New issue of Music & Copyright

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

Retail sales of recorded music in the US set to break the $10bn mark
US trade group the RIAA has reported another positive half year performance for retail sales of recorded-music. Subscriptions and streaming were again the star performers with growth in access service spending and advertising easily offsetting declines in sales of other formats. With the exception of advertising revenue from statutory services not distributed by SoundExchange, all the different streaming subcategories registered a positive first half of the year with paid subscriptions alone accounting for more than half of the six months’ total retail sales. The revival of vinyl continued with the growth in sales matching the rise in the prior year period. The average number of paying music subscribers increased at a slightly lower rate, but more that 14 million new subscribers were added in the six-month period.

Subscriptions the highlight in a positive first half year for Spanish recorded-music sales
Midyear retail sales figures published by Spanish music trade association Promusicae show the recovery in recorded-music sales has accelerated, with both digital and physical rising year on year. Subscriptions registered a particularly positive six-month period, generating more than half the retail sales total for the first time. Audio and video advertising revenue also increased. Unusually for a developed market, sales of CD albums were up, with consumer spending on vinyl rising sharply. Of the markets that have published sales details for the first half of this year, Spain is the clear leader in terms of growth rate. Moreover, given that subscriptions now generate more than half of the retail total, continued consumer interest in access services should mean a sixth consecutive year of growth as well as longer-term stability for Europe’s sixth-biggest music market.

Sharp rise in digital collections boosts MCSC royalty receipts to new record
Royalty collections in China have increased for the 10th consecutive year. In September the Chinese authors’ society, MCSC, published its business report for 2018, confirming that total collections had topped the previous year’s record and exceeded CNY300m ($41.8m) for the first time. Furthermore, the year-on-year growth rate was more than twice the rate in 2017, and collections have more than doubled in just four years. A new licensing deal with Tencent Music Entertainment (TME) swelled digital collections to more than half the total royalty receipts. Also registering a positive year was live performance and karaoke. Background collections, MCSC’s second-biggest revenue stream, were down, along with TV and radio income.

Classical streaming services targeting the underserved music aficionados
There’s clearly a growing appetite for classical music streaming, but the market’s leading operators aren’t set up to provide true genre enthusiasts with services they need. And that’s down to both the content they can provide and the way they go about organizing it. It’s no surprise, then, that a couple of start-ups have stepped up to serve the classical music fan with more tailored products that are all about granularity. However, both may well be underestimating the aficionado’s propensity to pay, not just for quality recordings, but also for content that enhances the principal audio experience. After all, the classical-music-consuming public is an affluent and discerning demographic that really ought to be fully served by services launched specifically to fulfill their music needs.

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New issue of Music & Copyright with Poland country report

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

Algorithms may have rhythm, but questions remain over who gets the credit
Artificial intelligence (AI) is set to make waves in the music industry. Algorithms are already composing music – albeit often with a little help from their artist friends – and with the technology advancing apace, audiences will certainly be listening to more AI melodies in the charts. However, composing with a piece of code that learns its skills from existing compositions raises some interesting rights issues that will probably take years to resolve. But that doesn’t mean that artists and songwriters won’t benefit from AI-based solutions on the royalties side as copyright owners become more creative with algorithms.

Europe’s top court details its ruling in the long-running Kraftwerk sampling case
At the end of July, the European Court of Justice (ECJ) made a ruling in a case involving Ralf Hütter and Florian Schneider‑Esleben, from German electronic group Kraftwerk, and two composers, Moses Pelham and Martin Haas. The case concerns a track called Nur Mir, recorded by German rapper Sabrina Setlur in 1997, which included a two-second sample from the 1977-released Kraftwerk track Metall auf Metall. The ECJ decided that sampling without authorization can infringe a phonogram producer’s rights, but that use of a sound sample taken from a phonogram in a modified form unrecognizable to the ear does not infringe those rights, even without any authorization. The case was initially filed by the Kraftwerk pair 20 years ago, and although the two were initially successful at the first trial and on appeal, the Bundesverfassungsgericht (Federal Constitutional Court) overturned the previous rulings. The case was returned to the lower court to be reassessed, and several questions of law were subsequently referred to the ECJ. Initially, the ECJ published its decision in a short press release. However, the European body has now explained in more detail why it came to its conclusions.

Subscription streaming drives up midyear recorded-music sales figures in Italy and the UK
New figures published by Italian recorded-music trade group FIMI and UK entertainment retail body ERA show recorded-music sales in the two countries increased in the first half of this year, with a rise in music subscriptions behind the growth. According to FIMI’s trade results, revenue from paid audio subscriptions overtook sales of physical formats, with a rise in income from the former more than offsetting a drop in sales of the latter. Further growth came from ad-supported offerings and video streaming. Moreover, the growth rate in the first half of this year was up on the rate in the prior-year period. ERA’s results did not include any ad-supported or video-streaming details but did show a healthy rise in subscription sales. Despite the continued decrease in sales of physical formats and music downloads, retail sales of recorded music in the UK are well on the way to registering a fifth consecutive year of growth.

