New issue of Music & Copyright with Japan country report

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

ECJ clarifies the copyright infringement rules concerning hyperlinks
The European Court of Justice (ECJ) has ruled that the posting of a hyperlink on a website to works protected by copyright and published without the author’s consent on another website does not necessarily constitute a communication to the public, so long as the person that posts the link does not seek financial gain and acts without knowledge that the works have been published illegally. The Dutch Supreme Court had asked the ECJ for clarity in a case brought by Sanoma Media, the local publisher of Playboy magazine, against GS Media, owner of the online news service GeenStijl. Sanoma had accused GeenStijl of repeatedly posting links to websites hosting unauthorized Playboy photos of the Dutch TV presenter Britt Dekker. Although the case centered on photos, the ruling could have major implications for a wide range of media services and search engines.

MCSC reports another record year for royalty collections in China
Royalty collections in China are on something of a roll at the moment with total income for authors and publishers last year rising sharply. In September the local authors’ society MCSC published its business report for 2015, confirming that total collections had increased for the seventh consecutive year. In addition to a record total, collections grew at the fastest rate since 2011, with domestic and foreign income both registering growth. Despite only a slight rise in digital income, the collection source was the biggest single income stream for Chinese authors and publishers. The growth predicted in the uptake of digital music services in the next few years should provide a significant boost for digital collections. Although MCSC welcomed the positive results, the authors’ society noted that it been forced to take out a high number of copyright infringement lawsuits against various music users. MCSC did note an improvement in the legal environment and copyright law enforcement.

Flexible pricing is key to longer term music subscription growth
Music subscriptions have quickly become the mainstay of the recorded music sector. The leading streaming services are boosting record company earnings and returning global trade revenue to growth after many years of decline. The number of subscribers to the likes of Apple Music, Spotify, and Tidal is continuing to rise, and consumer interest in music access rather than ownership is showing no signs of slowing. Perhaps surprisingly, the business model behind music subscriptions has changed little in the short time that the now-familiar brands have been operating. In most developed markets, there is a standard price across different streaming services and little difference in the amount of songs they offer. Free access is probably the biggest distinguishing factor, with some services maintaining an advertising-supported tier while others limit free access to a trial period. There is, however, a likelihood that some changes will have to be made to maintain the momentum. Because offering exclusives is currently a contentious move, streaming services may have to consider adjusting their prices to ensure future success.

Japan country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Japan music industry report. Japan is the second largest recorded music market in the world. According to the IFPI, the country ended 2015 behind the US in terms of overall trade revenue but was comfortably the global leader for trade income from sales of physical formats. One of only two Asian countries in the global top 10 (South Korea is the other), Japan is unique in several ways, with trade revenue from sales of physical formats still accounting for more than 80% of total record company income. After several years of decline, digital earnings have started rising again and subscription services are growing rapidly. The dominance of major record companies is being challenged by a number of local independent companies. Japan boasts one of the world’s largest authors’ societies in terms of royalties collected. It also has a buoyant live sector.

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Music & Copyright is published by Ovum.

New issue of Music & Copyright

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

Russia’s royalty collection system heading for a big shake-up
Russia’s music royalty collecting segment has been in turmoil over the last few weeks as Sergei Fedotov, head of state-approved authors’ rights collecting society the Russian Authors’ Society (RAO), was arrested and a group of rights holders left the organization to set up a new collecting society, the Russian Authors’ Union (ROAS). Police opened an investigation into RAO a year ago, alleging that RUB500m ($7.7m) had been funneled out of the organization in a series of dubious real estate deals. However, no action was taken until late June of this year, when Fedotov was unexpectedly arrested on suspicion of fraud. In the weeks following his arrest, another collecting society, RSP, which collects a 1% tax on imports of electronic devices that can be used for copying content and until recently was closely associated with RAO, announced that it is cutting ties with the embattled organization. At around the same time, the creation of ROAS was announced, a collecting society claiming to avoid repeating RAO’s mistakes.

Subscriptions take the digital lead in Japan; physical formats remain dominant
The Japanese music trade association, The Recording Industry Association of Japan (RIAJ), has reported midyear production figures for physical music formats and trade earnings from the sale of digital music in the country. Combined revenue from physical audio and music video production was down year-on-year, while total record company earnings from digital sales and services were boosted by growth in subscriptions. Taking physical and digital together, total recorded music revenue suffered a small dip, in contrast to the slight rise in the first six months of last year. Physical formats still account for more than three-quarters of total recorded music trade income in Japan, and the positive gains in subscription income in the six-month period were unable to offset lower physical format revenue. Digital sales have gained momentum in the last few years, and rising subscription sales mean that Japan is now more in line with most Western markets. However, the country has a long way to go before it reaches the digital tipping point.

