Business News Retail Top Stories

Entertainment retailers publish manifesto, call for more collaboration

By | Published on Tuesday 24 February 2015


The Entertainment Retailers Association this morning published a manifesto which requests for its membership of high street retailers, download and mail-order stores, and streaming content platforms “a new, more collaborative relationship with creators and content owners to drive growth”. And while the report looks at recent developments in and the future direction of music, film and gaming, much of the document is focused on the former, in particular when it comes to matters of licensing.

Bigging up the investments made by retailers, and especially digital operators, in the last decade, creating a new delivery infrastructure for the content industries – while also highlighting the importance of retail businesses as marketing channels – the manifesto calls on content owners, and especially music companies, to better collaborate with their retail partners to assure future success for all parties.

As is customary with manifestos, a short list of priorities is provided, with a five-point plan to deal with what ERA calls “the most pressing problems”. This includes calling on the content companies to tackle various issues around infrastructure, logistics and data, and especially copyright ownership data on the music publishing side. Plus often expressed concerns about windowing and the bunching of releases in quarter four are also raised, though this is the one area where ERA seems to be talking to DVD distributors more than the labels.

But you sense that the record companies and music publishers are very much the target when ERA calls for simpler licensing, lower barriers to entry to allow more diversity in the digital market place, and recognition that entertainment retailers actually operate on relatively low margins compared to their counterparts elsewhere in the retail sector. And while ERA’s viewpoints on licensing complications and the big upfront demands labels make of new digital services are all interesting, it’s perhaps the area dubbed “addressing retail sustainability” that is most timely.

As many artists, songwriters and publishers bemoan the size of the digital royalties they are receiving, some have indicated that the music rights sector should demand a higher cut of the revenues generated by the streaming platforms, which currently pay over approximately 70% of their income to the labels and publishers. Though given few, if any, streaming services are currently profitable, such a demand has always seemed ambitious.

And in the ERA report, the streaming firms – which position themselves alongside traditional retailers, and in doing so set some precedents as to what cut of revenue it is reasonable for them to take – seem to be saying “a 30% margin is as low as we can go”. Or, in the words of one anonymous digital service provider cited in the report, if the labels and publishers push for 80% of the money, the digital firms won’t survive, “and 80% of nothing is nothing”.

Whether or not the music community accepts that argument remains to be seen, though the case presented by ERA is compelling. But if artists, songwriters and publishers do accept that retailers simply can’t afford to give up any more of their revenue, then that fully focuses the digital royalties debate on why the labels are currently taking the biggest slice of all. Though at the core of the ERA manifesto is a call for all parties to better collaborate to ensure each stakeholder is getting a slice of a much bigger pie.

And that’s the message that was delivered by ERA Chairman Raoul Chatterjee this morning, who told reporters: “Entertainment retailers are the driving force for innovation in the entertainment industry. Over the past decade they have invested hundreds of millions of pounds in the UK in creating new routes to market for the music, video and games industries. [This manifesto] is an important element in continuing that work”.

He went on: “With an election imminent, there is no shortage of ‘manifestos’ arguing the case for what Government can do to promote growth. The good news for the entertainment industry is that many of the greatest opportunities are within our own grasp – if the various elements of the industry work together collaboratively”.