How music industry bosses have been left all at sea

Label bosses, managers, and publishers at the annual Cannes music gathering this week tried to work out how to get their hands on the missing money they believe they're due. In between, they listened to artists old and new. Pierre Perrone was there

Walking down the Croisette to the Palais des Festivals on a glorious sunny Monday morning, with the sweet smell of mimosa wafting in the air and the Mediterranean sea caressing the Cannes sand in front of the Carlton, it's hard to focus properly on the choppy waters that the music industry has been sailing into for the last few years.

The French market for music sales is down a staggering 17 per cent in value. The notoriously buoyant UK couldn't buck the trend and is also down 10 per cent. EMI's troubles have made front-page news. Even if digital music sales have helped the US market recover somewhat, the picture around the world is pretty bleak, with live appearances currently the saving grace of the industry.

This is what thousands of delegates from around the world attending the 42nd edition of Midem have been trying to come to terms with this week. Le Marché International du Disque et des Editions Musicales, to give the conference its full title, is a talking shop, a trade fair, a place to do deals and a chance to discover new talent from as far afield as China or Australia. Captain Beefheart and his Magic Band showcased here in the long and distant past – 40 years ago in fact. The deal that helped make "In The Summertime" by Mungo Jerry a worldwide hit in 1970 was also brokered in Cannes.

You can rub shoulders with most of the decision-makers – managers, label bosses, publishers, chief executives – shaping the future of the industry. Stars like Kylie Minogue, Vanessa Paradis and Johnny Hallyday also make flying visits, ostensibly to attend the NRJ Awards, France's answer to the Brits. This year, a suitably surreal encounter took place between Princess Stephanie of Monaco, the daughter of the late Grace Kelly, and Mika, the singer of "Grace Kelly", and the winner of the Révélation Internationale statuette at the NRJ Awards last Saturday.

In the era of the 360-degree deal and ISPs (internet service providers) Midem should probably think about changing its name to reflect the increasingly diverse number of ways we all now access music, from mobile phones to coffee-shops and, of course, the internet. Then again, we might end up with an unwieldy mouthful of a name closer to a locomotive puffing along than the snappy one-stop shop everyone is clamouring for.

These thoughts very much occupied the mind of the U2 manager Paul McGuinness, who delivered a keynote address entitled "The Online Bonanza: Who Is Making The Money And Why Aren't They Sharing It?" on Monday. Pulling no punches, McGuinness convincingly argued that ISPs have been making huge amounts of money out of music with very little of it trickling back down to the providers of that content, the music-makers.

"I've been managing U2 for 30 years. We've made some mistakes but the line-up hasn't changed and the band are as ambitious as ever. U2 own all their masters and copyrights and license them to Universal. We always understood that it would be pathetic to be good at the music and bad at the business. We were never going to be victims," said McGuinness, recalling the days when touring was a loss-making exercise bankrolled by record labels, before the increasing appetite for live music turned that equation around and enabled U2 to gross $350m on the Vertigo tour.

"I'm not here to boast, but to ask some questions and point the finger and talk about the effects of piracy and thievery," he continued. "It's time for the ISPs to take responsibility for the content they have profited from for years. The microprocessor developers come from the old counter-culture, with hippie values. Most of them are music lovers, Dead-heads, even. But they have a complete disregard for the true value of music. They don't think of themselves as makers of burglary kits but their killer applications have been founded on our clients' recorded music," argued McGuinness, who is up to speed with most new technologies. Indeed, he reflected on the groundbreaking deal he did in Steve Jobs's kitchen "with Bono, Jimmy Iovine [the producer who is now Universal Music US's head honcho], myself, and Lucian Grainge [of Universal Music UK] on the phone for the U2 iPod. We licensed 'Vertigo' for free for a royalty on the hardware and they spent $40m of advertising using the U2 track. A very satisfactory deal. It launched the album in a spectacular way."

Going back to the main thrust of his argument, he stated: "It's time to get serious. Revenues should be shared between the distributor and the content owner. I suggest we shift the focus of moral pressure from the individual to the ISPs and the device-makers. Apple, Hewlett Packard, Google, Yahoo, Tiscali, the list of people who owe us money is endless. We have to shame them into action. Their snouts have been in our troughs and feeding free for too long."

