass piracy.
Why were they attacking free?
Two reasons. Apple isn’t offering a free tier and so maybe they were spokespeople supporting Apple and its new steaming service. And also because the independents are doing very well in the streaming market – and obviously that is at the expense of the majors. It could be an attempt to regain control of people’s listening habits.
Early analysis of Beats 1 suggests it is very favourable towards the indies. Is this something Apple can keep up?
I think it tells you a great deal. I wish Beats 1 every success. I hope it is an extraordinary worldwide success because it will help the independent labels. Daytime terrestrial radio stations in the UK are really choked up with the majors’ priorities so the indies must look elsewhere; and now there is plenty of choice. SiriusXM [in the US] is also an extremely important partner for the indies. Market share for the independents, when you dig out the embedded market share [i.e. distributed by a major], is touching 35% in the US, which is fantastic. It is about liberation for consumers and also for service providers. Beats 1 is a great reflection of great music being brought to the public that would not otherwise be given that support at terrestrial stations.
The recent Rethink Music/Berklee report said the lack of transparency in the music industry is a big time bomb. Are they right?
I think it’s huge. I think it’s the biggest elephant in the room – ever. The core problem is a lack of transparency. Sony has gone on the record to say something like it is not there to primarily look after the welfare of its artists at the expense of its own company profitability. That speaks volumes.
What can be done?
You need to look at this from an international perspective. You have to remember that most of the digital deals are imposed on the world out of the US. I think this is beginning to cause real resentment and hostility amongst artist groups and other groups who are speaking up about this across the world. If the issue emanates from the US, it will have to be addressed in the US. If the US does not respond by cleaning up this part of its business so that there is transparency and fair distribution of revenues from deals struck with service providers, then the inevitable consequence in the long run is legislation coming in through Europe.
Is Tidal a solution here for musicians taking more control? Or hollow grandstanding by rich artists?
I don’t know the answer to that. Certainly there are lots of very interesting changes in the marketplace, of which that is one. I think there are label service deals and artist service companies [out there] who are leading the way in terms of transparency and flexibility around deal structures that allow artists far more involvement in the short and long term with the assets they are creating for and with that company. We are coming away from the assumption that artists are too absorbed in themselves and their music to understand what is going on in their name. That attitude cannot continue; but it has never prevailed in our sector.
What are your priorities for the coming years?
Over the coming years, AIM will continue to provide a great range of services to our members whose feedback lets us know we’re doing a very good job. We would like to see the indies back to 40% of the market and, therefore, the biggest music providers. We will continue to represent our members in every boardroom and at government to ensure that the role and importance of the sector is undiminished, supported and valued for its unique contribution to the music culture of this country.
What one thing would make AIM’s life immeasurably easier?
More majors, not fewer! But that may be a lost cause. So, to put it another way, for the majors to take responsibility for their role as market leaders for the benefit of all artists and companies, not just their own.