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.

Pressing vinyl problems need tech solutions
There’s no sign yet of a collapse of the vinyl revival, and audience demand for the format is in sharp contrast to that of its onetime nemesis, the CD. The segment does face challenges, however, as supply problems continue to dog record companies – while there are no hard numbers available, there are plenty of reports to suggest that long wait times for orders tend to be the norm. The answer would normally be increased capex to build big plants and boost capacity, but that is not likely to happen. Rather, the pressing sector is increasingly characterized by small operations owned and run by audiophiles. The solution, then, is to increase productivity, and that means investing in technologically innovative production facilities that finally do away with antiquated machinery.

Apple issues its response to Spotify’s claims of discrimination
In March Spotify filed a complaint against Apple with the European Commission (EC), complaining that the US tech giant has introduced rules to the App Store that purposely limit choice and stifle innovation at the expense of the user experience. Spotify accused Apple of acting as both player and referee to deliberately disadvantage other app developers. The company also said that after trying unsuccessfully to resolve the issues directly with Apple, it had made the request to the EC for action to be taken to ensure fair competition. The following day, Apple published a statement refuting the Swedish streaming service’s claims. Apple also accused Spotify of suing music creators following a decision by the US Copyright Royalty Board to increase royalty payments to authors and publishers over the next five years.

Tencent Music Entertainment publishes the first financial results since its December IPO
Chinese music giant Tencent Music Entertainment (TME) has published its first financial results since the company’s IPO in December 2018. Although TME’s move to go public involved the publication of documents detailing historic financial and operating details, the latest results provide a good indication of how the company is currently performing. Moreover, the dominance of TME in the music subscription space also illustrates how China as a country is shaping up in the face of considerable expectation from both local and international record companies. Revenue for TME last year was up along with net profits. The number of monthly active users of the company’s music and entertainment services also increased, as did the number of paying users. The popularity of music was confirmed by the publication of the latest China Internet Network Information Center (CNNIC) report on the use of different services by online and mobile users in the country.

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 report. Indonesia is one of a number of countries in Asia that is considered by music companies to offer real prospects for future growth. Although the success of music subscription services in developed markets has turned around the fortunes of recorded-music sales, in most cases sales are slowing, and the likelihood is that there won’t be a return to the record years of the late 1990s. So, continued expansion at a global level beyond the next five years or so must come from the so-called emerging markets, and Indonesia has the potential to be front and center in this future growth.

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Family plans and bundling are a big hit for music service subscribers

Ovum’s Digital Consumer Insights 2018 survey has provided some interesting answers to the question of how consumers subscribe to music streaming services. Certainly, the availability of multi-user plans as well as bundled offerings with mobile access have been a big success but, until recently, the precise popularity of the likes of family and student plans was largely unknown. The results of this Ovum survey clearly show that family plans are a hit with subscribers, so much so that they are keeping a lid on music streamers’ average revenue per user (ARPU). Also, despite bundle deals for music services through mobile operators becoming less generous, a sizable share of subscribers still gain access to music through their mobile operator.

Driving sales of recorded music in the last few years has largely been the responsibility of a small number of streaming services such as Apple Music, Deezer, and Spotify. These services have successfully convinced consumers that they do not need to own music but, for a fixed monthly fee, can access pretty much every track that has ever been released, or will be released, so long as they keep up the payments.
How users pay to stream music

Direct or as part of a bundle
Payment for a music subscription service takes a number of different forms. Consumers can either go direct to the service and pay monthly or make one single payment covering a year. That subscription can cover one person or a whole family (usually up to six people, including the account holder). Services also offer reduced-rate access for students. For a few years, users have also been able to take advantage of bundle deals with mobile operators that either roll in access to a music service for free with a mobile tariff or give a discount on the direct subscription price. The benefit for consumers is clear – lower-priced access to music. Mobile operators also benefit from increased “stickiness” of certain mobile tariffs, which boosts customer retention. However, as noted in the last couple of financial results presentations by Spotify, the rising popularity of discounted access plans has impacted on ARPU. No service has published precise details on how the total subscriber share is split by the different plans, but Ovum’s Digital Consumer Insights 2018 survey, conducted at the end of 2018, has shed considerable light on the uptake of the different plans.

Multi-user access accounts for a growing number of users
According to the survey, which took in the views of around 6,211 consumers spread across Australia, Brazil, China, Germany, the UK, and the US in December 2018, 60.7% of respondents said they took out a music subscription through a single package, while 34.7% said they accessed it via a family package, with the remaining 4.6% being students (see Figure 1). By country, the split offers some notable differences. For example, in the US, currently the biggest streaming market in the world, the family share was 43.4%, while in Brazil the student share was 9.9%. Given that a family subscription costs 1.5 times a direct subscription but provides access for the account holder and five other users, the survey findings suggest that the impact on ARPU could be significant, particularly if uptake of family packages rises faster than single-user subscriptions.

