Performance-rights distributions continue to defy global economic uncertainty

Performance-rights collections paid to record companies (producers) and performers are often seen as the poor relation to authors’ rights, with global receipts from performance rights traditionally much lower than the equivalent authors’-rights total. Yet for the past couple of years the growth in performance-rights collections has outshone authors’-rights collections. Moreover, the revenue stream is growing in importance as the recorded-music industry continues to battle falling sales.

Annual trade revenues from recorded-music sales are still on a downward curve. Even the most optimistic of analysts has suggested that global growth is unlikely to return for at least a couple of years. But, although trade revenues have fallen almost annually since the turn of the century, rights collections have fared much better. In recent years, it has been the sharp growth in performance-rights royalties paid to producers and performers that have led the way.

Inevitably, the drop in recorded-music sales led record companies to search for new income streams. Figures published earlier this month by UK trade association the BPI showed just how important alternative income streams have become. The BPI said revenues earned by UK record companies from sources other than the sale of CDs, DVDs and digital music accounted for 20.5% of the total trade revenues last year. Although performance rights are just one of several alternative income streams, their importance is growing annually.

Global performance rights in 2011
Globally, performance-rights distributions increased 9.4% last year, to US$1.7 billion, from US$1.55 billion in 2010 (see below table). Excluding the effects of exchange-rate fluctuations last year compared with 2010, total distributions were up 6.2%. Music & Copyright has calculated that performance-rights distributions to producers totaled US$895.8 million, up 5.9% compared with US$845.6 million in 2010. At constant currency-exchange rates, distributions to producers last year increased 3.1%. For performers, total distributions last year stood at US$803.8 million, up 13.6% compared with US$707.7 million in 2010. At constant currency-exchange rates, total distributions to performers rose 9.9%.

Assessing the annual performance-rights sector on a global level and comparing one performance-rights society against another can be unreliable because of the many territorial and operational differences. Several collection societies registered strong growth in collections and distributions last year compared with 2010, whereas others have been affected by circumstances related to developments confined to their country of operation only.

Even though the thorny issue of terrestrial AM/FM radio broadcasters’ payment of performance rights in the US has not been resolved, the country has quickly become the world leader for this type of rights payments. SoundExchange, which collects and distributes performance rights paid by digital broadcasters for producers and performers, received US$372.2 million in royalties from US digital-music services last year, up 40% year-on-year. Total distributions made by SoundExchange in 2011 stood at US$291.8 million, up from US$249.2 million in 2010. The likelihood is the distribution figure will rise sharply in 2012 as SoundExchange distributed US$204.4 million in digital royalties in the first six months of this year.

North America (US and Canada combined) accounted for 19.4% of the global total last year, up from 18.1% in 2010 (see above chart). Europe is the largest region for performance rights, accounting for 61% of the global distribution total last year, down from 62.1% in 2010.

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