Rounding off a convincing speech, McGuinness concluded: "Let's collect revenue for the use and sale of that content. The ISPs have a moral obligation. Their responsibility is not a luxury for the future, it's a necessity to be implemented right now. Our talented clients deserve better than the shoddy and careless way they've been treated in the digital age."

Stirring stuff, and much to be chewed over, which is exactly what veteran managers like Bertis Down (REM), Danny Goldberg (Steve Earle, the Hives) and Jazz Summers (The Verve, Klaxons, Badly Drawn Boy) did as they examined the ever-evolving relationship they have with their clients during a panel entitled "Managers and Artists: Rebuilding the Relationship in an Evolving Music Environment".

Talk of monetising, business models and mobiles can get awfully dry, so it was good to hear Peter Gabriel inject some humour into the proceedings during his press conference. Hopping on crutches after breaking a leg, Gabriel, whose wide-ranging interests include the Real World label and studios, expressed the belief that "there is still enough money for everyone to do well and survive. Own your database, maybe share it, but don't give it away to any label that asks for it. For selfish and moral interests."

But the visionary musician really caught the mood when he suggested the myriad of new business models currently being developed by the industry, from the Radiohead "honesty box" to his own We7.com venture – an advertising-funded free music download service – are a bit like "sex before marriage. Try it, see what happens. Try living together," he quipped before attending a dinner to honour him as Midem 2008 Personality of the Year.

Allan Klepfisz, the chief executive of Q-Trax, the world's first totally free, totally legal, peer-to-peer music service, seems to have reached the same conclusion. His company made quite a splash at Midem, with posters proclaiming "It Pays To Be Free", "The Tunes Are On Us" and "Free Is No Longer A Four-Letter Word", and exclusive after-hours gigs by James Blunt, the rapper LL Cool J and the Eagles legend Don Henley. One couldn't help think that, these days, artists work that much harder than in the old days and also make the most of the opportunities to maximise both earnings and exposure.

It may have been a corporate gig, but Henley gave it his all. Often a rather solemn figure with The Eagles, the singer was in good spirits, talking about previous visits to Cannes where he had enjoyed the best pizza he'd ever had. Fronting a crack band, half of whom are part of the Eagles touring line-up, he mostly concentrated on solo stuff ,with the media-bashing "Dirty Laundry" particularly fitting coming from a performer who looks like the missing link between Charlie Sheen and Phil Collins.

The moody, shimmery, AOR feel of "The Last Worthless Evening" and "New York Minute" reminded everyone that, for some time in the Eighties, Henley was as big a solo star as Madonna. Best of the bunch was the timeless "Boys of Summer". Henley did wheel out The Eagles' biggies with "Life in the Fast Lane" and "Hotel California", which had never sounded more appropriate. You can try checking out of the music industry, but the music never leaves you.

As always, the Brits were out in force, providing much of the jollity around the British music stand in the Palais, and also much of the talent on display during two concerts at the Martinez. Beth Rowley's smoky voice and winsome charm was the highlight of the acoustic showcase, even silencing some of the hacks at the back, and drawing comparisons with Amy Winehouse, who headlined last year's concert.

It was good to see Bailey Tzuke, too, with proud mum Judie Tzuke snapping away. Singer-songwriter Jack Savoretti has a smouldering intensity, which explains the interest US film-makers have shown in his work. He is due to perform in the 96 branches of Caffè Nero in the UK this month and next, so Starbucks should have competition on more than the latte front now. Inside the Martinez ballroom, Richard Hawley's timeless croon worked wonders on the crowd, especially when his crack four-piece band upped the psychedelic ante for "The Ocean". Reverend and the Makers bridged the gap between the electro sweep of early Simple Minds and the cocky swagger of Happy Mondays, as frontman Jon McClure shadow-boxed his way through "Heavyweight Champion of the World" and had the notoriously difficult industry crowd on the ropes.

On Tuesday, David Campbell, the chief executive of AEG Europe, the company behind the O2 in London, restored some much-needed optimism as he told the success story and the transformation of "the massive white elephant that was the Dome" into the most successful live venue in the world. AEG already have plans to open another 02 in Berlin. The opening of the British Music Experience, a permanent celebration of the contribution the UK has made to rock and pop, due to open at the same London venue next year, could yet turn out to be the cherry on a very nice cake.

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