CMU Weekly Editor's Letter

CMU Weekly – Friday 8 Apr 2011

By | Published on Friday 8 April 2011

Andy Malt

In last week’s CMU Daily, and the most recent edition of that there CMU Weekly podcast, we discussed the announcement earlier this month that PRS For Music’s revenue – ie the money it brings in for the songwriters and music publishers it represents from record labels, broadcasters, gig promoters and the owners of any public space where live or recorded music can be heard – had fallen for the first time ever. With just a 1% decline, the fall might seem insignificant, but some see this as the calm before the storm.

Of course, we’re regularly told that music publishing – the bit of the industry that makes money from songs rather than recordings – is one of the areas that will plug the gap as record sales continue to freefall. Artists who write their own songs will make more from their publishing royalties, and the labels who invest in them will start taking a cut of that money to help pay back their investment. But when a sizable chunk of publishing revenue is directly linked to record sales – ie the publisher gets a cut everytime a record is sold – that might be false hope.

Of course record sales have been slumping for years now, and PRS – which collects many though not all publishing royalties – has been bringing in ever more cash for its members each year. How? Well, firstly there are the other customers of songs, like broadcasters, gig promoters, pubs, bars, venues and digital service providers. There are more of those sorts of organisations wanting to use music than ever before – and PRS has got better at going after those who try to circumvent their copyright duties – so those income streams have been on the up year on year, compensating for the slump in record sale revenue, until now.

Another way in which PRS, and other royalty agencies, are clawing in more money to compensate for declining record sales is by convincing territories that have traditionally been a bit lax on copyright and royalties to start paying up. Political shifts around the world can help in that regard – each time a country traditionally hostile to the West decides it really wants to do business with Western corporations, there is an opportunity for rights owners and Western politicians to urge these countries to put their copyright systems in order. This is a slow process, but some progress is being made in some territories – Russia for example.

But the big nut to crack is China. Again progress is slow, though the Chinese government has begun to crackdown on piracy and the country’s Ministry Of Public Security recently published a detailed list of penalties for online copyright infringement, which included up to seven years in jail for more prolific offenders. Which was in part the reason why the country’s most popular file-sharing network – VeryCD – took all infringing content offline back in January and attempted to go legit.

Far better known than VeryCD, though, is Baidu, China’s biggest search engine. Baidu has been the target of a lot of criticism and a little bit of litigation from the music industry over the years for its MP3 search function, which lets users specifically search the net for MP3 files by artist or song name. The vast majority of the MP3s linked to come from unlicensed servers, some of which – according to past reports in The Register – could only be accessed via the search engine, suggesting the Chinese company was deliberately rather than incidentally providing access to copyright infringing music. Either way, the result was the same, easy access to millions of unlicensed free downloads.

But at the start of the week it was announced that the site had struck a deal with the Music Copyright Society Of China, China’s only collecting society, which has affiliations with various rights bodies elsewhere around the world, including the aforementioned PRS. Under this agreement, Baidu will now pass a share of advertising revenue on for every track accessed via the search platform. What’s more, the web firm then announced it is planning on launching a fully-functional fully-licensed digital music service for Chinese net users in May. Exactly what royalties rights owners will earn from all this is yet been revealed, but even if it is tiny – which it almost certainly will be – at least it’s a step up from nothing.

And if the Western industry could crack China – well, the doom and gloom might really start slipping away. True, there is a very long way to go, and domestic artists always do better there than Western acts. But the Chinese market is so big and growing so fast, any real breakthrough over there potentially opens up a large new revenue stream.

So look, I’m being all upbeat. Perhaps this is because as you read this I’ll be in Italy soaking up some sun and doing my best to actually take a holiday. That fact means that while we have a CMU Weekly bulletin for you this week, there is no podcast. But why not use this as an opportunity to catch up on a past week’s edition at (that’s where the ‘this week’s podcast’ buttons will take you this week), and then sign up to receive it every week via iTunes or RSS?

Andy Malt
Editor, CMU

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