When royalty collection costs outweigh the benefits, is it smaller artists that miss out?

Blog picThe accuracy of data regarding the reported use of music is key in determining the level of royalties paid to authors, publishers, performers and producers. Improvements in technology to identify what music has been played and performed at all manner of venues and establishments has resulted in higher collections and greater confidence that royalties are reaching the correct recipients. But is there a point where collection costs outweigh the benefits? And if so, are the smaller, less commercial artists the ones in danger of missing out? Continue reading “When royalty collection costs outweigh the benefits, is it smaller artists that miss out?”

Artists and composers swim against the tide in the battle of rights

Last month the European Composer & Songwriter Alliance (ECSA) held a press conference at the Silken Berlaymont Hotel in Brussels to brief news reporters about a stance it was taking against European broadcasters on behalf of music composers. ECSA accused Europe’s leading broadcasters of forcing composers to give up their rights in return for TV commissions. Big names in broadcasting, such as RTL, ITV, BskyB, TF1, ZDF and Rai, were all accused of operating a system called coercive commissioning – in return for awarding a composer with a commission, the composer must assign all rights in the music to the broadcaster or TV production company. Put simply, no rights, no commission. Continue reading “Artists and composers swim against the tide in the battle of rights”

Global performance-rights defy the global recession

New research published by Music & Copyright reveals that total distributions of performance-rights collections increased to US$1.46 million last year. However, the volatility of the currency markets greatly affected the year-on-year comparison. Excluding these exchange-rate fluctuations, global performance-rights distributions were up 6.3%.

With much of the focus on how the recorded-music industry has fared from year to year centered on the sale of music, the contribution to both record companies and performers from performance-rights collections is often overlooked. Recent years have seen performance-rights collections rise, in complete contrast to the falls in recorded-music sales.

Music & Copyright has calculated that performance-rights distributions to record producers totaled US$794.6 million, up 2.2% from US$777.4 million in 2008. But at constant currency exchange rates, distributions increased 8.2% last year. For performers, distributions last year stood at US$664.9 million, down 1.2% from US$672.7 million in 2008. At constant currency rates, distributions to performers rose 4.1%.

Europe is the largest region for performance rights. In 2009 it accounted for 64.8% of the global distribution total, down from 70.7% in 2008. Distributions in Europe decreased 7.8%, to US$945.5 million. At constant currency rates, distributions in Europe were flat. Several unconnected factors conspired to exaggerate the decline in European collections. The largest performance-rights society in the world in terms of representation, the UK’s Phonographic Performance (PPL), was hit by a ruling late last year by the UK Copyright Tribunal regarding the rates payable by pubs, bars, restaurants, offices and factories, which meant distributions to performers and producers were down. Problems with the Italian performers’ society IMAIE meant distributions were affected. IMAIE went into liquidation in July last year, and therefore royalties collected for performers have not been paid.

In terms of potential for growth, low collection rates in the less developed regions of the world suggest that countries in Eastern Europe, Latin America and Asia Pacific should be the main targets. However, the US still offers the greatest prospects, particularly in light of the continuing strong performance of digital-performance-rights society SoundExchange.

A resolution to the performance-rights issue in the US still seems a long way off. US copyright legislation exempts AM/FM-radio broadcasters from this type of rights, and the passage of new legislation to change this is making slow progress. The Performance Rights Bill (PRB) has been considered in committee and is awaiting approval in Congress and the Senate. Few estimates exist as to what the potential payments from terrestrial broadcasters could be if the bill is passed. However, SoundExchange has offered a glimpse of the revenues that might be possible. In 2009 it distributed US$155.5 million to producers and performers, up from US$100 million in 2008.

Music & Copyright is a fortnightly research service published by Informa Telecoms & Media.

US Performance Rights Act edges closer

The move to force AM/FM radio stations in the US to pay performance royalties has gathered speed following approval of legislation by the Senate Judiciary Committee. Although digital radio services in the US are already paying performance rights fees, their AM/FM counterparts only pay composers. The Performance Rights Act must now pass through both houses of Congress before it becomes law.

With recorded music sales continuing to fall in almost all developed territories, the positive position of global performance rights distributions to producers and performers is providing some relief. Total distributions of performance rights collections increased by 16% to US$1.5 billion in 2008, up from US$1.3 billion in 2007. The level of distributions to producers and performers is still dwarfed by authors’ revenues, but the growth in this revenue source is providing both producers and performers with a valuable income stream, at a time when the main source of income is continuing to fall.

We at Music & Copyright have calculated that performance rights distributions to record producers totaled US$790.1 million in 2008. This compared with US$712.7 million in payments to performers. Europe is the largest region for performance rights, accounting for around 72% of the total. In most cases broadcasting accounts for the largest share of performance rights revenues followed by public performance, although this can vary from country to country.

Performance rights royalties for producers and performers are often the responsibility of a single collection society. However, the structure and process of distribution can vary greatly from country to country, partly because of varying national legislation and international copyright treaties.

Although the greatest scope for growth of performance rights collections is in regions such as Eastern Europe, Latin America and Asia, the US has possibly the greatest potential of all. It had one of the largest increases in collections in 2008. SoundExchange collects performance rights for music and its 2008 distribution figure stood at US$100 million, up from US$36 million in 2007. However, the absence of a terrestrial radio agreement is a glaring omission. The National Association of Broadcasters has maintained that music played on the radio offers free promotion and boosts sales and so should not incur any broadcast fee.

China is also a glaring omission as a country that does not recognise performance rights. Although China amended its copyright law to provide a right of remuneration for the public performance of music as part of its commitment to TRIPS, it took several years for it to draft a schedule of tariffs, which were then blocked by the State Administration of Radio, Film, and Television. No new tariffs have been proposed. Other countries that do not recognise performance rights include Iraq, Iran and North Korea.

The largest single performance rights collection society in terms of revenues is the UK’s Phonographic Performance. In 2008 PPL licensing revenues increased by 11% to £127.6 million (US$186.7 million) compared with £115 million in 2007. The Dutch neighboring-rights society SENA had one of the lowest cost percentages of any collection society, at just 9.2% in 2008. It also has one of the highest levels of performance rights payments compared with the overall recorded music market. For 2008 the share stood at 25.1%.

Music & Copyright is a fortnightly research service published by Informa Telecoms & Media. Please join us at Linkedin