Sony Bets on Music Publishing Market Share

Sony Corp. this week announced it will purchase an additional 60 percent stake in EMI Music Publishing from Mubadala Investment Company for $2.3 billion in cash, giving the Japanese conglomerate a 90 percent share of EMI’s portfolio of music copyrights, which includes works by Kanye West, Alicia Keys, Drake, , Pharrell Williams, Queen, and much of the Motown catalog.

The move comes as part of a broader strategy mapped out by Sony CEO Kenichiro Yoshida to shift the venerable hardware maker’s focus away from low-margin consumer electronics toward building a stable of diverse and stable revenue streams.

“In the entertainment space, we are focusing on building a strong IP portfolio, and I believe this acquisition will be a particularly significant milestone for our long-term growth,” Yoshida said in a statement announcing the EMI deal.

Beyond its strategic value to Sony, however, the deal also clearly has a clear financial predicate: As growth in paid streaming continues to revive the recorded music business, the value of music publishing rights is also growing. The $2.3 billion Sony is paying for 60 percent of EMI values the full EMI catalog at $4.75 billion, more than double its price in 2012 when Mubadala and Sony first invested in the company.

The deal will also make Sony ATV the world’s largest music publisher by far, with a roughly 30 percent  share of the market

Number two publisher, Universal Music Group, with just under 20 percent of the market according to IFPI data, is also feeling bullish about the value of its portfolio. UMG’s parent company Vivendi has been teasing the possibility of a sale or spin-out of the music company, which includes a record label group in addition to its publishing assets to cash in on the growing value of its catalog.

EMI’s financial value to Sony, however, could be even larger than the raw calculation of its increased market share. The music industry’s still-chaotic data environment results in a vast but unaccounted pool of publishing royalties generated by streaming and other uses that are never attributed to the proper rights owners. Those moneys are eventually distributed by the performance rights organizations to music publishers based on the publishers’ market shares.

Since larger publishers are in the best position to negotiate with the PROs, they almost certainly end up collecting a disproportionate share of the kitty. For Sony, a bigger market share will likely mean an even bigger share of the unattributed royalties.

With the Music Modernization Act poised to pass the Senate and head to the president’s desk, moreover, a new pool of unattributed publishing royalties created by the MMA’s new blanket license for mechanical rights is also slated to be distributed on the basis of market share, yielding another windfall for the largest publishers.

The MMA itself, however, could contain the seeds of the unraveling of the “black box” premium currently enjoyed by the largest publishers. The bill calls for creation of a new open music rights database, to be maintained by the U.S. Copyright Office, intended to reduce the amount of unattributable royalty revenue collected by better matching sound recordings to the rights owners of the underlying compositions.

In fact, the music industry is currently bubbling with similar initiatives, such as the pilot program recently launched by rights-tech startup JAAK in partnership with Warner/Chapel Music Publishing in BMG. Both Warner/Chapel and BMG are far smaller than Sony ATV and UMG and so benefit proportionately less from the market share based spoils system.

Both the efforts to tackle music’s “black box” problem, and the investment environment for rights portfolios and rights management generally will be hot topics at the 2018 RightsTech Summit in October. For information on how to register for the conference click here.

Annual Global Royalty Collections Hit $10.8 Billion in 2016

Score one for the power of collection rights management. The International Confederation of Societies of Authors and Composers (CISAC), which represents over 230 authors societies in the music, audiovisual, literary, dramatic, and visual arts industries around the world, released its annual Global Collections Report this week which showed global royalty collections by its member organizations reaching a record €9.2 billion (US $10.8 billion) in 2016, up 6 percent from 2015.

Music royalties, which make up the bulk of CISAC-member collections, rose 7 percent for the year, to €8.0 billion (US $9.4 billion) powered by rapid growth in streaming services in several major markets. The U.S. and Canada saw the biggest increase, at 12.5 percent, followed by the Asia-Pacific region, which grew 10.3 percent.

Use of collectively managed works, primarily music, in traditional TV and radio programming accounted for the largest slice of the collections pie, at 42.8 percent, followed by live performances and background uses, at 29.6 percent. Digital uses, however, which include music and video streaming, saw the fastest year-over-year growth, surging 51.4 percent, and now account for 10.4 percent of all collections worldwide.

The reported noted that sluggish growth in collections from video streaming services in some markets prevented the digital category from growing even faster. Declines in traditional TV viewing and the loss of viewers to over-the-top services actually led to a 1.4 percent year-over-year decline in collections from the traditional TV and radio channel.

Whether the overall surge in royalty collections by CMOs is translating into higher payments to artists and creators, however, remains a matter of contention in many creative industries, particularly music. Many songwriters, for instance, have seen their incomes fall as the bulk of music industry revenue as shifted from the sale of individual recordings to collectively managed streaming licenses.

CISAC executive director Gadi Oron, however, sees the latest results as a vindication of collective management.

“This year’s report shows the system of collective management of creators’ rights is robust, successful and ready for more growth, he said in a statement. “The big traditional revenue streams, led by broadcast and live performance, remain stable and strong. Digital royalties continue to surge and in some markets already overtake other forms of income.”

CISAC president Jean-Michel Jarre, however, himself an electronic music composer, acknowledged artists’ frustrations with current revenue flows, but put the blame on digital platforms rather than on any shortcomings in the collective-management system per se.

“Despite [the sector’s]growth…collections are nowhere near the level they should be,” he said. “Large industries that use creative content are driving down the value of our works.  A simple illustration of this is the ‘transfer of value’ in the digital market where platforms such as YouTube are paying mere crumbs to authors.”

The full, 72-page report can be downloaded here.



