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Kim Bayley on the BVA's Video Insight Seminar
Friday July 17, 2015
Trust a retailer to tell it how it is. That was one clear
takeaway from yesterday's Video Insight Day held by the BVA and
supported by ERA. Amid the glitzy presentation, lavish eats
and hardcore security (attendees had to check in their phones and
sign an NDA!) the presentation from Tesco Non-Food Category
Director Ian Ditcham tackled one of the biggest challenges in the
video industry with laser-precision: the negative effects of early
digital release windows.
The ERA Manifesto, published in February, identified the
"The video industry seems wedded to inconsistent windowing
strategies," we said, "with titles available on download-to-own
platforms far earlier than on physical formats.
"Studios need to adopt windowing strategies that work for the
customer and recognise that a customer should not be forced to
choose between physical and digital."
Ian Ditcham amplified the point at yesterday's event effectively
telling video distributors: releasing digital before physical
reduces the effects of in-store efforts and theatre. In
essence there's no point putting in enormous effort to promote
something which has already lost its sparkle.
Instead, he said, the video industry should look to the
example of the hugely successful games industry which has proven it
can sell digital around physical, growing the overall market,
rather than selling digital at the expense of physical.
The answer he said is more cross category promotion and cross
To be fair many studios have acknowledged the point. In ERA's
rounds of meetings with the video industry to discuss our
Manifesto, many of them have acknowledged the need to do more to
support Blu-ray and DVD.
The point now is surely to back up those kind words with action.
As presentation after presentation pointed out, consumer appetite
for physical formats is still robust. It is way too premature to
push customers towards digital by using artificial windowing
Kim Bayley on why ERA is backing Monday as the optimum day for music releases
Thursday November 27, 2014
Gut reaction and an unswerving conviction that you are right may
be an admirable trait in an A&R man, but it fails to cut the
mustard in the more pragmatic commercial business of music
That's the key to ERA's objections to the major record
company-sponsored plan to enforce a worldwide Friday release date
from next Summer.
Our view is that the numbers simply don't add up.
When news first leaked of the plan to adopt a Global Release Day
a couple of months ago, retailers and digital services were
With national release days currently spread through the week, it
is certainly the case that this encourages short-term piracy.
Pirate networks on theworldwideweb are by definition global so
standardising on a single day seemed like a smart opportunistic
move which could potentially help sales.
Full marks, major record companies.
But our enthusiasm soon waned when we heard that the chosen day
was Friday. The objections focused on the impact on sales and the
impact on costs.
On sales, the UK's current release day, Monday, provides a real
boost at an otherwise quiet time of the week. In fact Monday is
currently second only to Saturday for sales. Inevitably it
generates not just sales of new releases, but impulse buys too.
Moving to Friday would not only kill this Monday sales boost, it
would likely lose those add-on sales, raising questions over
whether many stores would bother opening on Mondays at all.
On costs, the picture was even bleaker. An early week release
date gives time for restocking ahead of the weekend rush. Move to a
Friday and retailers could be faced with an unappealing choice
between being out of stock or paying expensive surcharges for
On the basis that we anticipated that retailers arguing for the
status quo would simply be dismissed as traditionalists, we decided
to commission research to determine precisely what the costs - and
any potential sales uplift - resulting from a switch to Friday
might be. We polled our members both physical and digital. We
modelled sales effects over every retailer type. We even
commissioned consumer research to check the preference of music
fans and of those who expressed a preference, most opted for
Monday. (To be fair, a BPI survey showed music fans backing Friday,
but in both cases the vast majority of consumers had no preference
On costs, our research was clear: taking additional staff and
delivery costs into account, a switch to Friday would need to
generate a minimum of £8m in additional retail sales a year just
for retailers to break even ie in a market which is clearly falling
we would need an increase of £8m just to stand still (and that's
without the additional costs to the record companies themselves
which would inevitably be passed on to retail).
