Original URL: http://www.theregister.co.uk/2008/02/29/bmr_feargal_sharkey/

Feargal Sharkey on three strikes… and after

A new deal for music fans?

By Andrew Orlowski

Posted in Media, 29th February 2008 15:46 GMT

Interview

Feargal Sharkey needs little introduction. A chart-topper in his own right, and as the lead singer of one of the greatest pop groups of all time, The Undertones, he subsequently crossed into regulatory and policy work - constantly agitating for musicians, songwriters and performers. At the start of the month he joined British Music Rights, which represents music publishers, composers and songwriters - and an important counterweight to the BPI, which predominantly represents large record companies.

With the music and broadband businesses at a historic crossroads, Feargal gave us a glimpse of some of the closed-door discussions we might see next.

Feargal on... paying for art

I'm aware a lot of people seem to think that when downloading something off the internet for free, there's a large, black, soulless, faceless, moneygrabbing multinational company there that will never miss the £7.99.

But the brutal reality of life is: according to the Musicians Union, 80 per cent of musicians will make less than £10,000 this year. And according to the MCPS, 95 per cent of composers and songwriters will earn less than £15,000 in royalty income.

Invariably, it's artists and creators who are at the sharp end of this food chain, and they're the ones that will get to the stage that they'll give up and go and do something else - because they have to pay the rent, pay the gas bill and feed themselves, buy shoes, and deal with all the things normal people expect to deal with in life. So people have to realise there's an implication in this.

There's been all this play about FairTrade coffee and FairTrade sugar - but what about FairTrade bloody music?

I've never met anyone who's prepared to go to work from Monday to Friday and not be prepared to be paid at the end of the week. But that's exactly what we expect our musicians and our songwriters and our composers to do. I don't get it.

Feargal on... the end of big label control

Everybody concedes that very rapidly, we're going to change a lot of traditional methods we've used to get music to the consumer. For some of the record labels that presents a huge challenge in itself. Traditionally they've controlled their businesses by controlling the distribution channel. Well, that's pretty much gone now.

Sorry guys, someone else controls your distribution channel and it's called BT, or Virgin Media or whoever.

El Reg: And they can't set the price?

I'm trying to be sympathetic, but lately I've been sitting in meetings with them asking 'how much do you charge for this?'

And they don't know. So you're running a business, and you don't know how much consumers are paying you? Well how do you build any kind of model out of that? How do you do the normal business planning things like - how many people should I employ next year or how big an office should I have?

Feargal on... the right to copy for free

One week ago the commissioner for the internal market, and the man ultimately responsible for copyright in Europe Charlie McCreevy gets up - and whilst talking about a number of other things involving the music industry - says, to quote, "Unquestionably creators are entitled to compensation in exchange for the private copying exemption".

So suddenly you've got the European Commission saying one thing - and the UK government is saying the opposite. Now we have no idea what that compensation should be, or how that compensation should be structured, or anything else yet. But shall we just start with the philosophical principle - and that twenty-odd countries seem to have put something into practice that does exactly that.

Feargal on... paying the "leeches" for file-sharing?

Fantastic.

The obvious thing is who's going to provide this compensation? Shall I assume it's the original songwriters and composers who don't make much money as it is.

That's one of the most fanciful and non-practical ideas I've heard for quite some time. But God bless them for making me laugh and cheering me up today!

Feargal Sharkey

Feargal Sharkey

Feargal on... do we still need record companies?

Has the internet and technology opened up opportunities for people to go out there and do their thing? Absolutely, no question. And in my book anything that's going to encourage people to be creative in any way gets my bloody applause every single time.

But the reality is this. Is MySpace going to turn you into U2? I'm afraid it's not.

Because to this day, I've yet to figure out another way to help sell you a million albums in North America. Now you have a record company with two million dollars of a promotions budget and the knowledge, skills, and experience and the network to help you spend it efficiently and effectively to help you sell a million albums in North America. I've not seen a way to replace that idea.

El Reg: But there's no exclusivity on production now, and the costs are falling?

I'm not sure about the cost argument. I have a caveat in that I own every record I ever made and I own every song I ever wrote.

Fundamentally it's a long, complicated story but after the second or third Undertones album, the band found themselves in a position where the rights reverted back to them. And from that point on, I made sure that everything we did - and in my solo career - applied. It's a nice position to be in.

Are your office and staff and manpower cheaper? No they're not, because you've still got the same team of people doing pretty much the same functions. Have you removed the need to put a man in the back of a van driving up the M6 with a load of records in the back? Maybe. So there may be something in distribution. But then you take into account all the digitisation costs, the huge amounts of money the large companies face digitising their back catalogs - and we're talking obscene amounts of money...

I'm not sure anyone's come up with a financially viable model you can go and sell music to mass audience and as a standalone business, make it work.

