Andy Malt 0:01 Setlist - the music business podcast from CMU. This week: the call for a UK ticket touting ban.

Welcome to setlist the music business podcast from CMU. I'm Andy Malt. With me is Chris Cooke. Hello, Chris.

Chris Cooke 0:20 Hello there.

Andy Malt 0:22 As ever, we're gonna take a look back at some of the biggest and most interesting music industry news stories of the last week, a week when the UK is Music Managers Forum published a music managers interim guide to AI which was produced by those guys at CMU.

Chris Cooke 0:40 Yeah, those guys again.

Andy Malt 0:41 They get about, don’t they?

Chris Cooke 0:42 They do get about. So yes, this was the latest guide as part of the Dissecting The Digital Dollar series. So regular listeners to Setlist, you know what that is all about. And this particular guide is looking at all things AI, both how artists and managers and other business partners in the music industry are using AI as part of the music making process and as part of music marketing process and other ways as well. But then also running through some of the copyright and licencing questions that AI raises, particularly from an artist and management point of view, offering a lot of advice on what managers should be thinking about and the questions they should be asking of the record labels and music distributors and music publishers that they work with.

It was launched as part of MMF’s Manager Summit where the whole focus for the day was on AI, although I say that because I've been told that is what happened. Unfortunately, even though we were launching the new Digital Dollar guide on AI, I was unable to be there myself. I was on a plane between Poland and Croatia. And the reason I'm mentioning that isn't to brag that I've been travelling across Europe this week. It's not even to explain why I wasn't at the Manager Summit, because I'm assuming that most of you listening to Setlist didn't know I wasn't at the Manager Summit and didn't care. But I'm telling you, because I'm in a hotel room in Croatia. So it may be echoey. It may be a bit weird. It's also very hot here and I've had to turn the air conditioning off. So there's a chance that halfway through our discussion on all the criticism of the Deezer artist centric model, I might pass out and don't think that I'm passing out in surprise or anger. It has no editorial significance. It is just as quite warm here in Indonesia and I have turned my aircon off in order to record this podcast.

Andy Malt 2:31 Okay, so by what you’ve said there, you think you're gonna make it all the way through the first story.

Chris Cooke 2:37 I'm pretty confident that when it comes to discussing ticket touting I can deal with the heat.

Andy Malt 2:44 Alright. We’ll see.

Chris Cooke 2:45 It is discussing Deezer’s artist-centric model that might get the temperature up to a point where I pass out but we'll see. We'll see how it goes. But anyway, yes, I should say before discussing the heat in the room where I'm currently sitting. What's more important is this new AI guide is available. It's free. So obviously if you're a member of the MMF then you already know about it, but it is actually accessible from the MMF website. We also posted a way to download it in our report on it on the CMU website. I'm sure that Andy Malt will put a link in the show notes. So you can go and download a copy for yourself.

If you are working for an independent record company that is a member of IMPALA. So generally that means you're a member of an organisation like AIM in the UK or RUNDA where I currently am in the Balkan region of Europe. If you're a member of a IMPALA allied organisation, we also as CMU published a report earlier in the year about AI as part of the One Step Ahead project. So if you are in the label world, you should go and download that one as well. But that is enough plugging I think I don't think there's anything else that we need to plug. If you're going to Reeperbahn, which is this week because this podcast goes out and moderating a panel there on Friday. See you there. That is all the plugging that we're going to do here today. But what are we here to talk about? It's not plugging stuff.

Andy Malt 4:05 No, later on we'll be discussing criticism of Deezer’s new plan for artist-centric royalty payments. But first, the FanFaIR Alliance campaign group against ticket touting last week set out a new agenda for the first time calling for the introduction of legislation to ban the for profit resale of tickets in the UK. At a meeting of the All-Party Parliamentary Group on Ticket Abuse, FanFair set out a three point plan that seeks to tackle the ongoing issues faced by artists, promoters and fans as a result of industrial level ticket touting on platforms like Viagogo and StubHub and as well as new laws FanFair also wants platforms like Google to stop touts buying their way to the top of search lists and is calling on the live music industry to give more visibility to price caps ticket resale initiatives to support the overall viability.

