New Business Models for Musical Works Good afternoon, I am going to say a few words about developing new business models for musical works. IFRRO – October 2009 Semu Belgium

Murdoch: Moving Beyond Dead Trees Even more true for musical works: Sheetmusic is very easy to copy Damage caused = BIG Rupert Murdoch told we should move beyond dead trees. Of course he was talking about news papers, but it is even more true for musical works, for sheet music. Sheet music is very easy to copy, most of the time just a few pages. The damage caused by the copying is quite big, it can be 2 or 3 euro per page.

Perceived value of sheet music is near to zero We Have To Face It Nobody wants to pay for music anymore ! Perceived value of sheet music is near to zero We really have to face it – people don’t want to pay for music or for sheet music anymore! The perceived value of sheet music is very near to zero...

Shift Focus What can we do? Certainly shift our focus from the carrier, the paper, the printing on dead trees to the content. Most music publishers have an enormous base of content, only published and available in the form of sheet music.

Developing New Models On two levels: Music Publishers Collecting societies If we are going to develop new models, we can do that at two different levels The music publishers themselves and the collecting societies.

REPACKAGE Your Content! Music Publishers REPACKAGE Your Content! DVD: pdf / audio (mp3) / video >< sheet music Membership sites >< paper methods New markets and new marketing methods Communication with customers Email lists Bookstores Supermarkets Every title is an individual Profit Unit => Happy customers, happy authors, Perception of value changes The publishers should repackage their content ! Instead of just publishing a piece of sheet music, put that same content on a DVD, with a pdf-file, an audio-file and a video-file. Maybe some background information about the composer, etc.... You create an immediate change in the perception of value of your product. Instead of only publishing a paper method for learning to play the guitar (and charge 17 € for it), put that same content on a membership site (and charge 17 €/month for it)... With these new products we open new markets and are able to use new marketing methods: start a communcitation with the customers, build email lists, sell your products in bookstores & supermarkets instead of selling only in the small sheet music shops. Look at every title as an individual Profit Unit instead of just printing hundreds of pieces of new sheet music per year. The customers will like it, the composers will love it and the perception of value changes incredibly.

Collecting Society Trying to change behaviour of the users is IMPOSSIBLE Move away from control & repression Move towards users’ licenses We ask what users want and why they need photocopies We negotiate and edit specific licenses for each sector Move bytes instead of atoms As a collecting society trying to change the behaviour of the users is impossible – just believe me. We have to move away from only using control & repression Instead let’s move towards creating users’ licenses. We ask what the users want and why they really need photocopies. We negotiate and edit specific licenses for each specific sector. And finally: we have to move bits and bytes instead of atoms.

Belgium 2004 - 2009 All sectors are covered & licensed: Music schools & conservatories Instrumental groups, choirs, orchestras... Churches Events General education (age 3 – 24) Structured approach: +90% licensed 3-year contracts: easy budgeting The last 5 years we used that strategy in Belgium. Between 2004 and 2009 we covered and licensed all sectors: Music schools & conservatories, instrumental groups, bands, choirs and orchestras – churches – one-day events, and finally the general educatoin from nursery school until university. We did this with a standard and structured approach and we licensed more than 90% of the market. We work with 3-year automatically renewing contracts, what makes budgeting quite easy.

Results for the Publishers Very substantial income from Semu Publishers’ own sales of sheet music TRIPLED (!) in 3 years time Since 2005 present at all the major international Music Fairs worldwide (Frankfurt / Paris / Tokyo / Chicago) – before 2004 they were practically non-existing A completely new dynamic in their business They realize their growth in a sharply declining market So, what are the results for the publishers? I made a little graph with the yearly revenue numbers of three major belgian publishers. You can see quite easily that from 2005 when we started licensing things started to change for the better. First of all, they get a very substantial income from Semu each year. What is even more encouraging is that their own sales of sheet music tripled in three years time. They now have the means to invest in quality products and they are present on all internationals trade fairs. Before 2005 they did not have an international presence. The licensing created a complete new dynamic – and amazingly they realise their growth in a sharply declining market.

Results for Semu We see the same picture in the yearly revenue of Semu. Again you see the start of a nice growth in 2004/2005, when we started to distribute the new licenses. This year we’ll have a revenue of 1 point 7 million euro for licensing sheet music. Belgium is a small country with about 10 million inhabitants. If you extrapolate our numbers to Europe, North America and Australia, we are talking about a possible collecting of about 200 million euro. For me, that’s developing a new business model for musical works.

2010 - 2012 Development digital platform Non-exclusive mandates from rightsholders In cooperation with organisations of the users Intensive marketing to our existing base of licensees What are our plans for the future? Well, we are preparing the development of a digital platform, based on non-exclusive mandates from the rightsholders, in cooperation with the organisations of the users. We will market this system in an intensive way to our already existing base of licensees.

You are watching here a very simple example for schools: The teacher or the school buys and downloads a file from this digital platform. On the condition that the school has a semu-license they can print out and distribute the musical work to the students. It’s practical and easy for the users. For our existing licenses it is complementary and i’m convinced it will turn out to create a nice synergy. But of course we will see this in two years time.

Thank You