On sales the evidence is inevitably more speculative. IFPI
commissioned research suggested a move to Friday would result in an
overall increase in UK recorded music sales of around 4%. Sounds
good, but that is equivalent to week one sales of every new release
over the course of the year increasing by a third. It would be
lovely if it were true, but it does not seem likely.
Intriguingly the IFPI numbers suggested that 95% of the benefit
of switching to a Global Release Day would still be achieved on a
Monday compared with a Friday.
For us it's a no brainer: if we can capture 95% of the benefit
with none of the costs, why would anyone even consider a Friday?
Adding risk and cost for a minimal benefit just doesn't make
And that's why we have taken the position we have. It's not
based on "gut feel" or "conviction" - just plain hard fact.
If there is to be a Global Release Day, an early week release
really does make more sense. The fact that US retailers are
prepared to abandon their time-honored Tuesday release date for
Monday only serves to reinforce the point.
Retailers have no problem conceding that on matters creative, on
matters A&R, record companies are far more qualified to make
the call. But when it comes to what's best for retail, what's best
for the consumer and what's best ultimately for sales, we really do
know our stuff.
Steve Redmond on the real story behind that controversial speech on copyright
Monday June 30, 2014
It would be true to say that ERA DG Kim Bayley's speech on
copyright and licensing last week was not received with unalloyed
joy by the music industry Establishment. Some of the language used
to describe it was rather ripe to say the least.
Kim Bayley: Controversial
But reading the text - you can see it here - it's hard to see what the fuss is
about. Its core premises seem self-evident. Although, credit where
credit's due, things are considerably better than they were -
streaming being a prime and positive example - the music industry
clearly was and arguably still is slow in coming to terms with new
technology. Licensing for digital services in Europe clearly is
overly-complex compared with physical retailing. And there have to
be opportunities to improve copyright law.
In fact Bayley's central argument that copyright law designed for
a pre-digital age of sheet music and plastic discs needs to be
updated is repeated almost word-for-word in a recent submission by
the RIAA to the US Copyright Office.
To be clear, not everyone has been critical of Bayley's
intervention. A stream of emails and calls to the ERA office, not
just from members, but from artist and manager organisations have
been overwhelming positive.
The explanation for the violent reaction from content owners is at
least in part attributable to shock at the idea that retailers
should have anything to say about copyright at all. For decades
this has been a debate record companies and music publishers and
collection societies have pretty much had to themselves. In that
sense last week's kerfuffle is akin to that when the Music Managers
Forum first came into being. Historically retailers have never
taken an independent line on copyright, but there's a simple reason
for that: in the physical world there was no need, not least
because the relevant copyright law was designed for a physical age
and worked pretty well.
Digital services in contrast only exist at all through licensing
relationships based on copyright law. And many services feel the
status quo is not working. Over the past months as the European
Commission has conducted its consultation into copyright, they have
watched bemused - and with increasing frustration - as one content
owner organisation after another has lined up to declare that the
current copyright regime is pretty much beyond improvement.
It was that frustration which formed the background to Bayley's
My sense is that digital services do not want a revolution, but
they do feel the content industry has to wake up to some very
The important thing now is to get beyond the name-calling and
frustration and see if the two sides can find common cause.
Even supermarkets couldn’t get Beck to Number One
Monday March 31, 2014
You have to grow a thick skin if you work for one of Britain's
supermarkets. After all, they are regularly pilloried for
everything from encouraging food waste (through BOGOFs) and
alcoholism (drinks promotions) to killing High Street stores to
selling horsemeat as beef. But even hardened supermarket executives
were a little surprised to discover their latest "crime" the other
week - preventing critics' darling Beck from reaching Number One in
the Official Albums Chart with his latest album,Morning Phase.
A lengthy editorial in Music Week lamented the fate of "poor
Beck" because the "likes of Tesco, Sainsbury's and Asda decided
against giving their customers the chance to buy it". The clear
implication was that these supermarkets had arbitrarily deprived
"poor Beck" of the Number One he deserved.