Poland country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Poland music industry report. Poland is one of Eastern Europe’s largest recorded-music markets, second only to Russia. However, the country is the region’s leader for trade earnings from the sale of physical formats and revenue from performance rights. For several years, high levels of piracy restricted efforts to establish a digital sector, but rising consumer interest in streaming and subscriptions has meant digital is accounting for an increasing share of overall trade sales. Positive economic results will also have boosted most music sectors in the country. Poland is unique in the European Union (EU) for being the only country not to have fallen into recession following the global financial crash 10 years ago, and the country’s economy is one of the EU’s success stories. UMG maintained its position as the country’s biggest recorded-music distributor, while authors’ society ZAiKS reported a third straight year of collection growth after two years of decline.

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New issue of Music & Copyright with Sweden country report

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

Recorded-music sales for UMG continue to outpace closest rival SME
French media company Vivendi and Japanese electronics giant Sony Corp. have reported financial details for their respective music subsidiaries, UMG and SME. Both companies continue to benefit from high sales of music streaming. For UMG, increased streaming income in the second three months of this year as well as a second straight quarter of unusually strong sales of physical formats boosted overall sales. Licensing income and revenue from merchandising sales also registered year-on-year growth. Not to be outdone, streaming sales for SME increased in the three-month period, the first quarter of the company’s 2019 financial year. Moreover, a modest fall in revenue from physical formats meant total recorded-music income increased year-on-year. Music publishing was the biggest growth sector for SME, with sales and operating income inflated by the acquisition late last year of EMI Music Publishing (EMI MP).

Artists with a gift for fashion stay in vogue
Leading artists such as Madonna and Lady Gaga have long been associated with high fashion and its brands to deliver music diva looks, but at the same time many musicians, especially rappers, have worked hard on developing branded clothing lines to bring their own styles to the street. We have now entered an era where the artist is also becoming a fashion creator, with Rihanna at the apex of the trend following her recent joint venture with luxury group LVMH. Not all musicians are able to clinch apparel deals, but there’s plenty of appetite from brands to work together with them short-term on clothing projects that can boost revenue and deliver marketing uplift.

SIAE reports mixed year for live entertainment in Italy
The Italian live events sector experienced an indifferent 2018, according to annual figures published by Italian authors’ society SIAE. Following a mixed 2017, total live entertainment box office receipts were up, along with audience expenditure and turnover. However, the number of shows/performances/events was down, along with admissions and attendance. In terms of box office, music concerts registered the highest growth of the tracked entertainment sectors, ahead of sports and traveling shows/amusements. Pop accounted for the biggest share of concerts, ahead of classical and jazz. The number of pop concerts edged down last year, while total classical concerts staged increased. Pop dominated box office takings, audience expenditure, and turnover. Cinema, Italy’s biggest sector by box office, suffered a fall in sales. Dance sales were also down year on year.

Sweden country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Sweden music industry report. As home to the world’s biggest on-demand audio subscription service, Spotify, Sweden has become one of the world’s most progressive recorded-music markets. The country’s digital share of trade sales last year topped 90% (see Figure 1) as combined spending on physical formats slipped to a record low. In addition to recorded music, consumer spending on tickets to live music events grew last year and are projected to rise further in the next few years. Royalty collections in Sweden are breaking records annually, with authors’ society STIM reporting earlier this year the eighth consecutive year of collection growth.

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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.

The US Copyright Office selects the Music Licensing Collective and Digital Licensee Coordinator
The US Copyright Office (the Office) has chosen the two groups that will facilitate the new system of mechanical licensing as determined by the Music Modernization Act (MMA). The aim of the MMA is to do away with the song-by-song notice of intention process and create a new blanket compulsory licensing system for digital music services. Moreover, the blanket-licensing structure should reduce the transaction costs associated with song-by-song licensing by commercial services and speed up the process of royalty payments to rights holders. The provisions of the MMA directed the Office to select a nonprofit group operated by copyright owners to administer the new blanket-licensing system from the beginning of 2021. Furthermore, a group representing digital music services has also been selected to coordinate the activities of the music licensees.

Germany records the best midyear music sales performance for more than 20 years
New figures published by the German music-trade body BVMI show that retail sales of recorded music in the first half of this year increased at the fastest rate for more than 20 years. Streaming registered a positive six months despite a slower growth rate than in the prior-year period. Buy-to-own formats also had a better half year with the rate of decline in sales of CD albums and downloads notably less severe. Spending on vinyl was up after a fall in the first half of last year. Despite already being the single-biggest revenue source, audio streaming accounted for more than half of the retail sales total for the first time. Furthermore, with streaming now dominant, the overall performance of the market will increasingly be determined more by the uptake of music subscriptions and less by the rate of decline of the once-dominant CD album.

