Tagged: royalties
Has the music industry forgiven Justin Timberlake for his MySpace links and accusations of artist exploitation?
Depending on where a musician sits in the music industry value chain, a top-10 list of what’s most important to an unsigned artist will differ greatly to one compiled by a million-album seller. Scratching a living out of music is something tens of thousands of musicians do every day. Although the Internet has opened up the promotion and distribution of music to anyone with a computer, it has also made selling music a lot more difficult as almost every single release in a digital-music store is available for free somewhere online. Continue reading
A short history of the music industry: different formats, familiar names but the same old problems
In the past 20 years or so, all sectors of the music industry have been through massive change. Format transitions, company consolidation and greater scrutiny of copyright and licensing have changed the industry beyond all recognition. But have the changes made for industry improvements, and more important, have the main players learned from their mistakes? The recent discovery of the first issues of Music & Copyright has allowed for a unique look at just how much certain things have changed, and how much they haven’t.
The newsletter’s 20-year anniversary came and went in September, but thanks to a long-standing subscriber, copies of the first 24 issues published have been found and make for interesting reading. Despite containing names that have either long since left the music industry or been swallowed up as part of industry consolidation, the headlines for a number of news stories resonate closely with happenings today. Continue reading
Big differences in splits for digital-music performance and mechanical rights in EU-27
As the issue of multiterritory licensing comes under the spotlight in Europe, differences in rates charged and rights splits will become more evident. Will an EU directive that breaks down national borders be followed by a bigger push for deeper collection-society harmonization across the region?
With publication of the European Commission’s new multiterritory licensing proposals, Brussels’ efforts to harmonize the EU’s digital-music landscape are looking to build on legislation harmonizing authors’ and publishers’ rights that are managed by collection societies. Continue reading
Consolidation in the music publishing sector is set to shake up Pan-European licensing
The European Commission (EC) is planning to publish draft legislation proposals early next year that will include new rules for the cross-border licensing of digital music. For several years representatives of the EC have expressed a mixture of mild irritation and outright annoyance over the licensing process for digital-music services in Europe. The number of such services has grown rapidly in the region, but several service providers continue to bemoan the time-consuming process involved in securing rights to operate in several countries. New business models specializing in digital-music delivery have brought change to collection societies, but according to some service providers, rights remain fragmented, and some providers have questioned whether the major publishers’ Pan-European initiatives have simply added a new layer of fragmentation and complexity to the licensing process, with Europe’s largest collection societies the only ones seeing any benefit. Continue reading
Is NCB the model for future Pan-European licensing?
Last month the Pan-Nordic mechanical-rights-collection society Nordisk Copyright Bureau (NCB) reported a fall in the total amounts collected and distributed to its owner societies for last year. Despite the decline, NCB described 2010 as an important year and one that removed much of the uncertainty over the collection society’s future. Perhaps more important though, is the fact that NCB and its owner societies have shown that collection societies, if left to their own devices, can develop a very workable multiterritory online licensing system. Continue reading
MIDEM and the music industry in 2011
MIDEM is now over for another year and representatives from all sectors of the music industry are busy digesting the comings and goings of the event. Some conference themes followed on from where they left off last year, whilst others debated new business models that rose to prominence during 2010. There were numerous cases of the traditional music industry bumping heads with supporters of these new business models. But at a number of conferences and panel sessions, there seemed to be a better understanding of some of the issues and concerns on all sides as well as a greater willingness from most of the participants to go that bit further to get their heads around each other’s issues, which in previous years, had been a source of major division. There were of course still plenty of areas of disagreement but on the whole all parties exchanged handshakes rather than insults. Continue reading
Global performance-rights defy the global recession
New research published by Music & Copyright reveals that total distributions of performance-rights collections increased to US$1.46 million last year. However, the volatility of the currency markets greatly affected the year-on-year comparison. Excluding these exchange-rate fluctuations, global performance-rights distributions were up 6.3%.
With much of the focus on how the recorded-music industry has fared from year to year centered on the sale of music, the contribution to both record companies and performers from performance-rights collections is often overlooked. Recent years have seen performance-rights collections rise, in complete contrast to the falls in recorded-music sales.
