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Streaming fuels growth in the songs business, though digital still only a fifth of collecting society revenues
By Chris Cooke | Published on Thursday 7 November 2019
The streaming boom is fuelling growth in the songs business as well as the record industry according to the latest stats pack from CISAC, the global grouping of song right collecting societies. Although digital still only counts for 19.1% of the money collected by those societies worldwide, partly because of how streaming cash is shared out between the rights, and partly because of the complexities of digital licensing.
The music data aggregated by CISAC through its network of societies each year provides an overview of all the scenarios in which song rights are licensed through the collective licensing system. Total music collections for 2018 were 8.49 billion euros, a 1.8% increase on 2017. Royalties collected from digital services were up 29.6% to 1.62 billion euros. Over the last five years digital income recorded by CISAC has increased a massive 185%.
But, despite digital income booming, and fuelling the overall growth, significantly more money is still collected from more traditional licensees, in particular broadcasters and the live sector. This despite there being a slight decline in broadcast collections which CISAC puts down to the slow shift of advertising budgets from TV and radio to digital, societies often having revenue share arrangements with key broadcast licensees.
But TV and radio income is nevertheless the biggest revenue stream overall accounting for 38.8% of total collections, while live and background music accounts for 30.3%.
One of the key reasons why digital makes up about a fifth of CISAC collections – while digital services accounted for 59% of recorded music revenues in 2018 – is the way monies from digital services are shared out across the music industry.
With downloads and streams much more is allocated to the recordings than the songs. Whereas when recordings are broadcast or played in a public space, monies are usually more equally split (if anything, songs get more). And with live music, where no recordings are used, only the songwriters and music publishers earn royalties.
Although it’s also important to note that with Anglo-American repertoire, many music publishers now license digital services directly rather than via the collective licensing system.
And while some of the money paid under those deals (specifically the digital income allocated to the performing rights or at least the writer’s share of that allocation) will still flow through the collecting societies – and therefore feature in CISAC data – not all digital income is counted.
In terms of regional trends, the US still sees by far the highest collections for songwriters and publishers, followed by France, Japan, Germany and the UK. Europe still accounts for more than half of total collections, though there is impressive growth in some key emerging markets, especially in Asia.
Beyond the stats, CISAC uses its latest report to again talk about the value gap, or what it has more often referred to as the ‘transfer of value’ caused by the pesky copyright safe harbour. There has, of course, been a big development in that domain since the last CISAC report with the passing of the European Copyright Directive and the safe harbour reform contained in article seventeen, which increases the liabilities of user-upload platforms.
CISAC boss Gadi Oron unsurprisingly welcomes this development in the report, noting: “The directive confirms what rightsholders have known for years: that safe harbours are a 20th century solution to a 21st century problem. A necessary aid to protect start-ups from liability in the 1990s, but obsolete and unfair for use by the global tech giants of today”.
However, even though the directive has been passed, work remains, both in Europe and beyond. The report states: “If 2019 was about securing the directive’s adoption in the EU, 2020 will be about the critical campaign for correct implementation, as well as the opportunities Europe’s action presents for legislators globally. The EU directive is not a simple legal template for other markets, but it lays down principles with important global implications. These affect discussions and reviews including in the US, Japan, Australia, New Zealand and China”.
On the wider trends in the songs business summarised in the new report, Oron adds: “This report provides many reasons for optimism about our sector. Digital revenues show an impressive increase, have nearly tripled in the last five years and have enormous potential for further growth. More markets are seeing digital income taking the top position of all revenue streams, which is an extremely positive sign. In a landscape of fragmenting income sources, the role of authors’ societies in generating monetary value for millions of creators has never been more vital”.
Meanwhile, CISAC President Jean-Michel Jarre directly connected the report with the safe harbour reforms in Europe, stating: “Digital is our future and revenues to creators are rising fast, but there is a dark side to digital, and it is caused by a fundamental flaw in the legal environment that continues to devalue creators and their works. That is why the European Copyright Directive is so momentous for creators everywhere. The directive has sent an amazing, positive signal around the world, building a fairer balance between creators and the tech platforms”.
You can download the new CISAC Global Collections Report here.
