Will Page says “music copyright has never had it so good” as global revenues reach almost $40 billion

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By Chris Cooke | Published on Friday 4 November 2022

Former Spotify economist Will Page has said that “music copyright has never had it so good”, with – by his calculations – the value of the wider music rights business now almost $40 billion worldwide.

The total value of music copyright in 2021, says a new report from Page, was up 18% to $39.6 billion, and would have been higher had the pandemic not impacted on certain music right revenue streams, such as live and public performance royalties.

However, he notes, without the pandemic, streaming might not have accelerated at quite the same level. So, swings and roundabouts.

Page has been estimating the value of the wider music copyright sector for a number of years now by aggregating and comparing industry data from various sources. That includes data on the recorded music market compiled by the International Federation Of The Phonographic Industry, and data about all the money collected by song right collecting societies around the world compiled by global collecting society grouping CISAC.

However, the annual stat packs published by IFPI and CISAC don’t cover all the revenue streams. For example, revenues generated by music publishers through sync deals and their direct deals with the streaming services are not included. Therefore Page also consults other sources such as Music & Copyright’s analysis of music publishing and, for the first time this year, estimates made by music business consultancy MIDIA regarding the revenues generated by those production music firms that operate outside of the collective licensing system, like Epidemic Sound.

Having crunched all of that data, Page’s report finds that the majority of music right revenues – 66% – is being generated on the recordings side of the business, so by the record industry, meaning that the songs side of the sector, which is to say music publishing, accounts for 34%. That’s a slight shift in favour of the record industry compared to 2020, when Page calculated 64.9% was generated by recordings and 35.1% by songs. And that’s an ongoing shift that’s been underway for a few years now – when Page first did this study in 2014 it was 55% recordings and 45% songs.

There’s a difference because of how income is split between recordings and songs is different depending on the specific revenue stream. With some revenue streams recordings and songs earn more or less the same. With some revenue streams – such as live music – only the songs earn. And with some revenue streams the majority of the money goes to the recordings.

Using Page’s terminology, ‘consumer spend’ revenue streams tend to favour recordings, while ‘business licensing’ is good for songs. And in recent years consumer spending on streaming has been the big growth revenue stream, while the licensing of live music and businesses that play recorded music in public was most heavily hit by the pandemic.

Discussing the trend in which recordings increasingly dominate over songs, Page says that’s because of “the recovery in consumer spend on music, which traditionally favours labels over publishing. This has been accentuated by the pandemic’s adverse impact on business licensing, which traditionally favours publishers over labels”.

While streaming does favour recordings over songs, the ongoing streaming boom is nevertheless benefiting the entire music copyright sector. And streaming now accounts for the majority of wider music copyright revenues – by Page’s calculations 55% of revenues in 2021 – up from 52% in 2020 and just 30% back in 2017.

So, while the debate over how streaming monies are split between recordings and songs continues, the entire sector is still benefiting from the streaming boom.

“The great news is the value of copyright keeps on growing”, Page writes. “Nostalgia has long been the biggest enemy of the music industry – a misplaced belief that we need to get back to the ‘good old days’ when record labels used to sell CDs to stores by the weight-of-pallet. Nostalgia can mislead and misinform – music copyright has never had it so good”.

The streaming boom has also ensured that wider music copyright revenues have continued to grow despite the impact of the pandemic on things like live and public performance licensing.

Page also considers the extent to which the COVID effect on those latter revenue streams constrained the impact of the streaming boom on total revenues. Although, he adds, the COVID lockdowns and resulting spike in demand for home entertainment possibly boosted growth at the streaming services.

“If we look at revenues across a two year time span, from (pre-pandemic) 2019 to the present, we see how performing rights have suffered, by $0.5 billion”, he writes.

“On one hand, had the world not entered lockdown, and performing rights income had continued growing at a 6% a year, then arguably they would be $1 billion higher today ($9.4 billion, not $8.4 billion), bringing the grand total past $40 billion. Yet on the other hand, had the pandemic not happened, streaming may never have accelerated the way it did”.

As noted, for the first time this year Page also includes stats relating to those production music firms that operate outside of the collective licensing system, of which Epidemic Sound is the market leader.

Production music is music specifically created for use in audio-visual productions. Companies like Epidemic Sound set up a new model for selling production music geared towards online content creators, which has been controversial in parts of the music community, but undeniably successful. MIDIA estimates that that strand of production music was worth $250 million in 2021.

Although the Epidemic Sound approach to production music was originally targeted at online creators making videos, Page also notes that podcasters are now a key customer of that service too. And podcasts are something he thinks the music industry should be giving more consideration to, given they are both a competitor for consumer attention, and an under-tapped customer of music.

Citing James Cridland from Podnews, Page writes: “Average weekly podcast listening [is] hovering around seven hours; the equivalent for music streaming is only a couple of hours more”.

The music industry can try to persuade consumers to listen to more music over podcasts, but should also be trying to get more music into podcasts. It’s currently really hard for podcasters to license commercially released music for use in their programmes, meaning most of the biggest podcasts are speech based, and when they do use music, they are getting it from the likes of Epidemic Sound.

Page says: “If commercial music wants to win back attention that’s been lost to long-form podcasts, it needs to give up on bringing a horse to water (expecting podcasters to adapt to current licensing complexity) and develop solutions that bring water to the horse (or ‘fight complexity with simplicity’, to quote Epidemic Sound). That way, music can compete for scarce attention that might otherwise go elsewhere”.

Elsewhere in this year’s study, Page also talks about “the strengthening US dollar and its impact on this global calculation”. He explains: “Given the IFPI ‘Global Music Report’ is presented in US dollars and in constant currency over time, the impact of the dollar’s dominance is two-fold: devaluing the absolute value of the ‘rest of’ the global music industry, and increasing the US’s relative share”.

He then considers “the mathematical impact this fluid exchange rate may have on next year’s ‘Global Music Report’ for 2022”, he goes on. “For simplicity’s sake, let’s assume that the US dollar has appreciated against the Yen from ¥110 to ¥130, an increase of 18%. Further, let’s assume the Japanese music industry continues to grow at 9% this year”.

“The 18% collapse in the Yen’s exchange rate, combined with the 9% growth in domestic revenues, results in Japan’s USD-denominated contribution to the ‘GMR’ falling 8% from what it reported in the 2021 yearbook”, he adds. “Of course, constant currency smooths out the dollar-trend (year on year change remains 9%), but there is an absolute drop in the dollar value of the Japanese recorded music industry. This matters, when adding up a global industry and determining its trend”.

This means that a US recorded music market that is already the biggest in the world, and which has significantly grown in strength with the streaming boom, has yet another boost.

Writes Page: “Add the impact of exchange rates and it’s possible that the US could make up half of all global recorded music revenues within the next couple of years. It’s both reassuring and alarming that one country dominates this global success story of music copyright, bringing to mind the old economic adage ‘when America coughs, the rest of the world catches a cold’”.

Read Page’s full report here.