Music & Copyright has calculated that performance-rights distributions to record producers totaled US$794.6 million, up 2.2% from US$777.4 million in 2008. But at constant currency exchange rates, distributions increased 8.2% last year. For performers, distributions last year stood at US$664.9 million, down 1.2% from US$672.7 million in 2008. At constant currency rates, distributions to performers rose 4.1%.
Europe is the largest region for performance rights. In 2009 it accounted for 64.8% of the global distribution total, down from 70.7% in 2008. Distributions in Europe decreased 7.8%, to US$945.5 million. At constant currency rates, distributions in Europe were flat. Several unconnected factors conspired to exaggerate the decline in European collections. The largest performance-rights society in the world in terms of representation, the UK’s Phonographic Performance (PPL), was hit by a ruling late last year by the UK Copyright Tribunal regarding the rates payable by pubs, bars, restaurants, offices and factories, which meant distributions to performers and producers were down. Problems with the Italian performers’ society IMAIE meant distributions were affected. IMAIE went into liquidation in July last year, and therefore royalties collected for performers have not been paid.
In terms of potential for growth, low collection rates in the less developed regions of the world suggest that countries in Eastern Europe, Latin America and Asia Pacific should be the main targets. However, the US still offers the greatest prospects, particularly in light of the continuing strong performance of digital-performance-rights society SoundExchange.
A resolution to the performance-rights issue in the US still seems a long way off. US copyright legislation exempts AM/FM-radio broadcasters from this type of rights, and the passage of new legislation to change this is making slow progress. The Performance Rights Bill (PRB) has been considered in committee and is awaiting approval in Congress and the Senate. Few estimates exist as to what the potential payments from terrestrial broadcasters could be if the bill is passed. However, SoundExchange has offered a glimpse of the revenues that might be possible. In 2009 it distributed US$155.5 million to producers and performers, up from US$100 million in 2008.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
Gene Simmons tells TV industry to learn from music business
Rock and TV star Gene Simmons told the TV industry that branding is everything and it needs to better embrace that. In a conference session at the MIPCOM TV market in Cannes hosted by Infoma Telecoms & Media’s Peter White, Simmons said the TV business needed ‘a kick in the pants’ and ‘needs to get sleeker and hipper.’ Informa is the publisher of Music & Copyright.
Simmons was in town to celebrate his A&E reality series Gene Simmons Family Jewels hitting the 100 episode mark and in a keynote address, he spoke to delegates about how he had built the brand of his rock ban KISS and built the TV show from a special to a long-running series.
“It’s your professional duty to make sure your brand spreads,” he told delegates. “I would rather be Disney than Sony, Lionsgate or Paramount – brands mean everything.”
A&E Network and BIO president and GM Bob DeBitetto explained how the Gene Simmons show had been used to build the A&E brand as it repositioned itself from ‘PBS with commercials’ to a more mainstream entertainment offering.
“We always look for shows that can help us differentiate ourselves,” he said. “When I saw the special with Gene it struck me how different it was – there was something unexpected about a rock star who is also a phenomenal family guy. At that time we were trying to reinvent A&E with programmes that surprised people. [KISS and Gene Simmons] were a bigger brand than we were and I thought why not try and get next to that.”
Simmons went on to say that KISS was the pioneering brand in exploiting the brand across all available platforms and that rights owners should heed the lessons of the music business and protect their intellectual property at every turn.
“Be litigious,” he advised delegates. “Sue everybody, take their houses, their cars. The music industry was asleep at the wheel and didn’t have the balls to sue every freckle-faced kid who downloaded tracks.”
If you want to hear what Simmons said then watch the interview in full.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
GEMA’s voting structure comes under scrutiny, but is it any less democratic than other collection societies’ in Europe?
In a country profile of Germany a few weeks ago, we reported that some members of the German authors’ society GEMA members had raised concerns at the unfairness of GEMA’s voting system at its annual conference. To recap, GEMA oper-ates three levels of membership: associated, extraordinary and ordinary (the highest level). These levels define voting rights at its annual conference. In 2009, there were 54,605 associated members, 6,406 extraordinary members and 3,343 ordinary members. Associated and extraordinary members have no voting rights at the annual conference. But in pre-meeting sessions, these two groups can nominate up to 34 representatives to participate in, and have voting rights during, the annual meeting. A proposal to raise the number of delegates from the associated and extraordinary membership from 34 to 42 was made at last month’s annual conference, but a decision on the proposal was been postponed until next year’s annual meeting.
