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BLOG: NZ MUSIC - PEANUTS, CHICKEN FEED AND THE MILLION DOLLAR DREAM

Ben Howe

Ben Howe is a partner in Flying Out, Arch Hill, Flying Nun and Aeroplane Music. Over the past 20 odd years he has thrumbed the bass in a few bands, helped found Independent Music NZ (IMNZ), helped bring and run Laneway Festival in NZ, was a promoter of international touring to NZ via Mystery Girl Presents and currently sits on the NZ Music Commission Board. The views expressed below are his own and not necessarily those of any of the aforementioned. When the young people take over and start running the music industry properly, he looks forward to pursuing old man activities such planting nikau and cabbage trees, photographing Soviet Brutalist architecture and riding a vintage Royal Enfield Motorcycle across the Himalayas.

Three years ago the 60 odd members of RIANZ (Recording Industry Association of NZ) voted on a restructuring proposal to merge with royalty collection/distribution society PPNZ and become a single entity - called Recorded Music NZ (RMNZ). At that time, as a RIANZ member ($350 per year), I voted against that proposal. The reason was because I believed that an organisation with a political agenda should be separate from the payment of royalties. In other words, there was a danger that local labels and artists would join RMNZ because they wanted to get paid, not realising that they were also lending their support and in fact giving greater weight to an organisation with an agenda strongly guided by the major recording companies.

Then - as now - I believed that if you join an organisation that lobbies government on policy and is a media spokesperson, then you should join solely because you support and believe in their principles. In most other cases when you join this kind of organisation there is a membership fee (e.g. IMNZ and the MMF), not a financial inducement of actually being paid to join up.

There were other positive things about the reforms, such as greater transparency, better systems of governance and elections - so it wasn’t all-bad. I supported these changes. Additionally, the individuals involved - including the people running/employed by the major recording companies, those at RMNZ and others - are very good people with good intentions toward New Zealand music. These factors make it very difficult to make critical observations about the NZ music industry, so I must emphasize them.

But, nevertheless, I opposed the merger because of the structure, because those good individuals will not be around forever and because the other positive changes could still have happened without the merger. Also, in most other countries they keep the advocacy and the royalty distribution organisations separate, and maybe that is for a good reason.

As it turned out, I lost that vote. In fact, I might have been the only member who voted against it.

Now RMNZ is a six-member board made up of representatives from the three major record labels (Universal, Sony, Warners - they have automatic board entry and are not elected), an independent label and an artist representative (who are elected by ‘independent shareholders’) and a chairperson (who is then appointed by the five other board members). Members then join RMNZ either as ‘independent shareholders’ (labels) or as artists. Since this restructure the organisation has collected over 2000 members, of which a proportion (the ‘independent shareholders’) get to vote every three years on electing just two of the six board members

But there are very basic differences between those that control the organisation and those that are its members. The main difference is that majors and large overseas indies (the controlling interest in the RMNZ governing board) derive most of their income in NZ from importing music from elsewhere, trying to maximise those sales in this territory then usually sending the profits back offshore. Local labels and artists (a minority on the board, but the whole RMNZ membership) create music here in NZ and then usually re-invest any profits into their own music or the local industry. Usually their ambition is to actually export their music elsewhere. So the difference is a business model of import/extract versus create/reinvest.

Because of these differences, we don’t always all share the same interests or have the same objectives, even though in this instance we are all represented by the same organisation.

In 2015 RMNZ reported that the total recorded industry in NZ was worth $74.4 million (wholesale music sales, physical, digital, performance royalties). From this total $13.7million comes from public performance and broadcast royalties, of which $10.7million is distributed by RMNZ to its members (majors, indies and artists).

The information that isn’t provided yet is what share of this money stays in New Zealand and goes to local artists/labels and what share goes offshore. But, based on previous years, I would hazard a guess of less than 10% (around $7million wholesale, $1 million public performance) goes to local labels and artists. The lion’s share, probably about 90% or more, goes to the much bigger international “import/extract” businesses.

So why is the New Zealand music share of this money so small? I believe this is largely because from the beginning it is not a level playing field. For example, commercial radio clearly favours safe sure-fire hits with track record/chart placements overseas over local NZ tracks that are untested. While many people might question the relevance of radio in this internet age, the reality is that it is still very important, and not just for getting people to hear your music. In fact, when you consider that $7million of the $13.7million collected by RMNZ comes from radio royalties and almost all of the money distributed is calculated on radio airplay data (also APRA’s distributions are similar) then the importance of radio comes into sharp focus - more radio airplay means more royalties received.

