Tue. May 18th, 2021


MBW’s Stat Of The Week is a collection during which we present why a single information level deserves the eye of the worldwide music business. Stat Of the Week is supported by Cinq Music Group, a technology-driven document label, distribution, and rights administration firm.


Within the final 12 months the place full accounts can be found, 2019, the UK’s de facto songwriter and writer PRO, PRS For Music, mentioned its annual prices amounted to 11.0% of the cash it introduced by way of the door.

Over within the US, one other not-for-profit PRO, ASCAP, estimates that its working bills quantity to round 12% of its annual income.

ASCAP’s principal rival within the States, BMI, says that, as soon as it’s spent its working bills, “practically” 90% of its revenues are then handed to rightsholders.

And in Germany, the market’s main PRO, GEMA, recorded an annual working expense fee in 2019 of 13.4%.

These figures – when utilized towards annual income numbers and run by way of MBW’s calculator – inform us one thing vital concerning the pre-pandemic world music business.

They inform us this: throughout ASCAP, BMI, PRS For Music and GEMA alone, the cumulative working bills of PROs in 2019 stood at comfortably north of half a billion {dollars}.

Songwriters and music publishers picked up this tab.

One can solely think about how colossal this invoice turned when all PROs, in each nook of the world, paid for his or her bills – from places of work to employees, expertise, bonuses, pensions and so on.

“The cumulative working expense of ASCAP, BMI, PRS For Music and GEMA in 2019 stood at comfortably north of half a billion {dollars}.”

Understandably, music rightsholders have lengthy raised prickly questions on PRO expenditure and effectivity.

On the similar time, PROs have staunchly defended the chunk of money they burn – pointing to, amongst different issues, the trillions of traces of information they course of yearly within the trendy period.

But a storm may now be brewing on the coronary heart of this dialog, propelled by two very topical elements.


Issue 1: The brand new breed

The previous few years has seen large-scale monetary entities transfer their cash into music rights in an enormous approach.

To select just a few latest examples: KKR, Windfall Fairness Companions, Blackstone, and Morgan Stanley have collectively dedicated billions of {dollars} to purchasing music rights. Every has a popularity for fierce monetary self-discipline.

Stated monetary self-discipline can also be shared by different institutional and/or public buyers in new faculty music firms equivalent to Hipgnosis Songs Fund, Spherical Hill, Reservoir, and Main Wave. (That’s to not point out public buyers in Warner Music Group, which floated final 12 months, and Common Music Group, which can float later this 12 months.)

“If you happen to’re a music firm and it’s not in your DNA at hand cash to companions if you happen to can keep away from it, if the cash will get caught in your pipes on the way in which out, that might kill returns for well-capitalized companions.”

Hartwig Masuch, BMG (chatting with MBW final month)

You may guess huge, then, that every of those events is microscopically scrutinizing the total worth chain of their music rights investments – hunting down profligacy, and demanding that not a penny is spent misplaced.

On this regard, the likes of KKR and Morgan Stanley are very a lot “on the identical facet” of songwriters.

As BMG’s Hartwig Masuch just lately phrased it, in reference to his firm’s new billion-dollar-backed alliance with KKR: “If you happen to’re a music firm and it’s not in your DNA at hand cash to companions if you happen to can keep away from it, if the cash will get caught in your pipes on the way in which out, that might kill returns for well-capitalized companions.”

That’s very true for PROs once we take into account the second, moderately miserable issue, on this new confluence of circumstances.


Issue 2: Public efficiency cash in publishing for 2020 took a critical nosedive

Songwriters and music catalog homeowners have already been warned to brace themselves for a Covid-hit decline in public efficiency revenue for 2020.

In October final 12 months, CISAC – the commerce physique repping a worldwide community of PROs – forecast that music royalty collections for music publishers globally would decline by between 20% and 35% in 2020.

This was on account of worldwide pandemic lockdowns hitting efficiency royalties for music catalogs in main markets, by way of the shutdown of bars, eating places, nightclubs and stay live shows.

Previously seven days, we’ve got seen the primary concrete proof of this development – and the early information shouldn’t be good.


MBW’s Stat Of The Week: Germany’s GEMA and the UK’s PRS For Music each say they noticed a double-digit drop in income collections in 2020 (-10% for GEMA and -20% for PRS). That drop in income, throughout each PROS, amounted to a mixed YoY decline of roughly USD $330 million. (That’s a €110.5m ($125m) drop at GEMA, and a £160m ($205m) drop at PRS.)

Germany’s GEMA has at present (Could 4) revealed its annual figures for 2020.

They reveal that the PRO noticed its whole collected revenues fall by simply over 10% final 12 months (-€110.5m) to EUR €958.8 million.

The principle explanation for this drop was a painful 43% fall YoY in “regional workplace collections” – aka royalties from public efficiency of stay and recorded music in Germany – to €230.1 million.

GEMA made up a few of this shortfall with a €97.7m YoY enhance in “remuneration rights”. Nonetheless, this was largely on account of a one-off cost for retrospective royalties from the Zentralstelle für personal Überspielungsrechte (The Central Workplace for Non-public Switch Rights). It received’t be repeated this 12 months.

