Merlin paid indie labels and distributors $845m in the past year, showing strong growth

In the 12 months to end of March this year, Universal Music Group‘s recorded music business generated digital revenues (including money derived from streaming) of €3.24bn, according to figures published by its French parent, Vivendi.

That was up just over 19% on the €2.71bn posted in digital revenues by UMG’s labels in the prior 12 months. (These numbers don’t take into account currency fluctuations.)

This is all important context for some new stats, revealed today by Merlin – the body which collects global digital royalty revenues on behalf of the independent label sector.

In the same 12 month period (to the end of Q1 2019), Merlin says it paid out $845m to its label and distributor members, but that this figure included more than $130m in revenues from non-royalty income, including proceeds from the sale of the body’s shares in Spotify in April last year. (MBW calculated at the time that this was worth in the region of $100m-plus.)

In pure royalty terms, then, Merlin paid out circa $715m in this annual period. That number was up some 38% on the $518m the organization delivered to indies in the prior 12 months.

Strong indie-distributed albums in the 12 months included releases like Tranquility Base Hotel & Casino by Arctic Monkeys (pictured), issued on Domino.

Merlin, whose membership consists of over 20,000 independent record labels and distributors from 63 countries, estimates that it controls 12% of the global digital recorded music market.

Its members include the likes of Beggars Group, Dim Mak, Domino, Eleven Seven Music Group, Entertainment One, Epitaph Records, !K7, Kobalt Label Services/AWAL, Mad Decent, mtheory, Mom + Pop, Ninja Tune, [PIAS], Secretly Group, Symphonic Distribution, Sub Pop and Warp Records.

(It’s important to note that Merlin doesn’t distribute revenues from the likes of Apple Music or Amazon Music. However, it does license the likes of Facebook, YouTube Music, Spotify, Deezer, Pandora, Alibaba, NetEase and Tencent Music Entertainment.)

Netherlands-headquartered Merlin says that, thanks to the above numbers, it has now paid in excess of $2bn to indies since it was founded in 2008. Although it took nine years to distribute its first billion dollars, it paid out the second half of the $2bn figure in just 18 months.

And according to an annual member survey published today (June 18), over 80% of Merlin’s global membership saw their overall business grow in 2018.

Over the past 12 months, Merlin has added another 141 companies to its membership – and now represents independent music businesses across 63 countries.

Charles Caldas, CEO, Merlin, said: “I am delighted to report another record-breaking increase in payments to our global membership. What’s particularly gratifying is the inclusion of more than $130m in monies that members would not have captured were it not for Merlin’s formation. These are significant revenues that underline the incremental value Merlin brings to our global membership.

“That we can deliver such payments is testament both to the collective strength of our members’ repertoire, and Merlin’s ability to deliver best-in-class licensing alongside fully equitable and transparent reporting and payments. It means Merlin’s members can report quickly and accurately to their artists and clients, that they can thrive as truly independent businesses, and invest even further in the creation and development of new music.”

“That we can deliver such payments is testament both to the collective strength of our members’ repertoire, and Merlin’s ability to deliver best-in-class licensing alongside fully equitable and transparent reporting and payments.”

Charles Caldas, Merlin

Helen Alexander, CFO, Merlin, added: “It’s an absolute priority for Merlin that our reporting is transparent and fully attributable, and especially so given the increases in non-royalty income. This is no small undertaking, but it ensures our members can understand what they’re being paid – and why.

“For instance, every cent that Merlin received from the sale of Spotify shares was paid out quickly, pro-rated on a track-by-track basis, and with 100% transparency.”

In 2018, Merlin agreed landmark non-exclusive partnerships with Chinese DSPs NetEase, Alibaba and Tencent. Meanwhile, the affinity for Merlin members’ repertoire across Latin America continues, with Brazil currently Merlin’s fifth most valuable territory and Mexico inside the Top 10.

The report was presented today by Merlin CEO, Charles Caldas, to delegates at A2IM’s Indie Week in New York.

Merlin has offices in London, New York and Tokyo, with a head office in Amsterdam.Music Business Worldwide

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