It is also not a level playing field because, superficially at least, it makes no sense for any label looking to maximize their own market share to support the growth in market share of their competitor. And if your main income comes from importing music, then logic dictates you will support policies and strategies that best support your own model, not those that encourage the growth of local music. That is just business. Not to take that approach would be a failure to do your job properly.

However, despite these imbalances and the concerns I have, the one important thing I did not foresee since this restructure is that RMNZ now has a very large membership. To be exact, 2216 members who are almost all made up of local artists, small record labels and others who fall into the local “create/reinvest” business model. This means the organisation has a huge responsibility. The board and staff are obliged to act in the very best interests of what these members and shareholders of RMNZ want. And here lies the silver lining of this situation.

I believe the biggest collective interest of the local RMNZ members is for our music to get a much larger slice of that $74.4million pie.

To achieve this - on behalf of it’s members - RMNZ needs to take a leadership role in a much more pro-active program of positive discrimination in favour of local music. In simple terms, positive discrimination is a tool used to address institutional or ingrained inequality, such as exists for our local music. Personally, I have no time for the argument that local music just isn’t good enough, as if somehow New Zealanders are genetically disposed to make inferior music and that is why we struggle to compete. This “cream rises to the top” theory is a very vague free market philosophy and it presupposes we all start from the same level playing field. But for the free market to actually be free, then we need to have a more level playing field to start with.

I also don’t agree with genre elitism that won’t support a collective movement to improve things for all local music. Personal taste and arguments about what is “good” and “bad” music are not relevant in this discussion. Rather, we need to have a united view and debating music “quality” weakens our position. Finally, I also have little time for arguing about music funding, not because I think it is perfect, but because I think it is a convenient distraction away from the more important issues around inequality and market share. Overall funding is a good thing and also a form of positive discrimination - though clearly we need more than funding alone because over the years the financial position of local music has not improved significantly.

Very soon RMNZ is holding an election for their governing board. Despite my concerns expressed above, I have decided this is a good opportunity to address these issues and seek some changes for the better, so this year I will be standing for the elected position of the independent shareholder member.

Only shareholders can vote (which probably isn’t most readers), but I also think the election is a good opportunity to discuss some of the issues facing New Zealand music and how to make the situation better. So that is why I have written this blog.

If elected, these are some of the initiatives I would try to introduce for the benefit of RMNZ members.

1. Advocate for 30% New Zealand Music market share

I believe RMNZ should become a public advocate for a target of 30% market share for local music in NZ, across all aspects of the business. This would be an aspirational target against which success is measured. It means that if radio figures, One Music percentages or any other aspect of the business fall below this 30% target, then we are forced to ask why? What can be done about it? Right now there are many great initiatives around local music, but most are not measured against anything concrete so we cannot even say if they are successful or not. If RMNZ adopts this policy and shows this leadership then I would hope other organisations with memberships would follow: APRA, IMNZ, MMF and so on. If the current NZ market share is around 10%, then if we achieved 30% this would (theoretically) mean everyone in music would all at least triple our turnover, and we would have a much more healthy, vibrant and viable local music scene. In dollar terms if this had happened in 2015 it would mean the local share of the recorded music industry would increase somewhere around $7million to $22million.

As mentioned above every percentage point less of local music played on radio means less money going into the local music economy. This is particularly relevant right now because the Radio Broadcasters Voluntary NZ Music Code is up for review in the coming months. It is crucial that RMNZ (and APRA) take a leadership role in supporting the Code's continuation or increase - at or above 20%. If the code is abandoned or reduced it would mean the loss of very significant sums of money going to all their New Zealand members.

