Last database update: 10/19/17 at 9:18 pm MST
 
 
Home 
 
News & Info 
CA Industry News 
NetNews 
Lefsetz Letter 
Encore Newsletter 
Industry Profile 
News Archives 
 
Search & Connect 
Agents 
Artist Avails 
Box Office 
Celebrities 
Managers 
Record Labels 
Talent Buyers 
Tour Dates 
Tour Promoters 
Venues 
 
The Street 
Box Office Scores 
New Releases 
Events Calendar 
Industry Links 
Billboard Charts 
VitalSigns 
 
Industry Postings 
Agent Postings 
Buyer Postings 
Avails Postings 
Classified 
 
Update Center 
Submit Data 
 
Support Center 
Report Data Errors 
Research Requests 
Technical Support 
Contact Us 
Opt-Out List 
 
Video Demos 

 
 
 
Legend
Email
Exclude this person from RapidAccess Emails
Tour Dates
Details
Non-Exclusive Agency Representation
Historical Tour Dates
   
 
CELEBRITYACCESS

Administration & Sales
Ph: (303) 350-1700
Fax: (303) 339-6877

Data Management & Technical Support
Encore/General Editorial
Ph: (860) 536-5700
Fax: (860) 536-5713

Mailing Address
Post Office Box 817
Stonington, Connecticut 06378-0817

   


CelebrityAccess

Advertisement
  

  Industry Profile




Industry Profile: Charles Caldas

— By Larry LeBlanc

This week In the Hot Seat with Larry LeBlanc: Charles Caldas, CEO, Merlin.

With more than two decades of experience in the independent music industry, Charles Caldas, as CEO of Merlin, now stands guard protecting the sector’s interest within this new world of emerging technology and global distribution.

London-based Merlin is a non-profit organization representing independent music companies on a global basis. As former CEO of Australia’s Shock Records, Caldas has a comprehensive understanding of the mechanics, drivers and needs of the independent sector, including its global power.

To its dismay, the independent sector has discovered in recent years that it can be marginalized in industry negotiations over music use.

Independents were outraged with the initial MySpace Music offering in 2008, in which only major record labels were granted ad-revenue sharing deals and equity stakes.

Until MySpace Music’s subsequent deal with Merlin, independents and unsigned artists faced being shut out of the revenue stream generated by ads on MySpace Music pages. Now the same eligibility and level of participation is offered to all independent labels licensing content to the service.

Launched at MIDEM in 2007, Merlin was quickly ratified by independent trade associations, as well as by leading independent labels, distributors and aggregators from around the globe.

MySpace and others may have figured that the music business is still the Big Four (Universal, EMI, Warners and Sony). However, independent labels represent about 30% of the global recording business today.

Caldas argues that the continued strength of iTunes and the massive uptake of users on Spotify in Europe illustrate that such services are succeeding because they are offering their customers a full choice of major label and independent music.

However, new services seeking to license music for online usage can go to Universal Music and practically tie up a quarter of the world's repertoire in a single deal. Independents may have long railed against the barriers to entry in the mobile and online spaces, but until Merlin came along, it was difficult for larger web sites and carriers to effectively deal with the independent sector.

The creation of Merlin made it a reality that there would be one global body representing the rights and interests of independents in such negotiations.

Merlin struck its first licensing deal in 2008 with the Sweden-based streaming service Spotify, where it is estimated Merlin members now account for over 10% of usage across the six European countries in which it operates.

Merlin has since inked key agreements with: simfy, Germany’s largest streaming subscription service; British Sky Broadcasting’s Sky Songs, an on-line audio streaming service and digital audio store; U.S. music subscription service iMesh; Irish music video web site Muzu.tv; the music community website Audiotube; and CatchMedia’s Play Anywhere, a cloud-based music service.

Merlin now has 6,000 label members from 25 countries, including such recording companies as: !K7, The Beggars Group, Aggro Berlin, Domino, True North, Naïve, Tommy Boy, One Little Indian, and Kontor Records, as well as such distributors as Kontor New Media, State 51, Virtual Label and Redeye.