Beck's album sold 13,819 copies in its first week to reach
number four, 2,730 copies behind the Number One, Bastille's Bad
Blood. Is it conceivable that the supermarket buyers got it wrong
and that with their support, he would have sold an additional 2,730
copies and reached Number One?
To suggest otherwise, say the supermarkets, is to fundamentally
misunderstand who they are and their contribution to the music
Beck's sales were disproportionately dominated by pre-sale and
core fanbase Monday purchases which we can assume the supermarkets
would never have been able to capture. Sunday and Monday sales
accounted for 43% of sales. Likewise sales were disproportionately
digital with a 43% share of sales going to non-physical formats.
That meant the addressable physical market was necessarily smaller.
With an additional 2,730 sales required to deliver him the Number
One slot, it would have meant every single full-range supermarket
(ie non convenience format) in the country would have had to sell
at least one and maybe two copies of the Beck album that
week. As one buyer put it, "Our customers are most likely to be
females aged between 25 and 45 who only buy four or five CDs a
year. Beck is unlikely to be one of them."
The Music Week piece mused wistfully that "Unlike with the likes
of HMV and the independents whose fates are tied to those of the
record labels supplying them, supermarkets can pick and choose what
kind of products they support." The point is correct, even if the
sentiment is misguided. Supermarkets argue that it is their skill
in selecting precisely which products are appropriate for their
customers which enables them to deliver huge numbers on the right
kind of product.
In the event, the performance Beck's Morning Phase has
vindicated the supermarket view that it was never likely to be
anything other than a specialist sell. Week two sales more than
halved to 5,512. Week three sales halved again to 2,906.
Between them the nation's supermarkets sold £188m worth of
albums in 2013, a quarter of the market. Recognise us for what we
do well, say the supermarkets, rather than criticise us for not
stocking albums our customers simply do not want.
Chancellor Osborne and the exaggerated death of the 99p download
Tuesday March 25, 2014
The Treasury spin machine traditionally works at full tilt at
Budget time and this year was no different, but this week's
breathless reports about the death of the 99p download took the
In a range of media from The Guardian to Wired to Forbes came
the news that "in a little noticed announcement" in the Budget
Chancellor Osborne planned to "clamp down" on a "tax loophole"
affecting music downloads, apps and ebooks.
As a result, the days of the 99p download were numbered, the
price of a single MP3 could go up to as much as £1.19 and the
prudent Chancellor was set to net a huge windfall.
Unfortunately for the Chancellor, but fortunately for the rest
of us, the stories bear little resemblance to reality.
First, the new measure has virtually nothing to do with the UK
Chancellor. He is simply enacting the latest in a series of
European Directives dating back to 2002 which seek to regulate the
treatment for VAT purposes of digital goods and services. The
decision to levy VAT at the rate prevailing in the country of the
customer's residence, rather than that of the retailer is not
peculiar to the UK and will in fact apply across the European
Second, the death of the actual 99p download seems unlikely. The
most common location for music and video download stores
operational in the UK - used by Amazon, among others - is
Luxembourg where the current VAT rate of electronic downloads is
15% (apart from ebooks where the rate is 3%).
On a 99p download, that means that the retailer currently
receives a fraction over 86p after VAT from which they have to pay
for all costs including the music. If all costs stayed the same and
20% VAT were to be applied, that would increase the price of a
download to just over £1.03, a long way away from £1.19.
Most industry watchers believe that the power of the 99p price
point is such that as they have done in the past retailers and
their suppliers will simply absorb the increase.
All in all, that Osborne clampdown and the supposed mortal
threat to the 99p download look a little overblown.
Any impact of the European Directive looks set to be restricted
to ebooks, which opens another can of worms entirely: why should
ebooks be taxed at all when printed books remain VAT-free, a status
of which the music and video industries can only dream?
But that's another story…