The final issue of Music & Copyright for 2016 is now available for subscribers to download. Here are some of the highlights.
GMR hits back at RMLC with antitrust complaint
US performance rights organization Global Music Rights (GMR) has filed an antitrust complaint at the US District Court for the Eastern District of Pennsylvania against the Radio Music License Committee (RMLC), accusing it of collusive tactics to depress the royalty rates paid by radio stations to songwriters and of operating an unlawful cartel intended to stifle competition among radio stations. The lawsuit follows a similar filing in November by the RMLC against GMR which accused the performance rights organization (PRO) of attempting to charge the US commercial radio industry monopoly prices to publicly perform musical works in the GMR repertory. In response, the RMLC described the GMR lawsuit as nothing more than a ploy designed to pressure the RMLC into paying higher royalty rates for GMR content than it currently pays other US PROs. It also accused GMR of ignoring the long-established court-set royalty rate system.
OTT video service growth and the challenge to broadcast royalty collections
Over-the-top (OTT) broadcasting of audio and video is a delivery system that has rapidly grown in popularity, from the perspective of both distribution and consumption. With its divergence from traditional means of broadcast – in that content is delivered using the open Internet rather than a service provider’s own infrastructure – it is not an understatement to say OTT has revolutionized broadcasting. Multiple services, including those from pure-play providers, such as Netflix and Amazon, and those from national pay-TV operators, are available across the world, many offering compelling libraries that include content from linear pay-TV services. Revenue from OTT services is rising, and growing numbers of consumers are finding the flexibility and convenience of OTT offerings preferable to traditional broadcast services. Pay-TV services’ entry into the OTT sector is as much about attracting subscribers who have yet to engage with a full paid-for offering as it is about competing with the current pure-play services. However, with the competition for broadcast eyeballs intensifying, collective rights management organizations could be forgiven for feeling a little apprehension that broadcast royalties are going to come under pressure, particularly given that the income source has for so many years been their biggest revenue generator.
Pricing, bundles, and new hardware set to drive digital music subscription growth
The recorded-music sector is rapidly becoming reliant on service providers rather than music sellers. The term “music retail” is fading from common parlance, and those years-old brands that for so long formed the epicenter of young consumers’ music lives have all but been replaced by the faceless but logo-heavy new kids on the block. It is often said that no one likes change, but the opportunities now available to many music industry service providers and secondary facilitators mean the latest changes have been for the better. Ovum has picked out three key trends that both primary and secondary music industry players should take note of if they want to benefit from what is now being seen as an industry on the up.
Sweden country report
In addition to the usual set of music industry statistics and news briefs, Music & Copyright also includes a detailed Sweden music industry report. Over a relatively short period of time, Sweden has become the world leader in terms of music access, with home-grown service Spotify dominating not only record-company earnings from digital music, but also total Swedish recorded-music trade revenue. While there has been an inevitable slowdown in the take-up of music subscriptions, the local IFPI branch said earlier this year that it was confident there was still room for growth and noted that interest in music in the country remained high. One of the ongoing beneficiaries of the digital growth has been authors’ society STIM, whose collections last year rose to record levels on the back of authors’ growing digital earnings. The live sector also registered a good year, with ticket sales to concerts and festivals registering healthy growth.
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The latest issue of Music & Copyright is now available for subscribers to download. Here are some of the highlights.
Mid-year trade results hint at a flat year for global recorded music sales
Almost all of the world’s biggest recorded music markets have published their mid-year sales figures. An assessment that the total global trade revenue from the sale of physical and digital recorded music and income from music access services will return to growth suggests the industry is heading for a stable year. Although music subscription services are continuing to experience gains in most of the leading markets, it remains on a knife edge as to whether the rise in record company earnings from access services this year will fully offset the lower income being generated by download and CD album sales. There have been some very positive mid-year results from countries that have suffered steady annual declines in recorded music sales for several years. But such is the ongoing dominance of a small number of markets, a return to global growth remains in the hands of the few.