Among the independent artists it represents are Vampire Weekend, Arctic Monkeys, Tosca, Bjork, M.I.A., Franz Ferdinand, Last Shadow Puppets, FIDO, Animal Collective, Scooter, Tiesto, White Stripes, Tom Waits, and the Pixies.

Caldas came to Australia from South Africa in the late 1970s when he was 12. His parents decided to migrate there to avoid having their son being conscripted into the South African Army.

After playing in several bands during university, Caldas got his first job in the music industry packing boxes. He joined Shock Records a year after David Williams, Frank Falvo and Andrew McGee launched the company, and he climbed through the ranks to become CEO.

For its first few years, Shock Records was perceived as just a hip indie label. Then it started having dance and pop hits, and international labels like Beggars, Koch and Epitaph came knocking on its door for distribution in Australia.

Today’s Shock is Australia’s largest independent music company.

Caldas, who moved to London in 2007 to head Merlin, has served as a board member of the Worldwide Independent Network (WIN), the Australian Recording Industry Assn., and the Australian Independent Music Association.

How many members does Merlin have?

At last count we are up to around 10,000 labels represented.

How much catalog?

We don’t tend to talk in numbers of tracks.

It was 1.5 million tracks 18 months ago.

I’m sure it is more than that now, but the measure that we have really taken to using is looking at market share. There’s two ways of looking at market share. One is pure Soundscan, looking at the broad market. In the UK, based on the official chart company figures, we (Merlin members) are just over 11%. In the U.S., (where the market is) slightly more fragmented, It is probably just under 10% which is healthy.

When we then look on practical applications where we have done deals, such as our long standing deal with Spotify, the market share there--depending on territory--varies between 11% and 16%. So we are definitely in that 10% to 15% band of value. So, this is not a bunch of long tail repertoire that is marginal.

The argument for different tier payments for tracks is that the majors are selling hit or popular tracks.

This is something we have looked at and something that we have talked to the services about a lot. Let’s look at the most successful music destinations. There’s LimeWire, The Pirate Bay and the (various) BitTorrent sites. Then, there’s the legitimate side with iTunes and in Europe there’s Spotify, which we have this massive success with. Something that they all have in common is that whatever you want is there. The offering is pretty much comprehensive. Customers have come to expect that. So, if you then build a service that has an incomplete offering, whether by design or by ignorance or by having an underlying belief that independents don’t matter, it’s inferior. It is just inferior in the marketplace.

This notion of value is important with independent repertoire.

I just gave a talk on this recently, and this was one of the things that struck me as I was trying to explain to people why Merlin was created. Part of it was the obvious thing. That as the market went from a regional network model to a global model- where once you put something online it is available globally and services weren’t limited by geographical boundaries in the way that physical retail was - It became a lot more complicated for independent rights holders to get on these services. Even if they were a very important big label or distributor in Europe, getting the attention of a service being run out of the U.S., on a global basis, is very difficult. And, from the services’ point of view, even though independent repertoire globally represents about 30% of the market, to effectively get to all of those (independent) people is thousands of thousands of conversations and negotiations, even with the (independent) aggregation that has happened in the marketplace.

The first thing we looked at was efficiency, but then this notion of value really hit me because what we essentially do is make it easier for services that are coming into the market to get the most important independent repertoire in the world in one place. The kind of labels that are attracted to what Merlin does are not the long tail, small bedroom operations.

Spotify has publicly said that Merlin repertoire represents over 10% of their overall business. That’s across all of their territories.

Certainly, Spotify’s perception is that independent repertoire is incredibly important to their business. I know what our share is. I don’t quite know what the entire independent market share is on Spotify. One thing that has been interesting, is that as you move up the monetization layers, and the more expensive the (Spotify) service gets—it starts with the ad-funded portion, and goes right up through the mid-tier subscription to the mobile subscription, which is the most expensive--our market share goes up. So people that pay for music, and who pay the most for music, seem to also consume music broadly.

Independent music can be somewhat exclusive in that it can’t be purchased everywhere.

