By Eric Baptiste
CISAC, the international federation of copyright societies with 230 members in 120 countries, recently published its annual report on its members’ global collections. As Chairman of the Board of the organization, I’d like to share with you what I took from reading the document.
Even with a few caveats, for example:
- Exchange rate variations relative to the report’s reference currency (the Euro) have a huge impact and need to be taken into account,
- the numbers date back to 2013 because they are based on actual reported results for all the societies and not estimates,
- not all revenues that go to creators and music publishers flow through the collective management system (synchronization being a good example),
- some rare organizations, like HFA in the US, are not CISAC members and therefore their numbers are not included,
some trends are worth highlighting.
The most important takeaway has to be the enduring popularity of music (87% of all collections) and the strength of its monetization – with one big exception, the sale of music recordings (both physical and as downloads). This is of concern of course since, from the 1950s at least, recorded music has provided a big part of revenues for music creators and the businesses that invest in their talent and hard work such as publishers and record companies. Yet despite the decline of “mechanical” rights, exchange rate-adjusted figures showed a 4.6% growth to 7.8 billion euros (a bit more than $11 billion Canadian dollars).
Looking at continents, collections on behalf of creators still originate mainly from traditional markets like Europe, North America, Japan and Australia, but the 2015 report shows changes at play. While these mature markets remain strong and have generally grown, from admittedly low figures the BRICS are indeed emerging in this field with a particular strong performance from Latin America. Look for that to continue in the next few years, and for China to grow its collections significantly.
Turning the spotlight to the businesses that generated the royalties, as usually reported, the live music segment is still growing and, as a result, is more important than ever to creators.
Less often mentioned is the resilience of the “traditional” media outlets (radio, TV networks, specialty TV channels, etc.). They were supposed to die a few years ago, they were predicted to turn away from music. Predictions from pundits are fine, but the real world provides the truth: performing rights collections reached 6 billion euros for the first time ever, and the bulk of these rights (45% of all collections!) come from TV and radio. Digital services, both musical (Spotify, Rdio, Deezer…) or AV ones (e.g., Netflix) so far seem to be adding value to the market, not undermining the more traditional players.
This is good news for all creators and the businesses that sustain them, like publishers. Even if it is too early for a final pronouncement, that situation appears to be in line with the history of the entertainment and media industries so far: because people could buy records and then CDs, they didn’t stop going to concert halls or arenas; TV didn’t kill radio; DVDs and Blu-Ray didn’t empty movie theatres; and so on.
We’ll have to be vigilant though because if indeed “this time it is different,” Jeff Zucker’s famous remark when he was NBC Universal’s big boss could become true: analog dollars could be replaced by digital pennies.
And in fact, only 5% of CISAC members’ collections come from “digital” sources. Some reasons for that may offer hope for growth: lots of these services are not yet available in many countries, and they’re still young and their market share is small.
However, unless things change fast and these digital services prove that they can generate significant turnover and not just humongous market valuations, things could become ugly fairly soon.
A world without TV channels, but only “over the top” services at about $10 per month, will not sustain the audio-visual creativity that we have today with, for example, acclaimed TV series being produced in seemingly every corner of the world. No more sales of recorded music and no more radio – just ad-funded online services – will not sustain the music ecosystem. The numbers simply wouldn’t add up.
In the meantime, as reported by CISAC for 2013 and SOCAN for 2013 and 2014, music creators and their publishers can count on the strength, hard work and economic success of their Music Rights Organizations in these times of big change.