Global Value of Music Copyright is bigger now than it’s ever been
Image: Unsplash/Soundtrap
6-MINUTE READ
As we continue to digest the recent news that global recorded music revenues reached ‘the biggest ever’ total of $25.9 billion in 2021, the discovery of a very old report sheds new light on just how much the entire music copyright industry – artists, labels, songwriters, publishers, and CMOs – has grown since the heyday of CDs, and who got what share.
In 2002, Donald Rumsfeld famously observed “there are known knowns (things we know we know) and there are known unknowns (things we know we do not know)”. In the case of music copyright, we know how much it was worth in 2020 (and the prior six years: 2019 | 2018 | 2017 | 2016 | 2015 | 2014); but its value back when CDs peaked – around the time of Rumsfeld’s remarks – has remained a known unknown. Until now.
To piece this all together, let’s begin with the labels.
The record label trade body IFPI offers a historical data set in their 2021 annual report, going back to 2001. At that time, based on US$ and in constant currency, the recorded music market was $23.6bn – a figure that’s comprised almost entirely by CD sales. Of course many caveats apply with historical data, not least that back then the ‘global’ coverage of the global yearbook would have been a fraction of what it is now.
Nevertheless, that 2001 figure gives us a large piece of the jigsaw puzzle to work out the value of music copyright at the time that nostalgia-types refer to it as its peak. A second piece of the puzzle comes from the twelfth edition of the National Music Publishers Association (NMPA) International Survey of Music Publishing Revenues – a report that has since been discontinued.
Here we have a treasure trove of figures that helps us hack together a global value of copyright for 2001. Mechanical royalties are in there, broken out by those received via the labels and those collected directly from users – meaning we can now reallocate the IFPI’s figure for monies that belonged to publishers. What’s more, revenues generated by the performing right are itemised and would appear to factor in the gross collections of Performing Right Organisations when compared to historical records. SOCAN, for example, reported around $73m for domestic collections in 2001, not a far cry from the $71.4m quoted in this NMPA survey for the same year. It’s worth noting that performing rights were a small drop in the ocean back then – now they’re the chief breadwinner for songwriters and their publishers. The study even includes interest earned from investment income – a figure we’ll remove from this analysis as it's not directly related to copyright.
So let’s hop, skip and jump the technicalities and look at what happens when you join the jigsaw pieces together, rip out the double counting and break down who got what.
In 2001, the global value of recorded music was $28.3bn – that is labels, CMOs and direct revenues that publishers collected at the time. Of that pie, just 23% went to publishing. Roll forward to 2020 and the pie has grown by 15% to reach $32.5bn of which the share to publishers has increased by half to reach 35%.
That was then, this is now
Of course we know that measurement wasn’t perfect back then. For starters, I wasn’t calculating the global value of copyright back in 2001 (and, ironically, was using Napster in some university lab instead). Obviously, measurement isn’t perfect and there’s much more to be done around capturing the revenues of off-grid production music companies like Epidemic Sounds (which MIDIA, a consultancy, estimates to be a little over a billion dollars). Then there are DIY platforms like Distrokid, TuneCore, EmuBands and many others – which, collectively, grab nearly one in every ten dollars from streaming services.
Then there’s the thorny issue of inflation: a dollar in 2001 would be worth around 65 cents today. It’s tempting to simply rip inflation out of these totals, but that needs resisting. Deflators should really be restricted to individual units like a CD, download or subscription (see Malbeconomics), not applied to aggregate pots of cash which are influenced by factors such as the volatility in volume and profitability of sales.
But the best-guess-estimate (using official reports) does hammer home two conclusions. First: the global value of music copyright has never been bigger, and the more recent figures compound this point. Second: songwriters, publishers and their CMOs are seeing a bigger share now than when CDs peaked.
Image: Adobe Stock/zhinna
It certainly moved around a lot during the intervening period – labels went from boom to bust to boom again, while publishers saw their share rise then fall. Fleshing that out further: when piracy peaked, consumer revenues fell thereby making wholesale revenues (B2B, sync, etc) a more prominent part of the business; that favoured publishers whose share reached almost fifty percent. Now, consumer subscriptions are tipping the scales in favour of labels again. It’s this ‘balancing act’ between labels and publishers which crystallises this work. Are we returning to a ‘new normal’ where we’ll see songwriters, publishers receive a quarter of the value all of music copyright generates? Or will we see another round of rebalancing as the pie expands further?
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. This work puts that nostalgia to bed: the business of music copyright has never had it so good.
Acknowledgements
Special thanks to Shannon Nitroy, Analytics Manager @ Spotify; Also, my thanks to Ger Hatton (IMPF); Emmanuel Legrand (Legrand Network); Adrian Strain and Sylvain Piat (CISAC); Mark Mulligan (MIDIA); Simon Dyson (Omdia); Tom Frederikse (Clintons); Chris Carey (Media Insights Consulting); and many industry executives. Design and infographics by Alice Clarke.