Merlin reveals global consumption boom for indie labels, Latin America leads the way, strikes new landmark deal in China

Independent record companies are experiencing a global consumer boom as more music fans discover independent music.

Latin American earnings for global digital rights agency Merlin have increased five fold for its members in three years, its CEO Charles Caldas revealed.

Caldas was being interviewed as part of a Q&A at South By Southwest by Wall St Journal’s Anne Steele.

Latin America has outpaced the more mature markets of the US, Europe and the UK.

Brazil, once plagued with piracy issues, is now the 6th biggest-earning territory for Merlin’s independent label members – ahead of France, Australia and Canada.

Argentina, Mexico and Chile are also among Merlin’s top-20 highest earning territories

Caldas expects Latin American audio streaming revenue for its members to hit $60 million in 2018.

New Merlin data unveiled at SXSW showed how audio streaming uptake in territories as diverse as Brazil, Mexico, Chile, the Philippines, Thailand and Indonesia is unlocking new opportunities for Merlin members.

“We now have irrefutable evidence that the new dynamics of streaming are opening up previously inaccessible territories to independent music, with a phenomenal consumption surge in Latin America and across Asia,” Caldas said.

“What feels particularly exciting is that we’re only at the start of this growth trajectory – and with potential of relatively untapped markets, including China, Russia and Africa, still to be realised.”

Merlin has this week finalised non-exclusive licensing partnerships with five leading Chinese digital music services.

It moves indies for the first time into the opportunities of China’s massive growth in digital consumption.

In Merlin’s most recent membership survey, 42% of indie labels said that over half their digital revenue originated from consumption outside their home territory.

By comparison, only 17% stated this was the case for physical sales, of CD or vinyl. Audio streaming accounts for the bulk of digital revenue for two-thirds of Merlin members.

Caldas pointed out, “Merlin’s independent record label members already occupy a unique position on streaming services, with their repertoire consistently over-indexing on subscription tiers compared to free ad-supported ones.

“Users of these services deeply engage with Merlin members' music, and are willing to pay for it.”

The SXSW interview marked Merlin’s 10th year in operation.

Opening for business in May 2008, Merlin acts collectively on behalf of more than 20,000 independent record labels and distributors from 53 countries.

It has offices in London, New York, and Tokyo, with a head office in Amsterdam.

The agency offers negotiating parity with the largest major music corporations, while enabling new-generation digital services to license – via a single global deal – music from the world’s most important, unique and successful artists.

Merlin’s 800-strong membership commands in excess of 12% of the global digital recorded music market, it estimated.  

Since 2012/13, total revenue distributions to Merlin’s indie label members have increased eightfold.

Last August, Merlin revealed that over a billion dollars had been paid out to members since 2008.  

In April 2017, the agency announced a new multi-year global licence agreement with Spotify.

It has agreed partnerships with over 20 digital music services – including Deezer, Google Play, iHeartRadio, SoundCloud, YouTube Red, Pandora, Vevo and KKBOX.

In China the major labels Universal, Sony and Warner have locked in exclusive licensing agreements with the media giant, Tencent, whose total divisions are worth $500 billion and owns the market’s biggest music streaming platforms.

It is ultimately in control of where major label-owned music ends up.

Merlin’s deals are non-exclusive, and with NetEase Cloud Music (NetEase Cloud Music), Xiami (Ali Music Group), QQ Music, Kugou and Kuwo (all Tencent Music Entertainment).

Merlin says that the five deals include new infrastructures and marketing, and enable its members around the world to directly reach an estimated new audience of half-a-billion people – representing 90% of all digital music users in China –  offering high-fidelity repertoire to paying service subscribers, and delivering low-fidelity versions to users of free-to-access ad-supported tiers.

A partnership with music industry services company Outdustry will implement and manage these landmark deals on an ongoing basis from their Beijing resources to maximise the effectiveness of the deals.

Caldas observed: “This is an exciting new chapter for Merlin. For the first time, repertoire from the world’s leading independent record labels will be legitimately available across China’s five most prominent music services.”

Mathew Daniel, VP International, NetEase Cloud Music, said: “This is a significant step forward for music licensing in China – we are pleased to be working with Merlin as it leads the independent music community to better navigate, promote and monetize their music in China.

“With the largest consumption of international music in China being via NetEase Cloud Music, this will open up a new audience base to these artists whilst introducing more great music to our users.”

A spokesperson for Ali Music’s copyright division stated: “Ali Music has been focused on the development of independent music for many years, having launched pioneering initiatives such as the 'Searchlight Project' to support music creators.

“Now, through a strong partnership with Merlin, Ali Music will provide a new development opportunity for independent music from around the globe.

“This deep, multi-faceted partnership between Merlin and Ali Music, covering copyright monetisation, promotion of content, supporting and development of independent musicians and much more, will provide a better platform and experience for independent musicians and fans of independent music.”