as advertising billboard report On Thursday (October 24), global royalty revenue rose 7.6% to 11.75 billion euros ($10.9 billion, based on average exchange rates in 2023), according to Paris-based trade group CISAC (International Social Council) ) new high. The article covers basic news – digital collections grew 9.6% to €4.52 billion ($4.18 billion); radio and television program revenues fell 5.3% to €3.37 billion ($3.11 billion) after a sharp increase the previous year ; Live and background music collections grew 21.8% to 3.06 billion euros ($2.82 billion), driven primarily by a recovery in the concert business. There are more details in the news article.
Now, let’s take a longer-term look at market conditions to see where the recent growth is coming from and what this means for the future. Since 2019, the music collection business has grown from 8.92 billion euros (8.24 million U.S. dollars) to 11.75 billion euros (10.9 billion U.S. dollars), an increase of 31.7% in five years, and an annualized growth of more than 6%. This arguably reflects market trends more accurately than year-over-year changes during this period, as the concert business has been severely disrupted by the pandemic.
Most of this growth came from the digital field, which grew by 119%, from 2.06 billion euros ($1.9 billion) in 2019 to 4.52 billion euros ($4.2 billion) last year. Perhaps more importantly, the €2.46 billion ($2.27 billion) digital growth represented nearly all of the business’s growth during that period. And that growth is starting to slow. In 2023, digital growth will slow down from 35.1% to 9.6%, causing overall growth to slow down from 29% to 7.6%. Some of this is inevitable — subscription streaming growth has plateaued in the U.S. and Western Europe, the two largest markets that have traditionally driven the business. The United States, Western Europe and Canada together account for nearly 75% of collection revenue. Digital revenue will almost certainly continue to grow—thanks to factors such as rising prices and new products—but the good old days of digital growth may be behind us.
However, the state of global royalty collections provides other reasons for optimism. First, a caveat: These numbers don’t perfectly reflect the music publishing business, or even provide a complete picture of public performance royalties, since some digital royalties are paid through direct transactions. Still, these numbers represent a best-case scenario for the global collections business, and it’s safe to say that direct transactions without data broadly follow these trends. However, this almost certainly underestimates the growth of the music publishing business, as it does not include U.S. mechanical publishing royalties, any synchronization rights and various new genre deals.
The challenge for the rights management association is that the second largest source of revenue for television and radio dramas does not appear to be growing. It was 3.4 billion euros ($3.14 billion) in 2019 and now stands at 3.37 billion euros ($3.11 billion) — a more significant drop than it seems when accounting for inflation. Since this revenue is tied to the TV and radio business in most markets, some of it appears to have flowed to digital, which has replaced it as the most important revenue source.
The live streaming business is more promising. The disruption of the pandemic has made it hard to see, but live and background music royalties are growing steadily — from 2.71 billion euros ($2.5 billion) in 2019 to 3.06 billion euros ($2.83 billion) last year. An increase of 12.7%. The numbers aren’t that big when looking at them over a five-year period, but live events are growing faster than other categories, and ticket sales growth for the biggest tours will lead to higher royalties in ticket-related territories. This trend is also expected to continue. This could make live music an important source of growth in both established and new markets.
Currently, the revenue of collecting societies is broken down as follows: 38.5% of funds come from digital; 28.7% from television and radio; 26.1% from live music and background music; 3.2% from CD and video sales; 2.4% from private copying tax (U.S. None); 1.1% from other sources. What will it look like in five years? It’s hard to imagine digital ad revenue climbing above half, as that would mean a significant drop in TV and radio revenue. Live rights fees should rise, perhaps significantly, and background music revenue may rise in some markets, although it’s unlikely to grow that much in the United States and Western Europe.
The sources of revenue for collections will also change: regions of the world that barely generated much revenue five years ago are also seeing impressive growth. Latin American collections grew 26.2% last year but have grown 108.2% over the past two years, driven by streaming in Mexico and Brazil and across Latin America. For now, this impressive growth doesn’t change the overall picture – the region still only accounts for 5.9% of collections revenue. But if this growth pattern continues, the market may soon become important. Over the past five years, Latin American collections have increased from 4.1% of the global total to the aforementioned 5.9%.
The same is true for some markets in Asia. Overall, there wasn’t much growth there – 0.3% due to yen fluctuations, but 6.8% in constant currency terms. However, 80% to 85% of collection revenue in Vietnam, Indonesia and the Philippines comes from digitization, with growth of 270.4%, 111.6% and 325.8% respectively in the past five years. Those increases aren’t enough to lift the overall business from a revenue perspective, but they’re growing fast enough to make a difference five years from now. Africa, hailed as having huge potential, appears to be in trouble: its share of global music collections dropped from 0.7% to 0.6%. This won’t have much of an impact on overall revenue in the short term. But this shows how serious challenges the music industry still faces in Africa, and how these impact real creators. The issues are complex, but also urgent: African creators deserve better.
However, larger markets continue to grow; the top 10 markets grew 6.3% last year. In the past five years, the United States and Canada have grown by 44.4% and 38.9% respectively, and the United Kingdom, France and Germany have grown by 44.5%, 34.7% and 20.2% respectively. The strongest growth during the same period was South Korea, which grew by 70.9%. The health and stability of larger markets should make it easier for fast-growing smaller markets to improve the overall business.
