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Independent publishers say that re-slicing the digital pie is the “defining issue” of the moment

By | Published on Friday 17 December 2021

IMPF Report 2021

The International Music Publishers Forum has launched a report reviewing the independent music publishing sector in 2020, with the study’s key conclusion being that the good old digital pie needs to be re-sliced to the song’s advantage.

The report summarises key trends in the songs business last year and the impact of the COVID pandemic on music publishers and songwriters. Most of those trends have been identified in earlier reports, though this one specifically hones in on where independent music publishers fit in.

By the IMPF’s maths, independent publishers accounted for about 28% of the music publishing market in 2020, which equates to about 1.68 billion euros in revenue. And of the top 50 most streamed songs on Spotify in various key markets, on average 46.8% were works that involve an indie publisher. The amount is lower in the UK and US (40% and 32% respectively), but higher in France and Japan (52% and 76%).

In terms of trends, obviously the songs side of the business was much harder hit by COVID-19 than the record industry, because the royalties generated by the live and public performance of music are much more important for songwriters and publishers.

And while it was live and public performance that was hardest hit, some broadcast and sync revenue streams also wobbled during the initial COVID lockdowns, and they too are key revenues in the music publishing sector.

Digital income in the main increased, of course, with the streaming boom unaffected by COVID-19, and that helped counter the losses elsewhere to an extent. Except, when it comes to streaming income, a much bigger portion is allocated to recordings than songs.

The split of streaming monies between songs and recordings is one of the key elements of the long running digital pie debate, which has escalated during the pandemic.

Although, of late, in the UK – where the digital pie conversation became a big political debate, of course – more focus has fallen on how the 50-55% of streaming monies allocated to recordings are shared between artists and labels.

In terms of increasing the 10-15% of streaming income allocated to songs, in the context of the UK #fixstreaming campaign, some would argue that the Competition & Markets Authority market study into the dominance of the majors is key.

That’s based on the argument that the majors being so dominant in recordings and songs is skewing things. Because with record deals the label generally gets a majority of the money, whereas with publishing deals the writer does. So if you have big catalogues of both recordings and songs, you’d prefer more streaming money to flow down the label side of the business.

The major publishers deny that they are hindered in deal negotiations by their sister record label divisions. And, in the US, where streaming royalties for songs are set in copyright law and decided by the Copyright Royalty Board – and it’s the streaming services rather than the labels which are the opponents in any hearings to set the rates – the National Music Publishers Association, of which the majors are key members, is pushing for an increase in the song’s share to 20%.

Generally the indie publishers – especially those with no significant interest in recordings – are more vocal on the need to re-slice the digital pie. Although they don’t always argue that any increase for the song should come from the recordings allocation, implying that maybe the streaming service’s cut should be reduced too.

In its report, IMPF goes big on the digital pie debate, saying it’s the “defining issue” for the publishing sector today. Though – while noting that labels are doing much better out of the streaming boom than the publishers – it also suggests that any re-slicing of the pie might involve the streaming services taking a smaller share.

“The issue of streaming rates is the most important and urgent priority for the wider community to address”, the report states. “It is, in fact, the defining issue of where we are at and where we are heading”.

“Rates for publishers have been low from the outset”, it goes on. “While record labels are reporting dramatic increases in revenues from streaming services, the publishing sector – and therefore the songwriters and composers they represent – does not benefit from this growth”.

Reviewing the approximate splits of the digital pie – with the song getting the smaller share – it then adds: “This is occurring at a time when the song itself is becoming more valuable as the business moves away from albums towards a track-based model. Simply put, songwriters, [collecting societies] and publishers need to generate a larger share of digital revenue”.

“The amount of revenue that streaming services make off the back of the work of creators and the gross disparity and inequality of what they pay out has reached scandalous proportions”, it concludes. “Streaming services need to increase their support for the work of composers and authors by paying up and paying fair!”

Of course, some would argue that – while the digital pie may well need re-slicing to the song’s advantage – there is another “important and urgent priority” for the music publishing sector today, which is dealing with the ongoing inefficiencies and inaccuracies in the way song rights are licensed and song royalties processed.

Those widely acknowledged inefficiencies all result in overly high admin costs, monies routinely going to the wrong people, and the wider publishing sector struggling to quickly respond to new digital opportunities as they arise.

The solution there, of course, is to address the music rights sector’s ongoing, never-ending and truly devastating data problems. But, admittedly, re-slicing pies seems a lot more Christmassy than fixing spreadsheets, so maybe IMPF is right to focus on the former at this time of year. Now I want a mince pie. And songwriters to get paid fairly, that too. But mainly a mince pie. Well, the mince pie first.

Meanwhile, here is the IMPF report.