Smart Marketing Procurement Thinking – Charlie Sheen Ate My Lunch!

We haven’t heard from Richard Kirstein of Resilient Music, in a while. He’s been busy writing a book and conducting research, as well as the day job! So we welcome him back with another thought-provoking post on the industry of procuring music rights.

I sometimes encounter disparaging remarks about the procurement profession:

“They know the price of everything but the value of nothing.”

The usual culprits are agencies being challenged on production budgets without the will to re-consider more cost-effective methods to achieve the same results. It’s easier to moan than address the issue.

I’m constantly looking for ways to apply smart procurement thinking to music rights buying – so here’s an idea I’d like to share with you.

We recently conducted a piece of research looking at sync licensing processes for commercial catalogue music in marketing communications – essentially commercials and online video. We published the results called The State Of Music Rights Licensing. In a market where buyers and sellers frequently misunderstand one another, it’s not surprising that each side complains about the other. For the buyers (brands and agencies), a key gripe was complexity.

We asked brand marketers:

“What would you like to change about how music is found and bought for your campaigns?”

These responses were particularly interesting:

  • “Straight-forward buys (price lists) that are pre-negotiated.”
  • “Buys that are based on number of views/listens, rather than geography or time”
  • “Music that can be bought for a campaign (and thus can be used across content, without new costs)’”
  • “Simpler and more transparent dealings with the different rights holders, i.e. dealing with one party.”
  • “I would like to have a roster of stock music or deals with labels to get good deals on music from bands that have yet to break through.”

 It’s apparent that brands wanted:

  • Simplicity
  • Transparency
  • All-in campaign pricing
  • Pricing rationality and predictability

In other words, an ability to license commercial catalogue music, by proper recording artists, with the same ease as “stock” production library music. Was this unrealistic?

Considering the tech innovations impacting the music business since 2000, it’s surprising how little the sync licensing business has changed – in particular the high value deals for “signed” repertoire by established artists used in consumer brand campaigns, both offline and online. There have been many attempts to automate the process – I’ve seen many platforms come and go. Some, such as CueSongs, have found a niche and I’m a huge fan of founder Ed Averdieck’s vision. Nevertheless, for famous titles and repertoire controlled by large rights owners, negotiation of sync licences is still a manual process, reliant on personal relationships and often taking many days or even weeks to conclude. This is the world I’ve inhabited for most of my career.

At the London Sync Sessions in October, I moderated a panel called Sync Is Dead, Long Live Sync. You can read the round-up here. We discussed what our industry would look like if it were reinvented from scratch by financiers.

The most common question I’m asked by Marketing Procurement executives is:

“What’s a fair price to pay for this music track?”

 Is this question informed by a commoditised world view of marketing assets where price is always a function of supply and demand? This got me thinking about the idea of music rights being traded on an exchange – something akin to the NYSE or NASDAQ. One party bundles rights up for sale and makes them available to potential buyers. The price constantly fluctuates for both current and “futures” trades.

Reimagine the movie Wall Street where Charlie Sheen’s character is shouting across the trading floor:

“I’ve got a 3 months’ future deal on “Nothing’s Gonna Stop Us Now” for 200 grand for 1 year FMCG spots in North America. Who wants it?”

Now project that forward from 1987 to 2016. What would it look like? Would music rights owners ever consider allowing their catalogues to be traded in this way? Would their artists and writers ever sanction it?

Of course many rights owners will think:

“Music is creative art and can’t ever be a commodity!”

However, for Marketing Procurement executives who scrutinise production budgets, music is just another line item on a spreadsheet.

The key question is whether music rights owners will consider that mindset and respond innovatively. Watch this space!

Issues for music rights owners when negotiating deals

Issues for music rights owners when negotiating deals

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