Figure 1: Share of music streaming subscription users by package, December 2018

Source: Ovum

Ovum’s Digital Consumer Insights 2018 survey also revealed details of access via bundled plans. Overall, 66.7% of subscribers held a direct subscription, with 22.2% of subscribers accessing a service via some form of mobile bundle, and 11.1% through a fixed-line service deal (see Figure 2). As with package access, there were differences by country. The UK had the highest share of direct subscriptions (76.3%), with China being the lowest (57%).

Figure 2: Share of music streaming subscribers by access, December 2018

Source: Ovum

Although bundled offerings with mobile and fixed operators have shifted over the last few years from being included for free with an access plan to simple billing arrangements, there are still plenty of bundled offers that give discounts on music subscriptions or extended free trial periods. Moreover, when respondents were asked about the addition or removal of a service bundle in the past 12 months, 24% said they added online music streaming compared to just 6% saying they removed music service access. So, at the moment at least, music bundling is still important for a significant number of consumers.

Despite music streaming’s advances, it is worth noting that music access is still a relatively new way of listening to music, so slight reductions in ARPU through discounted plans and bundled access are not a problem at the moment. However, the issue of costs to services is something worth keeping an eye on. Eventually, services may be forced into looking at raising prices, and the obvious first target is the underpriced family plan. As Ovum’s Digital Consumer Insights 2018 survey has shown, the multi-user plans have proved popular, and a modest price rise is unlikely to result in mass subscription cancellations.

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New issue of Music & Copyright with South Africa country report

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

US Supreme Court rules that copyright registration is required to begin an infringement claim
To make a copyright infringement claim in the US, rights holders must first have registered their work with the US Copyright Office. However, courts engaged in infringement claims have disagreed on the nature of registration, with some happy that a registration with the Copyright Office be made when an application has been submitted and others requiring that an application be granted. Authors have complained that the problem with waiting for a Copyright Office grant can lead to a lengthy delay in making a copyright infringement claim. However, proponents of the procedure suggest that the requirement to have a work registered before infringement claims can be made acts as encouragement to register works prior to their release. Now, the Supreme Court has provided clarity on the issue by ruling that rights holders must wait for a copyright registration to have been completed before an infringement claim can be made.

Recorded-music industry makes slow progress in efforts to tackle gender imbalance
Despite a rise in the number of initiatives to increase female participation in the performance, management, and technical sides of the music business, women remain severely underrepresented across the board. New research from the USC Annenberg’s Inclusion Initiative has highlighted the low numbers of women featuring in the performance of top-selling tracks, authorship of those tracks, and their production. This year’s Grammy Awards was a successful night for some of the world’s leading female artists, but their success masks a very real problem of gender exclusion. Although the USC Annenberg report spells out relatively simple solutions to overcome the lack of female opportunities, putting those solutions into practice and changing the mindset that songwriting and music production are jobs for men will be a long process.

SoundCloud must keep artists happy to thrive
Music streamer SoundCloud looked as though it might be on its way out a little over a year ago, but a spot of belt-tightening, an injection of finance, and a new CEO have improved performance. Now the company is upping its game and looking to make more of its large and dedicated artist community by providing a gateway to many of the world’s digital music providers. That pits it against the streaming sectors’ big boys, however, and SoundCloud will need to work hard to ensure that it gives its artists the tools they need both to create music and to distribute it easily and efficiently.

South Africa country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed South Africa music industry report. Despite its geographic location, South Africa more closely resembles a Western music market and has far more in common with many countries in Europe and North America than it does with its neighbors. Although this means per capita spending on music is high compared with other African countries, South Africa has experienced the same problems encountered in the developed world in the shift from physical formats to digital and from downloads to access. But although the rise in high-speed internet access has exacerbated problems associated with the unauthorized distribution of music, higher digital sales, rising smartphone penetration, and the rollout of several international streaming services suggests the market has a bright future.

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New issue of Music & Copyright with China country report

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

As endgame nears for the Copyright Directive, opponents plan their final hand
The European Union (EU)’s key institutions – the Commission, Council, and Parliament – have finally agreed on new copyright rules, in the face of intense opposition and lobbying from internet giants. The agreed deal between the institutions – the outcome of the so-called trilogue process that underpins EU rule-making that had already been subject to delay in December – includes the controversial Article 13, which will put the onus on the likes of YouTube to remove copyright-infringing material without being asked, something that online platforms have long resisted. For the measure’s supporters, Article 13 reinforces the position of content rights holders and enables them to be properly remunerated. But for some of its opponents, who have tended to rail against it in near-apocalyptic terms, it means the effective end of the internet as we know it.

