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A KOBALT MUSIC GROUP COMPANY A
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Rights Limited www.kobaltmusic.com
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That’s the ticket!
RETAIL n BY TIM INGHAM
HMV will still be on the High Street in three years, offering 15% more space to music – with an aim to be one of concert ticketing’s most significant players.
That’s the confident blueprint today revealed by CEO Simon Fox after the under-the-cosh retailer was given room to breathe by its banking syndicate, who last week decided to waive its January 2012 covenant test.
The decision followed vocal support from music and film suppliers, who are now likely to take warrants representing 2.5% of HMV’s equity.
“It’s an enormous relief, quite frankly,” Fox told Music Week.
“In December we had to put out a very unpleasant statement that mentioned ‘material uncertainties’, which we then repeated in our Christmas trading update.
“People could read that there was a pretty reasonable chance we would fail our forthcoming covenant tests. This significantly removes that risk. It changes everything and I’m enormously grateful to our music suppliers.”
“The key thing about HMV is that we have national scale. If you remove [us], the music market simply shrinks. It doesn’t go anywhere else.”
SIMON FOX, HMV
HMV plans to halve its £175m debt by 2015, with an imminent sale of its live subsidiary MAMA Group – into which it has invested £60 million – looking likely.
However, that won’t mean a narrowing of its music event ticketing business, which includes a new partnership with Ticketscript online and in 250-plus stores.
“Whatever happens to our live business, we intend to continue offering tickets to our customers,” added Fox. “Under any future scenario, HMVtickets.com and in-store ticketing will continue, and we intend to keep widening that offer. It’s an area of growth.”
Fox confirmed that music suppliers can now expect to see a “10% to 15%” increase of CD space in stores over the next eight weeks.
“We’re looking to become more of a music specialist, and that includes reintroducing vinyl,” he commented, adding that the extra space is “most likely” to involve a reduction of video games titles – a sector whose support was conspicuous by its absence over Christmas. As a result, HMV has now combined its technology and video games buying teams into one unit.
Fox added: “The key thing about HMV is that we have national scale. If you remove [us], the music market simply shrinks. It doesn’t go anywhere else.
“We continue to believe that offering people the opportunity to purchase [physical] product is important. Obviously it doesn’t make sense to trade unprofitable stores, but I’m confident that in three years time we’ll still have a significant national network.”
BMG’s master plan to take on majors
BMG is offering out-of-contract artists a serious new alternative to signing a record deal - claiming that it can back an expanded masters model with a bulked-up marketing warchest to match any major label.
The rights management business has revealed that it is looking to double revenue from master recording deals this year, telling Music Week that it is investing heavily and “talking to artists of every level”. BMG says that its masters model offers artists a revenue split of around 70% of net receipts, but it does not pay traditional advances. Instead, it agrees a budget with the artist and releases money for manufacturing, marketing and promotion - recouped according to the agreed revenue split.
“We are very comfortable managing master rights, as well as other elements [of releasing a record],” BMG CEO Hartwig Masuch told Music Week, calling the setup a “modern alternative to a record deal”.
He said: “We see a lot of opportunity in the [master recordings] market and are now accelerating our investment... We have the resources to manage product and marketing just as well as any major.”
BMG believes that Universal’s proposed purchase of EMI could reduce avenues for talent to reach the marketplace.
Masuch commented: “We are seeing more artists who have a publishing deal but are stuck without a label. Publishers can no longer sit on their hands and wait for labels to sign artists."
BMG retained around 16,000 master recordings when it split with Sony in 2008. The company has since signed 40 masters deals in Germany, Spain and the UK – a number it is now ramping up.
Masuch concluded: “We have ambitious plans and a budget to match our ambition.”