Chris Cooke 5:03 So yes, we are back to discussing a secondary ticketing ticket touting - for our American listeners ticket scalping - here on the podcast something we've discussed a lot over the years an issue or debate or controversy that obviously went a little bit less high profile during the pandemic when there were no tickets to tout. But as the live sector has got back to normal concerns about as you say, industrial level ticket touting it have returned, the FanFair Alliance was set up a few years ago in the UK, by the aforementioned mmf and a number of management companies and some booking agents and some people in the live space, who felt that ticket touting in the UK had got out of control on the back of campaigning by the fanfare Alliance and also within parliament.

There is this APPG for Ticket Abuse. And one MP in particular, Sharon Hodgson MP has been doing lots of campaigning within the political environment here in the UK. And on the back of all of that ticket, resale, secondary ticketing is now regulated to an extent here in the UK. So we've had some changes to the law over the years. And indeed, some existing laws in the past were not very well enforced to become better enforced. And as a result, companies like Viagogo and StubHub and the ticket touts that use those platforms do now have to adhere to some extra rules, in particular, being more transparent about the fact that they are not an official seller of tickets that they are a tout, both on the platforms and also in the promotion of the platforms, for example, on search engines, and there has to be a little bit more transparency about who is selling a ticket about any terms and conditions on the ticket that is being resold could result in the touted ticket being cancelled.

So there are a bunch of rules which are now better enforced here in the UK. And as a result, we have seen Viagogo, StubHub and the people that use them have to change the ways in which they operate. And in addition to all of that, we have seen an organisation called National Trading Standards going after some of the dodgier touts who are breaking some of the laws in the way that they were gathering and promoting and selling tickets on these platforms. So we have seen a bunch of improvements over the years. That means that ticket resale here in the UK is more regulated than in some other countries, I guess in particular the US where although there is now some talk of regulating ticket touting and secondary ticketing in the main that resell tickets in the US is much more of a free for all.

Andy Malt 7:33 However, FanFair says that more still needs to be done. And last week meeting it highlighted ITV News report from last year, which said that the vast majority of UK festival tickets listed on Viagogo were fraudulently advertised by just three people and fanfare said, these three sellers are, we believe still actively trading on the website. Then in March this year, reporters for BBC Radio for you and yours programme highlighted that a new generation of touts are exploiting ticketing systems with increasingly sophisticated software. In addition to that, in 2021, the Competition and Markets Authority, which has taken responsibility for monitoring and regulating the resale platforms made a series of recommendations that aimed to strengthen existing laws around ticket resale. But earlier this year, the UK Government declined to implement those recommendations.

Chris Cooke 8:32 Yes, because although I said that the regulation of certain ticketing here in the UK is now more rigorous than in some other countries, for example, the US, it is also true that some countries have gone further in the regulation of ticket resale. And the big bold statement that the FanFair Alliance made last week that we alluded to at the start of this section is it said that it believes it is now imperative for the UK to adopt legislation similar to countries including Ireland, France and Australia, that outlaws the resale of tickets for profit, while ensuring customers who can no longer attend an event are being provided with viable services to resell their tickets at the price they pay for them, or less.

So this is a big development because as we said, the fantech campaign has been running for many years now it has called for a number of new rules or for the better enforcement of existing rules. And as a result, we've had more regulation. But this is the first time that the UK campaign around touting is actually calling for the for profit resale of tickets to basically be banned. So if you buy a ticket for a show, and you can no longer attend, you could resell that ticket, but only at the face value of the ticket using one of the platforms that is set up for that kind of resale, but you would not be able to buy tickets for shows with no intention of going to see the show and then selling them usually at a markup on a platform like Viagogo or StubHub.

And in its statement calling for this change to UK law, as I say, it noted that these rules already exist in Australia and in France - actually France was the first to do this - Ireland it happened more recently - and FanFair noted that since the rule came into force in Ireland stopping for profit resale, that was introduced in 2021. Dublin shows for artists like Taylor Swift, Coldplay and Arctic Monkeys seem to have been delisted on websites like Viagogo and StubHub. So it seems that the ban in Ireland is working.