People who consume at places like Spotify, whether you consider them early adopters or advanced web users, they are demanding. I think that they support the sites that give them what they want. Certainly, one thing that we have discussed with Spotify, and what they feel has been a successful strategy for them, was not launching their service until they had the consumer offerings from a repertoire perspective. They didn’t want somebody coming to the site and being able to find Green Day but not being able to find the White Stripes.

Has that been their concern about not launching in the US?

I’m not privy to that. My impression is that Spotify has a very clear vision. In the way they launched and (that they) held the European launch until they got the product right. I’m sure that they are taking the same approach with their American launch.

MySpace Music overlooked the independent sector.  That has happened again and again.

As you say, we have seen it over and over again. Part of it comes from this misperception of where the value is in the market and, I think, probably at its core, that the (online) business wasn’t initially put together by people who had any level of sophistication and understanding of the music market.

Those large corporate entities of AOL Music and Yahoo Music, those entities when they came in, didn’t really engage with the independent sector, or they engaged with one or two companies. We have heard so many times that, “We’ve got a million tracks from The Orchard, so we’re fine. We have the independent sector covered.” They are taking this totally numerical approach to licensing, which is wrong. “We have a million tracks. That should cover us.”

They consider the music industry, but they don’t follow music.

Yeah, and we still come across this kind of thinking, particularly with companies coming into the market with the kind of (attitude) “Let’s just start the service, and we’ll worry about paying for music later, and see if anyone sues us.” They will look at who can do them the most damage first. That was always the majors because they were the most litigious, and they had the resources, time and energy to do it.

Of course, there’s been the RIAA (Recording Industry Association of America) prepared to do battle as well.

Yes. But what I don’t understand, is that services that come into the market and, for no reason that I can see other than a mind set, they will ascribe a different value within their service to independent repertoire. This was one of the cornerstones of the formation of Merlin - the fact that a long-term, healthy and competitive music market, that allows innovation and creativity, cannot have a two-tier system of remuneration. You can’t maintain a healthy independent sector when it is getting paid substantially less than its competitors are getting paid. It just is not sustainable.

Merlin has changed the perception of the indies in the marketplace.

Absolutely. In the last six months, it has started feeling like that. It is a couple of things. Partly, it’s us and the work that we’re doing to change the perception of the value of independent repertoire. There’s been this association for too long that independent, being unsigned or independent, equals bedroom artists. You look at the Billboard charts this year, and look at the UK charts in most years; but this year, I suppose, it’s sticking out a little bit more, independents are more than holding their own. The notion of independents as providers of front line content, and of hit repertoire, is something that took awhile—and, still I think in some cases, it takes awhile to get across to people.

The independent sector has become more important as the majors have had to deal with consolidations and roster cut backs.

The other thing that is happening as this market evolves and as the consumption of music increases, whether by legal or illegal means, those (former) barriers of entry to retail on the rawest level aren’t really there anymore. What we (now) see, is the (strong) performance of independent repertoire on digital services that don’t have limited shelf space in the way that physical retail used to. You used to have to buy your racking. Obviously, those with the most money bought the most racking, had the best positioning and all of the rest of it. Whether on Pandora, Spotify or on iTunes, independent repertoire performs above what people perceived (it did) in the physical market.

Merlin has made deals in the past year with Sky Songs in the UK, and Irish music video Web site Muzu.tv; and, in May, with simfy, Germany’s largest streaming subscription service.

We have also concluded a deal with AT&T for its new U.S. mobile service, and we are close to the completion of a deal with Vevo. There are more (deals) coming.

How did Merlin miss out on the free, advertising-supported U.K. streaming service We7 that launched in 2007?

There are a few services that would have made a lot of sense for Merlin to deal with, but we came along after the fact. There’s another yet-to-launch service called Catch Media, which is kind of a cloud computing service. They are in the process of launching. There are a number of deals there.

What is your sense of the overall music industry? 

On a broader view, there’s no doubt that it is an extremely challenging environment. I think that some of what has led us there has been some incredibly short-term thinking. There’s been a focus on extracting short-term value, as opposed to building something that is long-term and healthy, an eco system that sustains the broadest possible range of not only music producers but music services.

