In the wake of HMV Canada's imminent demise, there's at least one positive development floating around the music industry: the Independent Digital Licensing Agency (IDLA) is healthy, says the organization's executive director, Geoff Kulawick.
"Business is good and we've been growing every year," he notes. "And as the number of big distribution companies shrink, a lot of artists are looking toward working with smaller distributors and labels and it's a healthy time."
Representing 19 independent Canadian labels and distributing their product to such digital platforms and streaming services as Spotify, 7Digital, Archambault, Deezer, iHeartRadio, iTunes, Pandora, YouTube and many others since 2010, Kulawick says that although the IDLA is focused on more specialized global physical distribution and working exclusively with independent distributors outside of Canada, he's encouraged by an increase in competition.
"Digital is growing and it's growing at a very healthy rate and it's good to see more competitors getting into the streaming business," he says. "Downloads are dropping now. I think the physical market might actually outlive the download market at this point you know? Because people still like to buy physical goods at concerts and shows and whatnot, especially people that are 35 and older. And younger people are starting to appreciate physical goods, especially in the form of vinyl."
He also feels that the ballast of digital value is also on the incline.
"I think, going forward, the owners of the content are going to be able to extract more value out of the digital platforms that are actually at the front end with the consumer," says Kulawick. "People value music and they're willing to pay for compelling services and convenient, compelling service and brands are eager to be associated with the music experience. So I think that all bodes well for the future value of sound recordings."
He's not convinced that the same can be said for music publishing.
"I worry a little bit about music publishing given that a lot of the revenues that music publishers rely on are tied to legacy media like radio and television broadcasting," he explains. "So there will be some challenges there for music publishers, I think, going forward, but the owners of sound recording copyrights are in a great position to capitalize on the value of sound recordings."
But that fear doesn't spill into IDLA's current practices.
"Our business with IDLA and our own labels are much more on the sound recording side," Kulawick notes. "Well over 90% of our turnover is the recording side, not the publishing side. So we feel pretty excited about it and seeing new entries and the business changing, with Sprint just buying a (33%) chunk of Tidal, it's an interesting development.
"The value of music is going to be there and anybody who's delivering music to consumers needs to have a full offering. You can't have a compelling music service with gaps. So the independent distributors and labels are in a really good position - especially with Merlin out there negotiating more equitable deals, I think it's going to be pretty good going forward."
Although Kulawick says that streaming revenue today is basically hit, R&B and EDM-driven, but he feels another boom is on the horizon as an older demographic becomes more comfortable with the new paradigm.
"It really hasn't hit the adult market yet, and when I think of older generations getting more with digital music, whatever device that they engage with, we're going to see revenue jump up for jazz and classics, as it has for pop," he forecasts.
As the popularity of streaming increases, Kulawick also feels that IDLA is well-positioned to take advantage of its future.
"We maintain our own digital distribution channels and going forward, the world's going to become eventually, with the exception of accounts like Amazon and U.S. wholesaler Alliance Entertainment in the States, there's going to be very, very few physical accounts. So we feel like we're directly in business with Amazon and with Alliance in America, and the big one-stops in Europe. We think we're in good shape to offer compelling distribution services to independent labels and independent artists."
The organization is also ready to expand whenever the right opportunity arises.
"We're growing," he states. "IDLA itself is really just a services company for the labels that we distribute and that we own, so IDLA will grow as the number of label clients that we have grows and by the number of owned labels that the associated companies acquire, so we're still out there buying assets and other label catalogues and continuing to grow the number, depth and reach of our catalogue. We're now over 2500 albums of great, commercial, viable content."
Although he views the impending loss of HMV Canada as "a game changer," Kulawick says IDLA will remain relatively unscathed by the bricks-and-mortar retail loss and says the organization will shift more attention to places like Amazon.
"I feel terrible about those great people at HMV who lost their jobs, and the aftershocksare likely to impact people at many Canadian labels and distributors," he says. "But one thing I do see is that more people who are looking for physical goods are going to go to Amazon. Amazon has been our #1 account for a couple years now - we're a direct vendor with them on both the physical and digital side - and their marketshare has been growing rapidly. Their volume keeps going up, so we're going to be spending a lot more time optimizing our marketing of physical goods through Amazon.
"We are the Amazon experts. I don't think the HMV closure is going to affect us as much as other players. As the distribution landscape changes, IDLA will be on a more equal footing with some of the majors. But it's going to be real hard to fill that gap that's left by HMV."