New issue of Music & Copyright with Canada country report

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

Reassessing the impact of COVID-19 on the music industry
Over the last 12-months of so, all sectors of the music industry have been forced to adjust to the impact on their businesses from the COVID-19 pandemic. Trading conditions have been unprecedented, and the overall situation remains fluid given the continued prevalence of the virus in some parts of the world. The live sector is yet to start on the road to recovery. Some trials and experiments to test the safety of live performance have been conducted, but the industry remains on hold. In contrast, the recorded-music sector has suffered far less, with streaming gains more than offsetting all other losses, and the continued renaissance of vinyl providing a buffer to the ongoing demise of the CD. Revenue from performance rights has fallen and there is more bad news to come on that front in the current year. Revenue for music publishers was mostly positive last year, but the timeline in processing distributions means the sector is only just experiencing a downturn.

PRS for Music details the impact of COVID-19 on collections
UK authors’ society PRS for Music has reported its financial results for 2020, a year dominated by the COVID-19 virus and one that will long be remembered as the worst in terms of year-on-year performance. Three of the four main revenue streams suffered a decline with public performance the hardest hit. The shuttering of the live sector in the UK at the end of March last year resulted in a massive fall in live collections, while restrictions on the hospitality and nightlife sectors led to similar rates of decline for pubs and clubs, and hotels and restaurants. Digital was the only sector to experience growth with collections from streaming, VOD, and downloads all rising. International income suffered a more modest decline. However, a number of major overseas societies will not distribute 2020 collections until 2021, and so a further dip in international receipts is expected. While distributions to its members increased to a new record, PRS is expecting the collection dip last year to take its toll on distributions in the current year.

How record companies are making the music play beyond the core
The horizons of the recorded-music business now seem to know few bounds. Organizations operating in the gaming and esports sectors have already established themselves as clear and vibrant partners, with music and artists set for further integration into games titles and live events. Podcasting is another obvious area for development, with the music scene and its protagonists always able to provide ripe material for compelling storytelling, while the sound tracking of strong narratives is something of a no-brainer. Perhaps an extreme development is UMG’s rollout of its hotels initiative in three locations in the US. Even so, with all these kinds of ventures, record companies need to ensure that the fit is good, both in terms of the sector they intend to move and shake in and the consumers who inhabit them.

Canada country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Canada music industry report. Canada is one of the world’s bigger music markets. Although an ever-present in the top 10, the country has slipped a couple of places in recent years with South Korea and China registering higher gains in trade sales. Last year, however, Canada maintained its position as the eighth biggest recorded-music market, extending its lead slightly over ninth-placed Australia. Recorded-music consumption levels were up last year, along with trade sales. Streaming again registered healthy growth, albeit at a slowing rate. Notable in last year’s results was that trade revenue of vinyl overtook CDs with the former scoring a big increase in sales that more than offset lower sales of the latter. Inevitably with the impact on music users in the country from COVID-19, performance rights revenue fell sharply. For the second straight year, UMG and SME enhanced their market share lead over WMG and the independents. SOCAN is yet to publish collection results for 2020. However, based on member guidance, Omdia estimates receipts were down year-on-year, with online the only positive. Canada’s live sector has been badly hit by the pandemic with ticket sales falling to the lowest level for more than 20 years.

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New issue of Music & Copyright with Chile country report

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

Privacy groups and national authorities express concerns over content upload filtering
Close to 60 civil rights groups have written an open letter to senior European lawmakers detailing their concerns over the European Commission’s (EC) new copyright legislation that would impose a new responsibility on internet platforms to filter content that their users upload. One year ago, the EC published a comprehensive set of reforms aimed at overhauling the current rules on copyright, to increase cultural diversity in Europe and in the content available online. Included in the plans was an obligation to deploy technology to automatically detect songs or audiovisual works that right holders have identified and agreed with the platforms either to authorize or remove. The privacy groups believe the proposal would impose excessive restrictions on citizens’ fundamental rights and would contradict existing rules and the case law of the European Court of Justice (ECJ). Some national authorities have also questioned the legitimacy of automated upload blocking.

