Wednesday, January 29, 2014

Synchs boost French music publishing revenues (Part 2)

(This story was originally published in One Movement for Music, Issue 10)

A 2010-2011 CSDEM study made among its members by global research and accountancy firm KPMG, based on figures supplied by 53 of its members, showed that their overall revenues reached €196m in 2011 (up 3.6% from 2010), with majors accounting for 80% of that amount.

Rights collected by authors' society SACEM/SDRM represented 64% of overall revenues (€126m), up 2% on the previous year, with the increase in performance rights (€78m, up from €73m) more than compensating the drop in mechanical income (€43m, down from €47m).

At €51m, non SACEM-related income represented about 25% of the turnover, up 13%, thanks mainly to a growth in synchronization revenues (€31m, up 31%). Revenues from the sale of sheet music represented 9% of total revenues and were slightly down at €17m.

Local repertoire accounted for 19% of rights collected (€24m), while the origin of rights is split 42%-58% between the European Union and the rest of the world, with the US taking a major share.

CSDEM's Angélique Dascier
The total number of works owned by the companies taking part in the survey reached 6.9 million in 2011, against 6.1 million in 2010. The significant rise is due to an increasing number of non-French works represented by CSDEM members.

The amount of advances paid to authors, composers and catalogue owners by music publishers reached €9.2m in 2011, down 6% from 2010. Of that amount, 22% was allocated to new talent, 64% to confirmed authors and 14% for international catalogues (up from 7% a year before).

These figures give a good overview of the music publishing field in France, although they do not cover the whole range of companies involved in the sector, explains Angélique Dascier, General Manager of the Chambre Syndicale De l’Edition Musicale (CSDEM), the French music publisher's association. “These are economic indicators of the sector,” she says. A new study is underway covering 2013.

French music publishers grow market with pro-active behavior (Part 1)

(This story was originally published in One Movement for Music, Issue 10)

Ranking as the fifth largest recorded music market in the world, France offers significant upsides for music publishing companies. As the country of birth of “authors' rights,” France has a very high level of royalty collection and thanks to strong film, advertising and TV production arenas, its synch sector is growing.

Revenues for the sector have been on an upswing at close to €200m ($270m), thanks mostly to the development of the synch market (see sidebar), but publishers admit that it's been a difficult market for the past few years. One of the attractions of the French market has always been the high level of collections, with some of the highest rates in Europe paid by media for the public use of music on radio, TV or in clubs.

peermusic's Bruno Lion
“The use of music in media is the main source of revenue and France has some of the best rates in the world,” says Bruno Lion, Managing Director of peermusic France, as well as President of cross-industry organization Tous Pour La Musique. But like in other markets, publishers see extreme pressures of rates negotiated on their behalf by authors' society SACEM or on the fees that they negotiate directly for synch purposes, for example.

Central to the life of music publishers is authors' society SACEM, which has collected €803m in 2012 on behalf of authors, composers and publishers, 14% of which comes from digital use of music. The society has been going through a major renaissance under the aegis of newly appointed CEO Jean-Noel Tronc, a former executive from Orange and pay-TV group Canal+. “In a difficult context, we are changing the way we approach our business and so do authors' societies,” says peermusic's Lion, who is a board member of SACEM. “Sacem as a tool is changing. A new team has been put in place for the past 18 months and is now fully operational. Over 2013 and 2014, fundamental changes will take place. The new deal signed with YouTube is a good example of these changes.”

Issues with rates

However, if most publishers agree that SACEM is very efficient when it comes to collecting rights, some publishers are also critical at the way SACEM handles the distribution of rights, citing delays and inaccuracies in the process. “There are major challenges in the transformation and modernization of SACEM,” says Stéphane Berlow, Managing Director of BMG Rights Management France, “and as a publisher with a significant catalogue – we are now the fourth largest publisher in France – we have problems linked to size and scale. That said, there are also good aspects to the modernization, but on a daily basis, it is tough.”

Sony/ATV's Nicolas Galibert
“SACEM is very well structured now and more efficient,” says Nicolas Galibert, Managing Director of the combined Sony/ATV and EMI Music Publishing France. “But as one of the board members, one of the main issues for me is the level of rates. We should not let them slide. If the DVD sector is asking for lower rates because the market is going down, why should we accept? This is unfair.”

One publisher explains that the publishing rights for YouTube streams are “ridiculously low,” offering the figure of €150 for one million views in France, about 20 times less than what labels receive. These rates could not be confirmed since the new global deal between SACEM and YouTube signed in 2013 includes an NDA.

