Performance rights lift recorded music revenues
Revenues from performance rights, a license payable for music played in public, should exceed £600 million for the first time. This may seem insignificant relative to smartphone sales or apps revenues, but for the £10 billion recorded music industry, this is material. The UK public listens to billions of music tracks every year on TV, in the hairdresser, in dance classes and elsewhere: in 2014 the global daily license fee for use of music in public will be about £2 million.
Music is everywhere. But its ubiquity is arguably under-monetized. There are few of us who go a day without being exposed to music in some form, be this a song played on the radio, a tune in a shopping mall or an elevator melody. For millions of businesses, music adds value. It relaxes passengers when entering a plane, it sets the mood in movies and TV programs and it exhilarates younger shoppers. Collectively we listen to broadcast music trillions of times a year, on the car radio, in the hairdresser and elsewhere: in 2014 the global collective license fee for this is likely to be under £2 million per day.
Growth in performance rights revenues, recent and anticipated, has been driven principally by three mechanistic developments.
First, in countries where a license is obligatory, there has been a steady growth in the number of businesses paying a license. Typically collection societies would contact companies currently not paying a license, but in some markets growing awareness of the legal requirement to pay a fee has driven pro-active payment, which has reduced the cost of collection. In other markets, there is plenty of scope for payments to increase, as the current degree of under-collection is notable. For example, the Netherlands currently collects more performance rights revenues than Spain, despite having a third of the population.
Second, the fee paid by larger entities, such as television and radio broadcasters, has been increasing year-on-year on a sustained basis in major markets. Historically, the quantity of some licenses has been agreed on an ability-to-pay basis. So a small radio station may claim that its profits would only permit a modest fee. But increasingly fees are being agreed on the basis of value. Fees paid by small businesses have also increased in some markets.
Third, a growing number of countries which formerly did not collect revenues on a formalized basis have introduced, or are in discussions to introduce a licensing process. The most significant of these markets is China whose inclusion could add tens of millions of dollars per year.