MBW Views is a sequence of op-eds from eminent music business individuals… with one thing to say. The next MBW op/ed comes from Richard Leach, CEO of Curve Royalty Programs.
Right here, Leach explains why the European Fee’s investigation into Curve as a part of the Common/Downtown probe – and Curve’s subsequent divestment from UMG/Virgin to Jamen Capital and Merlin – modified how he thinks in regards to the phrase ‘impartial’.
This op/ed is customized from a speech Leach delivered at AIM‘s Related occasion in London on Thursday (September 10).
Independence means freedom from exterior management, rule, or assist. It’s the state of residing, appearing, and making selections by your self with no need assist or taking orders from different individuals or nations.
Broadly talking, no-one is impartial, not on this business anyway.
Whereas “interdependent” is an adjective meaning “dependent upon each other” or “mutually dependent”. It describes two or extra individuals, issues, or teams that depend on one another for assist, survival, or perform.
What I’ve come to imagine, is that for almost all ‘impartial’ means both the flexibility, freedom or alternative to talk for oneself, or the liberty of selection of a trusted 3P associate to talk in your behalf – that’s why AIM, Merlin, IMPALA, IMPF, A2IM, AIMPF exist and are so vital and cherished.
Let me develop.
Nearly each Curve consumer has requested us a variant of the identical query:
“What are your intentions?”
It’s not an informal query. Royalty infrastructure isn’t a short-term dedication. Music companies don’t transfer platforms each couple of years. So after we are requested about future plans, what is basically being requested is:
‘Can the consumer belief that the choice they’re making at the moment received’t change into an issue in 5 years?’
We at all times answered the query actually. Curve might have come to market in 2019, however myself and the 2 co-founders have been working within the music business since 2003. We didn’t have a ‘get wealthy fast, tech-bro agenda’. We do what we do as a result of now we have made this business our residence. Our intentions have at all times been to serve the “impartial” companions that now we have labored with for many years.
BUT…success has a behavior of making conditions that good intentions alone can’t navigate. Profitable companies, like ours:
- appeal to patrons,
- founders and/or traders of profitable companies like (deserve even) an exit,
- patrons have agendas,
- and agendas have a approach of quietly reordering priorities.
Good intentions don’t immunise in opposition to that.
For firms offering essential infrastructure to the music business, belief is formed as a lot by how a enterprise is owned as by the way it behaves. Intentions matter. Constructions endure.
That wasn’t how I considered possession when Curve turned a part of Downtown Music Holdings in 2022.
As I stated, we at all times answered that query actually. Downtown was impartial. There was no trigger for concern. What we didn’t do was ask the follow-up query.
We knew Downtown had backers. However we didn’t take the time to find out how lengthy these backers had been invested, what their return horizon would possibly appear to be, or what the life like purchaser’s universe for Downtown really was. Had we accomplished so, we’d have been much less confident that sure, a sale of Downtown will most likely occur ultimately, however hey, now we have years but to concentrate on our mission.
Downtown believed in Curve after we had been nonetheless proving what we might change into, invested considerably within the enterprise, and gave us the chance to develop far quicker than we might alone. I stay grateful for that. However I used to be too humble and didn’t leverage our place in our sale to Downtown to know higher what the long run would possibly maintain.
It seems we didn’t have very lengthy.
Inside two years, UMG’s Virgin Music Group had agreed to amass Downtown, Curve was on the centre of a European Fee investigation, and we had been watching a public debate about our operations, performed, we felt, on the unsuitable phrases.
What do I imply by that?
Right now, I concur that the EC’s principle of hurt was/is sound: if UMG owned Curve, they COULD achieve entry to commercially delicate information – royalty charges, advances, DSP gross sales and many others – that belongs to the impartial labels, publishers and distributors who use our platform, our cherished prospects. They MIGHT use this intelligence to poach artists, undercut opponents, tilt the enjoying discipline. The rascals.
I resisted this argument for a very long time. Not as a result of I used to be naïve about aggressive dynamics, however as a result of it didn’t match my expertise: we might merely by no means have handed the information over. Belief is the bedrock of Curve. The second anybody believes we’re doing something untoward with consumer information, we’re completed. We’re ISO licensed, shifting towards SOX certification, certain by confidentiality obligations to each consumer. It’s not a query of willpower; it’s structure. It’s existential.
Nevertheless, ultimately (it took time, I’m cussed), I got here to simply accept the EC’s place; not as a result of I used to be persuaded it was even possible (UMG doesn’t want your information to pinch your artist, if they need them, they are going to simply stick yet one more zero on the quantity than you!), however as a result of I needed to acknowledge it was doable. A principle of hurt doesn’t require likelihood. It simply requires plausibility. And the Fee was proper: the construction created the circumstances. Honest sufficient.
Anyway, as I stated to the EC case staff once I was summoned to Brussels in January, “I don’t agree with how you’ve got made your resolution, however I do agree WITH the choice.”
Although I now see the logic of the choice, I nonetheless really feel that what is way extra vital to Curve and its prospects is just not explicitly addressed in that logic.
The menace that was bothering us at Curve was one thing extra mundane, extra inevitable, and in some methods extra insidious.
It was the drag of company complexity.
After we bought to Downtown, Curve was 13 individuals. By the point of the divestment announcement, we had been thirty-seven. A staff of 13 has a singular approach of working. That is the factor we’re constructing subsequent. That is the factor we have to repair proper now. The agenda is brief and the main focus is fierce.