2. Allow One Music licensees to nominate where/to whom their fee payments go.

One Music is a good initiative where RMNZ and APRA have banded together so that venue music licensees (shops, café’s, etc) only need to get one music license rather than two from the two different music providers (APRA, RMNZ). In 2015 Recorded Music reports this is worth $3.8million. The main problem with this kind of license has always been measuring what actual music a licensee (shops, café’s etc) plays and then paying that money through to the correct recipient. At the moment payment is calculated using radio airplay statistics, though everyone is aware that isn’t probably what those shops, café’s etc actually play and this heavily favours big international artists with a lot of radio airplay. As a whole, the industry acknowledges this system is not very satisfactory, but has been unable to come up with a cost effective alternative. My idea to solve this issue is to allow licensees to nominate the music style that best describes the music they play, and then use existing genre based airplay charts to actually remunerate the artists/labels/publishers. Included among the styles/genres licensees could nominate “New Zealand Music” and if they nominated that then payment would be measured against NZ artist airplay. I strongly believe that many small businesses/retailers and so on would like to know their music license fee was going to local artists, and local artists would also get behind the scheme encouraging licensees to select the “NZ Music” playlist. It is an idea I have already floated with both RMNZ and APRA and so far, aside from the work involved in implementing it, it has met with a positive response as a possible solution. Hopefully this system would mean more money in the pockets of New Zealand artists and labels, rather than the current unsatisfactory system.

3. Introduce 50% of master Performance Royalties for ALL artists (local and international) at source.

I believe all artists, both local and international, should have access to 50% of master performance royalties collected by Recorded Music NZ, at their source. Currently the program where artists get 50% is only available to New Zealand artists via the Direct To Artist Scheme. While this is great for local artists, it also means that any label investing in NZ music only gets half of the income that a label releasing international artists get. In other words, major labels and internationals get to keep 100% of this income (subject of course to their artist deals), while local NZ labels/investors don’t. This imbalance provides a massive dis-incentive and competitive disadvantage to anyone who invests in local artists, because more money is made from selling international artists in New Zealand. Plus, in this instance, it is also only fair that all artists (local and international) get the same deal. We need to remove this two-tier system because more investment is essential for local music. In this case we need to have the same rules for all.

In keeping with the above policy of positive discrimination, I also support the argument that Maori music should have a respected and more prominent place in the New Zealand Music Awards. I also think it is worth taking a look at how the Folk, Classical and Jazz music awards are celebrated and awarded. The Music Awards are an important local music event and in this instance RMNZ should be applauded running them.

Finally, I actually believe that if these programmes were successful, and the local market share grew significantly, this would also benefit everyone, including the major labels. A vibrant local music industry would mean that the whole industry would grow as a result. I think local artists would be much more inclined to get behind RMNZ copyright initiatives (which I support) if they felt their more immediate and ‘real life’ concerns were being addressed - and local artists championing these causes will always get more traction. Additionally, a positive and vibrant local music industry will also attract more fans and consumers to music in general, which can only be a good thing for everyone.

I encourage people to comment and discuss anything here or related on social media or anywhere - I think it is important that anyone who cares about music thinks about these things. I also look forward to hearing the views and policies of all the other candidates standing for this election and hope to get the opportunity to debate some of these issues with them.



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  • Tony Richards on

    Ben, I am impressed with this well-written piece. Much thought, knowledge, passion and time has obviously gone into it, thank you. You have condensed and clarified some very important issues and your suggestions and solutions must be acted on. I hope you gain the elected position of the independent shareholder member. There’s money out there and it’s time more of it flowed back into the local industry, but it will take more push. If you need any support, especially lobbying, I’m happy to help.
    All the best,
    Tony Richards

  • Eti D Eves on

    Chur Doi bro!…Its nice to raise a few valid points as well as possessing valid figures and solutions. The 3 international music slugs Universal, Sony, Warners should be excluded from running music royalty collection for local musicians – it should be the other way round – A Local musician body should collect 100% of all music royalties then distribute it according to what you just said. Because if we leave it to them, we are dead and will always receive next to nothing as we have been for so long. They have been collecting commission and royalties for local musicians and keeping 90% all these years! its about time we do the collecting ourselves and kick those thieves out of the money bag…..

  • Nivara Lounge on

    Oh! I do so hope you get voted on to the board. I would like to have coffee with you in Hamilton if ever you passing through, to chat re what the live music venues are doing now and how we can play apart in our great New Zealand music industry. I need to let you know how we are suffering to survive in the industry as well. But over all your timing is good, because we in NZ have so many rising and untapped artists tipped to explode.

    Regards
    Ivan Muir
    Nivara Lounge
    .


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