As CISAC releases its latest figures, Eamonn Forde examines how the music publishing industry fared during the pandemic and where future growth lies for the sector.
In the early weeks of the pandemic in 2021, the forecasts for the music business were bleak. With touring impossible and many music-heavy TV and film productions on indefinite pause, two huge revenue sources for the publishing sector were suddenly – and shockingly – wiped off the balance sheet.
The prognosis from societies and publishers was as despondent as it was possible to get. Many set up hardship funds for members to help tide them over and payments were brought forward to try and cushion the financial blow as the business went into a major shutdown.
Rather than quixotically hoping for the best, many in the business began preparing for the worst while trying to figure out ways to keep everyone’s heads above the water for as long as possible. This was, without wishing to collapse into cliché, utterly uncharted territory and no one could say with any confidence when, or even if, there would be proper light at the end of the tunnel.
But now we can start to understand financially just how severe the pandemic’s impact was in its first year and get a much clearer sense, a year and a half on, of what the recovery process will be.
The broadest numbers on a global level so far were offered up by CISAC at the very end of October. The headline figure was the fact collections in 2020 were down by almost €1 billion from 2019, slipping from €9.17 billion to €8.19 billion.
The term “decimated” is frequently used incorrectly – often being taken to mean something being badly destroyed. Yet in CISAC’s numbers there was decimation in its truest sense where a tenth of the market (well, 10.7% to be precise) was wiped out in one year.
But it wasn’t quite a black and white picture of a hole being blown in collections. There was a dual dynamic of a strong growth in digital and an enormous slump in live, but where the strength of the former was not able to offset the weakness of the latter.
The most shocking of all the bad numbers here was that revenues from live (concerts and festivals) and hospitality/retail (background music, primarily) plummeted by 45.2% according to CISAC in 2020. Gadi Oron, the director general of CISAC, added that these revenues were “hardly likely to recover in 2021”.
If there was to be any comfort to be taken from the 10.7% drop, says Oron on publication of CISAC’s numbers, it was that it was “considerably less disastrous than was foreseen one year ago”, especially revenues from TV and radio (the backbone income of CMOs).
Just how bad did CISAC think 2020 was going to be? Almost three times worse than it turned out to be, with the organisation saying it was originally anticipating a decline of 25-30%.
“Without a doubt, the pandemic has been a catalyst for change, accelerating a transition to digital that will not be reversed”.
– Gadi Oron, CISAC
The pandemic became, according to Oron, “a catalyst for change, accelerating a transition to digital that will not be reversed”, with things like streaming having to do significantly more heavy lifting as other revenue sources dried up or were badly compromised. This digital uptick was by 16.2% to €2.4 billion, with Mexico massively over-indexing (digital revenues there were up 75.3%), followed by significant performances by Australia (up 51.3%), Canada (up 45.7%) and the UK (up 43.7%).
“Our task now is to ensure that collective management organizations worldwide continue to adapt to the hyper-acceleration of digital,” noted Marcelo Castello Branco, CISAC chair of the board as well asCEO of Brazilian CMO União Brasileira de Compositores.
Taking the whole revenue picture and then zooming in on a regional level, the US emerged relatively unscathed in 2020, with licensing collections down a minuscule 0.3% to €2.44 billion. Asia Pacific also proved pretty resilient, only slipping 3.7%. Europe – the biggest collection region for CISAC – dropped by 16.9% and Latin America slipped by 24.3%.
Oron suggested that Europe, as it is approaching digital saturation point, had very little room for revenue growth here when compared to other regions so it was predestined to be significantly hit. Digital may be strong in Europe but it could not grow enough to offset (or even cushion the blow of) the collapse of live in 2020.
While 2020 was bad, it was not as bad as CISAC’s own worst-case scenarios. That said, the body also accepted that 2021 (not having a full year of live music) is also going to experience a downturn – but regrowth could really start to kick in during 2022.
While digital might have put its shoulder to the wheel and made things a lot better (well, less worse than they could have been), there was still criticism of the digital payments to songwriters and where rates need to increase for them if they are to survive.
CISAC president Björn Ulvaeus used the publication of the body’s numbers to call, once again, for a greater slice of the digital pie to go to songwriters.
“Today, creators work in an inequitable ecosystem,” he wrote in the CISAC report. “If we accept that the song – or the creative work of any repertoire – is the foundation of our creative industries, why do we then accept the near-invisibility of the creator in the commercial value chain?”