BMI begins its legal challenge to the DoJ’s insistence on full-work licensing
US performing rights organization (PRO) BMI has started the ball rolling on its legal challenge to the US Department of Justice’s (DoJ’s) interpretation of the consent decrees and how both ASCAP and BMI license performance rights. In 2014, the DoJ began a review to examine the operation and effectiveness of the consent decrees. This was following a request by ASCAP and BMI to consider new ways of licensing, and most notably, that they be permitted to allow music publishers to partially withdraw certain digital licensing rights. However, while the DoJ declined to allow a partial withdrawal, its decision to insist on full-work licensing has drawn considerable fire. Following the publication of the DoJ’s statement on the closing of its consent decree review, ASCAP and BMI said that they would pursue a joint campaign to challenge the DoJ. ASCAP is to push for legislative reform; however, it is BMI that has fired the first shots with its initiation of a legal challenge.

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Music & Copyright is published by Ovum.

New issue of Music & Copyright with France country report

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

German recorded music sector on track for another year of growth
Figures published by the German music trade body Bundesverband Musikindustrie (BVMI) show that total consumer spending on recorded music was up 3.6% in the first half of this year compared with the same six-month period in 2015. A big jump in music subscriptions was behind the overall rise, with the increase in consumer spending on paid audio on-demand services fully offsetting all other format declines. The continued revival of the vinyl LP also boosted total retail sales. Despite the fall in spending on CD albums, the format still accounted for the majority of music retail sales. However, the boom in streaming sales pushed Germany ever closer to the digital tipping point.

Second consecutive year of decline for Polish royalty collections
Polish authors’ society ZAiKS has reported its financial statements for 2015. Although collections in the year were down compared with 2014, they were still the third highest in the authors’ society history. Total distributions were also one of the highest on record, while the administration rate remained virtually unchanged year-on-year. Broadcasting remained the biggest income source for ZAiKS. However, most of the main sources of broadcast income were down, resulting in an overall broadcast collection decline. The only real domestic bright spots for ZAiKS came from a small rise in collections from background music, public performance, and neighboring rights. Internet collections fell sharply along with private copying remuneration.

SIAE reports positive year for Italian live entertainment in 2015
The Italian live events sector experienced a positive 2015 according to new figures published by the Italian authors’ society SIAE. Following on from a fairly flat 2014, total box office receipts in 2015 registered a healthy rise, with concerts generating the biggest gains and a return to growth after a decline in 2014. Attendance reversed the previous year’s dip and increased in 2015, although the rate of growth was lower than box office spending and audience turnover. In addition to concerts, box office receipts from cinemas also experienced a reversal of fortune and registered an increase, cementing the cinema sector as the Italian entertainment industry’s biggest sector. Dance was the only sector to suffer a decline in box office receipts.

France country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed France music industry profile. The French recorded music industry is currently suffering due to the ongoing transitions from physical to digital and ownership to access. Consumer interest in streaming is maintaining overall growth in digital trade earnings, but falling sales of both downloads and CD albums have pulled down overall record company earnings. There is, however, some hope that this year will see a return to growth, with midyear trade revenue up year-on-year. French authors’ society SACEM registered a positive 12 months with collections increasing after a slight year-on-year decline in 2014. France’s live music industry is highly competitive with national and international promoters battling to represent big names. However, the last 12 months have been particularly difficult for the sector following a number of terrorist attacks.

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Music & Copyright is published by Ovum.

New issue of Music & Copyright with UK country report

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

Google’s latest antipiracy report sparks criticism from music industry
Google has published the latest version of its How Google Fights Piracy report, detailing its recent antipiracy activities. In addition to updating some of the facts and figures presented in the 2014 edition, the latest report explains how Google’s products and services have created opportunities for creators around the world and how the company has targeted those that have misused its services to commit copyright infringement. The report lists creators that have used the Google-owned service YouTube to boost their careers as well as develop new revenue streams and business opportunities. Reaction to the report from music industry bodies was swift. Both the IFPI and the BPI commented that Google has the resources and expertise to do much more than it currently does to limit the amount of recorded music accessed without permission on its platforms.

SGAE reports second year of modest growth in royalty collections
Spanish authors’ society SGAE has published its annual accounts for 2015 after approval from its membership at the June annual general meeting. SGAE has experienced an unsettled last few years with arrests of senior executives for misappropriation of funds followed by antitrust investigations over high tariffs for live performance and broadcast fees and several changes in its president. In terms of collections, the authors’ society has reported a second consecutive year of modest revenue growth after three years of decline. Ongoing economic difficulties have affected some of the main income sources. However, a big jump in private copying collections and growth in live music and general licensing collections fully offset revenue declines elsewhere.