But the main worry of publishers is what will happen if streaming becomes the main way to consume music. “Streaming takes over downloads and that has an impact on our revenues,” says Francois Millet, founder of boutique publishing house Vital Song. “It is now frequent to have some tracks for which 75% of the revenues come from streaming.”

For Berlow, changes in consumers' behavior with increasing adoption of streaming will have an impact on the level of revenues. “We will face real problems ahead if streaming continues to grow,” says Berlow. “Publishing gets the worst deals when it comes to streaming. It might be the future but this is a real issue for us to reach proper remuneration levels. One generation listens via YouTube, a younger one via Deezer. Lots of kids listen via Deezer. Music radio is starting to see a drop in audience, and as one mode of consumption replaces another, our levels of revenues are going down. Scale is one of the answers and we hope that services like Deezer and Spotify will reach enough scale to generate revenues.”

He continues, “In addition, the economic model [for publishers] is tougher and this affects our ability to take chances with new talent. It is hard to be optimistic in the short term but when we work on a daily basis, it does not affect us. We just move on and do our things.”

And things publishers do have expanded over the past few years. Gone are the days of simply collecting the proceeds from sub-publishing deals with international catalogues or cashing in publishing royalties with local when the manpower and the money were coming from record labels. One of the significant changes in the model is the dearth of investment in talent and new recordings from the labels, which has a trickle-down effect on music publishing, forcing publishers to change the way they approach their craft.

“The business of publishing has not fundamentally changed – which is to bring the right project at the right time -- but the partners have changed a lot,” says Lion. “Before, we worked a lot, and mainly, with the A&R departments of record companies or artists' management; now we work as well with TV or film production companies, concert promoters, not to mention artists as stand-alone units.”

New publishers join in
As a sign of the times, the number of music publishing companies has been growing, reflecting the view that publishing can still deliver a steady flow of revenue that can offset other declining parts of the music business. But it also highlights the growing number of artists who are self-published, or the rise of small DIY structures, according to Angélique Dascier, General Manager of the Chambre Syndicale De l’Edition Musicale (CSDEM), the French music publisher's association.

“We have a lot of new members, especially small structures,” she says. “Many of these new members set up a publishing unit aside from another business – they can be concert promoters, labels, etc. And there's a lot of young people, new faces, and this is quite dynamic, because they are also adopters of new practices, using the digital tools of today.”

Jean-Raphael Maraninchi
This influx of new players in the publishing arena and the fact that revenues are growing offer good business opportunities, according to Jean-Raphaël Maraninchi, Managing Director of Buddemusic France, the affiliate of German music publishing house Buddemusic. Budde has developed an expertise in electronic music and dance. One of its recent signings is David Shaw, a British DJ living in France. It also represents many catalogues signed by its parent company as well as international catalogues signed just for the French market.

“Publishing requires real local and international expertise,” says Maraninchi. “A lot of new companies set up by [indie] labels come to us to administer their rights – we are very good at collecting [royalties]. The French system is very complex and because it is in France, administration can be very burdensome. We also do a lot of partnerships with small labels and help them finance projects and do the back office. We also do a lot of co-publishing with labels.”

Peermusic's Lion sees the job of publishers evolving towards becoming service companies: “We bring a specific service, especially in the administration field, to many independent artists who need to have this part of the business properly handled. That's what we've been doing with [EDM act] Agora for 14 years, or with the Gipsy Kings or Kassav.”

With labels consolidating, a lot of the creative work is now falling in the hands of music publishers, but BMG's Berlow warns that publishers “are not immune against the changes in the marketplace.” He adds, “The role of A&R development has always existed, but it is tougher. We are happy when we sell 10,000 albums of a new artist when it was 50,000 a few years ago, so it creates a real economic problem.”

BMG, which started from scratch in France a few of years ago, has made a steady number of acquisitions (Francis Dreyfus Music, the catalogues of De Palmas, Louis Chedid and Gold, as well as FKO, home to Fela Kuti's works and the French catalogue of Virgin). Berlow describes the catalogues as “a foundation” which allows them “to be strong in sync and song pitching.”

Berlow says many acquisitions, as well as new projects, include publishing and masters, since it has become more and more difficult to find labels that will finance new recordings. “There's less labels and also less labels taking risks, so we have to step in,” says Berlow. “Publishing is one of the few music sectors that is not helped [financially], so I hope we can continue to do that.”