“If we accept that the song – or the creative work of any repertoire – is the foundation of our creative industries, why do we then accept the near-invisibility of the creator in the commercial value chain?”
– Björn Ulvaeus, CISAC
While Ulvaeus painted digital (as far as the songwriter is concerned) as mainly curse, Oron took the stance that it was perhaps mostly blessing in an extremely dark year. “Increased digital collections have mitigated the fall in other income sources in many countries, and this is a tribute to the efforts of CISAC societies to change strategy, shift resources and step up digital licensing activity,” he said.
He was supported in this by CISAC board chair Marcelo Castello Branco who said, “[B]eyond early apocalyptical forecasts, the decline has been mitigated by our critical commitment to exploring new areas of revenue, in particular in the digital sector.”
Alongside these numbers from CISAC for 2020 we also have new numbers from two of the biggest publishers globally to show how things were performing in at least part of 2021.
Sony saw its publishing revenues grow 26% to ¥47.31 billion in the first half of 2021, and the bulk of the growth was attributed to streaming. Publishing royalties from streaming services were up 47% to ¥23.71 billion.
In its analysis of the Sony Music Publishing numbers, Music Business Worldwide suggests streaming revenue was up 41.7% for the company in the quarter. It did, however, add an important caveat. “It’s always difficult to tell within these numbers whether Sony’s benefitted from a one-time advance payment from a digital service in a given period – but, regardless, the signs look very positive indeed,” it said.
Universal Music Group issued its first quarterly results as a public company on the same day that the CISAC numbers for 2020 came out. Streaming, naturally, was the key performer for the company’s recorded music and publishing arms. Publishing revenue for UMG in Q3 2021 stood at €363 million, an increase of 21.4% from the same period 2020 (although, as per CISAC’s numbers, this was characterised by a significant slump).
“Revenues benefited from the continued growth in subscription and streaming, the timing of certain society distributions and from an improvement in synchronization,” noted UMG in its filings.
It then added a revealing line about how the biggest music company in the world weathered 2020.
“While performance revenue experienced the delayed impact of last year’s COVID-related slowdown, this was more than offset by revenue from catalog acquisitions,” it said.
“While performance revenue experienced the delayed impact of last year’s COVID-related slowdown, this was more than offset by revenue from catalog acquisitions.”
– Universal Music Group
UMG buying out Bob Dylan’s entire songbook at the end of 2020 – with some estimating the deal at $300 million – was one approach to a pandemic-driven slump. Rather than stop acquisitions, it did the biggest deal in history for a single songwriter’s catalogue.
The blockbuster deals continued into 2021. In January, Neil Young sold 50% of his song catalogue of 1,180 compositions to Hipgnosis that, The Guardian reported, involved “an undisclosed cash sum that will certainly run into nine figures”. Then at the very end of March, Paul Simon sold his publishing catalogue to Sony Music Publishing in a deal that Forbes pegged at $250 million.
Mere days after reporting its numbers, Universal Music Publishing announced it was opening a new office in Shanghai. The major entered the Chinese market two years ago and said this new office “significantly expands UMPG’s operations in China”.
The mega-deals in terms of catalogues continue to happen. At the end of October this year, the Financial Times was suggesting that the David Bowie estate was looking to sell his entire publishing catalogue, where “[t]alks are at an advanced stage” and bids of “around” $200 million were being made.
On top of that, Billboard is reporting that Bruce Springsteen is looking to sell both his recorded and publishing catalogues, suggesting that the two combined could go for $350 million. Of that, upwards of $190 million would be for the recorded rights, meaning his publishing catalogue is being valued around the $160 million mark.
While 2020 turned out to be bad for the publishing world, it was nowhere near as bad as initial fears might have suggested.
Not everyone, of course, has the reserves to spend their way out of a pandemic. But those who can are seeing this as a prime opportunity to expand their global reach and boost their superstar catalogues. Rather than timorously hold back, they are fearlessly charging forward.
While 2020 turned out to be bad for the publishing world, it was nowhere near as bad as initial fears might have suggested. The battle for greater songwriter cuts from streaming will continue for the coming years but, as far as the macro dynamics of the sector are concerned, it has very swiftly returned to business as usual. Or, to be more precise, even more business than usual.