Global royalty collections see positive year, with growth in reported and constant currency rates
Combined royalty collections for the world’s 20 biggest collective management organizations (CMOs) that have published results increased last year at both reported and constant currency exchange rates. With several of the top 20 CMOs reporting their financial results in euros, the stability of the currency against the dollar resulted in closer growth rates for the two currency measures than the previous CMO financials review. However, currency rates still affected the performance of some CMOs. French authors’ society SACEM remained the leader in terms of total revenue. Seventeen of the top 20 CMOs reported rises in collections. The US is the clear leader in terms of authors’ collections at country level, with combined collections by CMOs ASCAP and BMI topping the $2bn mark. Europe was the biggest region, accounting for more than half of the global total.

China’s streaming success set to usher in a sturdier music market
Once synonymous with piracy, the Chinese music market has entered the mainstream in recent years thanks to the popularity of digital content and smartphones among young Chinese users. The prime mover has been Tencent Music Entertainment (TME), which has built its business on the back of its parent company’s online strength, as well as on its exclusive rights deals. Having aggressively built its dominant position, TME is now looking to work together with rivals and artists to help develop a healthier local music market.

Chile country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Chile music industry report. Chile is South America’s fifth-largest recorded-music market. Following an almost decade-long decline, record-company earnings have been registering impressive annual growth since 2012. Sharp growth in streaming income saw trade earnings from digital sales overtake that from physical formats in 2015, and the gap widened significantly in 2016.

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Music & Copyright is published by Ovum.

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.

Prince’s estate files copyright infringement claim against Roc Nation
The estate of the artist Prince has filed a lawsuit at the US District Court for the District of Minnesota against Roc Nation, accusing the company of copyright infringement. According to the lawsuit, Roc Nation-owned and -controlled music subscription service Tidal has been streaming the late artist’s recorded-music catalog without the necessary license. Prior to his death in April, Prince had pulled his music from all streaming services and was a fierce critic of access services. However, an exclusive deal was agreed with Tidal in August 2015 to stream Prince’s final album, HitNRun: Phase 1. In June, Tidal added a number of Prince albums to its service, claiming to have signed a deal with the artist. Although the estate said it recognized the initial agreement for HitNRun: Phase 1, it said it was unaware of any further deal between Prince and Tidal.

Court rules GEMA should not distribute collections to publishers
A court in Germany has ruled that GEMA does not have the authority to distribute royalty collections to music publishers. A case was brought by two author members of GEMA, who successfully argued that they should receive both the publishers’ share and the authors’ share of collections, since it is the authors alone who introduce usage rights to GEMA. Although the full reasoning behind the court’s decision has not yet been published, the result echoed an April ruling by a different German court in a case brought by an author of scientific works against collection society VG Wort. In that case, the court ruled that WG Wort could pay out of license fees for statutory remuneration to publishers in exceptional cases only.

Podcast take-up is growing, but monetization remains a challenge
In the US, 89 million people have listened to a podcast, and 17% of the population are regular listeners, a proportion that has grown substantially in recent years. But while podcasts are popular, they generate strikingly little revenue. Audiences are fractured, and advertisers are skeptical of the medium. Nonetheless, nearly all newspapers, broadcasters, and other media organizations produce podcasts in some form. For them, podcasts are a low-cost means of building their multimedia offerings and developing their brands. Similarly, some specialist podcast producers use the medium for self-promotion, while others simply carve out a modest living talking about a subject they love. More effective monetization may be around the corner as technology improves and as growing podcast audiences attract more interest from advertisers. But while podcasts have considerable room for growth in profitability, they will remain challenging to monetize in the short term.

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’s two main music industry sectors, recorded and live, have both experienced positive times of late. Local trade association ZPAV signaled in September that strong midyear recorded-music sales in the country will result in a third straight year of growth. Higher trade earnings from physical formats and streaming were behind this year’s recorded-music gains. Although Poland has no live music trade association, local promoters have reported positive results for 2016 and are expecting a similarly good 2017. In contrast to recorded and live, royalty collections in the country have suffered two years of declines, with rising earnings from public performance more than offset by lower broadcasting collections.

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Music & Copyright is published by Ovum.