The Kazaa settlement in 2006, as well as the initial MySpace Music deal that favored major labels, led to a renewed desire among the independents to more aggressively press for equal treatment in a digital music market.

Absolutely. I totally agree. If you take a long view of this, which we have to, this is different than coming into the market and trying to turn a short-term buck. We are really trying to build an infrastructure that will be important to the independents into the future. We had to have those arguments to flush out the issues. It was not necessarily going out and picking fights, we were getting sand thrown in our face.

The Kazaa settlement was pretty early on.

Well, I think with Kazaa there was a belief that the industry trade bodies, the RIAA, and IFPI were going to do that (a settlement) on behalf of everybody, which clearly wasn’t the case.

Up to the initial MySpace Music deal, the leading independent labels still felt they would be treated equally and fairly by the new services. They then discovered they weren’t being invited to the table.

No. Look, there are layers and layers if you start looking into what, where and how the digital space has developed in regards to independent repertoire. If you talk to the biggest independents, they clearly don’t like being lumped in with this kind of long tail perception.

I have been in the independent sector for my entire music life. I ran Shock in Australia for a long time, and I was in a band before that. I’ve been in this world and I’m probably as cynical as the next person when it comes to how much independents are able to ignore the fact that they are independent and (must) create something that is of a mutual benefit to them.

Merlin has been extraordinary. From the very first day, we gathered a lot of memberships very quickly, and from the leading independents first, which I thought was most encouraging. It was created by the leading independents on a global basis, outside of those core companies that really worked first to put it together.

Merlin was part of a suit against XM Satellite Radio Holdings for copyright infringement which is nearing settlement.

XM is a two year old lawsuit we have been participating in over the recordable Inno (recording) device. We will feed that (settlement) through to our (members) over the course of the year. There have been other settlements that we’ve done that have to remain confidential due to the nature of the agreements.

Has a settlement been made by Merlin with LastFm over its Artist Royalty Program?

I couldn’t comment on that. But I would say that was reasonably astute.

The lawsuit with XM indicates that there is another side to what Merlin does.

The other side of what we do is copyright infringement work. Not against users or consumers, but, essentially, against services that have settled with the majors or are in the process of being sued or settling with the majors. One of the things that struck us all at the inception of Merlin was that what was really missing in the Kazaa instance was somebody out there gathering the evidence, and putting claims in on behalf of independents in those kinds of cases.

When did you leave Shock Records?

I left Shock in the middle of 2005.

What did you do for two years prior to Merlin launching?

I consulted for awhile. The initial intention was that I was going to take a step (back) and take on a more international, strategic role.

You had a spinal infection in those two years.

I was hospital for two weeks and in bed for probably another 5 weeks. Then it was a couple of weeks of recovery. For most of the first year, I really wound down. I spent some time in Portugal with my family.

One of the things peaking your interest was the digital side of business.

We dabbled with a few things when I was at Shock in terms of selling music online. But the whole digital explosion peaked my interest. So, I started doing consulting to local companies looking to build online stores and working with companies looking to acquire online rights. That’s eventually how I got into the Merlin thing. I was in Europe, on one of these consultancy things, and I went to a meeting at Popkomm (in Berlin) where independents were discussing the challenges of the digital market. I don’t quite recall how or why, but somewhere in there I got offered the (Merlin) job. I think because I was the only person that they knew that wasn’t employed already. I was at a loose end.

So I consulted for a little while. It became obvious very quickly—because I spent time talking to both sides of the equation; talking to services and talking to independent rights holders, looking at where the impediments were, what the problems were, and what was or wasn’t needed.

Did you have a concern about moving from Australia to the UK to operate Merlin?

No. I have lived in lots of different places in my childhood. My wife and I have always been great travelers. We both still have a healthy sense of adventure. The kids were young enough that we both felt this was a great opportunity to spread our wings and try something new.

The first year's financing for Merlin came from IMPALA (The Independent Music Companies Association). How is Merlin funded now?

It is now funded from taking a portion of the funds that we generate on behalf of the members, from the legal settlement side, and from the commercial side.

At the time, the climate was that independents were going to be squeezed out of markets as the major labels and publishers further merged.