A staff inside a bigger organisation operates in a essentially totally different atmosphere. Not a worse one, essentially. However a much more advanced one. We reported into senior administration at Downtown Music Group, who reported to the board at Downtown Music Holdings, who reported to the shareholders, who, it seems, wished to capitalise on their funding. Which meant that Downtown itself was going by transformation, centralising processes, operating a sale course of, navigating an EC investigation, managing the inevitable politics. And at a floor degree priorities had been shifting, a number of agendas competed for a similar sources, the work of alignment, because it usually does, crowded out the work itself.
Let me be clear, eyes vast open or half squinting, and even clammed shut: we signed up for this. In fact, we didn’t know every little thing that was happening or about to occur. However I’ve labored at bigger firms. I had a reasonably good concept of what MIGHT be in retailer for us. We weren’t acquired merely to run Curve; we had been introduced in to assist construct Downtown. I don’t remorse the collaboration, and I’m happy with what we achieved collectively, it actually contributed to the continuous enchancment of the platform. However we additionally began pushing in a number of totally different instructions directly, diluting efforts throughout varied fronts. And we underestimated the pressure. I can inform you, that, similar to DIY, integrations are at all times longer, tougher and dearer than you suppose they are going to be. We had been solely simply discovering a pathway by when Part 2 was introduced, and we then had been considerably in limbo till the divestment closed. The entire thing took over a yr .
This isn’t a narrative about dangerous actors. Downtown aren’t the villains. Nor, deep breath, are UMG. That is in regards to the structural price of success, in different phrases what occurs when a small, centered enterprise enters a bigger one. It occurs each time. It’s not a conspiracy, it’s simply how organisations work.
And in a market the place impartial companies are making decade-long commitments to their essential royalty infrastructure, the gradual dilution of focus is a hurt as actual as any principle about information entry. It simply doesn’t have a paragraph quantity within the merger laws, doesn’t make for salacious headlines or have speedy catastrophic penalties, but it surely does create a creeping drag on companies not generously outfitted with sources to soak up simply.
The EC investigation additionally helped reframe how I take into consideration the phrase “impartial.” I imagine it’s employed… imprecisely on this business.
Nobody is really impartial. Not the labels, the publishers, not the distributors or the platforms and not Curve. We’re all embedded in an online of relationships, dependencies and mutual obligations. After we converge round this phrase ‘impartial’ what we try to protect is just not isolation: it’s autonomy. The flexibility to stay wholly centered in your shoppers, to make selections on their behalf with out these selections being filtered by another person’s P&L, to be the sort of associate any enterprise can choose and belief with out questioning who they’re ultimately going to promote to.
While it serves as a lightning rod, I believe “Independence” doesn’t describe what we’re defending. Interdependence – a community of aligned, mutually reinforcing relationships that collectively protect autonomy – is nearer to the reality I believe.
“We by no means actually noticed ourselves ‘impartial’ anyway. As a substitute, we see ourselves as a hub of interdependence amongst our consumer base. In that, now we have at all times taken a ‘hive-mind’ or ‘crowd-sourced’ method to the continuous growth of the service.”
Richard Leach, Curve
Which brings me to what occurred subsequent in our little story.
At the start of final month the divestment lastly closed with Curve being acquired by Jamen Capital and Merlin. For those who don’t know, Jamen is a London-based funding agency constructed particularly to offer development capital to impartial music companies with out exchanging fairness. Merlin is the worldwide digital licensing physique for impartial labels; a membership organisation constitutionally structured in order that no main label can maintain any possession stake.
That issues. Curve’s “independence” is not only a assertion of intent however is an architectural reality. It’s constructed into the settlement between Merlin and Jamen that Curve can’t be immediately bought into main label possession. EVER. Certainly, there may be even a restriction to promote Curve to an inventory of huge companies for an excellent variety of years. (I’m curious to see what the circumstances could be the place Merlin would ever wish to promote Curve). That is an possession construction during which alignment is embedded within the material of the partnership somewhat than assumed. This isn’t a promise that may be walked again in a future board assembly. It’s as near a assure as these items get.
So, after nigh-on 4 years of acquisitions, investigations and sudden classes, expertise has taught me that belief is finest served not simply by well-articulated, and certainly honest intentions alone, it’s most significant when it’s intrinsically constructed into possession.
We by no means actually noticed ourselves ‘impartial’ anyway. As a substitute, we see ourselves as a hub of interdependence amongst our consumer base. In that, now we have at all times taken a ‘hive-mind’ or ‘crowd-sourced’ method to the continuous growth of the service. We take every little thing we see, really feel and listen to throughout the client-base (and past) and synthesize all these views and practices into Curve. So, all of our shoppers are, indirectly, dependent upon, and benefitting enormously from, being inter-connected by utilizing Curve.
Importantly for Curve, and for its shoppers, the extra speedy significance is easier: for the primary time in various years, 100% of our consideration and power is directed in the direction of the individuals we serve. This week the Curve administration staff spent quite a lot of time with the newly fashioned board. The overall possession of the corporate, certainly the totality of the decision-making authority, was within the room.
The complexity is gone. The agenda is brief. The main target is fierce as soon as once more.Music Enterprise Worldwide