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 with Australia country report

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

Sony/ATV and Pandora sign second direct licensing deal
Music publisher Sony/ATV has signed a direct licensing deal with online radio service Pandora. Described by both companies as a “win-win,” the deal will see increased performance royalty rates payable by the digital music service to the publisher, while Pandora will benefit from greater rate certainty and the ability to add new flexibility to its product offering over time. The deal is the second direct agreement between the two: The first was signed in 2013 after Sony/ATV withdrew certain digital licensing rights licensing from the US performance rights organizations ASCAP and BMI. However, that deal was declared invalid by a rate court judge, who ruled that authors organizations’ partial withdrawals of licensing rights was not allowed under the consent decree and that blanket licenses offered by ASCAP and BMI music include all repertoire.

Report on Spotify’s revenue-neutral status raises more questions than it answers
A new report published by the European Commission’s Joint Research Centre has examined how the rise of music subscription service Spotify has affected sales of downloads and the popularity of unlicensed online music distribution. The report found that the use of Spotify does impact on download sales and goes some way to displacing music piracy. However, the report notes that losses from displaced sales are roughly outweighed by the gains in streaming revenue, meaning that Spotify is effectively revenue-neutral for the recorded music industry. Although the report’s conclusions are limited, given that Spotify was the only service used to measure the wider impact of streaming, it raises questions over the wider distribution of streaming revenue to the different rights holder groups and why, if streaming is revenue-neutral, are so many artists unhappy with their royalty payments.

Rightscorp and the high costs of copyright enforcement
US-based copyright enforcement company Rightscorp keeps making headlines, mostly for the wrong reasons. The firm may be able to count a handful of leading music publishers on its roster but it has yet to demonstrate that it can make its anti-piracy system work for its bottom line. In addition, Rightscorp has come under fire for alleged harassment of those it considers to be copyright infringers and is fighting a number of lawsuits. It is also in dispute with leading US ISPs Cox Communication and Comcast, the kinds of companies it needs to have on it is side if it is to be a commercial success. In short, Rightscorp seems to be having difficulties making friends right now.

Australia country report
In addition to the usual set of music industry statistics and news briefs, the latest issue of Music & Copyright includes a detailed Australia music industry profile. The Australian recorded music industry has endured a long period of falling sales. Although consumer interest in music subscriptions is strong, spending on music access services has not been able to offset declines elsewhere. The country looked to have turned the corner in 2012 with record company income from digital sales fully countering the drop in CD album sales. However, trade revenue contracted in 2013 and 2014 and prospects for future growth are not so good. In contrast to the recorded music sector, Australia’s live music industry has registered two years of rising ticket sales and attendance. Authors’ society APRA AMCOS is also experiencing its best years, with strong gains in digital income boosting total collections to record levels.

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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.

PRS for Music begins legal action against SoundCloud
UK authors’ society PRS for Music has begun legal action against the online audio streaming service SoundCloud. In a notice to its members, Karen Buse, executive director, membership and international at PRS, said the decision came after “careful consideration” and followed “five years of unsuccessful negotiations” to agree a license. No license means PRS members are not being paid for music streamed by the service. SoundCloud responded to the lawsuit by claiming that it does not need a license for its existing service and said it has deals in place with thousands of rights holders including record labels, publishers, and independent artists. The service described PRS’s actions as regrettable given that commercial negotiations with the authors’ society were ongoing.

Live music competition heats up in Germany as Live Nation muscles in
In August, the global events giant Live Nation Entertainment (LNE) formed Live Nation Concerts Germany (LNCG) with the local concert promoter Marek Lieberberg to promote concerts and festivals in Germany, Austria, and Switzerland from the beginning of next year. LNE said at the time that Lieberberg was the fifth largest promoter in the world and that the deal would add more than 700 shows and 2 million fans to LNE’s current platform of 23,000 shows for 60 million fans across more than 40 countries. Under the terms of the deal, Marek Lieberberg will be chief executive officer of the new division with Andre Lieberberg serving as president. However, LNE has already failed once to crack the German live music sector and there are no guarantees the company will succeed this time around.