The lyrics battle is still on, but questions remain over the sector’s creativity
The music industry has fought hard against what used to be a whole host of online, unlicensed song-lyric pirates, forcing a number of them to turn legitimate and many more to the irrelevant periphery. However, there is still a battle going on among licensed providers in what remains a largely unpoliced segment, as evidenced by the recent spat between two leading outfits. Song lyrics are increasingly regarded as a valuable tool by social networks looking to provide their users with ways of boosting engagement with others, especially when it comes to telling “life stories.” But the business has yet to see a great deal of innovation beyond different simple means of sticking words across videos and images; it is time to be more creative with lyrics to develop an edge over the competition.

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. Of all the leading recorded-music markets, Japan is certainly the most erratic, with some sizable differences in annual performance. Looking back over the last decade, total trade revenue from recorded-music sales has been inconsistent, with one or two years of growth followed by a couple of years of decline. However, despite record company income from physical formats continuing to be unpredictable, the digital sector has become more stable. Moreover, after a lengthy reliance on downloads, the subscription sector is now generating more revenue for the local industry than any other digital income stream.

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New issue of Music & Copyright with Brazil country report

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

Damaging accusations against two of the music industry’s biggest players make June a month to forget
The music industry is on the up at the moment. After enduring a long period of falling sales, the success of music streaming has returned the sector to growth. Music publishing is also benefiting from consumers’ willingness to access music rather than buy it. In an effort to keep the streaming train on track, some of the biggest players have come together to create a best-practice code to prevent stream manipulation, or the artificial inflation of streams served by underhand means. The creation of the code came in the same month that two of the music industry’s biggest players have been criticized for the way they have acted toward authors and artists. The NMPA in the US took a pot shot at Spotify after the streaming service said it wanted to claw back royalty overpayments to publishers based on new royalty rates that Spotify was appealing against. UMG has come in for major criticism over the way it handled the loss of master recordings that were destroyed in a fire 10 years ago.

Music goes DIY, but unsigned artists still need business savvy to make it big
The digital age and social media have proved a boon to DIY music. Thousands of unsigned artists have been able to break through initially online and sell their output through a raft of web-based stores. And the independent music sector continues to grow apace as a result. Myriad services have been developed to support unknown artists, either by enabling widespread digital distribution and royalty collection, or by helping provide crowdfunded finance. However, musicians can’t rely 100% on such platforms to always come up with the goods on the business side of the music industry. Some commercial nous and commitment are required, as it always has been, to make it big.

Both AKM and Austro Mechana see growth in collections
Austrian authors’ society AKM maintained its unbroken streak of collection growth last year, a trend that dates back more than 10 years. The collection society reported an increase in all of its main domestic revenue sources. Furthermore, overseas receipts were also up year on year. In a repeat of 2017, digital recorded the highest growth rate for AKM. However, despite the rise, digital remains a minor revenue source for Austrian rights holders. Public performance is the authors’ society’s biggest income source, followed by live music and TV. AKM subsidiary Austro Mechana (AUME) also reported higher revenue last year, with most of the growth coming from private copying. Backdated private-copying payments have been a big factor in AUME’s revenue in the last few years. However, excluding AUME’s biggest revenue source, total income for the collection society was still up year on year.

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 report. Following two consecutive years of contraction, trade earnings from recorded music in Brazil have risen for two years in a row. Streaming was the sole growth driver, with income from access services more than offsetting a big drop in sales of physical formats as well as a dip in performance rights and lower revenue from synchronization. Umbrella rights organization ECAD reported a fall in collections and distributions last year, following two years of growth. Brazilian events promoter Time For Fun (T4F) registered a positive final three months of last year but an overall dip in revenue for the 12 months.

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New issue of Music & Copyright with Germany country report

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

Standing Committee publishes review of Canadian copyright law
The Canadian government’s Standing Committee on Industry, Science and Technology has published its review of the country’s Copyright Act. Depositions and testimony from numerous industry stakeholders went into the review and the subsequent report makes a number of recommendations and observations to the government as to how the seven-year-old copyright law should be amended. Rights holders were keen on several changes, such as the introduction of greater controls on user-generated content services and the creation of an administrative body to deal with site blocking. Music industry stakeholders also pushed for the removal of the radio royalty exemption. However, the committee took a more balanced view of the necessary changes. The report has been presented to the government as guidance and the recommendations are advisory only.