IMPALA was seeing it. Merlin ended up being something that IMPALA and labels from outside of Europe very quickly supported. On the political side, IMPALA was fighting an increasing consolidation of the (European) market. On a practical side, we had the side-lining of independents in these settlements happening. Also, there was the difficulty in establishing the value of independent repertoire with the emerging digital services. There were a lot of things going on that demanded action.

It made practical sense to base Merlin in the UK, where there’s a viable system of independents, and such healthy independent music industry associations as the Assn. of Independent Music (AIM), and the Worldwide Independent Network (WIN).

Yeah. The fundamental difference that strikes me every time I go to the U.S. is that in Australia, Europe and the UK, these markets have managed to maintain a distribution path to the (retail) market that’s not in the hands of the majors. It’s not like (that) in the U.S., where outside of one or two truly independent distributors, you are in the hands of wholly-owned subsidiaries (of majors) like ADA (Alternative Distribution Alliance) or Fontana.

You were born in Johannesburg, South Africa.

Both my parents are Portuguese. My mother grew up in Mozambique; my dad migrated there to look for work. He was a fitter and turner (a person who manufactures and assembles mechanical parts), which is a lost art. Somebody who made dies for tool making. We were in South Africa in the mid-70s. There was (military) conscription, which was compulsory in those days. I don’t think either of them wanted me to end up in the army. So they looked to where they might have a more stable future, and they applied for Canada, the U.S. and Australia. I don’t quite know how the decision was made, but Australia won out in the end. I was 12 when we left.

That was a turbulent period in South Africa.

Oh, it was. Just before we left was the time of the Soweto riots. We were living in Johannesburg. I still have some family there. I think for my parents this was not what they had signed up for. And I don’t think they were great fans of the government. They went to South Africa looking for a better and more stable life.

Have you been back to South Africa since?

I went back for a conference a couple of years ago, very briefly. I went to a family wedding awhile ago.

Do you feel more Australian?

Probably somewhere between Portuguese and Australian. Portuguese from my parents and my family there now that I have become very close to. So, I’ve got that side of me. Obviously, Australia was my formative years.

Before joining Shock Records, you had worked in the warehouse at another company?

There was a company called Musicland, which was a tiny distributor that went out of business. I was in my 20s. I had finished school. I was one of these people who took an awfully long time to finish school. I went to at Monash University in Melbourne for five years.

Studying what?

I am a film critic, apparently. It was a Bachelor of Arts (degree) and I majored in film theory. At university, I was trying to find as much time as possible to play in a band and work at the university radio station so I could get the occasional free record.

What was the band?

It was a late ‘80s, early ‘90s indie acoustic pop band, These Future Kings. We did an album, an EP and some singles through this label called Rampant. I played guitar and wrote half of the songs.

[These Future Kings came about in about 1985 when Caldas met Perry White at Monash University in Melbourne. Both had a radio show on the university radio station, and both played in local bands. Caldas was in Gothic Farmyard; White was in Polar 1500. These Future Kings’ debut album “Carnival” was produced by sound engineer Tim Cole of Not Drowning Waving. It was followed by a 4-song EP called “After This.” There is also an unreleased second album "Via Dolorosa” but the label folded before it was released. Afterwards, Caldas and Perry performed in a band called The Lost Highway.]

What did your parents think of 5 years in university and playing with bands?

My mother died when I was quite young. I was very lucky that I had a father who just believed that I would find my feet. He believed in me and thought as long as I had a passion and interest in what I was doing, and that I was following my heart, it would all work out. I was very lucky that there wasn’t a lot of pressure.

What position did you have at Shock when you joined in 1989?

I was again packing boxes. I had gone off traveling. I went to Portugal for the first time to meet family that I didn’t know (previously) that I had. They were mostly in Lisbon and up north. I came back broke, staying at my dad’s place, and I got a phone call from David (Williams), asking if I wanted a summer job because there was one coming up. Someone was going on honeymoon. So I filled in, doing box packing and selling records on the telephone.

Six of us worked in a house. It was a summer job, working in a sun room when it was 100 (F) degrees outside, and everybody smoked. I’m sure it would not pass any health inspection in current history.

