Eamonn Forde Meets… – each month, the veteran music business journalist speaks to a senior industry figure about the topics that really matter – and gets the opinions of the people who make the decisions that count.
November 2024: Jeremy Sirota, CEO of Merlin. Startup shutdown: startups need to understand (and respect) music and music’s value more, but equally copyright owners need to stop putting unnecessary obstacles in a pathway that is already fraught with danger and defined through a chilling failure rate. Merlin Connect promises to make things here better and easier; but can it achieve all this in a world where each side in the negotiation needs the other exactly as much as they distrust the other?
Sirota explains why, having been on all sides of negotiations during his career, he has a rounded understanding of needs that is all too often lacking, where music startups must do tough due diligence on their propositions before even seeking licences, why the negotiation narrative became too restrictive and where deals can be more Where’s Waldo? and much less MC Escher.
This interview took place before Merlin’s current dispute with TikTok erupted. We subsequently approached Merlin for comment about the dispute but it declined to speak until matters were resolved. Merlin claims the service is trying to cut it out of licensing deals and instead do direct deals with Merlin members. If anything, this merely proves Sirota’s points that the indies’ collective market share should be valued and not subjected to a divide and rule strategy, regardless of how new or big any “startup” is.
There was, for many decades, the “one in 10” equation faced down by major record company A&Rs: of every 10 acts they sign, having filtered out thousands to get to the signing stage, only one will become a superstar, or at least be profitable. In the world of music startups, where mountains of dead company landfill pierce the sky, these look like delicious odds.
The startup world is predicated on the most terrifying failure rates. Even if they raise money, they are often handing over too much equity and will hand over even more to raise the next funding round; and if they need to license music, the deals are always in the labels’ and publishers’ favour (and they might take even more of your equity) and can be pulled when the short licensing terms expire. At least if you threw $10 million in banknotes in a furnace, you would be able to warm your hands for a bit.
Merlin was set up in 2007, just as Spotify was preparing to launch in Europe, to represent independent labels while digital was still finding its feet. The philosophy was to give music service access to multiple labels’ content, streamline licensing and use collective bargaining to get smaller indie labels better deals than if they negotiated directly.
Jeremy Sirota was appointed CEO of Merlin, the independent labels’ global digital rights agency, in early 2020 and had a career before that in a multitude of areas of the music business. He started out at a law firm, then held several senior positions at Warner Music Group (including SVP, head of business & legal affairs at WEA and ADA) and from there moved to music business development and partnerships at Facebook.
Sirota says through his career he has seen “in the thousands” of startups. This can lead to startup fatigue; but it can also mean a refined and instant understanding of when something has potential or when it should be put out of its misery.
He outlines what he calls his “threshold questions” when encountering a new service. “Do you have a unique selling point?” he hypothetically asks. “Do you have a product market fit? Are you solving a problem? And even if you are solving a problem, is that a problem that needs to be solved?”
Artfully complex: the startup licensing problem
The biggest pitfall, as he sees it, is that unchecked founder enthusiasm, accelerated by the securing (or potential securing) of Series A funding, means too many startups skip over doing tough and reflexive due diligence on themselves.
Enthusiasm can be a rocket launcher; it can equally be the thing that stops you seeing the cliff edge until it is too late. Like Homer Simpson on a skateboard trying to jump the Springfield Gorge. “I’m going to make it! This is the greatest thrill of my life! I’m king of the world!” Until…
He suggests there are three art-related analogies to understand the licensing landscape, with the first two being the common reality and the third being the most desired outcome.
- Like walking into an MC Escher painting: “It’s inherently complex and you sometimes just end up back in the same place.”
- Like going through a Richard Serra installation: “It is beautiful. You want to be there. But the same thing happens. You kind of get nowhere.”
- A Where’s Waldo? puzzle: “It’s still complex, but once you find it, you’re done. There it is.”
I suggest a fourth possibility – Ikea, where you go round in circles looking for the exit and what you are after is not even in stock. “With really odd names that are hard to pronounce,” says Sirota, joining in. “And even when you buy it, you have to figure out how to install it yourself!”
He says the establishment of Merlin Connect in June this year was designed to help startups dodge the historic licensing precipices and dead ends. “The initiative will make music licensing more accessible to a select group of promising emerging technology platforms by delivering fully cleared, quality music,” explains the Merlin Connect site. “Our aim is to find and empower the next generation of music monetization opportunities for Merlin’s membership of independent record labels, distributors, and other rights holders.”
Sirota adds to this description. “What we are trying to do with Merlin Connect is to create a turnkey solution to provide a sandbox of quality music across the independent ecosystem that allows them more flexibility than I’ve ever seen offered to be able to experiment with music in their platform,” he says. “It is simplifying music licensing: and not just at a licensing level, but also an operational level.”
Indies should be leading the way
His thesis is that independent labels, with upwards of a third of the global market (depending on how you measure it), should be priority licensing partners on both a market share level and a creativity level.
“Think about the nature of the music coming from independents,” he says. “It tends to be more experimental. They are the ones pushing culture. And so those are the ones the platform should be resonating with. And, by the way, independent doesn’t necessarily mean small. Some of the artists that our members have already committed to for this programme [Merlin Connect] are big-name artists.”
He feels that two cultures, music and technology, have been butting heads for too long and this has been jeopardising the potential of new services using music.
“It’s always just been too restrictive,” he says. “I don’t believe the ones who’ve tried this [before] have truly understood how technology operates. What [Merlin Connect] does is to simplify everything – the opportunity, the licensing, the operations – and then create that access and forum to tap into these fandoms. There is something unique about this that really excites me.”
