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Total music right revenues rose 2.7%, according to Will Page’s latest study

By | Published on Friday 19 November 2021

Will Page

Will Page – the former Spotify economist and author of the book ‘Tarzan Economics’ – published his latest overview of the wider music copyright business earlier this week, concluding that in 2020 music rights generated $32.5 billion, a 2.7% uplift from 2019 despite the COVID pandemic hitting some key revenue streams.

Page has been seeking to put a value on the wider music copyright business for a number of years now. Although the International Federation Of The Phonographic Industry puts out an annual report of global recorded music revenues, and CISAC publishes a round up of monies collected by the song right collecting societies, there are gaps and overlaps with those two reports.

First, mechanical royalties paid to publishers by labels when physical discs are sold appear in both reports. Meanwhile, monies collected directly my music publishers around sync deals and, increasingly, streaming (especially with Anglo-American repertoire) are not accounted for in either studies.

Page’s annual review removes the overlaps and attempts to fill the gaps. He reckons that means recorded music generated $21.1 billion in 2020, with song royalties passing through the collective licensing system totalling $9.3 billion, and publishers generating an additional $2.1 billion in direct revenues.

2020 was dominated by the pandemic, of course, and in the music rights domain COVID affected different revenue streams in different ways. Monies due from the live and public performance of music, and broadcast and sync, were all negatively impacted. Meanwhile, streaming continued to boom, if anything helped by the lockdowns, which possibly persuaded more people to start paying to stream.

Because the way monies are split between recording rights and song rights are different depending on revenue stream, COVID hit songwriters and publishers much more than it hit the record industry. Which means recorded music accounted for nearly two thirds of music right revenues in 2020.

In an article for Music & Copyright – also published on Page’s blog – he writes: “The lockdown boom of streaming revenue and bust to performing rights collections gave labels almost two-thirds of the pie (64.9%) and publishers just over one-third (35.1%). When this exercise was first conducted in 2014, the split was more even, at 55% for the labels and 45% for publishing. The scales have really tipped”.

“But will they tip back toward publishers as bars and restaurants reopen and public performance collections recover?” he adds “Or will labels cement their lead as streaming revenue grows even faster? Lest we forget, there’s a policy angle at play, with a UK parliamentary inquiry having amplified the cries for a more balanced distribution of streaming between labels and publishers. These cries may yet grow louder, and more contagious”.

That UK parliamentary inquiry, of course, put the spotlight on the economics of streaming, and how streaming monies are shared out between artists, labels, songwriters, publishers and the streaming services themselves. Among other things, there was much discussion as to whether the current approximate split of digital income – whereby 50-55% of streaming monies go to recording rights, and 10-15% to song rights – was fair.

Beyond any re-slicing of the digital pie when it comes to the Spotify-style business model, Page also considers what the big growth music right revenue streams of the next decade might be, and whether they will favour recording rights or song rights.

He notes the revenues that are now coming into the music industry from fitness apps like Peloton, which use music in their video content. This new revenue stream could favour song rights, he reckons, because it’s basically a sync scenario, where traditionally monies are split more like 50/50 between songs and recordings.

Plus “the prominence of covers in these types of content would tip the scales toward publishers” – and if any new entrants in this market look to save costs on music, “library music becomes relatively more attractive”, which tends to sit on the music publishing side of the business.

That said, the ongoing rise of TikTok probably favours recording rights, given that those platforms are treated as on-demand streaming services with Spotify-style splits.

Although, some in the songwriting community are now starting to ask why a platform that clearly involves synchronising music into short-form video is being treated as a streaming service and not a sync scenario, where the song rights could demand a bigger cut.

Plus, Page notes, there might be additional opportunities for songwriters and music publishers on the video sharing platforms if services shift into the karaoke or covers domain, with the record industry’s original recordings not getting used.

Finally, Page also considers the livestreaming spike that occurred during the pandemic. “The question is how will livestreaming and (real) live music coexist?” he muses. “We could have a situation where five million fans are backstage livestreaming with their favourite band before they go out to perform to 50,000 fans in a muddy field”.

“With respect to the balance in copyright, this is all publisher upside”, he concludes. “First, there is the return of live performance – silenced during the pandemic – which will add to publisher coffers. Second, there’s the addition of livestreaming, which creates a new revenue stream for songwriters, publishers and their [collecting societies]”.

You can read Page’s full post here.