The company certainly grew.

Distribution in Australia in those years was very fragmented. Au Go Go Records in Melbourne had a small distribution arm; Waterfront Records in Sydney had a small distribution company and Mushroom Records had (a distribution arm). My memory of doing (early) deals were people turning up at the front door with a box of singles, and asking if we would sell them, and us saying, “Yes.” If they sold, they would come and pick their money up. If they didn’t sell, they would come back and pick their singles up. It was certainly fun. It coincided with, I suppose, the real coming of age of the independent sector where we came to have SubPop, Creation, 4AD, Epitaph, Beggars Banquet and Koch.

Shock became part of a global independent network that emerged.

Absolutely. You would go to MIDEM, and there was a true network of people introducing (independent product). If someone in the States was looking for a metal distributor, then they would be sent to talk to our metal label manager. Or, if it was a dance label, we’d have our dance guy there. And similarly, (music) that we knew that people were looking for, whether it was in Germany or the UK, we’d send it to them. We virtually had sister-and-brother companies around the world. We felt we were part of something.

A DVD division was created at Shock called Kaleidoscope.

The DVD thing was very much driven by David. One of his great ideas was to aggressively get into DVD very early. There was a sense that, in the same way that the music industry really diversified as Shock grew, the same thing was happening to home video. There was a lot of amazing product out there that just couldn’t be handled by the majors.

When you left, how many people were under you?

Certainly, in excess of 130. It feels like it took an instant (for the company to grow), but over a few years it went from that front room to something more serious.

What was your role as CEO?

I was much more looking at the strategic direction of the business. As with many independent companies, the company was blessed by having passionate, knowledgeable and dedicated people working for it. People who had stayed there for a long time and really believed in what they did. So, a lot of what I did was to make sure that there was enough space for those people to do what they cared about.

Did you oversee the international business?

Yeah. Certainly, for me, one of the foundation stones of Shock was its international reputation. I felt that the relationships with our key partners were very important, and with the merging labels that we started to deal with. I did spend an awful lot of time traveling and spending time with our partners, trying to understand what they needed, and trying to build our service around that.

The Offspring’s album “Smash” debuted at #1 on the ARIA chart and stayed there for three weeks in 1995. Who got the multi-platinum award at Shock for the 450,000 copies sold in Australia?

A lot of people got that one. That really marked the beginning of a time when there were a lot of records that sold very big volumes.

Was the company ready for that kind of success?

Yes and no. Yes in terms that we had had enough minor successes. We had had some chart success with (former Saints guitarist) Ed Kuepper, a local artist; with Primal Scream; and with some things on Beggars Banquet. And we had the retail relationship in place. And we had had a broad enough music offering by that stage. A market like Australia was not only strong in straight alternative rock but we had a good metal section. We had punk rock, and dance managers. So we were spread out broadly.

Not long after the Offspring, we had a local label called Central Station Records, which had two or three #1 records, including Hocus Pocus ("Here's Johnny") in the space of six months. They also launched a dance compilation series “Wild,” built around a radio station (Wild FM), which was selling in the 100,000 to 150,000 unit range.  We had “Bleach” with Nirvana and had done Sepultura, and (beginning to distribute) Roadrunner was around the same period.

There were a lot of really successful records and we had enough breadth that we didn’t succumb to the kind of the massive rise and fall that other (distribution) companies went through in the aftermath of the Offspring’s (massive hit album).

Larry LeBlanc was the Canadian bureau chief of Billboard from 1991-2007 and Canadian editor of Record World from 1970-89. He was also a co-founder of the late Canadian music trade, The Record. He has been quoted on music industry issues in hundreds of publications including Time, Forbes, the London Times and the New York Times.


Top of page
Pricing Enroll Contact Us Advertise With Us
Please let us know if you find information that is incorrect or missing.
CelebrityAccess/EventWire is best viewed at a minimum screen resolution of 1024 x 768
Website Use Agreement
© 1998-2017 Gen-Den Corporation. All rights reserved.
CelebrityAccess® is a service mark of Gen-Den Corporation.
Privacy Policy