Each different main class of assortment for GEMA – together with broadcast and on-line collections – fell YoY in Germany in 2020.



Worse information might now be on the way in which for music rightsholders, in line with GEMA boss Dr. Harald Heker, who mentioned: “All in all, we’ve got concluded the disaster 12 months 2020 in a passable method for GEMA. This will likely, nevertheless, not disguise the truth that the scenario stays extraordinarily tense.

“The pandemic goes to considerably scale back pay-outs of GEMA within the present [2021] and doubtless additionally within the coming [2022] 12 months. For a lot of music creators there will probably be an unlimited monetary drought section.”

“The pandemic goes to considerably scale back pay-outs of GEMA within the present and doubtless additionally within the coming 12 months.”

Dr. Harald Heker, GEMA

Eagle-eyed music rightsholders may be aware within the desk above that GEMA’s bills in 2020 dropped by €11.4 million YoY through the pandemic-hit 2020, whereas the PRO’s revenues fell by €110.5 million.

Consequently, GEMA’s working price margin rose significantly – from 13.4% of revenues in 2019 to 14.9% in 2020, as its total price margin bounded as much as 15.9%.

Stress will now construct on Dr. Harald Heker (annual wage: €691k in 2019) to seek out extra efficiencies, and slash extra prices, at GEMA amid the “monetary drought” he predicts for 2021.


PRS For Music logo

One other vital set of economic outcomes from the PRO world arrived final week from the UK’s PRS For Music.

They confirmed that revenues collected worldwide by PRS For Music declined by 19.7% in 2020 versus 2019 – down £159.9m to GBP £650.5m.

Revenues generated by stay efficiency of music fell 79% YoY at PRS in 2020, down to simply £11.3m.

“Revenues collected worldwide by PRS For Music declined by 19.7% in 2020 versus 2019.”

Like GEMA, PRS For Music has fired an early warning shot about 2021, noting: “[M]any of the royalties paid out final 12 months had been collected earlier than the primary lockdown, that means that the sharp decline in revenue will probably be felt by music creators by way of 2021 and past, with distributions [in the current year] anticipated to fall by not less than 10%.”

(PRS’s distributions, moderately than its collections, really rose very barely in 2020, however would have benefitted from any lag in payouts from royalty collections made outdoors Covid-enforced lockdowns.)


With our headline above in thoughts, right here’s an extra-interesting stat from PRS: the PRO says that its internet prices “excluding charitable donations and subsidies” fell by by £12.1m, or 13.8%, in 2020, because it tightened its belt through the pandemic.

The issue? That’s £147.8 million much less of a drop that PRS noticed in whole royalty collections year-on-year (-£159.9m).

In different phrases, similar to at GEMA, PRS’s price discount in 2020 seemingly received’t be sufficient to cease its working price margin (as a share of income) spiralling upwards.

“The dramatic fall in [PRS’s] revenues over the past 12 months will probably be mirrored in declining distributions all through 2021.”

Andrea c. Martin, PRS For Music

This isn’t the form of statistic that may please music’s latest, and richest, institutional buyers. And it’s one thing PRS For Music CEO, Andrea C. Martin, should wrestle with over the following 12 months.

(Martin’s wage, for now, stays unknown: in PRS’s final annual submitting with UK Firms Home, it merely says that the agency’s ‘Highest Paid Director’ earned £991,000 in 2019. This was Martin’s predecessor, Robert Ashcroft, who left PRS that 12 months. The submitting additionally reveals Ashcroft was paid a sum of £294,000 “for compensation for lack of workplace”.)


In October final 12 months, in reference to the pandemic’s anticipated results on publishers’ efficiency royalties, Warner Chappell Music CEO & co-Chairman Man Moot informed MBW: “I don’t assume assortment societies needs to be first to sing the blues right here.

“Some are good, some aren’t so good; some really feel like allies and companions, however some are inefficient, holding on to cash and charging excessive fee charges.”

Moot actually received’t be alone on this view – each within the music business, and all through Wall Avenue.

At PRS For Music, Andrea Martin has informed her constituents to brace for a “difficult” 12 months forward “because the dramatic fall in revenues over the past 12 months will probably be mirrored in declining distributions all through 2021”.

But the scrutiny heaped upon the expenditure of not-for-profit PROs in main music markets – whether or not PRS, GEMA, ASCAP, BMI or past – positively received’t be in decline in 2021.

The truth is, it would hit fever pitch.


Cinq Music Group’s repertoire has received Grammy awards, dozens of Gold and Platinum RIAA certifications, and quite a few No.1 chart positions on quite a lot of Billboard charts. Its repertoire contains heavyweights equivalent to Dangerous Bunny, Janet Jackson, Daddy Yankee, T.I., Sean Kingston, Anuel, and tons of extra.Music Enterprise Worldwide



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Picture Supply : www.musicbusinessworldwide.com – https://www.musicbusinessworldwide.com/is-a-reckoning-coming-to-the-way-collection-societies-spend-songwriters-money/

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