The music industry must be more proactive about interactivity
New digital tech developments and ever more powerful computer processing are making consuming music a less passive experience. In various parts of the music industry, players are experimenting with interactive features that build a degree of customization into audio and audiovisual content. Although some of the creations are proving hugely popular, interactivity still feels like a nascent segment, and many players seem reluctant to go beyond the basics. They risk missing a great opportunity to develop more immersive experiences that really engage with audiences, especially millennials keen to stamp their mark on music-based content.

UK country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed UK music industry profile. The UK recorded music industry is in something of a lull at the moment. Three straight years of decline ended in 2013 with a rise in trade revenue. However recorded music sales dipped in 2014, with rising income from streaming unable to match the drop in downloads and CD album sales. Last year saw the continued shift from ownership to access, but overall trade earnings were down for the second consecutive year. In contrast to trade earnings, the retail value of recorded music sales grew year-on-year with a rising number of subscriptions fully offsetting consumer spend on singles and albums. Royalty collections in the UK were more positive: Both PRS for Music and PPL registered annual growth. Live music continues to be the most robust leisure sector in the UK with tours and festival appearances still the most secure way for artists to generate revenue. Despite the overall increase in ticket sales, smaller venues in the country continue to close because of rising rents, urban development, and noise regulation.

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Music & Copyright is published by Ovum.

New issue of Music & Copyright

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

Brexit and the implications for the UK music copyright sector
As the world comes to terms with the UK’s vote to leave the European Union (EU), many in the music industry are figuring out what “Brexit” will mean to them. Stakeholders across the industry have voiced their surprise at the result as well as concern about its potential impact, but they have also expressed a willingness to not let the referendum result affect what has long been a multinational business sector. According to EU rules, the UK has two years to untangle itself from the various EU institutions. This means that although little will change in the short term, UK rights holders face uncertainty once negotiators on both sides start poring over the finer details of Brexit.

Combined BUMA and STEMRA collections up for the fourth consecutive year
Dutch authors’ societies BUMA and STEMRA have reported a fourth consecutive year of annual growth in joint collections after three consecutive annual falls. Combined income for the two collection societies grew at an increased rate last year, with gains reported in both performance and mechanical rights. Strong growth in streaming in the Netherlands resulted in a sharp rise in digital collections for BUMA. However, digital remains a small source of revenue for authors and publishers in the country. STEMRA’s income benefitted from a big jump in private copying remuneration following changes in rates and the extension of fees to e-readers.

Where have the courts left us with music copyright?
Typically, when cases involving music are brought before the courts, the trials revolve around one of two rights: either the copyright in the song itself (i.e. the musical score and the lyrics) or the copyright in the actual recording of the song (i.e. cases involving sampling of the recording). A number of music cases recently have involved both types of copyright and have shown that where there’s a right, there’s a fight – especially when significant cash is at stake. In this article, Luke Hill, intellectual property lawyer at Marks & Clerk, examines some recent copyright cases both in Europe and the US, to explain how the law is developing and assess the implications for artists and rights holders.

Brazil country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Brazil music industry profile. Following four straight years of growth, trade earnings from recorded music in Brazil edged down last year. Revenue from digital sales and services more than offset a fall in sales of physical formats, but the drop in performance rights income meant total Brazilian record company earnings contracted for the first time since 2010. Despite the overall decline, there were positive developments in the subscription sector, with trade earnings from the likes of Deezer, Napster, and Spotify almost trebling. Moreover, combined income from subscriptions and advertising is now the biggest revenue source for Brazilian record companies, overtaking the previous favorite, CDs. UMG held on to the leading position it gained from SME in 2013, but local independent Som Livre registered the biggest market share gains in 2015. Umbrella rights organization ECAD reported its first decrease in collections this century, blaming difficult trading conditions. Brazilian events promoter Time For Fun (T4F) reported a flat 2015 for sales but began 2016 with a doubling of revenue in the first three months, a record for a single quarter.

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Music & Copyright is published by Ovum.

New issue of Music & Copyright

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

Guvera lifts the lid on its finances and business strategy
Guvera’s plans for an IPO remain in the balance after the Australian Securities Exchange (ASX) decided to block the streaming service’s listing. The Australian service detailed its IPO plans at the end of May, but when it published its supporting prospectus, the Australian Securities and Investments Commission (ASIC) forced a revision of the document. Then, 24 hours after the new prospectus was submitted, the ASX said it was refusing Guvera’s admission to the official list. A meeting between the two parties is set to take place to discuss the decision. Whether the listing takes place at all will soon become clear. Either way, the IPO prospectus has provided an insight into Guvera’s operating performance as well as its future plans. In common with most streaming services that are running up some pretty heavy losses, Guvera’s cost of sales heavily outweigh its revenue. Although the service is available in 20 markets, the prospectus revealed details of Guvera’s plans to concentrate on 10 of those markets, most of which have provided little in the way of earnings for record companies in previous years. Also included in the document is an assessment of the risks faced by investors, fueling the already intense debate on the robustness of the music-streaming business model.

