Innovation & the Music Industry. A Chat with EMI’s Barak Moffitt.

We spoke with EMI’s Barak Moffitt on the current state of the music business, how the company is embracing innovation, and the impact of subscription services on downloads, the industry and piracy.

Barak Moffitt is Executive Vice President, Global CORE at EMI Group, where his skill and background in technology, change management, recording, and composition is helping him play a key role in the company’s transformation into a global rights management business.

At the helm of Capitol Studios and Archives, Barak is working to revive the label’s rich history at its iconic Capitol Studios and build the Capitol Tower into a hub of creative excellence, sonic integrity, and passion for music. He is a staunch advocate for quality in sound and is at the helm of efforts to bring EMI Music’s rich catalog to the digital world in high-definition. Under his leadership, Capitol Studios is now a key strategic label asset, with the iconic Capitol Records Building being transformed into a collaborative and creatively-charged environment for EMI’s artists and writers.

At EMI Music Publishing, as COO of CORE and CTO, Barak oversees such programs as its client-facing and web-based technology products, its creative metadata department, product and marketing, and its Masters program where he has produced many heritage artist recordings such as Roy Orbison, Tommy James, and Felix Cavaliere of the Rascals. 

 

WHAT IS THE CURRENT STATE OF THE DIGITAL MUSIC BUSINESS?

Well the global wholesale physical market has been on a nose-dive since the turn of the century and the growth of digital formats have only partially mitigated that decline. New business models are emerging that cater to changing consumer preferences, the most significant of which is the move from ownership to consumption. Or at least, consumption (for instance, the streaming services ranging from Spotify to YouTube) happening in parallel with ownership. So the way we look at it is that growth for a music company has to come from embracing the opportunity that’s afforded by new and diversified revenue streams that want to participate in the rights that we represent. This includes everything from physical sales, to digital downloads, mobile, apps, music related apps, streaming, brand partnerships, sponsorships, performance, synchronization, licensing, merchandising, and cloud services. When you stack all those things together you start to see a pretty attractive growth curve. That’s if you’re effective in maximizing your opportunities. It’s a pretty different landscape than where the record industry has come from in the past where the physical market was the dominant revenue source. You see a shift from being a product driven company that sells to the consumer via the traditional retail channels, to a highly fragmented revenue base much of which is based in services to other businesses.

ARE WE HEADING TOWARDS GREATER FRAGMENTATION OR WILL THE INDUSTRY CONSOLIDATE OVER TIME?

I think in some areas we will see consolidation, but the short answer is that there is no one silver bullet to bring the music business back to the glory days of the past. We need to embrace the fact that innovation is going to continue to grow at a surprising pace and new models are going to emerge that we can’t predict today. So we need to focus on driving the rights that we represent and our permissions as governed by the deals we make with our artists so that we can be the most successful music company in connecting those artists to the new innovations that are happening in the market place.

IS THERE A PARTICULAR SERVICE THAT YOU’RE MOST EXCITED ABOUT?

It’ll be interesting to see what happens with Spotify. iTunes is also continually innovating with things like Mastered For iTunes, iCloud, and iTunes Match and I’m particularly excited about the prospect of improving the fidelity of audio delivered to the mass consumer in the digital marketplace. But again, I think a lot of the opportunity comes from the non-traditional sources even outside of streaming and downloads, that includes synchronization, brand partnerships, apps, and other things that we’re just starting to see develop legs.

ARE WINDOWING ALBUM RELEASES HELPFUL TO ARTISTS OR IS THIS JUST ABOUT MAINTAINING THE STATUS QUO?

Look, some people just look at the raw basics here – an artist doesn’t get the same revenue from their album being played on a streaming service as they do from, say, a download on iTunes. But this ‘unit-sales’ oriented way of thinking doesn’t really take into consideration what kind of revenue a fan is producing on average. In my view, I’m not sure the data bears out the concern that the consumption model cannibalizes the ownership model. We’ll work with each of our artists to make sure that we come to the answer that feels right for them, obviously, but I’m not sure that windowing is the best way forward for the vast majority of artists. We’re going into a world where music is ubiquitous and convenient – any song, anytime, anywhere. And as these services go global, we’re are starting to see more and more meaningful data that can help us continually improve our understanding of these dynamics.

MY NATURAL INCLINATION AFTER DISCOVERING MUSIC ON SPOTIFY OR PANDORA IS TO DOWNLOAD THE TRACK FROM ITUNES. SO FOR ME, CONSUMPTION HAS NOT CANNIBALIZED OWNERSHIP – IT HAS PROBABLY ENHANCED IT.

Yeah. The way we talk about it here is if you think about the evolution of digital man where you have three categories of consumer that we currently service. One is the Tower Records guy who listens, buys and has a pride of ownership. His lifestyle or sense of identity is projected by the albums that are on his CD shelf or album collection. In the middle you have this MP3 guy who has one leg over the digital evolutionary fence, who is about ripping and burning and likes to own his music. I would probably fall into this category. I do have a pride of ownership. I grew up at a time when music was scarce and ownership has a meaning to me. And then there’s this Facebook / Spotify guy, usually kids growing up who can have any song, anywhere, anytime. It’s about streaming. It’s about sharing. It’s about having access immediately to anything – ‘Mr-Right-Now’ kind of a guy. It’s a person who tends to prefer tracks over albums. But I think we service all three of those profiles today. One may be developing faster than the other and dynamics can always shift but but as I said, early data indicates that consumption models are complimenting the ownership model and not cannibalizing it.

DO YOU THINK SUBSCRIPTION SERVICES ARE A GOOD WEAPON AGAINST PIRACY?

Yeah I think so. It’s much easier now to press “play” on Spotify than to download an album on Bit Torrent. The easier it is to listen to music for ‘free’ and to do so legally, the less of a threat piracy is going to be.

WHAT DO YOU THINK OF SEAN PARKER’S RECENT STATEMENT AT SXSW THAT THERE’S “BLOOD IN THE WATER” AND THAT THERE’S A WAR COMING BETWEEN THE LABELS, PUBLISHING COMPANIES, AND THE ARTISTS OVER SUBSCRIPTION BASED REVENUE?

I don’t agree with that because at EMI our role is to connect our artists with successful outcomes. That’s why we exist. So we start with what’s best for the artist. Our view is when you do the right thing–combined with rigor, passion, integrity and discipline–good results will follow. We don’t see ourselves as having adversarial relationship to our artists at all. We’re here because of the music they make. And we’re here to help establish and deepen the connection between the artist and their fan. That’s our job, that’s our role and it’s central to why we’re here.

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