The best example of all is that Apple were publicly acknowledging that iTunes does not make them any money. What it does for them is drive a nice hardware business for them - thank you very much indeed. Twenty million iPods in the run up to Christmas?

El Reg: Apple has close to $20bn in the bank now cash and it doesn't really know what to do with it. That could buy them a couple of major labels - or maybe all of them?

That could well come.

Feargal on … building a digital music business

I try to reasonably optimistic about these things.

Are people going to stop being creative? Probably not. And if you try and stop them, for sheer belligerence as much as anything else they'll probably be more inclined to do it. And I quite buy into the idea of technology democratising creativity - that's fantastic.

Are people at the other end of the chain going to stop liking music, and wanting to consume music, and listen to it, experience it? Absolutely not - and there is a bigger demand for music has never been higher.

The bit we're trying to work out right now is the bit in the middle that joins the two together. So, if the statements made for Apple for example are true, you could not go out and run iTunes as a separate standalone business, because you're going to lose money.

It's simple - good businesses make money and bad businesses don't make money, in which case they're out of business very quickly. And that's the point I'm getting at. I'm not sure some of the gains technology has to offer a record company aren't offset by costs somewhere down the line. The reality is someone's struggling to create a business based on a 79p download. We're going to have to start exploring other ideas.

Feargal on... three strikes

Even within the past seven days there's been any number of conversations going on - and they're very sticky - with ISPs revolving around the ideal of how do we do this together. We need something which gives you some sort of commercial incentive as an ISP, but which also ensures we as the music industry have a financial model that can still keep signing artists and making records.

It's not a big mindshift right now. I have genuinely seen a huge mental shift in the past six months - that conversation wouldn't have taken place a year ago.

It is incredibly reassuring that if the government will stand up and say, if you can't come up with a commercial solution to something that's a commercial problem, then we will legislate. Personally I have concerns about that, based on my five years as the radio regulator of commercial radio. I'm acutely sensitive to the idea that kind of regulatory intervention does not necessarily provide you with a 100 per cent solution.

El Reg: What concerns?

Nobody in the music industry has any idea what it means when the Government says they're going to regulate.

El Reg: Is it the threat of legislation that's changed that - that's opened up negotiations with ISPs?

It's not the threat of legislation, it's the commercial environment. The set of problems ISPs are facing is totally different. You can only sell so many broadband connections to people in the United Kingdom, then you can't sell anymore. You can only sell so many mobile phones, then everyone's got one.

So they're looking at their business and thinking, "how can we grow this?" That drives you down the route of content and what extra services can you get out of them? What can you offer them that gets an extra fiver out of them?

Feargal on... an end to "piracy"?

Whatever the music industry will do will not eradicate uploading. There will always be people like that. We'll file it under the same category as pirate radio: I noticed when they shut down another 20 stations in London, I'll hazard a guess that a week later there were 25 up there instead of the original 20! There will always those people who've got to do it.

What is beginning to come out of some of the research is: some of the educational messages are getting through. I think most people understand that there is a moral issue here - in that you are depriving young musicians, artists, songwriters, and composers from any ability to generate any kind of income.

It is beginning to look like is that potentially 70 per cent of people downloading music and not paying for it - when we go "do you actually realise what the impact is?" The indication is they'd stop doing it. They push the moral responsibility to the back of their minds.

Feargal on... DRM

There's a whole consultation on DRM in Europe. We've struggled to explain to them: "I don't know why you're bothering about this right now." The commercial world's gone {woosh}. It's over.

Feargal on... next generation deals for online music

I have reservations about creating a system where we sell music to people we've just cut off. I'm not sure that's where the music industry wants to be right now.

What the business needs to do is sit down with the ISPs and tech companies, and come up with some sort of structure - even though that might be a multi-layered or multi-tiered structure - that not only gives the ISP the incentive to make the colossal investment it's going to have to make in providing the fibre optic cable to everybody's home in the UK, but also provides the music industry and artists and creators carry on to do it all next year.

So just off the top of my head: would you pay an extra £2 a month to download five tracks you could do what you want with? Would you pay a tenner for as much as you can download of the entire music catalog of history?

El Reg: Like PlayLouder MSP?

Yes. We're wrestling with that because there's no traditional business models, no data. We're working through a lot of blind assumptions Would people like an all-you-can-eat download service? I suspect they probably would. In which case, is £10 enough? Or £25 too much? Or £12.50? These are the things we're trying to figure out right now.

El Reg: But that means people like Geoff Taylor and his members coming to the table and licensing in a way they've never licensed before.

Everybody's very sensitive to the idea that long-term [the position now] is unsustainable to the music industry. And consumers have to get their head around the idea that they cannot continue to do what they've been doing as well - and both of us have to be a bit more grown up and adult and do something where we can all help each other. ®