Domestic acts top charts
Local repertoire is dominant in France so continuing to invest in domestic talent is paramount for publishers. In 2013, 17 of the top 20 best-selling albums were by French-speaking acts (Stromae's sophomore effort Racine Carrée topping the charts with over a million album sales). With Urban, Dance and Pop being the taste of the moment (Robin Thicke's “Blurred Lines” was one of the most played songs in France in 2013), other music genres are finding it more difficult to access radio playlists. Even Rock as a genre has its own radio challenges, but for genres like Jazz, Classical and World, it is even tougher.

Métisse Music's Petra Gehrmann
Petra Gehrmann is the German-born founder and CEO of music publishing company Métisse Music, which counts among its diverse catalogue such artists as Marina Cedro from Argentina, Jun Miyake from Japan, whose music is featured in Wim Wenders' documentary Pina, or La Caravane Passe from France. She confirms that it is not simply with the financing of the recordings that publishers have to be involved in these days. “More and more companies are closing down among indie labels and distribution companies, so we do more and more management for our artists and try to find opportunities for our artists outside France, where it's become difficult,” says Gehrmann.

Gehrmann takes the positive view when it comes to the synch market. With over 200 films in production every year in France, the local industry offers many opportunities to either place music or to provide original scores. “There is a strong film industry in France and it helps,” she says. “There are a few music supervisors who work on many different movies and they are quite open. TV documentaries are also a good platform for music. In cinema, when a composer is picked, the publishing is usually grabbed by the production of the movie and we can do a co-publishing deal with a 50-50 or a 60-40 split, and sometimes they take it all if they finance everything.”

Flexibility and adaptability are the key word these days for publishers, partly for business reasons but also because, as bluntly put by Francois Millet, founder of boutique publishing house Vital Song, “capturing publishing rights is a national sport, and it impacts every single project you can work on.”

Nicolas Galibert agrees: “Everybody wants a piece of publishing. Labels now systematically ask for a cut in publishing. It is part of the contracts. That was not the case.” But he also says publishers have to understand when to split their publishing share. He explains, “When it is a musical and the producer of the show takes the financial risk, I don't mind doing a co-publishing deal – the revenues will come from so many sources: live performances, radio, TV, and even merchandising. Same when you place a song with [veteran rock icon] Johnny Hallyday. You know he is a market puller, and you are going to benefit from his exposure.”

And since publishers end up working more and more directly with artists, more than often financing their recordings, this allows publishers to often own both the publishing and the recording rights, which is a bonus for synch deals. In addition, France has a very sophisticated system of collection for neighbouring rights (performance rights paid to performers and labels for the public use of recordings). “Neighbouring rights are very important and represent over 20% of our masters' revenues,” says Berlow, whose company has been building catalogue in both recording and publishing.

Expanding the business
Some publishers like Lion or Galibert go as far as registering for neighbouring rights all the demos and recordings that they have paid for from the artists/songwriters signed to their companies. “These can be used in many different ways such as inclusion in box-sets, or as extra songs on albums, and so much for the better if on top they generate ancillary rights,” says Lion. “We are going to focus on neighbouring rights,” concurs Galibert. “Even our demos will be registered. And we will be producing shows like musicals. We see that segment evolving nicely alongside concert music for films. This is the kind of repertoire that is rarely played live and we see a lot of potential.”

Galibert had the opportunity to experience first hand how to structure a music publishing company fit for the digital age when he combined the French units of Sony/ATV and EMI Music Publishing. The integration of the two companies took about two years and is almost complete (mergers in France can take time due to stringent labor laws). “We have a team of 27 people with about 25% in A&R, 25% in the sync department and 50% in admin and royalties,” says Galibert. “Our policy was to take the best from all sides, but it was not always easy to achieve. Then we had to put in place processes. Everyone has seen the workload increased, so it was necessary to create processes. The French are really productive, unlike conventional wisdom.”

To grow their business, French publishers have joined forces to set up of a database of French lyrics, which – after over two years in the making – is now fully operational and provides access to the lyrics of 50,000 songs in French, coming from catalogues of both independent and major publishers. The B2B site ( is managed by Musicstory and licensed to third parties. “Each publisher keeps ownership of its content,” explains CSDEM's Dascier, adding that a deal with global platform Lyricfind is in the works.

Vital Song's Francois Millet
“There was no market for lyrics in the physical word, but with digital, lyrics started to get a lot of usage, but usually not through legally cleared platforms. We felt there was a need to do something and we built the database from scratch,” explains Dascier, who adds that revenues so far are under €100,000 but growing.

“This has created a new market and a new revenue stream for publishers,” confirms Vital Song's Millet, who was involved within CSDEM in the setting up of the database. “It is a guarantee that our lyrics can now be available legally on the net and are exploited on a constant basis. And no site can now take the excuse that there is not legal ways to access lyrics in French. No more excuses!