It’s well known that publishing isn’t always the fastest-moving part of the music business.
It can often take anywhere from six months to two years for royalties from songs licensed by the likes broadcasters, clubs or restaurants to trickle through the system until rightsholders actually get paid.
Amidst the ongoing disruption caused by the pandemic, industry experts have been sounding the alarm of a significant looming dip in licensing revenues for publishers and songwriters in 2020 and 2021.
At the start of the month, Harald Heker, CEO of German collection society GEMA, which paid out over $1 billion to music rightsholders last year, warned the org’s members that GEMA expects a “massive decline” in annual collected income in 2020 because of COVID.
“On the business side, with bars, clubs, restaurants [all shutting due to COVID] it’s going to have an impact,” said Moot. “Anybody who talks about their numbers in publishing and doesn’t mention that just isn’t dealing with the realities.”
The warning signs for the publishing industry’s fortunes in 2020 couldn’t be clearer, but the actual effect on the entire sector in currency terms has remained unknown – until today.
According to the latest annual Global Collections Report published by CISAC today (October 28), lockdown measures and cuts in advertising revenues due to the pandemic are expected to result in lost music royalty collections for the world’s music publishers of between €1.8 billion($2bn) and as much as €3.1 billion ($3.45bn) in 2020.
That would result in an annual revenue decline of between 20% and 35%.
“Today, uncertainty about the future for creators is even worse than it was when the pandemic first emerged.”
Björn Ulvaeus, CISAC
The dire forecast for 2020 follows what was the global music collection sector’s sixth consecutive year of growth in 2019, which according to CISAC’s new report, was up 8.4% to almost €9bn ($10bn).
Last year’s growth was driven by the then-thriving live industry, in addition to background music and increased licensing.
Revenues from live and background accounted for 29% of all music collections in 2019 at approximately €2.6bn ($2.9bn) but will be hit hardest by the pandemic.
Cancellations of events and social distancing measures are expected to lead to a 60-80% decline in 2020, according to CISAC, which follows an increase of 5.6% in 2019.
In addition, collections from broadcast, radio and cable are expected to decline by 10-20% in 2020 due to slashed advertising budgets.
This was the largest music collections source in 2019, accounting for 37% of collections at approximately €3.3bn ($3.7bn).
Elsewhere, CISAC reports that digital music collections hit €2bn ($2.2bn) in 2019, but adds that “digital remains undervalued”.
The increase in music subscriptions and strengthening of licensing deals with platforms boosted growth in 2019.
One bright spot in an otherwise gloomy outlook for 2020 was that digital streaming surged during lockdown and CISAC reports that collections are forecasted to grow by as much as 15% this year and will help mitigate collections declines elsewhere.
Digital’s relative immunity from the impact of the pandemic will not offset losses in other uses, however, with digital revenue accounting for only 22.5% of global collections.
A deeper look at the report shows that a few major markets helped drive global growth in 2019, and all of those will see declines in 2020.
CISAC notes that societies in major markets report widely varying decline forecasts, ranging from -11% in Canada (SOCAN) to -46% in Italy (SIAE).
Netherlands entered the Top 10 collecting territories in 2019, replacing Spain following the suspension of SGAE from CISAC membership.
CISAC reports that, on a regional basis, 50.4% of the world’s collections were generated in Europe in 2019 (see below), with Canada/USA generating a combined 27.4%.
Latin America’s share of global collections in 2019 was 5%, while Africa and Asia-Pacific’s global share was 0.8% and 16.4%, respectively.
CISAC President Björn Ulvaeus said: “Today, uncertainty about the future for creators is even worse than it was when the pandemic first emerged. Millions of creators are losing their livelihood. We were the first industry to be impacted and we will be the last to return to health.
“Creators are innovative, entrepreneurial, and resilient, but to build a long path out of this crisis, we have to turn to governments.
Added Ulvaeus: “This is not just for emergency funds; however welcome those have been. Policymakers also need to tackle the problems in front of them: the deep flaws that have skewed the playing field for creators for many years.
“COVID-19 did not create this skewed level playing field. But it has sure aggravated and exacerbated it. This is the time for governments to show they take creative industries seriously. It is time for policymakers to wake up and act”.
“Things will get worse for creators before they get better, with loss of collections in 2020 translating into reduced distributions in 2021.
Gadi Oron, CISAC
CISAC Director General Gadi Oron added: “Looking ahead, this Report reflects extraordinary resilience across our sector, but not yet recovery.
“Things will get worse for creators before they get better, with loss of collections in 2020 translating into reduced distributions in 2021.
“In this crisis, CISAC’s member societies have acted to defend their creators with all means available. While the current crisis is exposing the deep fragility of the collective management system, it is at the same time showing the vital importance of its work for creators”.
“This troublesome period is clearly not over – but it is fair to say we are all building bridges to whatever comes next while staying positive and alert to future opportunities and challenges.”
Castello Branco, CISAC
CISAC Board Chair Marcelo Castello Branco, said: “This year, we have all been caught in a perfect storm. The coronavirus pandemic has thrown into reverse our global growth, and its effects will be felt throughout 2021 and 2022.
“This troublesome period is clearly not over – but it is fair to say we are all building bridges to whatever comes next while staying positive and alert to future opportunities and challenges.
“We must now battle to stay in the game and be ready to support, represent and pay our right holders what they deserve and expect from all of us”.
All € to $ currency conversions made at 1.113 USD-to-EUR 9M 2020 average, as estimated in Vivendi’s Q3 2020 resultsMusic Business Worldwide