Mixcloud Attracts 1 Million Music Curators With Royalties Paid, No Venture Funding

Online radio platform Mixcloud announced that more than 1 million uploaders have contributed radio shows, DJ mixes and Podcasts to the service. Collectively they’ve made more than 10 million shows available for streaming. On average, listeners stream more than 2 million unique shows monthly.

The lean 15 member team at the 8 year old London and New York based startup has never taken a dime of funding while at  the same time paying music licenses from the time it launched. Income is generated from brand partnerships with the likes of Red Bull, Adidas and Coca Cola.

Source: Mixcloud Attracts 1 Million Music Curators With Royalties Paid, No Venture Funding – hypebot

Copyright Royalty Board? Statutory, Mechanical Performance? A Primer for the World of Music Licensing and Its Pricing

The Copyright Royalty Board (CRB) is currently fielding proposals from stakeholders around a new rate-setting process that will cover 2018-22, a process that is causing high drama in the music industry as stakeholders debate publicly over each others’ proposals.

The highest-profile of these disagreements stems from the National Music Publishers’ Assn. (NMPA) and the Nashville Songwriters Assn. International (NSAI), which have jointly criticized Sony Music Entertainment for its participation in the rate-setting process. Essentially, publishers and songwriters are on one side, and on-demand (or “interactive”) digital music services like Spotify are on the other.

Source: Copyright Royalty Board? Statutory, Mechanical Performance? A Primer for the World of Music Licensing and Its Pricing | Billboard

Canadian Music Rights Company Acquires Royalty Collection Startup 

Audiam, a company that collects missing streaming royalties for songwriters such as Bob Dylan, James Taylor and Metallica, has been acquired by a Canadian performing rights group.

The Society of Composers, Authors and Music Publishers of Canada, whose clients include star acts from R&B’s the Weeknd to rock band Nickelback, bought Audiam as part of its effort to more efficiently identify its clients’ compositions when they are played on digital services such as Spotify AB, Apple Inc.’s Apple Music, Pandora Media Inc. and Alphabet Inc.’s YouTube—and to pay them for all such instances.

Source: Canadian Music Rights Company Acquires Royalty Collection Startup – WSJ

How Much Are Pay Per Stream Royalties Really Costing Musicians? 

Is it fair that a 50-second song costs the same as a 20-minute composition? Back in the days of album-driven sales, track length didn’t matter much. If an album contains 50 tracks of 1 minute each (punk, grindcore), it would sell for roughly same price as an album with 3 tracks lasting 20 minutes each (post-rock, ambient).

Streaming services have changed this. Payouts occur on a per-stream basis. All songs treated equally. This means that if the amount paid per-stream is something like $0.005, Godspeed You! Black Emperor would make just 2 cents every time someone listens to Lift Your Skinny Fists Like Antennas to Heaven (runtime: 1h27m).

Source: How Much Are Pay Per Stream Royalties Really Costing Musicians? – hypebot

TuneCore Artists Earned $42 Million Last Quarter, Up 16% 

tunecore_logoTuneCore artists earned $42 million in the first quarter of 2016, up 16% from the same quarter last year. Revenue from music streaming services like Spotify, TIDAL, Deezer and Rhaposdy has grown significantly, according to the digital music distributor.

More new TuneCore stats:

  • TuneCore artists’ earnings have grown by 730% from YouTube Art Tracks
  • Gross revenue has increased by 126% from YouTube Sound Recordings.
  • The Publishing Administration arm of TuneCore has seen a 188% increase in sync revenue.
  • Placements in popular TV shows include Empire, Grey’s Anatomy, The Goldbergs and Shameless.

Source: TuneCore Artists Earned $42 Million Last Quarter, Up 16% – hypebot

Irving Azoff Calls on Music Industry to ‘Work Together’ in NMPA Keynote 

In a keynote address at the National Music Publishers’ Assn. legendary music industry executive Irving Azoff called upon the music industry to work together.

“The music industry has never been more powerful and popular and we as an industry have never done a shittier job of rallying together as one industry,” Azoff said. “We should work together to solve the root of the problem” — fair compensation. “I had one artist who was making $450,000 a year between all of his royalties,” Azoff said. Now after the digital revolution, he is down to making “$40,000 a year.”

Source: Irving Azoff Calls on Music Industry to ‘Work Together’ in National Music Publishers’ Assn. Keynote | Billboard

Digital Music Era Ushers In New Rights for Veteran Studio Musicians 

harmonicaPaul Harrington, a leading session player on harmonica based in Rockwall, Texas, today announced that after a lengthy quest he has received digital session royalties for the Pitbull track, “Timber,” featuring Ke$ha.

Mr. Harrington was hired in 2013 to record the song’s signature harmonica riff, which kicks off the song and weaves through the entire tune. While he was compensated a meager amount for his time, Mr. Harrington, as with many session players, did not realize that there was money left on the table – a little known royalty owed to session musicians for digital airplay.

Source: Digital Music Era Ushers In New Rights for Veteran Studio Musicians | Business Wire

Nikki Sixx Launches Campaign to get YouTube to ‘Do the Right Thing’ over Music Royalties

Mötley Crüe co-founder Nikki Sixx is the latest musician to criticise YouTube over the royalties it pays out for music video streams. Sixx’s call for the video site to pay more to musicians for using their videos is part of a campaign by a coalition of prominent musicians launching this week, with pressure to be put first on YouTube, then on US legislators.

Sixx and James Michael – partner in his current band Sixx:AM – are calling for more artists to speak out and put pressure on YouTube to match the royalty payouts of music streaming rivals. A number of big names are expected to speak out this week.

Source: The Guardian

Get the latest RightsTech news and analysis delivered directly in your inbox every week
We respect your privacy.