Andy Malt 10:33 So, as we mentioned the call for a ban on for profit touting is part of a three point plan. It is in fact, point one. Point two calls for tech action, stating that platforms like Google and YouTube must stop promoting touts and help direct consumers towards legitimate sources of tickets. And point three calls for industry action, stating that across the board, the live music business needs to make kept consumer friendly ticket resale, visible and viable. All three points are backed by a whole load of booking agents, artists, managers, top promoters and music industry organisations. Such a long list of supporters in fact that this episode would be far, far too long if we stopped to read them all out. So we now just wait to see how government Google and the industry at large respond.

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And finally, on this edition of Setlist, there has been criticism of dieses plan to switch to a new system for paying out royalties mainly from the independent music sector. The indies do actually welcome some of the changes. Deezer is proposing to the way it allocates revenues to individual tracks each month, but they have concerns about one change in particular.

Chris Cooke 12:03 Yeah, so there are several elements to diesel's proposed new way for allocating its revenues to tracks a new approach that has been developed in partnership with Universal Music, and which both companies insist on calling an artist-centric model.

Now, we talked through all the various different changes on last week's setlist, so there's no need to go through all the different elements of this again, if you didn't listen last week, go back and listen. But today, let's focus on the one change that is causing the controversy. That is the plan to provide what Deezer is calling a double boost to and I quote, professional artists, which had to change that basically means that a play of a track from a professional artist will count twice when it comes to revenue allocation.

To qualify as a professional artist, a music maker needs to get at least 1000 streams from at least 500 unique users each month. Artists who fall below that threshold, some of them hobbyist musicians, but some of them probably self racing artists who just happen to be at a very early stage in their career, they will get a lower average per stream payout under this new system.

Andy Malt 13:13 And then in an interview with Billboard last week, Deezer boss Jeronimo Folgueira insisted that the threshold for being classified as a professional artist has been picked so that most independent and niche artists will already be above it. And DIY artists trying to launch a career in music will quickly cross it.

“If an artist doesn't get to 1000 streams and 500 listeners a month, they cannot make a living through streaming, regardless of what the payout model is,” he said. “So you're not actually technically a professional. And any up and coming artists that is rising up gets to those levels pretty quickly.”

Although that does seem to disregard the fact that many professional artists do not make their living only from streaming. And furthermore, this part of the plan means that the artists centric model will split the artist community into treating one group more favourably to the detriment of the other.

Chris Cooke 14:07 Yeah, and basically the hobbyist musicians who okay are not trying to make a living off their music will be penalised for the benefit of okay, the mid tier artists and the independent artists, but also the superstar artists at the top who clearly don't need the money.

So, as we said, this change this particular part of the artist centric model is proving to be a little bit controversial. In the statement last week, digital distributor and artist services company believe which works with lots of independent labels and independent artists took aim at this particular proposal. It said “as a company working with artists and labels at all levels believe considers that all artists shall be compensated equally by streaming services regardless of their stage of development. We strongly oppose an unfair reverse Robin Hood system” - That's a good way of referring to it, isn't it? - “We strongly oppose an unfair reverse Robin Hood system that is centred around taking compensation from rising artists to allocate it to top and established artists forever. It is our belief based on our data that such a system would reduce diversity and discourage creativity.”

Andy Malt 15:16 IMPALA, the pan-European trade organisation for the independent sector has also expressed concerns, in a statement it asks whether the proposal could lead to a possible two-tier approach impacting the work of independent labels who account for 80% of new releases - including artists patiently awaiting discovery, artists who deliberately cater to niche audiences, artists from smaller territories and newcomers just embarking on their artistic journey - as well as label decisions on which services they choose to deal with."

Chris Cooke 15:48 One thing that Folgueira doesn't discuss in his Billboard interview is which, if any artists were consulted about this artist-centric model. We said this on last week's Setlist the fact that neither Deezer nor Universal have been specifically listing the artists or the artists managers that they have consulted as part of the process of developing this new model generally suggest to us that they haven't consulted the artist community, which if you're gonna call it an artist centric model, I don't think it's a very good look. And it seems Indie labels have not been consulted about this either.

And on that point, and IMPALA said that “the Deezer proposal has been developed in a vacuum with the market leader instead of the sector”. Not only is that not ideal, IMPALA added that “unless other stakeholders agree” - by which we mean all the other licencing entities on the recording side, so the other majors, the bigger indies, particularly the Indies, who licence through Merlin and then all of the independent distributors, companies like Believe. Until those companies also endorse this new approach IMPALA said it couldn’t “see how it could apply outside of Universal Music repertoire.”

