In yesterday's edition of the weekly Record of the Day magazine is this open letter to Lord Mandelson from editor Nicola Slade. Paul Scaife, who's now more important than Stephen Fry (see here) very kindly gave me permission to paste it in full. For a copy of this magazine you can download it as a free sample from the front page of the RotD site or use this direct link.
Declaration – I used to work for Record of the Day and occasionally still do. It's a great team of people and a terrific music company.
Back to this letter, I think it's absolutely bang on. I'm not sure labels are ever going to unite to develop a necessary new business model to save themselves. Which is why I too believe the time has come for the government to intervene and impose compulsory collective licensing on the UK record industry and achieve something that's actually beneficial to music consumers.
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We feel compelled to write an open letter to you today to highlight the news that Virgin Media’s music service is going to be delayed for some time owing to a negotiation impasse with record labels.
In light of the recently proposed Digital Economy Bill, we believe it’s imperative for you and your advisors to keep abreast of such developments. Maybe you are aware of what has occurred, but we would like to add our voice to the chorus, so to speak.
Virgin Media and its joint venture partner Universal Music Group announced their intention to launch a subscription-based unlimited download and streaming package earlier this summer. We count ourselves among those who welcomed their plans, believing it to be a forward-thinking and potentially ground-breaking service which would greatly appeal to British music fans.
This week it has transpired that EMI, Sony, Warner Music and – as far as we can ascertain at the time of writing – Merlin (which represents the indie community), are holding back the launch as a result of a dispute over price-points relating to the unlimited download aspect of the service. We also hear unconfirmed reports that EMI is also seeking for the unlimited download offering to be capped – therefore negating the uniqueness of the original offering. The price point, we believe Virgin had set, was in the region of £15 per month, or as someone close to the company told us, "the price of two CDs".
Virgin had confirmed that it hoped to launch before Christmas, and while discussions remain ongoing, it is now in a position that it cannot provide a firm launch date for any time in the near future. It is also thought that Virgin might be forced to reassess its original plans in order to satisfy the needs of the labels.
For background purposes, Virgin Media in the latter part of last year was poised to launch a music ISP service, in association with one of the music industry’s most savvy technology companies, Playlouder. Those plans were disappointingly scrapped at the last minute after it transpired that certain record labels refused to license their content. We also believe that the music-based ISP service would have proved to be successful and would have provided another outlet to entice certain quarters away from P2P platforms.
This latest piece of Virgin Media news arrives at a time when ad-funded streaming services in the US are being overhauled. MySpace has acquired the much-beleaguered Imeem, while Apple stepped in and picked up Lala.com only this week. From the outside it is no surprise that the Apple/MySpace behemoths would choose to acquire those platforms – if only to utilise their ‘back-end’ technology. But what it does show is that these services were unable to survive as stand-alone propositions. It therefore does not bode well for similar services here in the UK. Although we believe Spotify and We7 to be resilient, we too recognise that it is an uphill struggle for them to draw in enough revenues to maintain their services going forward. There is therefore a desperate need to introduce into the UK market new legal services which are not funded by advertising, but which still provide an innovative and new offering for consumers – just as Virgin Media has been trying to do.
In light of the Digital Economy Bill – where might all this lead us? We understand your target is to reduce piracy by 70%, but how is that achievable when the record labels who have lobbied government so hard are simultaneously stifling the launch of innovative, new platforms?
This is unfortunately a rather sour note to end the year upon. It’s a regrettable and we believe, avoidable situation. Virgin ought to be commended for its vision. What a terrible shame, it is then that the same can’t be said of many of the UK’s labels? We urge you to question labels about their attitudes towards licensing new services and their failure to give innovative new business models a chance to even take root, let alone flourish.
Nicola Slade
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