Erik Brataas on the new music initiative that will keep Norwegian music rights within our borders
In today’s market, most Norwegian music rights are sold abroad. A new initiative — Indie5000 — is aiming to change that.
In a future not too far from now, you might be one of the investors backing a music catalogue consisting of Norwegian artists. This way, maybe you’ll even back a few of your favorite artists. It’s an idea that might surprise you — maybe you haven’t considered this before, or maybe you thought it already was possible? Well, in today’s market, the situation is this: Norwegian music heading for success abroad is often sold to one of the three big international labels — Warner, Universal, or Sony.
So how did we end up like this? Something has happened to Norwegian music in recent years: Where there once used to be a mainly Norwegian audience for the Norwegian artists, the world has begun paying attention to the Norwegian tunes. Artists like Astrid S, Sigrid, and Highasakite are growing bigger and bigger abroad. This is of course not lost on the international music industry either — suddenly, there’s a whole lot of international value to Norwegian songs.
But an independent streak fill the veins of many Norwegians: Ever since our unions with Denmark and Sweden (almost 400 years under their rule), we’ve been nurturing this unruly attitude. In recent times we have said no to the EU membership, and our geography (the open sea is also our neighbour) sets us a little bit apart from other European countries. It is surely in our ultimate interest to keep more music rights within Norwegian borders.
So what can be done in order to make our vision become reality?
Investing in music: A plan for the future
Erik Brataas is the co-founder of Norwegian music publishers Arctic Rights Management. Before this, he was for 18 years the CEO of Phonofile, who became the largest digital distribution company in the Nordics before being sold to Sony Music in 2017. He says he has “lived a lifetime” in the music industry, and is through his new initiative now aiming to stop the “leakage” of music rights. Still in the research phase, the plan is for Indie5000 to be an active contributor in aiming to stop the negative trend. To make time for the initiative, Brataas has taken a leave of five months from his job at Arctic Rights Management.
Music rights are steady going investments — you have master rights for 70 years after the recording was made. And music rights do not correlate with the equity market at all — even when there is chaos among the equity traders, the music market won’t be affected in the same way. The Norwegian pension’s fund have begun noticing this — they can have long-term investments instead of high risk and fast profit. Having a Norwegian music company dedicated to keeping Norwegian music rights within our borders will serve it’s own purpose: They are investments for the future.
Brataas is speaking from experience — the kind of experience that is coming from seeing the industry through several decades. The big companies are coming for our music — and in fact, they’re already here.
If you take some time to follow the international music blogs, you’ll see that there is big money being spent on investments. Companies are being bought at a quite high speed right now, with companies like Google and Tencent being very active — but I think a significant difference lies in Norway being a country with a small home market. And when we are working within the cultural spaces the way we do, Norwegian music record labels are usually too small for an investor to see the immediate value in spending time learning about them.
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The three music label kings
Universal, Sony and Warner — the three major music labels internationally — are certainly great for boosting the international fame of an artist. However, this hegemony of three “music label kings” is not necessarily always great for other music labels working to make it in the same industry.
It would be great for the music industry if we were able to create a solution providing the same kind of funding from Norway to maintain Norwegian rights at Norwegian hands. There is a bit of a political aspect to it as well: The Norwegian music industry is capable of building and creating a product with artists and producers involved, supported also by governmental education and grants, but at some point we don’t have the muscle needed to take the music abroad: And then, the rights get sold.
But selling the music rights might be the best alternative in some situations. Brataas would just like there to be a greater freedom of choice — so that not all music by successful Norwegian artists going abroad has to be handled by international labels.
It’s for all the obvious reasons: For the sake of job creation, financial growth, innovation, recognition of the artists and producers — but also as a tax income for the country.
And this is what the Indie5000 initiative is aiming to make possible — and the very reason Brataas is taking five months off from his job to develop a solution. The goal is to make sure the solution will connect private money and private capital to the music industry at a greater rate than today.
Before the company was sold to new owners, Brataas says Phonofile was in a dialogue with a large bank in Norway. The aim was to create a financial support for the small, Norwegian music companies that doesn’t appear very attractive for investors.
I’d say that everything was set — more or less — but then the company got sold, I quit, and the entire project was put on ice.
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Swedish music mountains
Looking to one of our neighbouring countries — or maybe just our own phone screens — we can see one of the most famous ways in which the Swedish music industry has succeeded: Spotify. Today, the Swedish streaming service has a market value of about $21 billion, and has been credited with having saved the industry. The verdict is out on whether that’s a fact for the lesser known artists — or if they’re playing for pennies in the digital world too, not just on the streets.
Sweden has been part of creating a lot within the music industry — ranging from ABBA to Spotify. But Phonofile had a pretty decent business in Sweden as well, and so we know that below the shiny tops and amazing Swedish stories, the landscape is quite similar to what we have in Norway. But with a strong, independent industry like ours, I don’t know why Norway has yet to succeed in the way Sweden has. But I think it’s partially down to the ambitious Swedish entrepreneurial spirit.
However: Underneath any big success in the music industry, there are entrepreneurs and enthusiasts spending their own money and risking their own private financial situation to create music.
And usually they won’t be able to find funding outside their own world. But at some point, if they’re being successful enough — the end story is often to sell or license rights to one of the three major labels.
Challenging the dynasties
Keeping the music rights within Norway’s borders and with the smaller labels will also pave the way for the growth of these labels. As with all other companies, not every music label is managed in the same way. And as the seemingly eternal rule of Egyptian pharaohs show, even great dynasties can crack. In theory, smaller labels with a creative mindset could take on the challenge of meeting the music label kings for a duel — if they are given the chance.
But as for now, Indie5000 is still just carefully testing the waters.
Indie 5000 is taking a very careful look into how we want to approach the tasks ahead. The initiative is made up of five companies with seven individuals that I have had in my close surroundings for many years, and I know them very well. We are looking at this as a five-month research process, where we are looking at and taking a deeper look into the music industry and the financial sector combined. If the answers we get during those five months are what we hope they will be, we are going to move on to the next phase. We will hopefully be inviting investors, and make some kind of rights management company that have the financial resources to go in and buy, and potentially also lend money to that sector. Based on feedback so far, the next step can certainly be a structure which can inspire investors to have a closer look at the opportunities in this sector.
But to join forces, the creative music industry and the investor communities will have to learn each other’s languages and values.
Traditionally, I think both artists and independent labels have been careful about inviting investors to participate in their business or projects, and I don’t think that the financial sector has had a big appetite for looking into the music industry in smaller markets.
Indie 5000 want to bridge these two industries. Once the investors and the music industry have gotten to know each other, the world of business within the music industry can be opened up for more players.
And although we are starting out in Norway, we definitely view this in a global perspective. Indie5000 does definitely also look across borders — as music today by all means is a global trade.