The National Music Publishers’ Association’s annual meeting was held virtually Wednesday (June 10) due to COVID-19, where president and CEO David Israelite reminded membership that music publishing is still facing pre-pandemic threats to its business. Namely digital streaming services’ Copyright Royalty Board appeal and the Department of Justice’s review of ASCAP and BMI consent decree — which could also be an opportunity, depending on how the DOJ rules.
“We are now 2.5% years into the new [rating] periods but we still don’t have certainty on our rates because Spotify and Amazon are still appealing,” Israelite said in his state of the industry address.
The Copyright Royalty Board had improved songwriter rates to increase the headline rate incrementally 10.5% to 15.1% over five years from 2018 to 2022. YouTube and Pandora also appealed that ruling and the four services are collectively fighting back to reduce the rate.
Israelite reminded songwriters and publishers, “Remember, whatever gestures they give out, they are still in court trying to cut what they pay songwriters by a third.”
He also said the industry was still waiting on the DOJ’s review of the ASCAP and BMI consent decrees, still in place from 1941 when they were implemented to help the “fledgling broadcast industry…. Fast forward to today and those decrees are used to protect companies like Facebook and Google, which is ridiculous.”
The music publishing sector is asking the DOJ to amend the consent decrees to allow individual publishing companies to selectively withdraw their digital rights from blanket licenses so that they can negotiate direct deals with the digital services, but still enjoy the performance rights organizations’ blanket license for other music users.
Looking at 2019, Israelite pointed out the NMPA industry survey of its members found music publishing revenue grew 11.55% to $3.72 billion from $3.33 billion in the prior year.
That breaks out to performance revenue accounting for 52.3%, or $1.945 billion; synchronization 22.7% or $844 million; mechanical to 18.53% or $689 million; and other to 6.5%, or $241 million.
That compares with the prior year when performance was $1.8 billion, or 54.6%; synch was $696 million, or 21%; mechanical was $586 million, or 17.8%; and other was $217.5 million, or 6.6%.
Overall, that means that synch (which had been stagnating at around 21%) and mechanical (which had been steadily falling) are now “coming back” and growing again, according to Israelite.
So even as mechanical revenue from physical products and downloads are falling, that is being offset by revenue from things like the home fitness industry and micro-licensing, he said.
On another note, Israelite reported that so far this year, the NMPA has distributed $75.3 million from lawsuits and settlements, which represents a 573% return on the dues members pay to belong to the organization. Since 2005, the NMPA has returned $775.7 million to songwriters and publishers through its legal efforts.
Despite being a remote livestream, the annual meeting still featured many of the same elements typically showcased during an in-person event. These included a keynote question and answer session with the RIAA’s Mitch Glazier, a Mechanical Licensing Collective (MLC) update with CEO Kris Ahrend and a look at how the pandemic is impacting the music business as summarized by Nielsen Music/MRC Data senior vp analytics David Bakula. There were also interviews with songwriter and NMPA board member Ross Golan and Peloton music licensing executive Gwen Riley with trainer Emma Lovewell on how the brand incorporates music — which was notably friendly given that the NMPA and Peloton settled a $370 million lawsuit in February for Peloton’s use of unlicensed songs.
The organization presented its Icon Award to superstar Garth Brooks to close the event. Brooks discussed the importance of recognizing songwriters and showed appreciation for James Taylor by performing some of “Fire and Rain” and then his own hit, “The River,” which he said Taylor’s song influenced.
Discussing the MLC, Israelite reminded virtual attendees the collective will launch in January 2021. It will be the first time songwriters will be paid 100% of the licensee commission, since the services are paying for the MLC’s start-up costs and operating budget. Beyond that, he reminded attendees that the law will give publishers audit rights and transparency like they have never had before, thanks to having its own database. But he cautioned that the success of the payouts are dependent on having an accurate database, and reminded publishers and songwriters to make sure that their data is correct.
Looking ahead, even though the industry is still in an appeal over the CRB ruling for the current royalty term, it will soon start the process for the next term, which spans from 2023 to 2027. This time the songwriting industry will have a new benefit: It’s the first time that the CRB judges will set a new standard based on a fair market value, considering a willing buyer and a willing seller. That’s something the judges previously didn’t have to consider, and “that means the CRB judges have to try and figure out what would happen in a free market,” Israelite said.
“We are six months away from starting the next CRB process in January 2021,” Israelite said. “This will be the most important rate trial ever.”