As France welcomes MIDEM, its music industry still faces big challenges

Jan 29, 2013
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This past Saturday saw the kick-off of MIDEM, one of the world’s biggest and best conferences and tradeshows focusing on the music industry. This year’s edition, which will be running through tomorrow,has  had a particularly strong emphasis on digital.  It’s evident that digital still continues to be both a blessing and curse for the sector, which is still very much a topic of debate in the industry. Though having grown 13.9% over the last year to €90 million in revenues in France alone (downloads and streaming), the rise in digital music still doesn’t compensate for the fall in sales of physcial music formats, which declined 14,9% over last year.

This decline has resulted in numerous negative consequences for the sector, including the (likely) downfall of retailers such as Virgin Megastore. One big bright spot for France, however, is how quickly streaming services, such as market leading Deezer, have caught on here.  France is now apparently the number two ‘streaming market’ after Sweden, the home of global leader Spotify.  This trend is helping to drive innovation and the growth of French tech music ecosystem, but as with other digital music trends, the majors and independants still haven’t figured out how to fully capitalize on this.  There’s a lot of discussion in the global music industry about how to respond to these challenges, but in France, the debate more often than not, tends to move into if the French government can (rather than should) help the industry cope with all this.

Even at MIDEM, one of the most publicized debates was about the Google tax, which France’s music industry is, unsurprisingly, all for.  The main argument from their perspective is that internet titans, such as Google have benefited enormously from music content which, in many cases, has been used illegally. As such, the industry is hoping the tax would be a means to help rebalance things. By ‘rebalance’, this basically means the industry expects to receive subventions, funded via the tax receipts, in order to help compensate for the, reportedly, 60% of revenues lost by sector over the last 10 years. All of the industry’s main trade associations are quite vocal about the need to act and to do so quickly, particularly given the increasing difficult economic condititions for the sector. However, in an interview with the AFP at MIDEM, Minister Fleur Pellerin made it clear that her strong preference would be to focus on an approach that helps France’s ‘cultural industries’ adapt to the digital revolution rather than one that relies on goverment subsidizing the sector.  Culture Minister Aurélie Filippetti, also present at MIDEM, appeared to be more of a proponent of providing some type of financial support for the sector, but also seemed to want to steer clear of the “s-word” (aka subsidy).   Of course, there were also the usual debates about Hadopi, which has been an on-going saga for the goverment.  In an effort to be consistent with their anti-piracy stance, the music industry is prone to enact some type of punishment, which they prefer be an automatic fine (current proposal is 140€) rather than suspension of the offender’s internet service.

The feeling in the industry can best be described as strong skepticism about the government’s ability to act quickly, if at all.  As Minister Pellerin and Minister Filippetti don’t seem to yet be fully on the same page on the purpose and consequences of the Google tax, the industry might be best served by coming up with its own ideas and solutions to stop the bleeding rather than instinctively looking to the government to help clean-up the mess.