France's neighbouring rights societies SCPP and SPPF have jointly collected €104.4m in 2020, down 14.7%

By Emmanuel Legrand

French neighbouring rights collecting societies for record labels SCPP and SPPF have collected a combined €104.4 million in 2020 against €122.4m in 2019, down 14.7% year-on-year. SCPP collected €79m versus €88.5m in 2019, down 10.5%, while SPPF collected €25.4m against €33.9m a year before, down 25%.

  SCPP collects on behalf of the three major companies and over 3,500 independent labels, while SPPF represents exclusively indie labels. 

  SCPP said the decline in collections was due to "very sharp drops" in the collection of fair remuneration (down nearly 19%), following the closure of cafes, bars, restaurants and nightclubs and other businesses using music. 

Stability of private copying remuneration

  Revenue from the exploitation of music videos also suffered, with a 3% drop, and phonographic rights were also down 8%, mainly due to the changes in the collection of webcasting royalties. Remuneration from private copying remuneration collections remained stable compared to 2019.

  SCPP said that the stability of private copying remuneration and adjustments to the distributions made between SCPP and SPPF, overall in favour of SCPP, have "made it possible to limit the drop in collections."

  SCPP distributed €81.1m to its members, down 8.7% compared to 2019. The decrease, according to SCPP, is not linked to the health crisis, but to the need to re-examine, jointly with the SPPF, the rules for distributing remuneration for private copying and from fair remuneration.

A very bad year 

  In 2020, SCPP has also increase its support to members and has financed 1,440 projects, against 1,218 in 2019, for a total amount of €21.98m. In addition, €5m of exceptional aid was allocated to its members, of which €2m were paid in the form of non-repayable grants.

  Marc Guez, Director General of SCPP, told NewsTank that the overall collections were "ultimately better than what we had expected, since our initial forecasts were rather at minus 20%." Guez attributes the improvement to revenues from private copying, which "remained stable, and even improved slightly, and that was not expected." However, he added that the 10.5% drop "is a first in the history of SCPP, and 2020 will remain a very bad year."

  For 2021, Guez predicts a similar 10% drop in collections, observing that "cafes, hotels and restaurants remained closed longer in 2021 than in 2020." 

Strengthening services to labels

  SPPF labeled 2020 as "a difficult year" with a series of "unfavourable events" such as the Covid-19 crisis, the ruling from the Court of Justice of the European Union in September on non-discriminatory payments (see box below), which affected the organisation's support budget for musical production, and the continuation of the dispute with SCPP on the allocation of non-distributable royalties.

  In this context, SPPF collections fell by 25% compared to 2019, amounting to €25.4m, while distributions reached €21.5m. The society allocated financial advances for a total of €9.1m. In addition, SPPF allocated exceptional financial advances in the amount of €4.1m, which benefited nearly 100 members, and it awarded €6.8m in grants to a total of 939 projects.

  "SPPF now brings together 2,000 producers who are the driving force behind the recorded music market in France," said SPPF Managing Director Jérôme Roger. "This creative capital is extremely valuable for boosting the music production market. SPPF plays its full part in supporting their activities and intends to strengthen the level of services it provides them."

The domination of algorithms

  SPPF said that despite the drop in its collections, its admin rate only grew by 0.5%, to 8.5%, "one of the lowest in France among distributing collective management organisations," said the organisation.

  SPPF President Emmanuel De Buretel, founder and CEO of indie company Because, listed a few areas that the organisations has identified as requiring action: “The historical concentration in the music sector tends to shift to several places: if the barriers to entry for independent producers have decreased with the rise of music streaming, the domination of algorithms and the concentration of playlists are new areas of concern. The process of concentration underway within private television channels [with the planned merger of the top two commercial network, TF1and M6] also demands from us a duty of vigilance to preserve musical diversity in this sector. "

> The impact of the CJEU ruling

Both SCPP and SPPF had to take into account the recent decision taken by the Court of Justice of the European Union, which ruled in September 2020 that societies could not discriminated performers based on their country of origin. This decision has prompted the need for rights societies in France to restructure their support budget for cultural projects and engage in a major reform their aid system.

  A significant part of the funding for the aids system comes from the non-distributable royalties from equitable remuneration, which mostly come from the use of music from countries that have not ratified the Convention of Rome, in particular the United States. 

  As a result, both SCPP and SPPF have put on hold the allocation of these specific funds. SCPP, for example, estimates that it removed €2.93m to its aid budget to put in a reserve as a precaution. 

Need for a European fix

   According to SCPP, this CJEU decision "changed the situation of equitable remuneration in Europe and in France," and SCPP could no longer use the legally non-distributable sums from fair remuneration to support creative projects.  

  From January 1, 2021, SCPP has restructured its budgets to take into account the new situation, which will result for the full year, in a drop of about 45% drop in budgets for recurrent aid project from SCPP. 

  SPPF said the the Minister of Culture Roselyne Bachelot has committed to push in Brussels for a top-down solution to fix the CJEU decision, in the way of an amendment to the 2006 directive on rental rights and certain neighbouring rights and said it remained confident that the issue could be fixed by 2022.