Hungarian royalty collections see third straight year of growth
Hungarian authors’ society ARTISJUS has reported a third consecutive year of growth in royalty collections, with the total for last year topping HUF20bn ($74.2m) for the first time. Private copying was again the dominant collection source. However, after two years of growth boosted by increased receipts from mobile handsets, collections in 2018 were only marginally up on the previous year. Total collections were also boosted by positive results from public performance, with ARTISJUS reporting higher receipts from the hospitality sector as well as ongoing improvements in payment discipline. Digital collections were down for the second year in a row. Furthermore, digital remains a minor revenue source for ARTISJUS members. The authors’ society said in its business report that the shift to streaming has presented collection challenges, not least from the higher collection and distribution costs.

Music lines up its gaming partnership plays
Esports – video games played competitively in front of spectators – is already a major entertainment sector and is set to become even more significant in the next few years. Millions of gamers around the world play leading interactive titles while listening to music, while the esports events themselves – often taking place in large arenas – usually feature live music performances to fill out the experience. Unsurprisingly, this is attracting serious attention from the music industry. Partnerships are the best way into this business for gaming ingénues, but those eager to grab a share of esports’ fast-growing revenue need to quickly firm up strategies if they are to cut through and be successful in professional gaming.

Germany country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Germany music industry report. Retail sales of recorded music in Germany have plateaued in the last few years. Although subscription and streaming sales have registered healthy growth, the gains have fallen just short of fully offsetting the drop-off of physical formats and downloads. Notable in last year’s sales figures was that subscriptions and streaming overtook CDs to become the biggest single revenue source. While sales may have failed to increase year on year, the greater the share of spending on access services the better the chance Germany has of returning to growth. Authors’ society GEMA also suffered a decline last year with collections and distributions both unable to match the previous year’s record levels. However, the underlying performance was positive as collections in 2017 were inflated by one-off payments. Moreover, collections exceeded €1bn for the third consecutive year. Live music remains a stable sector. Ticket sales last year topped the previous year’s record, and live music event collections by GEMA have increased in four of the last five years.

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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.

SGAE committed to reform after CISAC suspends the society’s membership
Troubled Spanish authors’ society SGAE has been suspended from CISAC over concerns about the society’s operations, discriminatory treatment of rights holders, and unfair practices relating to the distribution of royalties. A report from CISAC containing recommendations for changes to the society’s governance rules, statutes, and royalty distribution practices was presented to SGAE over a year ago. A lack of progress on the confederation’s requirements resulted in the opening of a sanction procedure. Although CISAC said it has been working with SGAE for a number of months, a lack of progress on change has led to the authors’ society’s expulsion. SGAE has been embroiled in a scandal involving an alleged inappropriate and unbalanced television broadcast distribution scam. SGAE’s offices were raided by local police investigating claims made by some of the authors’ society’s members, who stated that SGAE was complicit in the scam. Despite the expulsion, SGAE says it is confident that it will be readmitted to CISAC after required changes are endorsed at the society’s June general assembly.

Sweden as a model for developed countries’ music subscriber potential
When music industry analysts comment about the potential future size of the music streaming and subscription sector, they often look to developing markets such as China and India, both of which have been re-energized after years of stagnation under the cloud of piracy. Certainly, the world’s two most populous countries have a central role to play in continuing the rise in recorded-music sales, along with several of their smaller neighbors. But many developed markets are still a long way from reaching their potential, and so for the next five years at least, these markets will remain the backbone of global growth. The paucity of official subscriber details means approximations and forecasts are the only way to plot the future of recorded-music sales. There are, however, one or two countries where granular evidence can back more precise estimations. Moreover, given the advanced position of some markets, the recorded-music sector has a model on which to base its future potential.

Podcasts are starting to look like a good bet for music companies
Record companies and music streaming operators are seeing value in the podcast and are investing in the content and production sides of the business. While both see podcasting as a way of increasing engagement with audiences, there’s also an opportunity for music streamers to increase their revenue outside their core music-listening businesses. Success lies both in making podcast discovery an easier operation than it is right now and in developing strategies to grab a decent share of the growing podcast advertising market – as far as the latter is concerned, those with data expertise at the heart of their activities ought to do best.

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 report. The UK’s music industry is experiencing a positive period at the moment. After several years of decline, recorded-music trade sales have now increased for three years in a row. Going one better, the retail value of recorded-music sales has risen for four consecutive years. Trade and retail sales have benefited from rising subscription sales, and streaming growth has more than offset a drop in spending on physical formats and downloads. Last year the UK retook third place from Germany in the global trade revenue ranking (see Figure 1). UMG extended its market share lead over second-placed SME, with the former gaining share and the latter suffering a decline. Royalty collections in the UK are on the rise, with both PRS for Music and PPL continuing to register record receipts. Live music continues to be the UK’s most robust leisure sector, with tours and festival appearances still a secure way for artists to generate revenue.

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