Apple’s royalty battle reflects digital challenge – We7

We7 CEO and co-founder Steve Purdham is over the moon at achieving a BT Digital Music Award, but warns that the industry remains under threat – even at this stage in its evolution.

“The digital world is about to go through another upheaval with 1 billion streams on MySpace Music, We7 Launching in November and Apple threatening to pull the plug,” he said, speaking to Distorted Loop just in advance of the revelation of the royalty deal for publishing in the US announced last night.

Despite the hubbub of activity, Purdham thinks there’s still significant challenges to the development of the digital music industry.

“All of this activity shows two things, first the demand for digital music is outstanding and if allowed to flourish will build a very healthy business for artists, labels and fans alike,” he said, warning, “but at the same time the fundamental economics of the industry are still trying to kill off the opportunity rather that allowing it to grow.”

Purdham believes there’s a need to take a much wider view of the industry – a view that’s not entirely based on revenue, a strategy that involves a much wider perception of success in the short, medium and long term within an industry for which anything is rapidly becoming possible. (Well, that’s how I understood what he told me).

He said, “To-date business models are looking too much at the atomic level of the track and the royalty due at that level, rather than the potential ARPU – Average Revenue Per User over a year.”

Returning to Apple’s battle to ensure that royalty payments don’t rise so far that they kill the still nascent digital medium, Purdham adds, “I may not like Apple’s methods but they are highlighting and absolute issue that could still kill the financial potential of music is not addressed.”

Similar matters were addressed at the recent EconMusic event in London, during a series of panel discussions, digital music pioneers successively stated that there remain overweaning  layers of complexity to technology firms attempting to do business with the music industry.

These levels include reluctance by labels to swiftly migrate to new business plans; legal matters which restrict usage and licensing of tracks; the lack of immediacy in the move to grant trans-European music licenses; and many other matters which restrict the digital growth story, and limit the potential of disruptive start-ups equipped with radical new ideas.

That resistance is bad for artists, argued UK singer/songwriter Billy Bragg, speaking at the same event.

“The industry resists at all points because they say they are defending artists,” said Bragg. “They are not. It’s my income they are pissing with. I want access to these people and their technologies (he said, pointing to the technologists he sat with on the panel), I want to have my right to do just that….”

“As artists and a music industry we need to figure out how we can configure ourselves to help these people (technologists) make shitloads of money for us, the artists….reducing the complexity of music licensing is critical for future innovation,” he stressed.

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