ICMP panel discusses the impact of Covid and the road to recovery for publishers

By Emmanuel Legrand

Music publishers have been strongly impacted by the Covid-19 pandemic and recovery will take a few years before their business gets back to pre-pandemic levels. Such was the overall picture painted by a group of international publishers speaking at a virtual media call under the aegis of the International Confederation of Music Publishers (ICMP), ahead of the organisation's AGM.

  “Covid has hit us hard,” said Jackie Alway, the new Chair of ICMP, and EVP at Universal Music Publishing. She pointed out to a “drastic drop in performance revenue” in every country, and the complete stop of live music activities globally, as two of the main factors impacting music publishers.  

  Alway said publishers are not on their own on the road to recovery and the “nature and the scale of these challenges affect us in the music industry.” She added: “This is a time when we need support of trade associations more than ever.”

Changes in the way markets operate

  Mary Megan Peer, CEO of peermusic, concurred with Alway that Covid-19 had an impact around the world and brought “profound changes in the markets we operate in.” Performance rights were hit hard, she said, as there was a complete shut down of live music but also the closing of bars, venues, and all the businesses that use music. “The impact is huge and historic for music publishers and for the entertainment industry,” said Peer.  

  Peer said the goal is to “bring back figures to pre-pandemic levels.” Revenues from digital have been growing during the pandemic, she noted, after worries that it would also be affected by the lockdown. “The initial dip in music streaming was quickly neutralised,” she recalled.

  Other streams of revenues, such as sync, have been affected too since TV and film production almost halted for most of the year. However, Peer said that her team kept sync “quite steady” and that the current levels of sync licenses is pretty back to normal, if not above normal due to the rush to complete projects that were put on hold.

Long term view on the value of music

  Looking at the future, she noted that the industry will have to continue to adjust to the way people have changed consuming music during Covid.  

 Chris Butler, the outgoing Chairman of ICMP and a director at London's Wise Music Group, said that like many publishers, Wise Music, which is 85 years old, takes a “long term view on the value of music. Our rights are enduring, and technologies come and go. We need that long term view and a stable copyright environment and  ICMP can make sure we have a proper framework to do that on a global basis.”

  Commenting on business in times of Covid, Butler said Wise was able to maintain a high level of business, except for one key area, the live sector, which is a critical stream for companies focusing on “serious” music. “That's a vital revenue to composers and the ability to perform and engage with music enthusiasts, and that was decimated by the necessary restrictions on gatherings,” said Butler.

A pipe-line effect

  Butler also touched upon the cycles of revenues for publishers, for whom a major part of revenues go through the international network of collecting societies. “Our collection organisations are worldwide and distribution takes time and we'll experience a pipe-line effect when Covid is over. For us, it will take time for us to recover and for the pipe-line to flow normally,” cautioned Butler.

  One of the important work done by ICMP, local publishers organisations and the music industry at large, was to alert governments about the need for support mechanisms. “We work with governments to make sure there is appropriate commercial support and preparing the ground for the safe resumption of live performances. This is key to kickstarting the return to life for performers and publishers.”

  Butler warned that “2021 is going to be a tough tough year, but we will slowly come back and will be the last people out of this.”

Critical support for SMEs

  ICMP Director General John Phelan said music publishing is a global $6 billion business, but this figure is going to take dive before experiencing an upturn, and deliver an expected 6% growth rate by 2030. The focus of the organisation now is to ensure that the sector gets out of the crisis and “ensure critical support from governments for SMEs.”

  At the same time, it also continues to focus on ensuring that the overall copyright framework continues to support the industry. Phelan went through a a series of issues at stake, in particular the notion of safe harbours, tackled in the European Copyright Directive, and also under scrutiny in the US as part of the review of 1998's DMCA's fair use provisions.

  “Platforms derive enormous revenues and do not pay fairly publishers and songwriters,” said Phelan, who welcomed the fact that “after unprecedented campaign EU's Article 17 is now a reality and applies to all platforms.” The plan now is to work with other governments in other parts of the world to get platforms liable for music uploaded.  

Growing the pie for publishers

  Moving forward, the music publishing industry should be focused on “growing the pie” said Phelan, either through accelerating the licensing of new platforms, or by driving value in promising markets such as India. In conclusion, Phelan said he forecasts that the ongoing Covid crisis will continue to impact the industry “towards 2023.”

  David Israelite, President and CEO of the National Music Publishers' Association (NMPA), was invited to provide a round-up of the key US issues. The first topic he touched upon was the current rounds of rate determinations with the Copyright Royalty Board. He indicated that the round known as CRB IV is about to start for the determination of rates applied to interactive streamers for the period 2023-2027, but the rates for 2018-2022 still have not been implemented as the rates set by the CRB have been challenged in court by the likes of Spotify and Amazon Music.

  “We are still litigating,” said Israelite, who indicated that the process should wrap up this fall, and he felt confident that the courts will confirm the rates that will then apply retroactively. The increase agreed by the CRB would result in a 40% rate increase over five years, which Israelite described as “a major victory against services.” But, he added, “we are still nowhere where we should if we had a free market but it is a significant increase.”

Preparing for CRB IV

  Meanwhile, the NMPA is also focused on CRB IV, which will involve the same parties, around the CRB. “We have not filed our case yet,” said Israelite, “but we will be asking for an increased rate. One thing that has change since the last time is that we now have the Music Modernisation Act [MMA] which has many thing and one thing is a change in rules in how the trial works, with a willing buyer-willing seller approach. So judges will be able to use a different formula to set the rates.”

  Israelite said he was “very optimistic” that these rate standards will help publishers get rates increase higher than they did in the last round.  

  Israelite said the NMPA will unveil on June 9, during the organisation's AGM, the market figures for publishers in the US for the year 2020, which should show an increase in revenues from digital, with streaming becoming the dominant source of revenue for publishers. “It's not like for labels, but it is becoming significant so rates are important,” he said.

Properly license digital platforms

  In the past year, the NMPA was active negotiating licensing deals with platforms with new business models, which included deals with YouTube, TikTok, Peloton, Snap, among others. “We may not be happy with the rates but at least we have negotiated deals,” he said. 

  He also singled out platforms like Roblox or Twitch that “are not licensing properly and try to diver the responsibility to customers.” And then there are sites that “are not trying to license” and get sued by the NMPA, such as Wolfgang's Vault.  

  Israelite said that although there is not an as heavy legislative agenda in the US as there was in the past four years leading to the MMA, he said that the NMPA keeps pushing the agenda of publishers and songwriters on Capitol Hill.

Threats on term of copyright

  He alluded to a plan from a member of Congress who planned to introduce a bill that would reduce the term of copyright. “We went to war before it was introduced and managed to convince Congress to not introduce [the bill]," revealed Israelite, who did not name the initial sponsor of the bill. [Sources in DC said the initiative was from Senator Tom Cotton of Arkansas.]  

  For Israelite, the fact that things like that could happen means that publishers need to be constantly alert to avoid any legislation that would erode their rights. “When the MMA passed in 2018, Congress did not want to hear from the music industry for a long time, so we thought we would have a break, but it was not to be the case,” he explained.