France's music publishing revenues reached €393m in 2018

By Emmanuel Legrand

The French music publishing sector was worth €393 million in 2018, up 7% from the previous year, according to figures unveiled by French music publishers' associations CSDEM (contemporary repertoire) and CEMF (classical).

  The figures, published in the 'The 2017-18 Music Publishing Barometer', show that revenues from collective management organisation SACEM represent two third of the sector's revenues at €246m, up 3% year-on-year, while sync revenues were up 33% to €68m in 2018 and revenues from international collections were up 7% at €47m. 

  "Revenues from SACEM were up 3% thanks mainly to a growth in digital revenues and stable performance rights, which managed to balance the drop in revenues from mechanical rights," explained Anne Jouano, Sony/ATV France's CFO and President of CSDEM's studies commission. She added that publishers' growth was mainly due to sync and international revenues. Mechanical rights were down 4% year-on-year in 2018, to €126m.

Sync revenues up 17%

  The Barometer was compiled by research company Xerfi and was based on a questionnaire sent to a panel of 280 music publishers, representing over 56% of the rights distributed by SACEM to publishers. 

  Overall, the share of revenues from collective management have suffered a slight "compression" between 2014 and 2018, dropping from 67% to 63% of music publishers' total revenues. SACEM collects mechanical rights from phonographic and video exploitation, private copying, and foreign rights; public performance rights (live, radio, television, broadcasting in public places, foreign rights); and digital rights (streaming, download, mobile ringtones). 

  Synchronisation revenues accounted for 17% of the market in 2018, up 3 points in 4 years, while international rights collected directly by sub-publishers accounted for 12% of the market in 2018, up 2 points in 4 years. Digital rights were up 17% between 2017 and 2018 to €13.8m, but only represent 3.5% of music publishers' revenues.

Losing out on digital royalties

  One of the explanation to the low share of digital revenues is due to the fact that major music publishers and big independent publishers operating in France do not collect directly digital royalties for the use of Anglo-American repertoire in their territory. These streams of revenues are directly collected by their parent companies through one-stop deals with collective management organisations (such as SACEM for Universal Music Publishing or SOLAR, a joint venture between PRS for Music and GEMA for Sony/ATV).

  Stéphane Berlow, founder/CEO of Spin-Off, estimated during a presentation of the report that over €15m did not appear on the balance sheets of French publishers due to pan-European agreements. "Revenues generated by the Anglo-American repertoire in France does not transit through the French affiliates of the major companies," said Berlow, a former MG of BMG France. "For French publishers, this is a loss of value because this money does not flow back through the system any more."

  The average turnover of music publishers in France was around €655,000, with 61% of the companies surveyed claiming a turnover under €1m, 25% a turnover between €1m and €10m, and 14% over €10m. Major companies accounted for 48% of the business. "The French market is very fragmented," said Berlow.

A drop in profitability

  In terms of music genres, the survey showed that 81% of the revenues came from the exploitation of pop/contemporary music, with 10% coming from classical music and 9% from music libraries.

  Publishers in France experienced a 5.4% drop in profitability in 2018, "a trend that affects most publishers, regardless of their size," said CSDEM. Two main reasons explain the erosion of profitability: the increase in non-recoupable expenses linked to the increasing number of project, in particular involving new talent, and a 7% increase in overhead costs between 2017 and 2018.

  Interestingly,  local repertoire represented 33% of music publishers' total revenue in 2018, but accounted for 63% of the company's gross margin. New local talents represented 31% of the revenues generated by local repertoire, and 37% of the gross margin. 

Implement tax breaks

  Juliette Metz, the President of CSDEM and CEO of music publishing house Encore Merci, said that the report showed that music publishers in France have managed to maintain a high level of activity, despite losing on the digital front and investing heavily on new talent (half of the 896 contracts signed in 2018 by French publishers related to new talent).

  However, she warned that such activity could be at risk if some measures were not taken by the government. In particular, Metz said publishers would expect to benefit from tax breaks, similar to the ones benefiting record labels, and that a specific support scheme for music publishers should be set up within the newly created Centre National de la Musique. "It is important for us to benefit from tax breaks and support systems since publishing is the only part of the music sector that is not supported in any ways," she said.