Digital and overseas gains boost STIM revenue to new record
Swedish authors’ society STIM has reported another record financial year with total collections and distributions to its members topping the previous records set in 2014. Collections from online and new media services again registered impressive year-on-year growth. Although broadcasting is still the biggest domestic source of collections, a slight decline in overall broadcasting income, coupled with gains in digital collections, meant the two revenue sources accounted for almost the same share of total domestic income. Collections from overseas remained the biggest income source for STIM’s author and publisher members and last year foreign earnings, particularly from the US and UK, grew sharply. Royalties from festivals and live music concerts suffered a second year of decline after a sharp rise in 2013.

Music’s year of virtual reality has the potential to pay off
The music industry is making a play for virtual reality (VR), and this year will see an array of VR initiatives, leaning primarily on live performance video. The VR segment is set to explode, with gaming likely to be the biggest beneficiary, but music companies could develop a new revenue category built on VR. However, to succeed, they need to ensure that their output is more than mere 360º video. Music content will need to be deeply engaging and immersive if it is to cut through.

JASRAC reports stable year for royalty collections
Japanese authors’ society JASRAC has reported a small decrease in royalty collections in the 12 months to end-March 2016, after a similarly small increase in the previous 12-month period. Despite a rise in general performance and digital collections and a flat year for broadcasting income, the continued decline in mechanical royalties resulted in an overall dip in collections. However, in contrast to collections, JASRAC reported that distributions to members edged up slightly in the year. Broadcasting remained the biggest single source of earnings for Japanese authors.

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Music & Copyright is published by Ovum.

New issue of Music & Copyright with Indonesia country report

The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.

Just how big is recorded music streaming going to be?
In a fairly short space of time, music streaming has become the most important distribution means for the recorded music sector. Earlier this year the IFPI reported that streaming gains were behind the first substantial growth in global trade earnings for almost 20 years. Add to this the fact that all the major labels have confirmed in the last few weeks that streaming was the top recorded music revenue source in the first quarter of this year. We look at the latest developments in the music subscription sector and explains why streaming is now so important for the recorded music industry. It also predicts just how high the total number of paying subscribers could reach by 2020.

Subscription gains fail to offset physical format decline in Japan
The Japanese music trade association, the RIAJ, has reported physical and digital recorded music trade figures for the first three months of this year. Production levels of physical formats suffered a modest decline in the period compared with the same period of 2015. In contrast, total record company earnings from digital sales and services increased year on year in the quarter. However, the rate of growth in digital sales was not sufficient to fully offset the physical format declines. Although record companies in Japan will welcome the rise in digital revenue, physical formats still account for more than 80% of total trade earnings in the country. There is a real fear that any acceleration in the contraction rate of physical format sales could spell a tough few years for the Japanese recorded music sector.

Streaming and manufacturing initiatives set to bolster the vinyl renaissance
Vinyl remains in resurgence as consumers continue to show an appetite for the traditional analog format. But demand is stretching the industry to the limit and established vinyl pressers are struggling to keep pace, hamstrung by antiquated equipment, with record companies relying on old engineering from central Europe to feed the pipeline. There are, however, plenty of signs of innovation on the manufacturing side as fresh blood is drawn to the business. The age-old format might also be in line for an HD upgrade.

Indonesia country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Indonesia music industry profile. Indonesia has the third-largest population in Asia after China and India. Like the two leaders, it has for many years been thought of as a music market that offers great potential. But as a marketplace for creative content, it has been badly hit by the widespread availability of pirate recordings, and unauthorized CD albums are on sale throughout the country for a fraction of the price of legitimate copies. More recently, digital piracy has grown in line with Internet access. Indonesia is no different from a number of other Asian territories where music piracy is widespread. However, unlike many countries in the region, Indonesia has made notable improvements on intellectual property rights protection. Mobile personalization is currently the biggest revenue generator for record companies in the country. But several of the international music subscription services have set up shop in Indonesia and there is real hope for the future of recorded music sales. Indonesia’s digital infrastructure is also developing well with smartphone penetration on the rise. Essentially, all of the requirements for further digital growth are firmly in place.

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Music & Copyright is published by Ovum.