Copyright collectives: Payouts are taking a nosedive

What you'll learn in this post:
  • Collection society revenues decline by more than 10% in 2021
  • Live sector crashes while streaming revenues rise
  • Streaming providers want to further reduce payouts to songwriters

As we have reported last year already, musicians and especially songwriters will have to suffer financial loses even after the pandemic. The reason for this is because the copyright collectives are distributing payouts with a delay of anywhere between 6 months and 2 years. The “Global Collections Report” published by CISAC, the umbrella organization of copyright collectives, have now, unfortunately, confirmed this.

According to the report, worldwide revenues for copyright collectives have gone down by 9.9%, which in absolute numbers is equivalent to a loss of more than one billion Euros. In the area of music, the losses amount to 10.7% or 775 million Euros. The only aspect to sweeten the pill: CISAC had originally predicted a downturn between 20-30%, meaning around 2-3 billion.

Drastic decline in the live sector

It comes as no surprise that the main reason for this downturn is the live sector, where revenues declined by 45.4%, from 2.9 billion Euros to 1.6 billion. What prevented a total crash was digital music consumption, that is, mainly streaming. Compared to 2019, the streaming sector grew by a whopping 16.6%. The broadcasting sector, however, dropped by 4.3%, which means that in the total area of “recorded music” there is still a net plus of 7.4%.

DSPs want to reduce payouts

CISAC also points out that the revenues from the streaming sector are entirely disproportionate to its popularity. Streaming only makes up a quarter of the revenues worldwide, thus generating less than the broadcasting sector. If the streaming providers had their way, the payouts for songwriters’ publishing rights would actually drop even further.

The streaming services always reach an agreement with the US Copyright Royalty Board (CRB) on the share of their revenues that they pay out to the songwriters for a certain period of time. For the 2018-2022 period, the CRB set the rate at 15.1%, although this was legally challenged by the streaming services (except Apple Music) and is still pending.

While the National Music Publishers’ Association is demanding a raise to 20% for the 2023-2027 period, the streaming services have other plans. Spotify, Amazon, and Pandora only want to pay out 10.5% of their revenues to the songwriters, which was the rate prior to 2018. Google and Apple want the same rate as the one for the 2018-2022 period, so depending on what the court rules, the rate will be set at 10.5% or 15.1%. Assuming the CRB doesn’t surprise us all, this means that the income for songwriters won’t be increasing by much and might even drop in the worst-case scenario.

The future

Since there have been a lot of restrictions in 2021 still, CISAC predicts that the numbers will not turn out too great either. Musicians will have to expect lower payouts in 2022, as well. Ideally, things will look up in 2023, as there will hopefully be a similar number of live events in 2022 as there were before the pandemic hit.