Cresting The Music Wave

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Sandy Monteiro (extreme left) presenting members of Metallica with the metal proving their marketing mettle.
Sandy Monteiro (extreme left) presenting members of Metallica with the metal proving their marketing mettle.

The music industry has been put through rounds of changes that have dealt body blows to how the business is run globally. Through it all, Sandy Monteiro has picked the right moments to land deals that have helped Universal Music stay fighting fit in the region. By Peter Buckenham

The Universal Music emblem has become an authority stamp for entertainment, movie stars and musicians. Acquiring Polygram in 1998 gave Universal Music the global lead as a major label. It has since gone on to concrete that status by purchasing EMI Music in 2012. The journey between these events wasn’t all cool running. Universal Music’s dominance doesn’t ensure success and the industry floundered at the onset of the digital age and had to change rapidly to survive. Sandy Monteiro, Universal Music’s President for South East Asia and Head of New Business, Asia Pacific (Ex-Japan), successfully turned the challenges confronting the industry into opportunities.

Sandy has music running through his veins. His parents were musical, his mother played the piano, his father played guitar and even wrote an instruction book for it. His cousin is the world-renowned pianist, Jeremy Monteiro and one of his older brothers, the late Swithin Monteiro, was a respected Malaysian music critic. Music was key during his childhood in the 1970s. After dinner on Friday nights his family would have their own talent show at home. A blanket would be hung over an old clothesline to provide a rudimentary stage curtain from which Sandy and his siblings would come one by one to take the spotlight and perform. Sandy plays “a mean ukulele and rhythm guitar”.

jeremy_cd_case_frontSandy started his professional life at Warner under the watch of Tony Fernandes who set him on his current path before leaving to run Air Asia. “Tony opened the doors for me, encouraged me to challenge the norm and never take ‘No’ for an answer… I will be forever grateful.”

Pinpoint the challenges that the music industry has faced in the last decade and Sandy has been there, navigating headlong into the slowly clearing digital horizon.

Golden Glow
Sandy describes the present as “a golden period” in Southeast Asia for Universal Music. “Three consecutive years of record regional profits, a great 2014, with China coming good for us on the licensing front and Korea with K-Pop. Digital sales in the region were 28.6% of total revenue in 2011 and are currently more than 33% of total revenue. Southeast Asia’s digital growth being 8% average, year-on-year over the last five years China has 13% growth, Taiwan 40% and Korea 8.2%. Prior to 2011, digital revenues for Korea accounted for more than 53% of the total business, so the growth rates are naturally lower given the high base number.

Overall, we’ve found that physical and digital models will only reach so far and Universal Music is continuing to adapt. We needed to innovate and figure out what the scope of the business could be. We’ve been successful in doing this so far with even better forecasts for 2015.

For Southeast Asia, stream/subscriptions have grown from 10.3% of total revenues in 2011 to 15.5% in 2013. In terms of key markets changing, China has averaged 24% growth over that period, Taiwan 46% and Korea 63% in the streaming part of our business.

Profit figures in Southeast Asia for Universal Music have been climbing steadily from 2011 to 2013 — about S$14 million in 2011, up 25.1% in 2012 and a further 14.2% in 2013.

A decade ago, when the industry didn’t know what to do with digital, Sandy recounts frankly about the serendipity and risk from which his reputation was built. In 2005, Soribada, a Korean Napster-style, file-sharing website had just lost a massive court case for infringing copyright and was ordered to shut down. Sandy was in Korea at the time, and as Universal’s head of digital for the region he was intrigued by Soribada’s operations.

Sandy Monteiro has spotted opportunities to creatively grow the business in unlikely sources.
Sandy Monteiro has spotted opportunities to creatively grow the business in unlikely sources.

He was the first person to engage with Soribada and seized an opportunity that cast a precedent for the industry’s future. “Once we’d looked at their operation and assessed their will and potential to operate with a licence, it created a path where Universal Music’s business has been prosperous and still retains meaning.

“Soribada, gives us the opportunity to create models. It turned out to be a good thing, we were lucky, and otherwise we probably wouldn’t be here today.”

STORM: Do developments in the music industry excite you?

SANDY MONTEIRO: It is exciting. In ‘the old days’ when I started it was a predictable business. The models and processes were predictable; you learnt the ropes and became the ropes one day. Now, young people are coming to the business with social networking or digital marketing know how. I’m learning more from them than they could ever learn from me. Whatever ropes we’ve learnt there are many more ropes being added.

bieber_bw_370STORM: How do you develop business plans when the digital landscape is evolving so rapidly?