SIAE reports slight growth in music repertoire collections in 2014
Italian authors’ society SIAE has reported a return to growth for royalty collections in 2014. Following a difficult 2013 when music collections fell and overall royalty income suffered a decline, SIAE said authors’ earnings from music repertoire edged up in 2014 with growth also reported for collections from dramatic works as well as opera. Although income from movies, literary works, and visual arts suffered a decline, the overall collection total for SIAE was positive. Digital music collections rose for the second consecutive year, but, as a share of total income, the collection source is still very low.
Rights holders use carrot and stick approach for music sampling
The art of music sampling had its heyday prior to the music industry’s sharp reversal of fortune. However, rights holders are increasingly eager to monetize the practice. Chasing unauthorized samplers through the courts is one way to do this, although EMI Production Music is choosing to give users of uncleared samples the opportunity to come clean, while also offering a spot of forgiveness for past sampling transgressions. But EMI’s initiative is a short-term promotional exercise above everything, and the threat of litigation will remain the primary mode of licensing enforcement — and revenue collection — going forward. However, those artists looking to legitimately use samples in their compositions are not finding it easy to clear rights and publishers really need to simplify their systems to accommodate them.
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 profile. Sweden has quickly become the world leader in terms of music access, with home-grown service Spotify dominating not only record company earnings from digital music, but also total Swedish recorded music trade revenue. There have been signs of a slowdown in music subscription take-up, but earlier this year the local IFPI branch said it was confident there was still considerable room for growth. The IFPI made its comments after mid-year figures hinted at a return to growth in total trade revenue after a slight dip in 2014. One of the major beneficiaries from the digital growth has been STIM, the authors’ society, with collections last year rising to record levels on the back of authors’ growing digital earnings.
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Earlier this week Sweden’s local music trade association Grammofonleverantorernas Forening (GLF) proudly reported that total trade revenues from recorded-music sales increased 5.1% last year, to SEK991.2 million (US$152.2 million), from SEK943.6 million in 2012. The rate of growth was lower than the 13.8% year-on-year increase in 2012, but higher than the 0.5% upswing in 2011. Streaming was the big winner, with record company earnings from services such as Spotify and WiMP rising to SEK705.9 million, from SEK541.6 million in 2012. Based on the latest GLF figures, streaming accounted for slightly more than 71% of total trade revenues in 2013, up from 57.4% in 2012 and just 1.5% in 2008.
In a statement, the GLF CEO Ludvig Werner said three straight years of growth had pushed trade revenues to their highest level since 2004. However, he cautioned that record company earnings are still just 60% of the peak year of 2000.
With all the headlines about Sweden’s streaming boom, it is easy to forget how big the Swedish recorded-music market once was and how far it has fallen. Moreover, there are plenty of questions over how high streaming sales can actually go, particularly given the slowdown in the growth rate of streaming earnings (30.3% in 2013, down from 55.4% in 2012).
In just six years, sales of CDs in Sweden have more than halved, yet there is little published evidence detailing whether those CD buyers have switched to digital or are simply buying less recorded-music. In the early years of digital, falling trade revenues were a clear indicator that consumers were either switching to unauthorized services, or abandoning the recorded-music industry altogether. Download sales have never really taken hold in Sweden and so the big unknown is whether music subscription services have attracted consumers that stopped buying recorded-music, or whether the services are simply causing a redistribution of trade revenues from CDs and downloads.
Rising earnings suggests the growth has come from more than simple cannibalization, but it would be easy to gloss over the possibility that fewer Swedes are spending money on recorded-music, and that those consumers that are spending, are spending more. If that is the case then there will be a limit on how big the streaming boom will take Sweden’s recorded-music sector. No one is expecting streaming sales to keep on rising, but if streaming can’t return record company earnings to 2000 levels, then what can?
Music & Copyright
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