After the concert promoter Monika Bestle filed a 106,000-signature petition last year, a hearing in May at the German Bundestag concluded that GEMA’s internal voting process was not well balanced. But is GEMA any less democratic than the other collection societies in Europe? Moreover, could members of other collection societies who are not eligible to vote at their annual general meetings cite the unrest at GEMA as reason for change in their national collection society?
PRS for Music in the UK and SACEM in France are two of Europe’s largest collection societies. PRS divides its membership into three tiers: full, associate and provisional. Of the total membership of 63,129, full members, which numbered 4,172 at the beginning of this year, have multiple voting rights; associate members (17,175) have a single vote; and provisional members (41,782) do not vote. The qualifying criteria for admission to each category of membership are based on a member’s earnings in the previous year. If earnings meet the threshold, which is defined as a set percentage of the total amount distributed to PRS members the year before that, the member is promoted to the next category of membership. Full members have a standard 10 votes. They qualify for an additional 10 votes if they have been a member for at least 20 years and during that time have received an aggregate number of distributions from PRS that is at least 10 times the annual qualifying figure for admission to full membership for the previous year or they have been a member for at least two years and during that time have received an aggregate number of distributions from PRS that is at least 20 times the annual qualifying figure for admission to full membership for the previous year.
Like PRS, SACEM has three membership levels for authors, composers and publishers: adherents (members), societaires professionnels (professional members) and societaires definitifs (full members). At the beginning of the year, the total membership of 132,000 was divided among 127,629 adherents, 2,277 societaires professionnels and 2,094 societaires definitifs. At SACEM’s annual general meeting, all members participate in the approval of the society’s accounts and elect the members of the board of directors, which is made up of six authors and two author-directors, six composers and six publishers. All members have a single vote, while societaires professionnels and societaires definitifs each receive 15 additional votes. The board of directors appoints members as societaires professionnels and societaires definitifs.
BUMA and STEMRA in the Netherlands operate as a single company, despite consisting of two separate bodies: Vereniging BUMA (the BUMA Association) and Stichting STEMRA (the STEMRA Foundation). Each has its own members and affiliates and its own board of directors. BUMA’s board consists of 12 members: six composers, three authors and three publishers. Candidates are recommended by the societies of composers, authors and publish¬ers, but members are elected by composers, authors and publishers collectively. STEMRA’s board consists of 12 members: seven composers or authors, four publishers and one member recommended by BUMA. The composer/author members are elected by writer/composer members of BUMA/STEMRA, and publisher members are elected by publisher members only. Voting is on a weighted basis, based on the publisher’s turnover, and any publisher gets a maximum of 10 votes. Once music authors and publishers transfer the commercial exploitation of their music copyright to BUMA/STEMRA, they become members (BUMA) or affiliates (STEMRA) and are eligible to vote. BUMA/STEMRA ended 2009 with about 16,000 members and affiliates.
Italian authors’ society SIAE has author and publisher members from a variety of arts, including the music, literary, drama, opera, visual and audiovisual sectors. It does not categorize members in tiers. Although rights holders can be contractually represented by SIAE, only members are allowed to participate in SIAE’s governing bodies. SIAE’s General Assembly (GA) consists of 64 members, which are elected by all members every four years. The GA, which meets twice a year, nominates the other governing bodies (president, board of directors, section committees, board of auditors, internal audit) every four years. From a total 81,839 “musical” members, 79,154 are authors and 2,485 are publishers.
SGAE of Spain ended 2009 with 96,955 author and publisher members. Its author mem¬bership is divided into the professional categories of music (72,748 members), grand rights (theater, drama, musicals, etc.) (7,371) and audiovisual (8,031). Voting rights are divided between temporary rights and permanent rights, with the number of votes weighted, based on royalty income. For temporary rights, the weighting of votes is dependent on royalty income received in the previous financial year, and for permanent rights the votes are weighted based on royalty income received in the previous five years.
