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The pandemic has dealt a “catastrophic blow” to the European cultural industry. But, despite the gloomy outlook, Valeria Brusnikina (Photo) declared that music and art were an international success and could explode again, writes Martin Banks.

In an interview with this website, Brusnikina, who represents an association that, among other things, defends the royalty rights of musicians and artists, was optimistic that the industry would recover from the end of the pandemic. She said: “A crisis can always present new opportunities. ”

But, during a visit to Brussels this week, Brusnikina, head of the IT projects portfolio of the IPChain association, told EUReporter that there was an “urgent” need to reform the current royalty payment system in order to that musicians and artists receive appropriate recognition for their work. .

She said: “Today the copyright holder depends on a lot of market players, iTunes, Spotify and other services that pay royalties, to collecting societies (CMR ), which are not ready to provide detailed statistics on the use of jobs. In Europe, the market is more for platforms, intermediaries and users than for rights holders and it is the content showcases that determine how much creators get.

She added: “The main actor in this field remains the musician and he / she needs services which will enable him / her to independently determine who, where and under what conditions uses his creations. Unlike the European market, she said Russia is building a system in which copyright holders receive reports on the actual use of content and the distribution of royalties is 100% dependent on this data.

For Europe to catch up, changes will be needed in the collective management of rights, she said, adding that “the activities of CMRs should be based on technological digital tools for collecting statistics on the use of musical works and phonograms, on the control of Internet resources. On the basis of the reports collected, digital services will make it possible to form a fair distribution of remuneration. ”

She added, “Rights holders, in turn, are provided with solutions that allow them to monetize content and manage their rights. In Europe, solutions like FONMIX and Hypergraph, which analyze data on the use of musical works, form the most objective reporting and calculate the exact amount of the artist’s remuneration, are not at all common. ”

Brusnikina told this site: “The report is based solely on radio and television, as the artist receives royalties for each play of a musical composition on the air. In other areas where royalties are due to artists, European CMRs operate on the principle of collecting remuneration and calculating payments based on ratings and averaged indicators. “

The Russian media market was estimated by PWC at $ 694 million in 2019. During the lockdown, it fell a record 48% to $ 363 million. At the same time, the pandemic has intensified trends related to digitization. The consumption of content on online platforms and other digital services has increased significantly in Russia. In the situation of a ban on mass broadcasts, artists were forced to seek new ways to monetize their own content. While previously 75% of a musician’s income came from concerts, quarantine restrictions have changed the income structure and now streaming platforms are the main source of income. We believe offline gigs will return, but streaming will remain the main source of income for musicians in Russia, as well as in Europe.

Lately, 75% of a musician’s income has come from concerts, but now quarantine restrictions have changed the revenue structure and streaming platforms have become the main source of income. We believe offline gigs will return, but streaming will remain the most important source of income for musicians in Russia, as in Europe.

She says RMCs are going through a “crisis of confidence,” adding: “In Russia, we faced this a few years ago. The problem is that musicians do not see statistics on the use of musical compositions, on the basis of which fair remuneration is calculated. This can undermine their confidence in CRMs. This problem is addressed with digital tools. In Russia and in the CIS countries, CMRs do not even have the possibility to manipulate notes or statistics because the use of works is recorded by the Hypergraph software package and the FONMIX reader. The information collected is consolidated in the “personal account” of the copyright owner, and each author can verify the calculations and ensure that he has received all the remuneration owed to him up to a penny. ”

She added: “We believe that over time, thanks to platforms based on blockchain infrastructure, each author will be able to manage and earn royalties for their intellectual rights without intermediaries and earn. The blockchain guarantees the security and immutability of data, which means that the crisis of confidence is resolved purely technologically.

It is a “model” that could be useful to other countries, she said, continuing: “Russia is developing an intellectual property management system based on the IPChain blockchain infrastructure. Services built on the basis of the IPChain network allow rights holders and users to independently manage rights to their creative works.

“We have studied intellectual property management systems in many countries around the world, consulted the music industry and made sure that our model is applicable almost everywhere. We are already cooperating with Italy, Latvia, Germany, Ghana and Colombia. Our ecosystem can function without being rigidly tied to current legislation, business processes and the institutional landscape. Blockchain has shown itself very well in the field of intellectual rights management, since it allows you to work with large databases in “trust infrastructure” mode. Information about all transactions enters the distributed IPChain network in a universal and standardized form, where it is impossible to replace or tamper with the data. In fact, the information does not belong to a specific entity, but to the whole market at the same time. ”

Brusnikina said: “Today all the prerequisites for artists to independently manage their rights, not only in the digital environment, but also offline, exist. This opportunity, in particular, is provided by FONMIX, which can also be used by CMRs. It is in this capacity that it operates today in most countries. ”

Returning to the ongoing pandemic, she revealed the impact this has had on the industry, saying, “We have researched this topic. Due to the restriction of concert activity, the Russian music market in 2020 fell by 47.7%. In 2019, the market size was $ 694 million and after the pandemic it fell to $ 363 million. At the same time, the income structure has changed. If previously, streaming represented 18% of musicians’ turnover, after the pandemic, its share is 57.3%. ”

However, the industry is gradually recovering. The average annual growth rate of the Russian music market, according to its calculations, will be 6.9% by 2024, and its volume will reach $ 968 million.

“However, we anticipate that ‘live’ concerts will probably not account for more than 20% of that number. As for the world market, according to various estimates, it has shrunk from 28 to 34%. The reason is, she said, a multi-month lockdown with concert bans and retail store closings. Globally, before the pandemic, most of musicians’ income (56.1%) came from streaming services, so the financial implications of the quarantine were not as dire for the global market as they were for the Russian market. A crisis can always present new opportunities for those who are ready to see them. For the music industry, this can be a growth engine. In Russia, the lockdown has spurred digitization and the development of new services, and motivated rights holders to actively engage in monetizing their content. ”

Her initiative, she insists, can contribute to the growth and recognition of lesser-known artists, saying: “The global collective management system is more geared towards supporting major and well-known artists and labels. The Russian experience in creating a digital infrastructure for rights management shows that these platforms provide access to smaller teams, young and little-known artists to break into the industry. Creative teams can raise IP-secure funds with the Co-Fi crowdfunding platform, or sell a song or samples to use in a TV show. And most importantly, the services available allow you to choose and build an independent strategy in the market, while maintaining your independence, and without selling yourself to music producers and publishers.

All of this should matter to a larger audience, she says, as global creative content continues to grow and diversify at a rapid rate.

Brusnikina said: “In the 20th century, everyone listened to a dozen or two pop stars, for whom the labels and ruthless marketing and PR machines worked. Web 2.0 ushered in the era of DIY in creativity. It is now possible to become popular without a label and without enormous marketing power. Stars are born on social media sites like VK, YouTube, TikTok. ”

Brusnikina concluded: “We live in a new era of content, which requires new approaches to content production and management. This is why influencer marketing is replacing major distribution and promotion channels, and collective management is being replaced by strategies for monetizing individual content. “


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