Executive Chair of IMPALA Helen Smith stated, more debate is needed on this vital question. And we look forward to further discussions to clarify the specifics of the Deezer proposal, and its potential impact on the music ecosystem before commenting further. In the meantime, it can only apply to Universal Music repertoire, unless or until other licences were to agree to the new system.

Andy Malt 17:24 Yeah, that's an interesting point. Because while Deezer has been pretty much presenting this as a fait accompli, the streaming service will need to get his other label and distribution partners to agree to the switch over to the new approach. In his Billboard interview Folgueira admitted that that needed to be done and said that that process was now underway,

Chris Cooke 17:44 Which is good news, I guess. Although I have to say last week towards the end of last week, in fact, I did see the CEO of a pretty significant DIY distributor, posting onto his social media basically saying, hey Deezer no one's contacted me, maybe you want to get in touch with possible suggests there is still quite a lot more work to be done by Deezer on this.

Folgueira did admit that they might initially have to operate the new system and the old system concurrently, bearing in mind that the plan is to put this live in France, its biggest market as soon as next month. Now, it is true that SoundCloud actually operates two different systems side by side, you may remember that SoundCloud introduced the so called user-centric approach to processing royalties, but only for some repertoire. So SoundCloud at the moment has to basically split the royalty pool into two at the start of every month. And then half of it goes out in the system that is used by Spotify and Apple and Amazon, everybody else. And the other half is distributed on a user-centric system.

So it may be that these are basically has to do the same thing, that it splits the money into two and then those companies that have signed up to the new approach will get their money distributed one way and the others will get it distributed the old way, although you have to think that the DIY distributors will probably never sign up to this. So I don't quite know how that is going to work. I guess we will see in the weeks ahead.

Andy Malt 19:15 Yeah, and back here in the UK, the CEO of the Association of Independent Music, Sylvia Montello, who actually discussed universals calls for an artist centric model on an edition of Setlist earlier this year, has echoed in parlours concerns.

She said AIM “welcomes efforts to review the current streaming economics model. But whilst there are many positives to take away, including desus continued intention to combat streaming fraud, boosting royalties for artists who can meet certain consumption thresholds could encourage a two tier system that would disadvantaged those navigating the first steps of their careers or working within emerging genres. Considering these proposals were agreed without industry consultation, more collaboration and transparency around modelling As needed to ensure they work for rights holders operating at all levels of the business.”

Chris Cooke 20:06 So we shall see how this develops, it wouldn't actually surprise me. If we don't see Deezer implementing some of its plan initially, because the other elements that we're not discussing this week, but we discussed on last week's Setlist, I think in the main are probably going to be supported by most of the artists and label community.

So the other parts of the plan, probably they could get people to sign up to quite quickly. So maybe, particularly to get the distributed across the line, they'll have to say, okay, what are the signs up immediately to the less controversial elements of what we have planned? And then we'll discuss the professional artists, non professional artists distinction, and trying to hammer that out on a slightly slower timeline, or will they say we've got the biggest music rights company in the world on board, we're just going to railroad the rest of you into doing this.

But I mean, that's not a very good look for Deezer, who has been trying to present themselves as being the artists champion here of reforming the model in a way that is good for as many artists as possible and to be fair, Deezer was a supporter of user-centric before pretty much everybody else and user-centric has generally been quite popular in the artists and management community. And I think everybody agrees the model needs to be reformed. So I think most people are happy that Deezer is taking the lead on this but to push everybody into this professional artists, nonfederal artists thing, if actually a lot of artists and indies are not up for it, that would not be a good look. So this story could develop in the weeks ahead. It will be interesting to follow.

Andy Malt 21:37 But that's all we've got time for on this edition of Setlist. If you want to read more about anything we've discussed this week, go to the show notes which you'll find in your podcast player right now. There's links you can click in there for more.

Don't forget to subscribe to the show, if you've not done that already. Rate and review the show as well. And if you've got anything you need to tell us very very urgently, you can email us setlist@unlimitedmedia.co.uk

Setlist is the music business podcast from CMU. It’s presented by Andy Malt and Chris Cooke. And for more on CMU go to completemusicupdate.com