In the latest issue of the newsletter we continue the analysis by looking at SUISA of Switzerland, SABAM of Belgium, AKM of Austria and STIM of Sweden. We also compare European collection societies with those operating in North America and Asia. The conclusion to all this? It would seem that although most collection societies restrict the voting at annual meetings to the most senior or exclusive members, virtually all of them continue to operate with full member support. For the time being at least. As always, comments are gratefully accepted.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
UK subscription music revenues to hit £350 million in five years? Surely not
If ever there was a perfect example of a new business model failing to achieve in the real world what looked so good on paper it is the subscription model of music consumption. Gaining access to all of the world’s music for the price of an album (plus a few extra bells and whistles) is a business model that has all the credentials to succeed but has so far failed to deliver.
To begin with, subscription download services attempted to promote their worth on the premise that they could provide access to millions of music tracks instantly. Consumers could download an unlimited number of tracks for a fixed fee. But the services failed to deal with consumer concerns that access to their downloads would be lost once their subscription lapsed. Subscriber numbers to such services, such as Rhapsody and Napster remain low. This is despite the fact that their service offering compares very favorably with other digital music services. Napster, for example, has now evolved from a subscription download service to one that offers a range of options. For example, in the UK it now offers three tiers that allow for unlimited streaming of approximately 10 million tracks but also includes a number of track downloads to keep depending on the subscription tier taken.
But it remains in the shadows of Spotify, which continues to attract significant media attention in the countries it operates. Spotify recently introduced a new lower-priced tier in all its seven European markets. For £4.99/€4.99, subscribers are provided with streamed music with no advertising but at a lower bit rate than the most expensive tier. Mobile access is also not offered and there is no offline facility. However, the new price brings Spotify into line with its main UK competitors. We7 added a £4.99 option to its advertising-supported service at the beginning of this year and Sky Songs, the subscription service from UK broadcaster BSkyB, quietly lowered its pricing to £4.99 in March.
The premium price point in the UK for PC-only streaming is clearly settling at around £5 per month with PC and mobile access at around £10. While the rollout and level of consumer interest in streaming in the UK is certainly not a blueprint for the rest of Europe, the popularity of music shown through high per capita spending in the country suggests that the UK is a market which will provide a good indication of the likely future success of music subscriptions.
At the moment, UK consumers favor the music-to-own model. According to “Evolution of Digital Media”, a survey conducted by OpinionMatters for the technology manufacturer Hewlett Packard (HP), 73.3% of those surveyed (respondents were aged 16 years and over) said they could not envisage a time when they would shift their consumption of music totally to a subscription model. However, 14.8% of respondents said they could envisage making a full switch to subscriptions within five years. If that actually happened, that would mean close to six million people in the UK would be using a subscription music service. If they were paying £5 per month, total annual retail revenues would be around £350 million. Compare this with subscription trade revenues in the UK last year, which totaled about £12 million, with advertising supported service revenues contributing a further £8 million.
Precise interpretations of these findings are, of course, very speculative at best, particularly as they are based on a very small sample of the UK population. Moreover, the survey contained no details on how much respondents would be prepared to pay for a subscription service and why the majority of respondents would not entertain using subscription services at all. The findings of a separate report, published by the law firm Wiggin and Entertainment Media Research, suggested a significant number of consumers would be willing to sign up to a subscription service if it was priced between £3.00 and £3.50. However, even at this lower rate, subscription revenues would generate in the region of £210 million to £250 million a year.
Is this going to happen? Probably not. Opinions given in surveys may provide an interesting and sometimes illuminating snapshot of consumer behavior at any one time, but, like subscription services, their findings look good only on paper. However, there is one factor that could affect the subscription success. Apple is rumored to be launching a subscription service and will make an announcement to that effect at its World Wide Developer Conference later this month. Prior to Apple’s launch of iTunes, a-la-carte downloading was almost as unpopular as subscription services are today (anyone remember MyCokeMusic?). Apple has subsequently become dominant in digital music retailing and its entry into music subscriptions could have the same effect. Watch this space.
Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.
