US music publishing income reached $3.7bn in 2019 but 2020 will present challenges

By Emmanuel Legrand

The US music publishing industry celebrated its best year ever in 2019, when overall revenue reached $3,719,796,271, up 11.55% over 2018 figures. But the coronavirus pandemic is expected to affect 2020 revenues due to an anticipated drop in public performances and synchronisation rights. “Covid has thrown the music industry into chaos,” said National Music Publishers’ Association’s (NMPA) President & CEO David Israelite during his yearly State of the Industry address at the organisation's first-ever Virtual Annual Meeting.

  Music publishing's 2019 record revenue marked the the fifth consecutive year of “significant” growth for the industry. In 2014, the industry's total revenues reached $2.1bn and the yearly growth rate has accelerated since 2016. In 2019, performance rights continued to be the most dominant stream of revenue for publishers, accounting for 52.30% of the total, followed by sync (22.69%), mechanical (18.53%) and miscellaneous (6.48%). Israelite noted that sync and mechanical revenue grew faster in 2019 than performance rights. “For a long time performance was growing as part of the pie but there's been a bit of a comeback of synch and mechanical,” said Israelite.

Importance of new revenue streams

  He attributed it the growth of mechanicals to ongoing good results from streaming and that more and more revenue has being categorised as mechanical because of recent successes at the Copyright Royalty Board (CRB) and how it is divided. With regards to synch, Israelite said the stream of revenue is “continuing to benefit from landmark deals made by NMPA,” including with fitness brand Peloton. Israelite added that new revenue sources were the key to the industry's future, as traditional sources of revenues such as physical, downloads, and even performance revenues are challenged.

  Israelite also highlighted “a fantastic year” in protecting copyrighted works, revealing that the NMPA distributed back to its members more than $75m dollars from litigation and settlements in 2019, representing a return on dues of 573%. Between settlements, judgment and deals, the NMPA has returned $776m to its members over the years. Looking to the future, Israelite listed five areas of focus. First on the list were the long-awaited results from the appeal to CRB III's rate fixing, challenged by Spotify and Amazon, among others.

Reviewing the consent decrees

  “We are two-and-a-half years into the rates and will still have no certainty of what the rates are because Amazon and Spotify are still challenging them,” said Israelite, who added that the industry was waiting to know what will be the rate structure for the remainder of the cycle and also retroactively. He reminded the online audience that while Amazon and Spotify are offering token gestures to songwriters, “they are in court to cut by a third” the revenues of songwriters.

  In second, Israelite said it was now urgent to know which decision the Department of Justice is planning to make about the consent decrees ruling ASCAP and BMI. Among the changes expected by publishers and songwriters are the right to selectively withdraw catalogues so that rates could be negotiated in open market conditions. “The idea that the Justice Department could use consent decrees to protect companies like Google or Spotify is ridiculous,” said Israelite.

  Next on NMPA's radar is to prepare for the launch of the Mechanical Licensing Collective (The MLC), which will be tasked from January 1, 2021 to license and administer mechanical rights. “We still have a lot to do,” said Israelite, in particular ensuring that the database of music works that will be used by The MLC includes as many works as possible, in an accurate manner.

Getting ready for CRB IV

  Israelite described the Music Modernisation Act, the 2018 law that created the framework for The MLC, as “the most significant development in our industry.” He added: “It is amazing that we have a mechanical collective where administration costs are paid by the licensees, and a database one hundred percent funded by the digital companies.”

  The NMPA is also already focused on the next CRB rate fixing process, with the next CRB IV round about to start in six months. “This is going to be the most important CRB trial we had,” said Israelite. “We are now asking the three judges to set rates on willing seller, willing buyer [basis],” he said, adding that during these complicated procedures, it was important for the industry “to stick together.”

  Last, Israelite said the NMPA would be relentless in the future in protecting and developing new business opportunities. “There's a massive amount of music used but not always compensated and licensed properly,” he said. “The NMPA will continue to fight so that no one can build a business on the back of songwriters. The days of building a business first and ask for forgiveness after are over!”

Protecting songwriters and creators

  Guests featured during NMPA's Virtual Annual Meeting included RIAA Chairman & CEO Mitch Glazier who detailed the work his organisation is doing to globally combat piracy during the Covid-19 pandemic. Speaking of the the recent US Copyright Office’s report on Section 512 of the Digital Millennium Copyright Act (DMCA), Glazier said “the services that should be responsible parts of the eco-system who can voluntarily come in and protect music have refused so far to do so in a way that really protects creators – that protects songwriters and artists.” 

  Other guests were The MLC CEO Kris Ahrend; songwriter, podcaster, producer and artist Ross Golan; David Bakula, SVP of Analytics, Insights and Research at Nielsen Music; Peloton’s Emma Lovewell and Gwen Riley; and singer-songwriter Garth Brooks, who accepted the NMPA Songwriter Icon Award in the name of his longtime publisher Bob Doyle.