Crunch time for SFX as company faces possible bankruptcy and break-up
Live music promoter SFX Entertainment is facing the real prospect of being broken up and sold after chairman and CEO Robert F.X. Sillerman failed in his move to take the company private. Sillerman has embarked on a second attempt to take back the company that went public at the end of 2013 but, with a new deadline of the beginning of October – a month that will also see Sillerman face up to legal claims from ex-business acquaintances that they were partly behind the founding of SFX – the future of the company looks bleak. Revenue keeps rising but so do losses and the ongoing uncertainty surrounding the future of company has driven up talk of bankruptcy and driven down the share price.

Physical formats are still the backbone of Japan’s recorded music sector
The Japanese music trade association, the RIAJ, has reported positive physical and digital recorded music trade figures for the first half of this year. Production levels of physical formats and record company earnings from digital sales and services increased year-on-year between January and June raising speculation that the total trade sales for the full year may return to growth after two consecutive years of decline. Although local record companies will welcome a rise in revenue, physical formats still account for around three-quarters of total trade income. Digital sales have proved resilient in the last year or so after some big annual falls, but should sales of CDs start going the same way as they have in many developed markets in the West, Japan’s recorded music sector may face some very tough times again.

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Music & Copyright is published by Ovum.

Why reports on the evolution of the music industry should focus on earnings and not on format wars

For anyone interested in the recorded-music industry and where it is headed, it is difficult to escape the many articles and reports speculating on how music will be served to consumers in the coming years. For those living in Norway or Sweden the answer is already very clear with music subscription services leading the charge to a growth in sales after countless years of decline. Such has been the rise in music subscriptions in the two countries, streaming now forms part of sales charts published each week. IFPI Norway added streaming to album charts from the beginning of November. Previously, the album chart had only included physical sales and downloads. Sweden added streaming to its national album chart in October. IFPI Norway said by including streaming figures the album and singles charts reflected “the total consumption of music in Norway.” Streaming has been included in the Norwegian singles chart since the spring of 2011.

Adding streaming usage to a sales chart is a natural progression in the collation of music sales and recognition of how accessing recorded-music has changed. Excluding streaming from sales charts, particularly in a country where the majority of trade revenues now come from subscription services, would make those charts incomplete, unrepresentative and irrelevant. Continue reading “Why reports on the evolution of the music industry should focus on earnings and not on format wars”

Has the music industry forgiven Justin Timberlake for his MySpace links and accusations of artist exploitation?

myspace_2452447bDepending on where a musician sits in the music industry value chain, a top-10 list of what’s most important to an unsigned artist will differ greatly to one compiled by a million-album seller. Scratching a living out of music is something tens of thousands of musicians do every day. Although the Internet has opened up the promotion and distribution of music to anyone with a computer, it has also made selling music a lot more difficult as almost every single release in a digital-music store is available for free somewhere online. Continue reading “Has the music industry forgiven Justin Timberlake for his MySpace links and accusations of artist exploitation?”

A short history of the music industry: different formats, familiar names but the same old problems

M&C coverIn the past 20 years or so, all sectors of the music industry have been through massive change. Format transitions, company consolidation and greater scrutiny of copyright and licensing have changed the industry beyond all recognition. But have the changes made for industry improvements, and more important, have the main players learned from their mistakes? The recent discovery of the first issues of Music & Copyright has allowed for a unique look at just how much certain things have changed, and how much they haven’t.

The newsletter’s 20-year anniversary came and went in September, but thanks to a long-standing subscriber, copies of the first 24 issues published have been found and make for interesting reading. Despite containing names that have either long since left the music industry or been swallowed up as part of industry consolidation, the headlines for a number of news stories resonate closely with happenings today. Continue reading “A short history of the music industry: different formats, familiar names but the same old problems”

Big differences in splits for digital-music performance and mechanical rights in EU-27

As the issue of multiterritory licensing comes under the spotlight in Europe, differences in rates charged and rights splits will become more evident. Will an EU directive that breaks down national borders be followed by a bigger push for deeper collection-society harmonization across the region?

With publication of the European Commission’s new multiterritory licensing proposals, Brussels’ efforts to harmonize the EU’s digital-music landscape are looking to build on legislation harmonizing authors’ and publishers’ rights that are managed by collection societies. Continue reading “Big differences in splits for digital-music performance and mechanical rights in EU-27”