Class action lawsuits against SME and UMG are set to clarify entitlement to US termination rights
Major labels SME and UMG are facing class action lawsuits filed at the New York District Court in an attempt by a number of authors to reclaim the copyrights to their music under the so-called 35-year law. David Johansen, John Lyon, and Paul Collins were named in the legal action against SME, while John Waite and Joe Ely are part of the action against UMG. According to the lawsuits, both record companies have refuted the artists’ termination rights claims on the grounds that the sound recordings are “works made for hire” and so not available for termination under US copyright law. In addition to copyright infringement claims, the artists have asked the court for declaratory relief that sound recordings cannot be considered “works made for hire,” and that the release of sound recordings created by a particular recording artist in album form does not constitute a contribution of a collective work. Although these two challenges to the record companies’ refusal to recognize the termination rights requests are not the first, they could prove to be the first to go all the way to trial and finally provide resolution to a problem in the making for more than 40 years.

It’s now “game on” for the music industry
Music and gaming are clearly natural bedfellows but the music industry has yet to fully exploit the potential of games and gaming audiences. The reach of some gaming platforms is vast, offering great marketing prospects for the recorded-music business, while esports events can attract sizable audiences that are also looking for content beyond the core tournament battles. Plus, as games developers have shown recently, there is real appetite for virtual concerts inside the titles themselves – and that really should be a cue for physical festival promoters to deploy gaming at events to further develop those live music experiences.

China country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed China music industry report. China’s relatively buoyant economy is reflected in several sectors of the country’s music industry. Recent trade results published by the IFPI show the country, often described as an emerging market, is starting to live up to its long-held potential with previous glimmers of optimism now turning into real sales. China’s digital infrastructure is highly developed, and with smartphone penetration on the rise, all the requirements for further digital growth are firmly in place. However, some creative sectors continue to suffer against a backdrop of unlicensed services and restrictive practices. Royalty collections have grown consistently for the last eight or so years, but given the size of the population and level of music use, rights holders’ earnings measured at a per capita rate are very small.

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New issue of Music & Copyright with India country report

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

Music streaming faces longer-term questions over falling ARPU and rising prices
Recorded music is a growth sector, with record company financials and trade sales results all indicating a very bright future ahead. Forecasts for longer-term growth are all based on the continued uptake of music access services, and despite the inevitable slowdown in the developed world, music streaming in emerging markets is becoming popular, and so it is fair to say that the recovery in recorded music is firmly on track after so many years of decline. There are, though, some issues that require a little consideration, particularly regarding the price of a music subscription. Although the direct single user price is now firmly established and unlikely to change for the foreseeable future, the uptake of the family plan, whereby a single account allows access for six users, and its impact on streaming service revenue and user numbers, is starting to raise a few eyebrows.

Spotify turns a profit on rising subscription numbers and looks to podcasts for future growth
Spotify has published its fourth quarter and full year results, detailing both the company’s financial position and its operating details. Revenue continued to rise at a healthy rate and for the first time, operating income, net income and free cash flow were all positive. Totals for premium subscribers and monthly active users (MAUs) all hit the company’s guidance. Average revenue per user (ARPU) edged up in the quarter compared with the previous three months but was down on the prior-year period because of the popularity of the Family Plan and Student Plan. Spotify confirmed that it extended its footprint in the quarter by 13 markets in Middle East and North Africa, taking the total number of countries where the service is available to 78. The company also said it was in the process of acquiring podcast producers Gimlet Media and Anchor to aid the acceleration in podcast listening.

SiriusXM set to open Pandora’s streaming box with completion of service acquisition
While music streamer Pandora has long been popular with audiences, the company has failed to live up to its early promise on the financial side. The company’s decision to develop a model based on advertising rather than streaming looks to be the wrong one, given the growing appetite among consumers for rental rather than purchased music. However, the recent acquisition of Pandora by satellite radio provider SiriusXM brings new resources in-house, including an experienced executive team that isn’t short on ideas on how to bolster the streamer, as well as how to make it a useful addition to the SiriusXM fold. The satellite radio company has a proven track record in subscription, and the takeover could prove a turning point for Pandora.

India country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed India music industry report. India’s biggest obstacle to recorded-music growth is piracy. Retailers have always struggled to compete in a market flooded with illegal copies. Moreover, rising internet penetration has brought with it increased access to unauthorized music distribution sites and services. However, developments in the last couple of years have suggested that streaming may be the way out of the piracy problem, but the road to prolonged higher sales and meaningful returns is likely to be a long one.