SANDY: Funny thing is when you are in the middle of it you are not looking at the change, you are reacting to what is available and just apply yourself the best you can. We didn’t sit with a piece of paper and set out what we were going to do for the next five years. We look for trigger points and where we think it could go, and then respond to the opportunities presented. We try ideas with people we can cooperate with such as with Soribada in Korea. As we roll out those ideas plans start to formulate, slowly but surely.

STORM: Was basing a Universal Music office here in Singapore a statement of intent to support local talent?

SANDY: In 2009, we discussed developing a hub for music here with the Singapore government’s Economic Development Board (EDB). The EDB was aggressive in having regional offices for brands based in Singapore. This was Universal Music’s primary focus as those brands matched our ambitions for new business. We were looking to help the brands engage their customers through music.  We now have a New Business team based in Singapore and they engage with brands and partners across the region. It is still a work in progress. The focus with the EDB’s support now is to identify local talent that with investment could have a global reach. One of our first projects was the release of Jeremy Monteiro and  Alberto Marsico’s album Jazz Blues Brothers under the Verve label (the same label as Ella Fitzgerald) to rave reviews internationally.

STORM: Does Singapore’s focus on science and business make it challenging for artists to develop freely?

SANDY: There’s a huge love of music and some really enthusiastic fans, especially amongst young people in Singapore. Discussions with the EDB regarding the music hub were not just about the scene in Singapore, it also focuses on talent being developed of a quality befitting the international stage. The EDB has been proactive in funding ideas and creating opportunities for artistes to gain experience by working in studios overseas and then coming back to develop projects here.

I think Universal Music has been and continues to be one of the biggest investors in regional/domestic music in SE Asia — either by direct signings or through distribution deals. It is however not uniform across all markets in the region — it is higher where we see high demand for local music and less so in markets where demand for local music is low. Singapore, unfortunately, has a double whammy with a limitation in its market size but also has a high demand for international and regional music; and less so for domestic artists (with some exceptions). Hence we see rather limited investments by major labels in domestic talent in Singapore. That is part of the reason why under our investment plan with the EDB we want to targets artistes who will reach beyond the local market. We have just started — Jeremy’s album is the first in this regard.

The barrier I see is in the lack of opportunities to perform; always seeing the same guys appearing in the same venues. It’s really hard to progress as an artiste when there are 100 people in the room and 65 of them are your friends and family. My main recommendation for anyone who wants to become an artiste is find 50 people who hate you and keep at it until they think you are really good.

STORM: How can those ‘opportunities to perform’ be created here?

SANDY: I experienced a classic example during my studies in Australia that is still valid. Every Wednesday at the University of New South Wales, there would be a band on the library lawn performing for free. I saw bands like Midnight Oil and INXS before they got good and made it internationally. We’re working with the Singapore government to help develop local talent in a similar grassroots environment. A word in a sympathetic ear can do a lot to get access to a University lawn as it’s harder than you think, and creating a circuit among such venues is even tougher. Having someone from government who says “let them do it” gives us hope. First, set up a circuit within campuses, where the artists get an opportunity to perform in front of a non-partisan crowd. From here they can hone their craft and figure out themselves what it is they need to do to win crowds over.

STORM: What is the secret to surviving change?

SANDY: Change in the business requires innovative thinking for all involved, not just the record labels but artistes, managers and promoters. The more we work together the better we can create revenue. Previously, each of the industry’s parts was so lucrative they could stand alone. Now, to survive and prosper, we have to be cooperative; collaborations are key, as the Soribada example shows.

I’m still moved by the music. That drives me. Demand for music is higher than ever. Success is about monetisation; how do we build platforms that benefit the fans, artistes and labels. 

There is no one revenue stream that stands alone. They are all interlocked. The more pieces you have to interlock, the more commercially viable it becomes for everybody. If we deliver what we expect to across the region in 2015 we will deliver the highest profits for Universal Music in Southeast Asia to date.

We understand that the business is changing dramatically and for the last few years Universal Music has been strengthening the diversification of its revenues in Southeast Asia. Managing the decline of traditional business whilst ramping up digital and new business opportunities, as well as working to improve market conditions. It is a sign that this strategy mix is working that we are anticipating one of our best years on record in 2015.

This year, we anticipate traditional retail to be 21% of total revenue, digital to be around 39%, new business/non-recorded income at 32% and licensing 8%. For music from the region, though it varies greatly country by country, broadly speaking domestic music accounts for 25% of total sales. It is not one focus but more of a consolidation of our efforts across all markets that will get us to these targets.

The industry stems from a basic eco-system driven by the love of music. That’s why I have a smile on my face. The love and demand for music will never die.

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