The MBW Review offers our take on some of the music biz’s biggest recent goings-on. This time, we chew over new statistics regarding the US music publishing (and songwriting) community’s annual revenues, and how they stack up against their friends and partners in the record industry. The MBW Review is supported by Instrumental.
At the close of 2014, the US music publishing (and songwriting) industry was hit with some worrying news.
According to a survey of the members of the National Music Publishers Association (NMPA), Stateside music publishers turned over $2.15bn in that calendar year – a figure which was down 2.5% on 2013’s haul of $2.20bn.
These numbers triggered some doomsday forecasts regarding streaming’s effect on the publishing business, as major and indie pubcos alike suffered from the decline of physical and download formats.
Fast forward to today, and the turnaround is remarkable. According to new NMPA member statistics, in 2018, annual US music publishing revenues hit $3.33bn, up 11.78% year-on-year.
This number is noteworthy for a few reasons. Firstly, the difference between that scary 2014 figure ($2.15bn) and 2018’s annual number – less than half a decade later – was over a billion dollars ($1.18bn).
In fact, in percentage terms, the growth between these two points was no less than 55%.
‘Hang on,’ you might say, with some justification. ‘Doesn’t the US music publishing industry keep making noise about how little its companies (and their songwriters) are getting paid from streaming? Particularly in comparison to the record industry?’
Well, yes, that is true. And the NMPA is certainly a vocal and aggressive lobbyist for its membership. (Example: speaking at an annual member meeting on Wednesday (June 12) in New York, where the $3.33bn figure was revealed, the NMPA’s CEO, David Israelite, revealed that his org’s legal action against copyright infringers had recovered $46.4m for publishers in 2018.)
But how does the US music publishing industry’s resurgence in recent years compare with that of the record industry in the same timeframe?
MBW can answer that question. We’ve run a simple comparison, using historical numbers delivered by the NMPA at its annual meeting, and equivalent data from the US record industry trade body, the RIAA.
Seeing as the NMPA’s member survey is on a trade revenue basis (i.e. the money pulled in by its members), the fairest comparison here is with the RIAA’s annual wholesale revenue figures, as opposed to its more oft-cited retail data. (The latter takes into account money retained by streaming services and other ‘retailers’ before a share is passed on to labels and artists.)
As you can see below, in the four years between 2014 and 2018, the US recorded music industry’s trade revenues grew by circa $1.74bn. (The RIAA has only given wholesale figures rounded to the nearest $100m for the past two years.)
That’s obviously a materially larger rise than the $1.18bn growth enjoyed by the publishing industry in the same four-year timeframe.
Yet on a percentage basis, the US record industry was up 35.8% in this period; the publishing industry, by contrast, grew faster – by 55.0%.
Another set of interesting numbers delivered by David Israelite on Wednesday concerned how last year’s $3.33bn in US publisher revenues were divided up by income category.
Israelite noted that 54.6% of this revenue consisted of performance revenues, with mechanical income on 17.8%.
MBW has looked back at Israelite’s other annual member addresses in recent years to see how this fares in comparison – and found that this annual income breakdown has remained fairly unchanged (see chart below).
The biggest growth area since 2015, for example, appears to have been Sync, which claimed 21.1% of total US publishing revenues last year – or $703.7m.
Stat of the day from MBW’s calculations here? According to RIAA figures, the US recorded music industry derived $285.5m from sync in 2018.
This tells us two things: (i) US music publishers are making more than double the amount of money from synchronization that their friends in records are generating; and (ii) Across both sets of rights, the sync industry generated $989m for labels, publishers, artists and songwriters last year. This number must now be odds-on to top a billion dollars in 2019.
Speaking to members at the NMPA’s annual address – where Ryan Tedder picked up a special Icon award – David Israelite said that the US publishing industry’s growth in the past three years (since 2015) was up by 32.5%, which he called “an amazing accomplishment for all songwriters and music publishers”.
He noted that the RIAA’s latest numbers showed the US record industry grew 12% year-on-year (on a retail basis) in 2018, a number which runs very close to that of the NMPA’s 11.8% equivalent figure. (On wholesale terms, the two numbers were eerily similar: the RIAA’s annual wholesale figure moved from $5.9bn in 2017 to $6.6bn in 2018, up 11.86%.)
Commented Israelite: “[The similarity between publishing and records’ US percentage growth last year] is amazing when you think about [the fact] that in recent times we’ve always lagged behind the growth of the record labels.”
“[The similarity between the publishing and recorded music industry’s US percentage growth] is amazing when you think about the fact that in recent times we’ve always lagged behind the growth of the record labels.”
David Israelite, NMPA
He noted that US record labels derived 86% of their revenues from digital sources last year, but that NMPA members – across online performance, mechanical and sync sources – only saw 32.6% of their money coming from digital platforms.
“[This] speaks to the diversity of income sources that music publishers and songwriters have that record labels don’t,” he said. “What’s amazing is that, despite that difference, our growth is is on par with what [the RIAA reported].”
The NMPA will now turn its attention to fighting an appeal from Spotify, SiriusXM/Pandora, Amazon and Google against new, larger mechanical streaming royalty rates which have been agreed by the US Copyright Royalty Board.
As for songwriters?
They may turn their attention to their phones. As in, calling their publishers on Monday, and casually mentioning: “Saw your guys’ revenues grew by over a billion dollars in the past four years… Erm, what’s my slice of that?”
The MBW Review is supported by Instrumental, which powers online scouting for A&R and talent teams within the music industry. Their leading scouting platform applies AI processes to Spotify and social data to unearth the fastest growing artists and tracks each day. Get in touch with the Instrumental team to find out how they can help power your scouting efforts.Music Business Worldwide