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New issue of Music & Copyright with US country report

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

The changing role of bundling in the ongoing digital music evolution
Music bundling with mobile subscription packages is a practice that has been around for almost 10 years. Credited with a major role in boosting the take-up of music subscription services, bundling has evolved over the years from the addition of a music service free with a mobile package to more discounted and promotional bolt-ons. There are exceptions, with some mobile operators persisting with the hard bundle. Moreover, the different regions of the world have distinct differences in what is an appropriate bundle. European mobile operators now offer the least friendly music bundles, while operators in Asia remain a mixed bag of hard bundles and promotional offers, with some persisting with their own-developed services rather than partnering with one of the international services. For a long time, US operators chose not to offer music services. However, two of the country’s mobile providers have defied the developed market bundle trend and gone all in with a hard bundle offering.

Japan set for a full-year rise in recorded-music sales
New figures published by Japanese recorded-music trade association the RIAJ show that the total production value of physical formats increased last year compared with 2017. Although audio formats suffered a decline in both value and volume, a big jump in the value of music DVDs and Blu-rays boosted the overall production value. Japan’s dominant physical music format, the CD album, suffered a fall in both value and volume. Only minor physical audio formats registered any growth. Full-year figures for digital trade earnings are set for publication in February, and based on digital revenue in the first nine months of the year, the world’s second-biggest recorded-music market looks set to register an overall increase.

Vivendi bets on streaming to get the most out of UMG sale
Vivendi is looking to sell a big slice of UMG to the highest bidder, at a time when streaming is making the music business a very attractive proposition indeed. Furthermore, UMG is a very appealing asset right now, based on its impressive lineup of artists and on their performances across platforms such as Spotify, Apple Music, and YouTube. There is much speculation regarding possible acquirers, with both private-equity firms and media corporations thought to be in the frame. Vivendi is naturally eager to get top dollar, but it has to ensure that any uncertainty created by the proposed sale doesn’t affect the performance of the very asset it is aiming to dispose of.

US country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed US music industry report. The US is the biggest music market in the world. Not only does it account for around one-third of global recorded-music sales, the country is home to the world’s largest live music sector and the single biggest live music promoter, Live Nation Entertainment. The US also has two of the leading authors’ rights organizations, ASCAP and BMI, and has quickly become the biggest performance rights market for record companies and performers, even though the country’s collection agency, SoundExchange, only collects royalties from digital music services.

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New issue of Music & Copyright

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

Competing music sales monitors report good year for US music consumption
US recorded-music consumption registered a very positive 2018, according to consumer research organizations Nielsen and BuzzAngle. Both have reported an increase in the growth rate of recorded-music consumption, with on-demand audio streaming the main driver. Nielsen has so far only released top-line consumption details, while BuzzAngle has published a full report detailing sales and consumption across the different music formats and access platforms. Streaming has attracted all the headlines, but both research companies have also highlighted the continued revival in sales on vinyl albums. Nielsen analysis on sales by genre will follow with the release of its full report, but BuzzAngle has confirmed that hip-hop/rap is the most popular music genre in the US, although the share of sales of the genre varies greatly by format and access method.

Jury set to get it on in Ed Sheeran plagiarism case
Artist and songwriter Ed Sheeran’s attempt to have a copyright infringement claim dismissed has been denied by a New York district court judge. The claim was made by the heirs of Edward B. Townsend, who cowrote the track Let’s Get It On with soul legend Marvin Gaye in 1973. The heirs have claimed that Sheeran copied elements of the Gaye track for the million-selling 2014-penned song Thinking Out Loud, the third single to be released from the album Multiply. Sheeran filed for summary judgement on the grounds that the two songs were not the same and that any similar elements between the songs were not protected by copyright. The filing also questioned whether the daughter of Townsend was legally entitled to make a copyright claim.

Webcast and streaming gains boost IPRS collections
Indian authors’ society IPRS has reported a big rise in collections for the financial year ending March 2018. The increase was the first since 2014 and was largely the result of higher public performance collections and income from webcasting and streaming. Although the collection society only publishes limited revenue details, it did say that receipts from local online radio service Mix Radio and YouTube boosted the overall collection total. Ongoing and lengthy legal action against FM radio broadcasters has so far failed to reverse previous legal rulings that the broadcasters do not have to pay royalties to IPRS for the use of its members’ content. IPRS has also taken legal action to force mobile operators to pay royalties for the use of its members’ music in value-added services such as ringtones and ring-back tones.

UK music consumption and retail sales continue to rise
UK music trade group the BPI and retailers’ association ERA have reported respective growth in music consumption and retail sales. Strong gains in music streaming boosted UK consumption levels and retail sales of recorded music last year. According to the BPI figures, which were supplied by the Official Charts Company (OCC), streaming consumption topped the previous year’s record level, while the revival in vinyl LP sales continued, albeit at a slower rate than in previous years. Data from ERA, also supplied by the OCC, showed that retail sales of music subscriptions were particularly positive. Neither the BPI nor ERA figures included any music video details, and so the overall year-on-year growth rate of streaming and digital in consumption and revenue terms will most likely be higher than reported by the two organizations.

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